Presentation on theme: "EUROPEAN COMMISSION DIRECTORATE GENERAL ECONOMIC AND FINANCIAL AFFAIRS The EU-MED trade of goods under the influence of the Barcelona Process Arno Bäcker."— Presentation transcript:
EUROPEAN COMMISSION DIRECTORATE GENERAL ECONOMIC AND FINANCIAL AFFAIRS The EU-MED trade of goods under the influence of the Barcelona Process Arno Bäcker CNR – Institute of Mediterranean Societies International Conference: Bridging the gap: the role of trade and FDI in the Mediterranean Napoli, 8-9 June 2006
Disclaimer The opinions expressed here are those of the speaker and do not necessarily reflect those of the European Commission.
Barcelona Declaration (1995) o oBuilding on long standing (trade) relations between EU and MED countries and preferential treatment of MED products, particularly since the end-1970s o oEuro-Mediterranean FTA is a core objective … o o… and seen as key instrument to increase growth and improve living conditions o oGradual realisation through bilateral Association Agreements (AA) and, in addition, free trade agreements between the MED partners o oAAs have prompted progressive asymmetric tariff dismantling in industrial trade, and agricultural preferences for the MED o oENP offers a “stake in the internal market” o oWhere do we stand?
Framework developments Nov Barcelona meeting: 5-year roadmap for tariff dismantling, market access, trade-related policies Oct “Pan-Euro MED Protocol of Origin” adopted by Egypt, Israel and Morocco Approximation of standards, technical regulations and conformity assessments for industrial products March 2005 Marrakech meeting launched negotiations on services and investment (including right of establish- ment) based on AAs and GATS Art. V (without ALG, SYR) -> July Brx -> text mid Negotiations have already started with some countries on a progressive and asymmetrical agricultural liberalisation “with a possible selected number of exceptions”. Negotiations on an efficient dispute settlement mechanism. -> July Brx -> bilateral protocols by end of 2007
Questions 1. 1.Implementation progress 2. 2.Reduction of tariff and non-tariff barriers 3. 3.Actual trade creation 4. 4.[Is tariff reduction sufficient for expected welfare improvements?]
ad 1) EU-Mediterranean cooperation
ad 2) Lags of import-tariff reductions
ad 3) Trade between EU and MED countries Source: European Commission (data for 2004).
Trade between EU and MED countries Based on EUR values
Trade between EU and MED countries
Source: European Commission (Mio EUR).
Issues No direct measure of aggregate EU-MED tariff reduction -> measure trade creation Trade data “polluted” by other factors Methods to isolate the EU-MED FTA effect Gravity models T vs T’=T’(Y,Y*,P,P*,D,Ś) Export/import functions, e.g. M=M(Y,e,Ś)
Determine AA impact Import function M=M(Y, e, …) AA dummy variable other dummy variables to control for conflicts (ALG, ISR, …) N=5 (ALG, ISR, JOR, MOR, TUN) T=13 ( ) Data: Eurostat COMEXT, IMF
Conclusions (1) EU-MED bilateral trade liberalisation until today has mainly concerned industrial goods. The EU opened its markets for these products already at the end of the 1970s. Most MED countries have started liberalising imports from the EU only recently. Conclusion after accounting for other factors: the tariff reduction prompted by the AAs has already increased MED imports from the EU significantly. This is also a catalyst for MED exports and the technology transfer. Nevertheless, the overall picture of (EU-) MED trade is unsatisfying. Trade volume is probably to low to make sufficient welfare progress within a satisfactory time horizon. This is due to low regional integration, slow liberalisation and structural problems…
Conclusions (2) … EU-MED trade liberalisation is incomplete (in particular services trade). However, since the beginning of 2006 complementary measures are being discussed or entering into force. Regional trade liberalisation is progressing only slowly and hampered by political conflict. It is also held back by transport and other transaction costs in the MED countries. ~> Agadir FTA, productive infrastructure investment and trade facilitation The MED countries need to strengthen the private sector, business and investment climate (competitiveness!). This is also necessary to prepare for the “stake in the Internal Market”. (~> European Commission, DG ECFIN (ed.), Occasional Papers No. 17 and 25) The European Neighbourhood Policy helps to support the necessary reform process, for instance with guidance through ENP Action Plans.