The EU was set up after the Second World War to create a common market and in recent years the EU’s policy range has expanded even more moving towards, ‘an ever closer union of the peoples of Europe.’ Although membership of these Institutions is desirable, international interdependence can and does undermine state sovereignty, for example international treaties such as NATO and the implications of the IMF. With membership of the EU certain decision-making responsibilities are transferred from national to EU institutions and EU law is incorporated into a states constitution and overrules statute law. An example of this is practice was in Britain in the early 1990’s with the Factortame case ruling the Merchant Shipping Act (1989) invalid as it broke EU law.
Global capital flows are massive and can overwhelm the ability of states to defend their currencies and economies. Black Wednesday in 1992 is an example of when Britain had to change policy and withdraw from the ERM because it couldn’t stand up against the currency speculators. Integrated economies increase the susceptibility of countries to external crises. During 1997-99 the difficulties faced by financial institutions and other countries in Japan, Thailand, Indonesia and other East Asian countries resulted in a slow down in world growth and reduced aggregate demand in the west and caused problems for the USA and European firms and banks with links to the Far East and the rapid outflow of funds from south East Asia devastated local economies.
Globalisation has also meant that it is easier and cheaper, due to the development of containerisation and the use of large planes and ships, to travel between countries, and it is becoming increasingly difficult for Governments to control national borders. This has made it easier for terrorists to move around and also for illegal goods to be bought into countries such as drugs and pornography, which undermines state sovereignty.
Globalisation is causing more and more firms to think globally. Advances in technology, transport and even the rise in skill levels throughout the world are enabling firms to target consumers throughout the world and to operate in a range of countries, not just industrial but also in developing countries. This is leading to an increase in foreign direct investment. Multinational countries are seeking out the lowest cost countries in which to locate production and parts of the production process, and some are now being labelled transnational companies as the have substantial operations in a large number of countries. Multinational companies can therefore exert enormous leverage on countries desperate for jobs and investment, particularly the poorer states and even on developed countries such as Britain. For example, Nissan threatened the British government that they would pull out of Britain if they don’t join the Euro and in 1999 the British Government agreed to pay BMW £129,000,000 over five years to save the Rover plant at Lon Bridge.
The emergence of global rather than national markets has also increased the pressure on the world’s resources. Increased air travel and the growth of global tourism have made the world a smaller place but also more fragile in terms of sustainability. To try and achieve sustainable economic growth, summits are held to try and come up with solutions. This can put pressure on states to change policy and affect their sovereignty, such as the pressure on America to decrease its pollution and have a more environmentally friendly economy.
However, although it can’t be ignored that globalisation can make sovereignty seem irrelevant there is a case for arguing that the state and state sovereignty still matters in the international system. States still have the power to regain devolved power, for example Britain can withdraw from the EU whenever it wants, and so in theory states are still sovereign in that respect. The state can still control its own domestic laws, for example in the USA capital punishment exists and in Saudi Arabia they still chop off the hands of thieves. Different countries spend different amounts of their GNP on public spending, e.g. the US spends 33%, whereas Germany spends 49% and countries control their working hours, for example its 35 hours a week in France. Globalisation hasn’t affected different countries cultures and traditions. The state is still the focus of national identity and many ethnic groups without a state to identify themselves with still desire one, for example the Kurds. Globalisation has not created a totally borderless world; states still fight over borders and have armies in case of invasion. Immigration is controlled and Trade rules are enforced through the World Trade Organisation. This was set up in 1995 and currently has 136 members; it seeks to promote trade liberalism through a series of negotiations and also operates a trade disputes settlement mechanism, which is binding on the member countries.
Governments can limit the effects of globalisation, especially in the area of communications. For example the French court ordered Yahoo to ban Nazi memorabilia on its American sites or face a daily fine, and the USA has passed a law requiring schools and libraries to install software on their computers to block material harmful to the young. Under EU law, European consumers may now sue EU based internet sites in their own countries. China has covered its country with an intranet isolated from the rest of the online world with software that blocks unwanted content. The internet should be easier to regulate in the future with IPV6 a new expanded IP address which means that each computer will have a unique serial number, so every data packet sent will carry a users electronic fingerprints. This will help the police regulate illegal use of the internet and even help them catch paedophiles more easily.
It is clear that globalisation is an important issue in today’s world and it does affect nation states sovereignty. Modern communication is hard to regulate and it’s easier for drug traffickers and terrorists to move around. Membership of global institutions takes away sovereignty from states and multinational companies are given too much power and influence. Integrated economies make countries more likely to be hit by external crises and the world’s resources are being depleted. However different cultures and traditions still exist between countries and national identity is still incredibly important to the world’s citizens. States can control trade and have mechanisms to control communication; they can create their own laws and decide which institutions to be members of. Therefore, in conclusion, although it is clear that globalisation has a big effect on states it is obvious that National sovereignty still matters and could never be described as irrelevant.
