Transcript Folie 1

EU-MPCs :
Overview of Trade Issues
Contents
Preliminary remarks
The aim of this overview: questions arising from figures
An Asymmetric Neighbourhood
EU-MPCs integration dynamics
Agreements
Financial assistance
Trade
FDI
 The trade liberalisation process
 Conclusions




Preliminary Remarks:
1. The three pillars within the Euro-Mediterranean Partnership (also
known as the „Barcelona Process“):
a)
b)
c)
Political and security partnership,
Economic and financial partnership,
Social, human and cultural partnership.
2. The main aim of the EMP is to promote economic growth. The main
instrument for this is the creation of a Free Trade Area (FTA) by
2010.
3. The components of the EMP:
a) The Euro-Mediterranean Association Agreements (EMAAs) aimed at liberalisation and
cooperation in different areas;
b) The financial support provided through MEDA and the European Investment Bank
4. How far the FTA will be reached depends on:
a) Relative importancy of liberalization to other factors,
b) Amount of liberalization achieved by the agreements.
The aim of this overview:
questions arising from figures.
Ten year after the beginning of the Barcelona process it is time to take
stock. This is in part the aim of this seminar.
Our overview has a narrower aim: to remind you some figures that
can help to answer the following questions.

Can we identify progress in the process of economic
integration between Europe and Mediterranean partner
countries?

Can we detect some sign of positive impact resulting from
the Barcelona process on the MPCs development?

Above all, can we say that the role of Europe as economic
partner of MPCs has been strengthened by the Barcelona
process in comparison with the rest of the world?

How attractive does Europe appear as a partner for MPCs
in comparison to the rest of the world?
The aim of this overview:
questions arising from figures.
The answers to the above questions are crucial in our view
if the general objective of the Barcelona process, and of
the announced (future) European Neighbourhood Policy,
is to build a security belt around Europe through
economic cooperation and integration.
An asymmetric neighbourhood
Euro Med - per capita GDP (2003)
Current international $
30000
25000
20000
15000
10000
5000
AR
EA
EU
RO
KE
Y
TU
R
IA
SY
R
N
JO
RD
A
AE
L
IS
R
O
N
AN
LE
B
EG
YP
T
A
IS
I
TU
N
CO
O
RO
C
M
AL
G
ER
IA
0
Source: World Bank
The total GDP of all MPCs is about the GDP of Spain and about
15% lower than the total GDP of EU accession countries.
MPCs are small economies characterised by
high level of debt …
Economic indicators of MPCs (2003)
COUNTRIES
GDP (level)
ALGERIA
MOROCCO
TUNISIA
LIBYA
EGYPT
LEBANON
ISRAEL
JORDAN
PALESTINIAN
TERRITORIES
SYRIA
TURKEY
Note: (1) 2002
Source: World Bank
(billion $)
66,53
43,73
25,04
19,13 (1)
82,43
19
110,23
9,86
3,45
21,5
240,38
GDP growth (%)
2000-03
(%)
4,0
3,9
4,2
n.a.
3,8
1,6
1,9
4,2
Debt
(% of exports)
86
125
146
n.a.
154
757
n.a.
174
Annual inflation
1995-03
(%)
10,1
1,2
2,9
n.a.
4,7
2,6
3,2
1,0
-9,5
2,4
3,4
n.a.
249
227
10,1
5,1
48,3
… high population and lack of employment
Demographic characteristics of MPCs (2003)
Population
Total
(mln)
31,8
30,1
9,9
5,6
67,6
4,5
6,7
5,3
Growth a) Density
(%)
(pop/km2)
1,2
13,4
1,2
67,4
0,9
60,5
1,5
3,2
1,4
67,5
1,0
432,7
1,9
302,6
2,1
59,4
Labor force
Total
(mln)
11,6
12,7
4,1
2,0
27,1
1,4
2,8
1,9
Growth a)
(%)
4,0
2,5
2,5
3,0
3,0
3,1
2,8
4,3
Urban
Unemployment b)
population
(%)
58,8
57,4
67,4
88,5
42,9
90,6
92,1
79,1
(%)
28,1
12,4
15,0
30 c)
10,0
18 d)
9,8
13,2
ALGERIA
MOROCCO
TUNISIA
LIBYA
EGYPT
LEBANON
ISRAEL
JORDAN
PALESTINIAN
TERRITORIES
3,4
4,3
546,6
n.a.
