External Trade:

THE EU

AND

THE MEDITERRANEAN

1. An introduction to the Euro-Med 1. An introduction to the Euro-Med partnership…partnership…• The Euro-Med Partnership involves the EU countries The Euro-Med Partnership involves the EU countries

andand Algeria, Egypt, Israel, Jordan, Lebanon, Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, TunisiaMorocco, the Palestinian Authority, Syria, Tunisia and and TurkeyTurkey..

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.

• Mediterranean countriesMediterranean countries::

– In an unstable regionIn an unstable region

– Lack education and training institutions.Lack education and training institutions.

- Lack financial structures to attract foreign - Lack financial structures to attract foreign capitalcapital

2. How will Mediterranean countries 2. How will Mediterranean countries be affected by a Free Trade Area be affected by a Free Trade Area with the EU?with the EU?• Mediterranean countries may benefit in the Mediterranean countries may benefit in the long-long-

runrun..– Increased FDI (potentially).Increased FDI (potentially).– Workers become more skilled (more productive).Workers become more skilled (more productive).– More jobs, with higher wages.More jobs, with higher wages.

• Stand to lose out in the Stand to lose out in the short-mediumshort-medium term term– Lower custom duties Lower custom duties higher domestic tax rates. higher domestic tax rates.– Deteriorating trade deficits (Deteriorating trade deficits (ΔΔ imports > imports > ΔΔ exports) exports) – Job losses, resulting from the opening of the heavily Job losses, resulting from the opening of the heavily

protected industrial markets of the Arab countries to EU protected industrial markets of the Arab countries to EU exporters.exporters.

3. How will the EU be affected by a 3. How will the EU be affected by a Free Trade Area with the Med?Free Trade Area with the Med?• Israeli-Palestinian conflict viewed as primary Israeli-Palestinian conflict viewed as primary

concernconcern, viewed as a source of terrorism. , viewed as a source of terrorism.

• Lack of coherent EU wide approach to foreign Lack of coherent EU wide approach to foreign policypolicy,, different countries have different agendas. different countries have different agendas. See Common Foreign and Security Policy (CFSP – See Common Foreign and Security Policy (CFSP – seems to be simply lip service to UN charter… seems to be simply lip service to UN charter… aspirations with no substance)aspirations with no substance)

• Long and complex historical relationsLong and complex historical relations with the with the Mediterranean block due to Europe’s colonial past Mediterranean block due to Europe’s colonial past in the region. Example of France and colonial in the region. Example of France and colonial relations with Lebanonrelations with Lebanon

• Geographical factorsGeographical factors: European claim that : European claim that the Mediterranean block is in ‘Europe’s the Mediterranean block is in ‘Europe’s neighbourhood’. This proximity makes neighbourhood’. This proximity makes economic and political stability in the economic and political stability in the region a key objective, for fear that it region a key objective, for fear that it would have spill over effects in Europe. would have spill over effects in Europe.

• E.g. - It has claimed that acts of terrorism E.g. - It has claimed that acts of terrorism over the past three decades on European over the past three decades on European soil have mostly stemmed from the Israeli-soil have mostly stemmed from the Israeli-Palestinian conflict. Palestinian conflict.

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

• Although in the end it can be argued Although in the end it can be argued EU policy EU policy framework is subservient to US imperialismframework is subservient to US imperialism, hence , hence for explanation of EU states policies relevant for explanation of EU states policies relevant clauses can be found in the National Security clauses can be found in the National Security Strategy (document prepared periodically by the Strategy (document prepared periodically by the U.S government to highlight national security U.S government to highlight national security concerns for congress and how the administration concerns for congress and how the administration plans to deal with them)plans to deal with them)

• Ex: Javier Solana (EU high representative for the Ex: Javier Solana (EU high representative for the CFSP) recommendations on EU foreign policy –CFSP) recommendations on EU foreign policy –

• ““The policy paper says states which violate The policy paper says states which violate international norms should realise there will be a international norms should realise there will be a price to pay in terms of their relations with the EU. price to pay in terms of their relations with the EU.

• It also appears to align European policy more It also appears to align European policy more closely with that of the current US administration, closely with that of the current US administration, saying that trans-Atlantic relations are saying that trans-Atlantic relations are irreplaceable as a foundation for world security’’irreplaceable as a foundation for world security’’

4. Levels and types of trade 4. Levels and types of trade between the EU and the Medbetween the EU and the Med• The Euro-Mediterranean Partnership comprises The Euro-Mediterranean Partnership comprises

two complementary dimensions:two complementary dimensions:

• Bilateral dimensionBilateral dimension• Euro-Mediterranean Association AgreementsEuro-Mediterranean Association Agreements• Reflect the general principlesReflect the general principles• Contain specific characteristicsContain specific characteristics

• Regional dimensionRegional dimension• Deal with common problemsDeal with common problems• Strategic impactStrategic impact

•There is a There is a clear contrast in the clear contrast in the MediterraneanMediterranean between those countries between those countries which focus on particular products (in which focus on particular products (in particular, energy products) and those which particular, energy products) and those which are more diversified, with a greater are more diversified, with a greater emphasis on industrial products.emphasis on industrial products.

