1. The Impact of Syrian Trade Policies on Agricultural Trade Performance Basheer Hamwi

2. Preface Syria is a key country in the Middle East region for its strategic geographical location. Relative commercial advantage Total area: 18.5 million ha (5.9 million hectares are cultivable - irrigated area 1.4 million ha, 24%)

3. Introduction Gradual economic reforms (open up its domestic markets) Reforms covered all Syrian economic sectors – foreign trade liberalization – adoption of market mechanism – integration with world economy Trade liberalization – promote exports – stimulate economic growth – increase social welfare and reduce poverty

4. Policy Framework Reconsideration Substantive reforms in the last few years (macroeconomy and agriculture) – enhancing the competitiveness of Syrian economy by improving the legislation environment Macroeconomic policies – fiscal and monetary policies (exchange rate/currency regulations) – investment policies – trade policies (custom duties and procedures, trade agreements and negotiations) – insurance policies – banking and credit system – private sector liberalization

5. Fiscal and Monetary Policy Reforms Harmonization and stabilization of the exchange rate Establishment of private and Islamic banking systems Setting up of private insurance companies Modernization of the taxation system Introduction of several financial services (electronic signature, electronic money exchange, etc.)

6. Investment Policy Reforms Investment law n. 8/2007 (more incentives and additional guarantees and exemptions from taxes) Opening up sectors for investments (stimulate economy and encourage investments) “one window” system to facilitate procedures to implement new projects.

7. Customs Policy Reforms Customs law n. 38/2006 Abrogating barriers on customs clearance, simplifying customs procedures Rationalizing tariff system, reducing charges on imports and activating free zones Exempt primary goods and inputs from custom fees

8. Trade Policy Reforms Rapid trade reforms in the last decade – remarkable evolution – significant simplification of rules and measures Abolishing work in certification for imports or exports Hastening the execution of electronic trade Simplifying import requirements, phasing out import restrictions, relaxing import ban list to allow import of new commodities Eliminating all restrictions on exports and exempting agricultural exports from taxes

9. Reforms Concerning Agriculture Sector Gradually relaxed control on: – cropping pattern, – output pricing, – access to imported inputs – marketing arrangements All exports of agricultural products exempted from income and production taxes Non-tariff import constraints removed Agricultural imports’ ban list is reduced

10. Trade Agreements for Economic Reform Bilateral, regional and multilateral agreements with commercial partners The Great Arab Free Trade Area (GAFTA) highly facilitates Syrian market access and trade with member countries (17 countries) – significant increase in trade with the Arab region Syria implemented free trade agreement with Turkey and signed many trade agreements with other countries The initiating of Association Agreement with EU and preparation for joining WTO evolved the reforms for better

11. The Impact of Policy Reforms on Economy Improvements in macroeconomic policies advanced and supported growth Economic growth in this decade soundly higher than past Growth consistently averaged at about 5% Indicators of good performance: – low budget deficits – relatively low inflation rates – stable exchange rates – adjustment of foreign debt – liquidity surplus in national banks

12. Impact of Policy Reforms on Investments Reforms aim at making Syria attractive to investors 1991–2006 – 3824 investments projects (employed 220 thousand person) – in 2006 alone, 351 projects (161 in agriculture) 2001-2005 investment growth rate was 7% (21% of GDP) Foreign investment in 2005 was at 1.4% of GDP

13. Impact of Policy Reforms on Trade Performance Trade liberalization, simplification of custom procedures, modification of custom tariffs and implementation of trade agreements – boost in foreign trade (major expansion of export and import performance) – international trade to meet local needs 1997-2006: average annual growth rate was 16% 2006: US$ 20.7 billion (12% increase with respect to 2005) 1997-2006: average annual increase of contribution to GDP 28% 2006: 61% of GDP

14. Total Trade /GDP

15. Impact of Policy Reforms on Total Imports and exports Rapidly evolved since 2001 and almost doubled in 2006 1997-2006: total import raised annually by 15% (from US$ 4 to 10.6 billion) Last five years: total imports accelerated by 20% annually Syria recorded impressive gains in total exports and sharply increased its presence in the Arab market (implementation of GAFTA) 2001-2006: export value doubled, from US$ 5.3 billion to US$ 10.1

16. Total Trade, Import and Export developments

17. Impact of Policy Reforms on Agricultural Trade Agriculture sector is one of the largest contributors to GDP Major role in the Syrian economy Major beneficiary of trade liberalization policies and agreements with trade partners Trade of most agricultural products constantly increased Agricultural trade rose rapidly, climbing more than US$ 883 million (94%) during 2000-2006

18. The Evolution of Agricultural Trade, 2000-2006

19. Impact of Policy Reforms on Agricultural Imports Expansion of agricultural import encouraged through many legislative regulations 1997-2006: agricultural imports almost doubled from US$ 293 million to US$ 580 million 2000-2006: Agricultural imports increased by more than 61%

20. Evolution of Some Agricultural Imports

21. Impact of Policy Reforms on Agricultural Exports Steady growth in production (policies promoting investment and competitive environment in agriculture) 2000-2006: Agricultural exports raised by 14% annually to more than US$ 1.2 billion (outstanding increase compared to most products in the other sectors)

22. Development of Some Agricultural- Exports

23. Impact of GAFTA on Total and Agricultural Trade GAFTA implementation gave more favorable access to Arab markets Trade boosted in both imports and exports 2000-2005: total trade with GAFTA from US$ 1.1 to US$ 2.7 billion (about 20% annual increase) 2005: Agricultural trade with GAFTA as a share of total agricultural Syrian trade amounted to 37%

24. Improvement of Total and Agricultural Trade with GAFTA

25. Impact of GAFTA on Total Imports and Export 2000-2005; imports from GAFTA from US$ 0.4 billion to US$ 1.3 billion last five years – imports from GAFTA 26% growth (21% from the rest of the world) – exports to GAFTA 15% growth (US$ 1.3 billion in 2005, 7% of total export)

26. Total Imports and Total Exports to GAFTA

27. Impact of GAFTA on Agricultural Imports and Export Agricultural import was particularly stimulated by the elimination of tariffs on agricultural products in GAFTA member countries 2001-2005: Agricultural import from GAFTA tripled from US$ 85 million to US$ 270 million Last five years: Agricultural exports more than 12% increase to US$ 228 million

28. Agricultural Export to GAFTA and to the Rest of the World

29. Conclusion (1) In the last decade, Syria has changed its economic strategy and committed to liberalize its economy and open up sectors to further integrate with the world market. This resulted in great transform toward trade liberalization and called for considerable adjustments in the legislative structure Syrian economy underwent big changes in the regulations governing almost all economical sectors As a result, the economy, the investments and the trade have greatly improved

30. Conclusion(2) The implementation of the GAFTA regional agreement has greatly affected the total and agricultural trade positively Signing the Association Agreement with EU and the application to join WTO accelerated trade reforms and thus Syrian trade were substantially improved Agriculture sector was the most beneficial of trade liberalization. This was reflected in its advanced trade performance

31. Than you for your kind attention