24,2
n.a.
n.a.
SYRIA
17,4
1,9
94,0
52,5
6,0
4,2
11,5
TURKEY
70,7
1,2
91,2
67,0
33,5
2,3
10,5
a) Annual growth 2000-03; b) average percentage labour force (2000-03); c) 2004; d) 1997 est.
Source: World Bank, FAO, CIA
• High growth of labour force
• High unemployment levels
The economies have not been able to
grow fast enough to absorb a fast
growing labour force (except Israel)
Causes of slow economic growth:
Oil dependancy, …
Exports from MPCs (2003)
50000
40000
Million $
30000
20000
10000
0
ALGERIA
MOROCCO
TUNISIA
EGYPT
LEBANON
Total
Oil excluded
ISRAEL
JORDAN
SYRIA
TURKEY
…High protection…
Trade restrictiveness and Mean Tariff (2003)
5
40
4
31,5
3
35
34,5
30
22
20,3
17,1
2
20
17,1
14,9
1
12,4
8,8
5,6
(1
5)
Y
E
U
KE
YR
S
P
AL
ES
TI
N
IA
N
TE
TU
R
IA
S
IT
O
R
IE
N
JO
R
D
A
R
R
L
AE
AN
B
IS
R
O
N
PT
G
Y
E
YA
LI
B
IA
IS
TU
N
LE
M
O
R
O
C
LG
E
C
O
0
R
IA
0
A
10
4,4
Freedom Index
Simple Average MFN Tariff
Note: Freedom index: Free (Score 1-1,99), Mostly Free (Score 2-2,99), Mostly Unfree (Score 3-3,99), Repressed (Score 4-5)
Source: World Bank, Heritage Foundation
With exeption of Israel, all MPCs have protectionist trade policies
…Extensive state interference in economy…
 Public sector employment accounts for 1/5 of non-military
employment in MPCs
 The contribution of the public sector on the GDP is significant (30%
in Egypt and Tunisia, close to 60% in Algeria)
 Public investments in MPCs are close to 40% of total investment
Over-staffed public sector
Dominant presence of state enterprises
Causes of slow economic growth
in MPCs
Source: Kuiper, De Crescenzo (2004)
Agriculture is an important sector but its role
in the economy differs among MPC
Contribution of agriculture to GDP and employment in MPCs (2003)
Composition GDP (%)
Agriculture labor force
Agriculture
Industry
Services
(% total labor force)
1990
2003
ALGERIA
10,3
55,1
34,7
26
14
MOROCCO
16,8
29,6
53,6
45
40
TUNISIA
12,1
28,1
59,8
29
22 a)
LIBYA
7,6 b)
49,9 b)
42,5 b)
n.a.
17
EGYPT
16,1
34,0
49,8
40
32
LEBANON
12,2
20,1
67,7
7
n.a.
ISRAEL
2,8 a)
37,7 a)
59,5 a)
4
3
JORDAN
2,2
26,0
71,8
5 c)
PALESTINIAN
TERRITORIES
n.a.
n.a.
6,2
12,0
81,8
SYRIA
23,5
28,6
48,0
32
30
TURKEY
13,4
21,9
64,7
n.a.
36
Note: a) est.; b) 2005 est.; c) 2001 est.
Source: World Bank, CIA world factbook
Agreement integration dynamics
The region trade integration has broadly remained unchanged for two
decades, but in the last few years some significant efforts have been made.
EMAAs, WTO, GAFTA and Agadir membership of MPCs
EMAA
WTO
GAFTA
Agadir
Signed
Effective
Member
ALGERIA
2002
b)
observer
MOROCCO
1996
2000
1995
1998
2003
TUNISIA
1995
1998
1995
1998
2003
LIBYA
observer
1998
EGYPT
2001
2004
1995
1998
2003
LEBANON
2002
c)
observer
1998
ISRAEL
1995
2000
1995
JORDAN
1997
2002
2000
1998
2003
PALESTINIAN
TERRITORIES
1997
1997 a)
SYRIA
d)
1998
TURKEY
1995
1995
1995
Note: a) Agreements with the Palestinians Territories are an interim agreement; b) Ratification of
agreement with Algeria is pending; c) With Lebanon an interim agreement for early
implementation of trade measures is in force since March 2003; d) Negotiations with Syria are
ongoing since 1997; e) Libya is an observer until UN sanctions are lifted.
