dell' Aquila, C.

Kuiper, M.H.

English

Name not available

The Euro-Mediterranean Partnership: Policy and Research Issues

Wageningen Yield 

 ENARPRI Coordination: CEPS· Place du Congrès 1 · B-1000 Brussels · Tel: (32.2) 229.39.85 · Fax: (32.2) 219.41.51 
e-mail: eleni.kaditi@ceps.be ·  website: http://www.enarpri.org  
 
 
European Network of Agricultural and 
Rural Policy Research Institutes 
Thematic Network on Trade Agreements and European Agriculture 
Policy Brief No. 2 · September 2003 
 
The Euro-Mediterranean Partnership: Policy and Research Issues* 
Crescenzo dell’Aquila Marijke Kuiper 
National Institute of Agricultural Economics (INEA) Agricultural Economics Research Institute (LEI) 
 
The Euro-Mediterranean Partnership (EMP), launched 
at the Barcelona Conference in 1995, represents a renewed 
involvement of the EU with its Mediterranean Partner 
Countries (MPCs).1 The partnership covers political, 
economic and social aspects. Establishment of a 
Mediterranean Free Trade Area (FTA) by 2010 is its focal 
point. The partnership consists of two elements: 
Association Agreements (providing the institutional 
framework for cooperation and trade liberalisation), and 
financial support through the MEDA programme (a 
financial support programme providing funds for easing 
structural adjustments in the MPCs). 
The EU and the MPCs have different stakes in the 
EMP. The MPCs are a minor (potential) market for the 
EU. For the EU the establishment of the FTA should 
therefore be seen as part of its security strategy: increasing 
stability at its southern border by promoting economic 
growth, and fostering links between the two regions. For 
the MPCs the EU is a major trading partner and the FTA 
would offer a major increase in trading opportunities. The 
EMP can also serve as a way of locking-in structural 
reforms of the MPC economies that would be difficult to 
achieve otherwise. Whether the EMP will achieve its aims 
depends on the way the EMP is implemented, and on 
factors affecting the performance of MPC economies. 
Domestic causes of the poor growth record of MPCs 
MPCs are faced with a poor growth record (tracking 
behind achievements of comparable other countries), high 
population growth, and high current levels of employment. 
As a result their economic growth is not able to absorb the 
growing working population, creating concerns for social 
stability and migration. Their lagging economic growth 
can be attributed to three causes: high dependence on oil 
exports and remittances, high protection of the domestic 
market and excessive state interference in the economy. 
Oil exports and remittances are important sources of 
foreign exchange for a number of countries, distorting their 
economy by boosting domestic demand (‘Dutch disease’). 
The resulting appreciation of the exchange rate promotes 
investments in non-traded sectors while reducing 
investments in the traded sector. A second factor takes the 
form of high protection rates. The MPCs are among the 
                                                        
