External Trade:

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External Trade THE EU AND THE MEDITERRANEAN
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1. An introduction to the Euro-Med partnership

• The Euro-Med Partnership involves the EU
  countries and Algeria, Egypt, Israel, Jordan,
  Lebanon, Morocco, the Palestinian Authority,
  Syria, Tunisia and Turkey.

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• The Barcelona Process started at the
  Euro-Mediterranean Conference of Ministers of
  Foreign Affairs, 27-28 November 1995
• It aimed to establish a Euro-Mediterranean Free
  Trade Area (EMFTA) by 2010, through Association
  Agreements with the EU
• At present, there are agreements between the EU
  and Tunisia, Israel, Morocco, the Palestinian
  Authority, Egypt, Algeria and Lebanon.

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• Mediterranean countries
• In an unstable region
• Lack education and training institutions.
• - Lack financial structures to attract foreign
  capital

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2. How will Mediterranean countries be affected
by a Free Trade Area with the EU?

• Mediterranean countries may benefit in the
  long-run.
• Increased FDI (potentially).
• Workers become more skilled (more productive).
• More jobs, with higher wages.
• Stand to lose out in the short-medium term
• Lower custom duties ? higher domestic tax rates.
• Deteriorating trade deficits (? imports gt ?
  exports)
• Job losses, resulting from the opening of the
  heavily protected industrial markets of the Arab
  countries to EU exporters.

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3. How will the EU be affected by a Free Trade
Area with the Med?

• Israeli-Palestinian conflict viewed as primary
  concern, viewed as a source of terrorism.
• Lack of coherent EU wide approach to foreign
  policy, different countries have different
  agendas. See Common Foreign and Security Policy
  (CFSP seems to be simply lip service to UN
  charter aspirations with no substance)
• Long and complex historical relations with the
  Mediterranean block due to Europes colonial past
  in the region. Example of France and colonial
  relations with Lebanon

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• Geographical factors European claim that the
  Mediterranean block is in Europes
  neighbourhood. This proximity makes economic and
  political stability in the region a key
  objective, for fear that it would have spill over
  effects in Europe.
• E.g. - It has claimed that acts of terrorism over
  the past three decades on European soil have
  mostly stemmed from the Israeli-Palestinian
  conflict.

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• Economically, in comparison to the United States,
  Europe is the primary trade partner to the
  Mediterranean (majority of this trade is oil).
  Exports to the EU are nearly triple that of those
  to the U.S. Some argue that this is why Germany
  and France refused to go to war with Iraq.

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• Although in the end it can be argued EU policy
  framework is subservient to US imperialism, hence
  for explanation of EU states policies relevant
  clauses can be found in the National Security
  Strategy (document prepared periodically by the
  U.S government to highlight national security
  concerns for congress and how the administration
  plans to deal with them)
• Ex Javier Solana (EU high representative for the
  CFSP) recommendations on EU foreign policy
• The policy paper says states which violate
  international norms should realise there will be
  a price to pay in terms of their relations with
  the EU.
• It also appears to align European policy more
  closely with that of the current US
  administration, saying that trans-Atlantic
  relations are irreplaceable as a foundation for
  world security

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4. Levels and types of trade between the EU and
the Med

• The Euro-Mediterranean Partnership comprises two
  complementary dimensions
• Bilateral dimension
• Euro-Mediterranean Association Agreements
• Reflect the general principles
• Contain specific characteristics
• Regional dimension
• Deal with common problems
• Strategic impact

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• There is a clear contrast in the Mediterranean
  between those countries which focus on particular
  products (in particular, energy products) and
  those which are more diversified, with a greater
  emphasis on industrial products.
• Turkey, Algeria, Israel and Morocco account for
  more than 75 of trade between the EU and the
  Mediterranean.

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What has the EU done to encourage trade with the
Med?

• Tariff dismantling, providing greater market
  access and regulatory policies
• Mediterranean countries now enjoy duty-free
  access to the EU market for manufactured goods
• One of the key objectives of the Association
  Agreements is the liberalisation of trade in
  services and investment as well as the
  liberalization of agriculture

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?How important is Mediterranean trade to the EU?

• Most of Europes external trade is with rest of
  the world - the entire North African market is
  only equivalent to the internal Portuguese market
  
• Total Euromed trade with the EU (excluding
  Turkey) reached 120 billion euro in -2006, which
  represents just over 5 of total EU external
  trade.
• In the EU, France, German and Italy are the
• main trading partners of the Mediterranean.
• EU imports from the Mediterranean were mainly
  industrial products (59.4 in 2005) and energy
  products (25.2).

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?How important is EU trade for the Mediterranean?

• 50 of the exports of Mediterranean countries
  goes to the EU. However, this is only an average
  and specific figures vary greatly between
  countries. 83 of Tunisian exports go to the EU
  but only 3.2 of exports from Jordan go to the
  EU.
• 55 of FDI in the Mediterranean is from the EU.

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Trade within the Mediterranean

• Trade between countries in the Mediterranean
  region is limited to 4.5 of total imports and
  6.2 of total exports

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• Mediterranean Partners are committed to implement
  free trade among themselves and this can be seen
  by examples such as the Arab Maghreb Union and
  the Agadir Agreement signed in February 2004 by
  Morocco, Tunisia, Egypt and Jordan.

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• Four sub-regions encompassing the Mediterranean
  Southern Europe, the Balkans, the Maghreb, and
  the Mashreq

• Economic chasm between the North and the South
  Mediterranean
• Fragmegration

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Barcelona Process- 3 criteria.

• Regional integration- e.g. Agadir FTA agreement,
  Arab Maghreb Union.
• Association Agreements
• Financial Assistance-e.g.MEDA

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Success or Failure?

• Exports from the region to EU27 have increased by
  10 per year (2000-2006).
• Imports from the EU to region have risen by 4.
  (2000-2006)
• Trade between the two regions reached 120 billion
  euros in 2006.

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Success or Failure?

• Trade dependence of region on EU has increased by
  52(1995-2003)
• Growing poverty of East Med. states
• Negligible dependence of EU on region.
• EU Enlargement alleviates EU dependency on energy
  supplies

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Conclusion Weak partnership

• Serves interests of the EU.
• Lack of legitimacy.
• Rejection of liberalization and conditionality
  e.g. Syria
• Asymmetrical interdependence
• Middle Eastern conflict

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• By
• Laura Meadowcroft
• Valerie Noury
• Lucy Reynolds
• Kate Chadwick
• Sam Davis
• Rhian Johnson