M u l t i l a t e r a l t r a d e n e g o t i a t i o n s a n d r e g i o n a l i n i t i a t i v e s : S t r a t e g i e s f o r d e v e l o p i n g c o u n t r i e s North African Development Forum Trade for Growth and Job Creation Marrakesh, February 2007 UNCTAD Robert Hamwey Trade Negotiations and Commercial Diplomacy Branch Division of Trade in Goods and Services, and Commodities

Multilateral Negotiations & Regionalism UNCTAD 2/ 15 Focus Regionalism and North Africa

Multilateral Negotiations & Regionalism UNCTAD 3/ 15 RTAs and Regionalism There has been a proliferation of Regional Trade Agreements (RTAs) RTAs are the mechanism through which regional integration is advanced Bilateral, sub-regional, regional and inter-regional scales North-North, North-South and South-South in scope

Multilateral Negotiations & Regionalism UNCTAD 4/ 15 Types of exchange in RTAs Merchandise (movement of goods) Preferential tariffs, harmonised external tariffs Services (movement of labour) Facilitated temporary immigration, mutual recognition, harmonised standards Investment (movement of capital) Privatisation, regulatory reform, competition policy ‘Shallow integration’ ‘Deep integration’

Multilateral Negotiations & Regionalism UNCTAD 5/ 15 Within the region (regional i.e., intra-regional) Scales of exchange With other countries / regions (inter-regional) With the world (multilateral)... MTS (i.e., WTO) ‘Wide Integration’ ‘Open Regionalism’

Multilateral Negotiations & Regionalism UNCTAD 6/ 15 What level of liberalisation ? Region Other Regions World Level of liberalisation Merchandise Services Investment ? What is optimal ? Varies by sector (and mode) Scale

Multilateral Negotiations & Regionalism UNCTAD 7/ 15 Motivations Advantages of RTAs over the MTS Literature suggests significant gains (much more than RTAs on merchandise alone) More easily negotiated between limited set of participants with similar levels of development, geographical proximity and cultural ties Allow for regional specificity Allow for a greater degree of reciprocity Reduce free-rider problem

Multilateral Negotiations & Regionalism UNCTAD 8/ 15 Motivations Advantages of RTAs over the MTS Allow for greater liberalisation of temporary movement of services suppliers Often include cooperative mechanisms for building institutional and infrastructural capacity At the same time RTAs complement the MTS Facilitating the transition to multilateral liberalisation by strengthening indigenous supply capacities and regulatory effectiveness

Multilateral Negotiations & Regionalism UNCTAD 9/ 15 North African Initiatives Regional UMA Agadir GAFTA Inter-Regional EuroMed, European Neigborhood (North-South) GSTP (South-South)

Multilateral Negotiations & Regionalism UNCTAD 10/ 15 North African Initiatives All have focused on liberalising merchandise trade Results have not met expectations Intra-regional trade remains weak ~ 3 % of total merchandise trade Deeper integration liberalising services trade and investment remains to be advanced It can generate dynamic gains needed to boost intra-regional merchandise trade, including by improving access to and efficiency of producer services (... increased export competitiveness)

Multilateral Negotiations & Regionalism UNCTAD 11/ 15 Experiences in other regions ANDEAN MERCOSUR CARICOM ASEAN SADC Of 153 RTAs operational today, 43 are economic integration agreements in services notified under GATS Article V South-South RTAs on services : An element of developing countries’ development strategies

Multilateral Negotiations & Regionalism UNCTAD 12/ 15 Possible Next steps for North Africa Define a region for deeper integration (UMA, ECA-NA, GAFTA, EuroMed,... ) Promote regional trade and investment through trade facilitation and regulatory reform Ensure preference margins for the region to avoid the ‘hub and spoke’ effect and attract regional investment Identify sectors where the region has a strong potential to enhance supply capacity through preferential treatment and a unified industrial policy in an RTA

Multilateral Negotiations & Regionalism UNCTAD 13/ 15 Negotiate progressive multilateral liberalisation to allow time for the development of regional capacities Identify sectors where the region has a weak potential to enhance supply capacity on its own and where extra-regional investment through inter- regional and multilateral liberalisation is desirable Identify sectors where participation in production chains can be enhanced through inter-regional and multilateral agreements Possible Next steps for North Africa

Multilateral Negotiations & Regionalism UNCTAD 14/ 15 Assistance from UNCTAD Working closely with ECA and other international organisations, UNCTAD is ready to assist with: Sectoral analyses and assessments of optimal scale of liberalisation Elaboration of regional agreements on services and investment Regulatory reform and competition policy WTO accession (Algeria, Libya, Sudan) WTO negotiations, and in particular GATS negotiations UNCTAD actively supports and provides capacity building under the Aid-for-Trade Initiative

Multilateral Negotiations & Regionalism UNCTAD 15/ 15 Thank you for your attention.