1 The EMP gathers, besides EU members, three candidates to EU 
membership (Cyprus, Malta and Turkey) and nine countries negotiating 
new EuroMed Association Agreements (Tunisia, Morocco, Israel, 
Palestinian Authority, Jordan, Egypt, Lebanon, Algeria and Syria). 
most protected regions of the world, in contrast to the 
global trend towards reduced protection. Their domestic 
firms are sheltered from international competition, 
reducing incentives for efficiency improvements. This high 
protection in combination with a focus on non-traded 
sectors with an inflow of non-trade foreign exchange 
resulted in a production structure that is not internationally 
competitive. A third factor is the extensive influence of the 
state on the economy through an over-staffed public sector 
and a dominant presence of state enterprises. Booming oil 
revenues in the 1970s and 1980s further stimulated public 
sector expenditures. 
Asymmetric liberalisation achieved by the EMP 
By reducing protection the EMP affects only one cause 
of lagging economic growth, thus limiting its contribution 
to spurring economic growth in the MPCs. The 
contribution of the EMP is further reduced by a limited 
scope of liberalisation and the structure of the agreements. 
A major difference with earlier agreements is the 
reciprocal nature of trade liberalisation in the EMP. Due to 
earlier agreements, a good share of MPC manufacturing 
exports has had free access to EU markets since the 1970s. 
Industrial trade preferences in the EMP are therefore in 
effect unilateral liberalisations by the MPCs. At the same 
time liberalisation of agricultural trade and trade in 
services is very limited. In a nutshell the EMP is thus 
reduced to simply opening the closely protected MPC 
markets to manufactured goods from European producers. 
Apart from an asymmetry in the extent and pace of 
liberalisation, the EMP has a geographical asymmetry. 
Although the Barcelona declaration calls for the 
establishment of a Mediterranean FTA, the EMP consists 
of bilateral agreements between the EU and individual 
MPCs. The result is a hub-and-spoke structure favouring 
EU producers. This structure reduces the scope for MPCs 
to attract FDI, and leads to an unequal distribution of 
benefits from liberalisation between the EU and MPCs. 
Furthermore, the different pace at which agreements are 
concluded could give some MPCs a head start in creating a 
more competitive production structure. Future South-South 
integration (for example through GAFTA or the Agadir 
agreements) could then lead to an unequal  distribution of 
the costs and benefits among MPCs, creating political 
tensions. 
 ENARPRI Coordination: CEPS· Place du Congrès 1 · B-1000 Brussels · Tel: (32.2) 229.39.85 · Fax: (32.2) 219.41.51 
e-mail: eleni.kaditi@ceps.be ·  website: http://www.enarpri.org  
Non-coherent policies  
Agricultural liberalisation could provide an important 
impetus to general economic growth in the MCPs, by 
reducing poverty (generally located in the rural areas), and 
by increasing (rural) employment. It could therefore make 
an important contribution to achieving the security aims of 
the EU. In practice, however, agricultural trade 
liberalisation is dominated by domestic policy concerns; 
the EU is not granting any noteworthy new concessions in 
agricultural trade. This implies that the current complex 
structure of agricultural tariffs and non-tariff barriers is 
being maintained to protect EU producers of 
‘Mediterranean’ products. The MPCs mimic this behaviour 
by maintaining their high protection on staple foodstuffs. 
The net result is an effective lack of liberalisation of 
agricultural trade. Liberalisation of the flow of natural 
persons could also contribute to economic growth in 
MPCs, since remittances play an important role in their 
economies. The EMP, however, does not offer anything 
beyond the results obtained through GATS, implying an 
absence of liberalisation of services. 
The limited scope of the liberalisation achieved through 
the EMP, and especially the lack of agricultural 
liberalisation, have strong implications for the effects of 
the EMP. Excluding agriculture blocks an avenue for 
increasing (rural) employment and economic growth, both 
of which could ease the impact of reduced tariff income 
from unilateral liberalisation of manufacturing trade by 
MPCs. At the same time disbursement of MEDA funds 
(meant to ease the transition) is only a third of the 
commitments, and the implementation of MEDA shows 
serious shortcomings. EU policies towards the 
Mediterranean region can therefore be characterised by a 
strong contradiction between foreign policy objectives 
(increased stability and prosperity at the Southern border) 
and domestic policy concerns (protection of agricultural 
producers and fostering the interests of producers of 
manufactured goods). 
Policy issues 
In light of the above, the following policy issues can be 
identified: 
· Coordination of domestic and foreign policy interests. 
Foreign and domestic EU policies towards the MPCs 
are currently conflicting. Explicitly considering 
conflicting objectives would foster the consistency of 
EU policies, and would support development of 
alternative policies satisfying the multiple objectives 
of the EU.  
· Design of policies to support structural changes in the 
MPCs. Liberalising trade reduces high protection 
levels in the MPCs, but it also has strong implications 
for government tariff revenues. The EU should take 
the structural features of the MPCs into account to 
avoid unwanted side-effects (such as social unrest) 
and to be more effective in stimulating economic 
growth. 
· Promotion of south-south integration. To achieve the 
aim of a prosperous and secure Mediterranean region, 
South-South integration should become an integral 
part of the EMP.  
Research issues 
To support the formulation of policies that account for 
the political and economic reality on both the EU and 
MPC side, the following research issues can be identified: 
· The extent and impact of non-trade barriers (NTBs). 
The increasing importance of NTBs for trade in food 
(e.g. vertical integration of production, grade and 
quality standards) implies on the one hand that the 
impact of agricultural trade liberalisation could be 
limited. On the other hand, they provide an 
opportunity for designing policies that promote 
integration of MPC agriculture in European chains, 
possibly promoting agricultural growth within the 
limits of the current protection structure.  
· Contribution of liberalisation with the EU to 
economic growth in the MPCs. Taking promotion of 
economic growth in the MPCs as the aim of the EMP, 
limited insight is currently available on how the EMP 
interacts with MPC policies and structural features of 
MPC economies. Most existing studies focus on the 
(lack of) liberalisation on the EU side, while limited 
insight is available on the structure of protection on 
the MPC side, their trade agreements with third parties 
(notably the US) and the impact of their policies on 
economic growth and poverty reduction. Furthermore, 
the different pace at which agreements are being 
concluded with the MPCs may affect the distribution 
of costs and benefits when establishing a 
Mediterranean FTA. 
· Regional impact of liberalisation in the EU and 
possible links with eastward expansion. Liberalisation 
of trade with the MPCs will have a negligible impact 
on the EU as a whole. The main opposition to 
liberalisation stems from Southern EU producers who 
will face increased competition. At the moment there 
is no insight into which regions will be negatively 
affected by a liberalisation of agricultural trade with 
MPCs. Furthermore, the eastward expansion of the 
EU possibly offers new markets for the southern EU 
producers, which could offset the negative impact 
from liberalisation with the MPCs. Such a linking of 
South and Eastward expansion could make 
establishment of a Mediterranean free trade more 
feasible politically.  
 
* This Policy Brief is based on ENARPRI Working Paper 
No. 2, Which Road to Liberalisation? A First Assessment 
of the Euro-Mediterranean Association Agreements, 
Crescenzo dell'Aquila and Marijke Kuiper, September 
2003. 
For further information:  
dellaquila@inea.it, and M.H.Kuiper@LEI.DLO.NL  
 
 


NARCIS 

http://library.wur.nl/WebQuery/wurpubs/fulltext/35637

The Euro-Mediterranean Partnership: Policy and Research Issues

Abstract

Similar works

Full text

Available Versions

Name not available

Wageningen Yield

NARCIS