Source: EU Commission, WTO
Current MPCs trade
MPCs are relative trade-dependent economies. The sum of exports
and imports of Mediterraneans countries amounted to more than
55% of their GDP in 2003
Imports and exports (% gdp)
1980
1990
1995
ALGERIA
64,7
48,4
57,9
MOROCCO
45,3
58,9
61,5
TUNISIA
85,8
94,2
93,4
LIBYA
97,6
70,8
51,6
EGYPT
73,4
52,8
50,0
LEBANON
117,9
77,1
ISRAEL
103,1
80,1
75,4
JORDAN
124,1
154,7
124,6
PALESTINIAN
TERRITORIES
n.a.
n.a.
76,8
SYRIA
54,8
56,3
69,0
TURKEY
17,1
30,9
44,2
Source: World Bank, World Development Indicators database
2000
63,8
69,0
91,9
51,0
39,2
50,8
85,8
110,2
2003
63,3
68,7
90,3
45,3
52,4
81,4
114,6
75,2
67,8
55,6
59,0
73,2
58,6
The EU is the main trading partner of the Mediterranean Partner
Countries (MPC), accounting for almost 50% of imports and
exports of the region as a whole, although ist weight decreased in
the last decade
Exports and Imports of MPCs (1995-2003)
Exports to EU25
(% of total exports)
1995
2003
ALGERIA
66
55
MOROCCO
60
69
TUNISIA
80
78
LIBYA
82
80
EGYPT
47
42
LEBANON
25
19
ISRAEL
33
28
JORDAN
6
3
PALESTINIAN TERRITORIES
n.a.
n.a.
SYRIA
59
47
TURKEY
55
55
Source: UNCTAD
Imports from EU25
(% of total imports)
1995
2003
60
62
52
63
71
74
66
63
40
37
50
49
53
41
34
24
n.a.
n.a.
35
30
48
47
•The share of exports from Morocco to the EU has grown and Turkey remained constant.
The relative share of the EU in the exports of the other countries has been declining
• The EU share of imports from MPCs has decreased in most of the countries (except
Algeria, Morocco and Tunisia), indicating a diversification in the import pattern of MPCs in
relation to the rest of the world
•In 2004, the MPCs share in total EU25 imports is 8,1 (6,9 in 1999) and in total EU25
exports is 8,5 (8,2 in 1999)
Inter Arab Trade does not seem to be affected by the
EMP: only in Morocco the IAT/TET ratio has
decreased between 1995 and 2003
Inter-Arab Trade/ Total External trade (Millions of USD)
Total Inter
Country
Arab
Trade
JORDAN
1.496
EMIRATES
3.291
BAHRAIN
2.169
TUNISIA
991
ALGERIA
560
SAUDI ARABIA
6.474
SUDAN
537
SYRIA
1.298
SOMALIA
185
IRAQ
714
OMAN
2.142
QATAR
572
KUWAIT
1.263
LEBANON
761
LIBYA
1.135
EGYPT
924
MOROCCO
1.145
MAURITANIA
37
YEMEN
738
26.431
TOTAL
Source: Arab Monetary Fund
1995
Total
Ratio
External
IAT/TET
Trade
(%)
5.155
29
45.073
7
7.878
28
13.817
7
20.139
3
77.455
8
1.797
30
8.679
15
417
44
1.090
66
10.218
21
5.610
10
20.716
6
7.485
10
17.021
7
15.180
6
14.453
8
1.229
3
3.521
21
276.931
10
Total Inter
Arab
Trade
1.657
4.619
1.750
1.148
503
7.016
447
1.138
94
1.449
3.048
1.269
1.740
1.094
998
2.048
1.689
40
1.042
32.789
2000
Total
Ratio
External
IAT/TET
Trade
(%)
6.496
26
84.844
5
11.028
16
14.389
8
30.294
2
107.671
7
3.359
13
9.072
13
375
25
18.272
8
15.797
19
14.845
9
25.992
7
6.931
16
16.071
6
23.980
9
18.949
9
1.184
3
6.121
17
415.672
8
Total Inter
Arab Trade
2.807
7.582
2.676
1.386
1.144
10.146
1.475
2.241
136
1.261
3.249
1.552
2.038
1.484
1.186
2.848
1.642
69
1.819
46.741
2003
Total
Ratio
External
IAT/TET
Trade
(%)
8.421
33
111.562
7
12.155
22
20.318
7
38.269
3
131.983
8
5.424
27
10.565
21
483
28
13.045
10
18.242
18
19.314
8
31.623
6
8.612
17
18.002
7
23.495
12
22.928
7
1.565
4
7.440
24
503.445
9
FDI FLOWS
Small FDI´s inflows in the region: one of the
lowest rate worldwide.
