Transcript Seminar

Agricultural trade and the
Barcelona process. Is full
liberalisation possible?
Slides for Seminar
Course in Trade and DOmestic Policies in an Open Economic Settting
Prof. Jose-Maria Garcia-Alvarez-Coque
22 September 2002
1
The Euro-Mediterranean trade
relations

A key word: assymetry.

GDP per capita ratios:
– France/Morocco = 18
– Italy/Egypt =15
– Spain/Algeria = 9
– EU average/Syria = 18

8 Arab countries in the region have a
total GDP = 1/2 Spain’s GDP.
2
Assymetries in agricultural trade
 EU accounts for about 50 % of SPs’ agricultural
exports. SPs account for about 5% of EU
agricultural imports.
Intra-regional
trade: too little: intra-regional
exports among SPs are 7 times lower relative to
exports to the EU.

Situation is not the same accross the region:
Share of Arab countries in total Syrian exports is
20 percent.

EU surplus: > 1billion Euro.

Marked inter-industrial specialisation
3
E U t r a d e b a la n c e w it h S P s
T O T A L - A G R IC U L T U R A L P R O D U C T S
O t h e r a g r ic u lt u r a l p r o d u c t s
977
296
M is c e lla n e o u s e d ib le p r e p a r a t io n s
228
P r e p a r a t io n s o f v e g e t a b le s a n d f r u it s
-4 9 1
P r e p a r a t io n s o f c e r e a ls
172
S u g a rs a n d s u g a r p ro d u c ts
553
F a t s a n d o ils
206
P r o d u c t s o f t h e m illin g in d u s t r y ;
C e r e a ls
555
E d ib le f r u it a n d n u t s
-1 3 9 0
E d ib le v e g e t a b le s
-4 1 3
D a ir y p .; e g g s ; n a t u r a l h o n e y
570
M eat
242
L iv e a n im a l s
-2000
1 9 9 8 -2 0 0 0
250
-1000
201
0
1000
2000
m illio n e u r o
4
The Barcelona process

Aims: “sustainable and balanced economic
development with the view of creating an area of
shared prosperity” (Barcelona Declaration, 1995).

Instrument: The Association Agreements (AA)

Structure of the AAs:
– FTA (with a negotiated schedule)
– Political provisions
– Harmonisation of standards
– Financial cooperation
– Social and cultural cooperation
5
Status of the AAs
Algeria
Signature 12/01
Egypt
Signature 01/01
Jordan
Signature 11/97 Effect 03/02
Lebanon
Signature 12/01
Morocco
Signature 02/96 Effect 05/00
Syria
Negotiation since 1998
Tunisia
Signature 02/95 Effect 03/98
6
Why agriculture is important in this
context?

Assymetric reciprocity: the FTA involves
reciprocal concessions in industrial trade.

But, agricultural exports keep
constrained to “traditional flows” (use of
TRQs and VERs.

So, this FTA is not fully consistent with
the “comparative advantage” principle.
7
What we know ...

Agricultural trade in the Mediterranean region
is not free: “Pre-Uruguay Round” trade
measures.
– Multilateral liberalisation: a serious option.
The end of the “agricultural exception”: not
dramatic for European agriculture.


Import liberalisation without reciprocal
concessions reduces benefits for SPs.

Foreign Direct Investment in the region is
constrained by the “hub and spoke" system.
– Lack of South-South integration
8
Welfare balance for a partner...
Assumption
Static effects (FTA – EU)
(trade creation – trade deviation
+ Harmonisation of standards, red tape
deregulation
Sign
=
=+
+ FDI and long term productivity growth
+
+ Bilateral Agricultural liberalisation
or
Multilateral agricultural liberalisation
++
9
Is a co-operative solution possible?

In the South: uncertain benefits for SPs from
long-term and painful economic reforms.

In the North: fears of competition: appeals
to “fair” trade.
10
Narrowing opposing positions
 EU enlargement.
– Boost of EU horticultural exports to CEECs.
– Enlarged market for Mediterranean products


Substantial CAP reform towards rural development.
Intra-industrial trade
– European experience
– Possible push through South-South integration

Liberalisation of services.
– What about the whole agri-food system, including
distribution, logistics and transport?
11