•Turkey, Algeria, Israel and MoroccoTurkey, Algeria, Israel and Morocco account account for more than for more than 75%75% of trade between the EU of trade between the EU and the Mediterranean.and the Mediterranean.

What has the EU done to What has the EU done to encourage trade with the Med?encourage trade with the Med?• Tariff dismantling, providing greater market Tariff dismantling, providing greater market

access and regulatory policiesaccess and regulatory policies• Mediterranean countries now enjoy duty-Mediterranean countries now enjoy duty-

free access to the EU market for free access to the EU market for manufactured goodsmanufactured goods

• One of the key objectives of the Association One of the key objectives of the Association Agreements is the Agreements is the liberalisationliberalisation of trade in of trade in servicesservices and and investmentinvestment as well as the as well as the liberalization of liberalization of agricultureagriculture

How important is Mediterranean How important is Mediterranean trade to the EU?trade to the EU?• Most of Europe’s external trade is with rest of the Most of Europe’s external trade is with rest of the

world - the entire North African market is only world - the entire North African market is only equivalent to the internal Portuguese marketequivalent to the internal Portuguese market

• Total Euromed trade with the EU (excluding Total Euromed trade with the EU (excluding Turkey) reached 120 billion euro in -2006, which Turkey) reached 120 billion euro in -2006, which represents just over represents just over 5% of total EU external trade.5% of total EU external trade.

• In the EU, France, German and Italy are theIn the EU, France, German and Italy are the main trading partners of the Mediterranean.main trading partners of the Mediterranean.

• EU imports from the Mediterranean were mainly EU imports from the Mediterranean were mainly industrial productsindustrial products (59.4% in 2005) and (59.4% in 2005) and energy energy productsproducts (25.2%). (25.2%).

How important is EU trade for the How important is EU trade for the Mediterranean?Mediterranean?• 50% of the exports of Mediterranean 50% of the exports of Mediterranean

countries goes to the EUcountries goes to the EU. However, this is . However, this is only an average and specific figures vary only an average and specific figures vary greatly between countries. 83% of greatly between countries. 83% of Tunisian exports go to the EU but only Tunisian exports go to the EU but only 3.2% of exports from Jordan go to the EU.3.2% of exports from Jordan go to the EU.

• 55% of FDI55% of FDI in the Mediterranean is from in the Mediterranean is from the EU. the EU.

Trade within the MediterraneanTrade within the Mediterranean

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

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

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

• ‘‘Fragmegration’Fragmegration’

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

Barcelona Process- 3 Barcelona Process- 3 criteria.criteria.• Regional integration- e.g. Agadir FTA Regional integration- e.g. Agadir FTA

agreement, Arab Maghreb Union.agreement, Arab Maghreb Union.

• Association AgreementsAssociation Agreements

• Financial Assistance-e.g.MEDAFinancial Assistance-e.g.MEDA

Success or Failure?Success or Failure?• Exports from the region to EU27 Exports from the region to EU27

have increased by 10% per year have increased by 10% per year (2000-2006).(2000-2006).

• Imports from the EU to region have Imports from the EU to region have risen by 4%. (2000-2006)risen by 4%. (2000-2006)

• Trade between the two regions Trade between the two regions reached 120 billion euros in 2006.reached 120 billion euros in 2006.

Success or Failure?Success or Failure?• Trade dependence of region on EU Trade dependence of region on EU

has increased by 52%(1995-2003)has increased by 52%(1995-2003)• Growing poverty of East Med. statesGrowing poverty of East Med. states• Negligible dependence of EU on Negligible dependence of EU on

region.region.• EU Enlargement alleviates EU EU Enlargement alleviates EU

dependency on energy suppliesdependency on energy supplies

Conclusion – Weak Conclusion – Weak partnershippartnership• Serves interests of the EU.Serves interests of the EU.• Lack of legitimacy.Lack of legitimacy.• Rejection of liberalization and Rejection of liberalization and

conditionality e.g. Syriaconditionality e.g. Syria• Asymmetrical interdependenceAsymmetrical interdependence• Middle Eastern conflictMiddle Eastern conflict

ByBy

Laura MeadowcroftLaura MeadowcroftValerie NouryValerie NouryLucy ReynoldsLucy ReynoldsKate ChadwickKate Chadwick

Sam DavisSam DavisRhian JohnsonRhian Johnson