FDI Inflows (1970, 1980, 1990, 1995, 2000-2004)
FDI Inflows (1970, 1980, 1990, 1995, 2000
-2004)
3000000
160 000
140 000
2500000
120 000
1500000
Millions USD
Millions USD
2000000
World
1000000
Developed
countries
100 000
80 000
60 000
40 000
20 000
500000
Developing
countries
0
1970
1980
1990
1995
2000
2001
2002
2003
While global FDI flows have
increased at a dramatic rate
over the past 15 years
2004
0
1970
Africa
1980
1990
1995
2000
2001
Latin America and the Caribbean
2002
Asia
2003
MPCs
…FDI into the MPCs has been
minimal and stagnant,
representing around 1% of the
world FDI flows
2004
Between 2001 and 2004 MPCs share in EU‘s FDI
flows has grown …
EU25 FDI outflows (2004)
EU25 FDI outflows (2001)
Asia (- MPCs
countries)
9%
MPCs
1%
EU25
52%
America
33%
Africa (- MPCs
countries)
1%
Other countries
1%
Asia (- MPCs MPCs
countries)
1%
10%
Other countries
6%
America
11%
Africa (- MPCs
countries)
4%
Europe-EU25
7%
Europe-EU25
3%
…but it tooks only 1.4% of total EU´s FDI.
EU25
61%
Between 2001 and 2004, the share of EU25 and US in
MPCs total inflows was about 50% (31% EU25, 15% US).
EU25 and USA FDI outflows to MPCS
5000
4500
Millions USD
4000
3500
3000
2500
2000
1500
1000
500
0
EU25
US
2001
Source: Eurostat
EU25
US
2002
EU25
US
2003
EU25
US
2004
Why Such a Small FDI Share?
•The region has long been plagued by violent conflict and instability
•Several Mediterranean states have compounded this problem with poor economic
governance
•Governments have monopolies in most strategic sectors – especially energy
•Private sectors are generally small and largely dominated by family business groups
• Poor social and physical infrastructures (eg. education and transport) diminish the
attractiveness of the region. Electricity per capita, telecom and internet penetration
rates are relatively poor
• Underdeveloped financial sectors (eg. central and private banking infrastructures)
impede the mobilization and channelling of funds.
• Strong local partners (eg. experienced local contracting firms) have been lacking,
and there is a shortage of skilled labour
• Several of the region’s administrations have lacked accountability and consistency
(a feature of autocratic systems of governance).
•There are still significant trade barriers in UE and MPCs
Measures to improve FDI conditions
specified under Barcelona Process
•Withdrawal of the state so as to:
improve resource allocation and competitiveness;
increase budgetary resources;
encourage national and foreign private investment
•In-depth reform of indirect taxation, so as to reduce fiscal pressure on
foreign trade
•Opening up of financial intermediation activities to competition and
scaling down public sector involvement in this field
•Support for privatisation in the Mediterranean region
Financial support through MEDA and EIB
• A cornerstone of the EMP is a financial support for the whole region through
MEDA.
• MEDA is comparable to the PHARE (Eastern Europe) and TACIS (Central Asia)
programmes.
• MEDA replaced previous bilateral aid protocols. The Funds:
MEDA I (1995-1999) 3,435 million €
MEDA II (2000-2006) 5,350 million €
• MEDA pursues the creation of an EMFTZ by 2010 by supporting mainly
structure adjustment programmes and economic transition programmes
•The biggest difference of the new European Mediterranean Association
Agreements (EMAAs) with former agreements from the 1970s is the reciprocity
• In addition, the European Investment Bank has launched in 2002 the Facility for
Euro-Mediterranean Investment and Partnership (FEMIP) for promoting private
sector development.Total loans in 2004: 2,2 billion €.
• The main competitor of the EU, the US, has already FTAs with Israel (1985) and
Jordan (2002) and in 2003 launched a plan to create the Middle East Free Trade
Area (MEFTA) by 2013.
Comparison of EU and US financial
contributions
MEDA I and II commitments and USAID economic assistance
MEDA I e II Commitments
USAID economic assistance
1995-99 2000-04 1995-99 2000-04 1995-99 2000-04 1995-99 2000-04
Millions
Millions
(% total
(% total
Millions
Millions
(% total) (% total)
euro
euro
bilateral) bilateral) USD
USD
164
233
6
10
3
14
0
0
656
678
25
29
85
136
1
1
428
329
17
14
6
1
0
0
686
354
27
15
4307
3172
38
31
182
74
7
3
57
197
1
2
5980
3659
53
36
254
204
10
9
511
2089
5
21
ALGERIA
MOROCCO
TUNISIA
EGYPT
LEBANON
ISRAEL
JORDAN
PALESTINIAN
TERRITORIES
111
351
4
SYRIA
99
136
4
TOTAL BILATERAL
2580
2359
100
TOTAL REGIONAL
480
739
TOTAL
3060
3098
Source: European Commision, USAID Greenbook
15
6
100
354
3
0
9
0
11303
922
0
10191
11303
10191
100
100
Between 1995 and 2004, the EU15 share in total MPCs
grants and loans has decreased from 53% to 45%.
EU15 ODA grants and loans in MPCs
100
(% of total)
80
60
40
20
Source: OCDE
2004
Y
KE
TU
R
IA
IS
TU
N
IA
YR
S
TE
P
AL
.
O
R
O
C
M
1995
R
R
.
C
O
YA
LI
B
B
AN
O
N
N
LE
JO
R
D
A
L
AE
IS
R
PT
G
Y
E
A
LG
E
R
IA
0
The Liberalisation Process
a) The Liberalisation of Agricultural trade
•Key sector in most of the MPCs, for which the EU is the principal
overseas market.
• EU Agricultural trade policies are a complex system of seasonal
preferences for sensitive products (e.g. tomatoes and oranges)
• EU quantity and quality restrictions:
Tariff rate quotas (TRQs) on a large number of fresh fruit and vegetables and some
dried or processed ones, as well as flowers, Tunisian olive oil and all qualities of
wine;
Reference quantities (RQs) imposed on many fresh fruit and vegetables, some
dried or processed ones, nuts, and fresh and preserved tropical fruit;
 Sanitary and phyto-sanitary standards
•MPC preferences are even more limited, both in terms of share of
preferential over total trade flows and in term of tariff reductions for
strategic products, like cereals and milk, that lead to high domestic prices.
The Liberalisation Process
Even if a liberalisation of agricultural trade would have
enormous impact on Euro-Med trade flows, no defined
prospect for the liberalisation of agriculture was stressed
under the Barcelona Process
There have been no significant new concessions made by
the EU for agriculture products in the EMAAs, nor are these
expected to come about in the near future
The Liberalisation Process
b) The liberalisation of Industrial
products trade
The EMAAs set out a trade liberalisation commitment by the MPCs, which
complements the tariff-free treatment for industrial goods already granted
to their exports to the EU since mid-1970s
Under the EMAAs the MPCs gradually remove all tariffs on imports of
industrial products from EU over by 2010.
The specific time schedules for dismantling are differentiated according to
the sensitivity of the goods.
Tunisia is ahead of other MPCs in reforming ist economy and
implementing a range of major reforms, except for abolishing trade
barriers. If the liberalisation of manufactured goods was implemented
overnight, 1/3 of the industrial firms would go bankrupt.
With a view to achieving a full FTA, the MPCs are also expected to
implement free trade among themselves (South-South integration)
The Liberalisation Process
The liberalisation of textiles and clothes trade
•The countries in the Southern and Eastern Mediterranean area employ
over 3.7 million people in the textile sector: 39% of total employment in
Morocco, 41% in Tunisia, 34% in Turkey.
•The share of T&C exports of their total exports to the EU is high (e.g.
54% for Tunisia, 53% for Morocco, 47% for Turkey)
•The importance of this sector is double:
-Because of the very important dependance of MPCs on the Eu market for their
exports and employment;
-Because of the close relationship between EU T&C industry and the T&C
industry of those countries, via investment and subcontracting relationships
•In 2004, the EU imports from MPC represent 28% of EU textile market
(12,8 billion €) and EU exports to MPC represent 14% of EU textile market
(2,3 billion €)
•Due to WTO, the Agreement on textiles and clothing expired on
2005
•Between January and May 2004, the EU imports from China represent
11% of EU textile market. One year late, the EU imports from China
represent 22% of EU textile market.
The Liberalisation Process
c) The liberalisation of trade in Services
The liberalisation of trade in services
• will spill over into the production and export of goods
• will serve to improve the functioning e.g., transport, energy, telecoms,
finance in the MPCs
• Regional solutions to promote liberalisation of trade in services:
Reform of the transport sector at national level, definition and
promotion of an efficient regional transport infrastructure network, with
national transport systems linked to each other and with Trans-European
Networks
Development of appropriate energy policies
Modernisation of the telecomunications sector and facilitation of
interconnections as a prerequisite for the development of the Information
Society.
The Liberalisation Process
 In the context of the EU’s relationship with its Mediterranean
partners, rules of origin (ROOs) are increasingly seen as playing
an important role.
 In principle the Mediterranean partners should adopt what is known
as the “pan-European system of cumulation of rules of origin”
 Rules of origin can indeed serve to restrict suppliers’ ability to buy
their inputs from the cheapest available source. In so doing rules of
origin impact upon patterns of trade, production and consequently
also welfare. Clearly to the extent that rules of origin do indeed
have such an impact, this is likely to fall most heavily on small,
possibly less diversified economies, who consequently find it more
difficult to source their inputs domestically and competitively.
Conclusion 1
What do these figures tell us?
The European Commission has reached a critical level in order to
have a significant impact on national policies only in some
Mediterranean Partner Countries.
The total MEDA I and II commitments for the period 1995 -2004
have been less than one third of the USAID economic assistance
for the same period (even if this assistance has been concentrated
in three countries: Israel, Egypt and Jordan).
The EU15 (European Commission and member states) share in
total MPCs grants and loans has decreased from 53 % to 45 %.
Conclusion 2
The MPCs are not following the global trend towards trade liberalisation
and this implies that these countries are losing in terms of international
competitiveness relative to other regions in the world.
This creates a cumulative process: high protection rates increase the
relative strength of import-substitution inefficient industries and in this
way the strength of lobbies in favour of maintaining high protection rates
increases as well.
The mechanism is made possible in presence of inflows of foreign
exchange coming from remittances, export of natural resources, financial
official assistance (grants and loans) and FDI.
A role in maintaining the mechanism was the preferential access to
European markets that some MPCs countries enjoyed for some products
(for example textiles and clothes).
Currently, the liberalisation of textiles and clothes imports from Asia
dramatically changes the context in which MPCs have to compete in
European markets and the expected returns of investments made in these
sectors.
Conclusion 3
Some final considerations within the framework above described:
Trade liberalisation needed for attracting more FDI and increase
competitiveness of the MPCs production creates major problems
for government tariff revenues and for the social impact of the
structural adjustment process in both import-substitution
industries and export-oriented industries.
Which are the financial resources and the size of unilateral trade
liberalization that EU is willing to offer to MPCs for alleviating their
structural adjustment?
Conclusion 3
The increasing trade with the US suggests that their trade
agreements and financial support are more effective than the
European initiatives.
In fact, when the prime objective is political as well as related to
creating development, the quantity of assistance, both in terms of
absolute value and in proportion to the offer by other donors,
becomes an important factor in the effectiveness of the policy
itself. This is the case particularly when other countries offer
assistance, having objectives not always consistent with or in
conflict with European ones.
In conclusion what does the EU currently offer to MPCs in order to
carry on the Barcelona process?