Eu-Med Agpol Conclusions Preliminary Version 16 Mars 2007

What we have done? Combining models and qualitative/chain specific analysis in an integrated manner to assess the impact on the EU of the liberalization between the EU and the Med countries : Models :  EU-MED-ROW level : CAPRI, Gravity Model  Country level : Morocco (all sectors,CGE, detailed ag.sector), Turkey (Ag.sector)  EU Regional Nuts II Level: Regional Vulnerability Index + CAPRI Qualitative analysis :  Experts surveys for fresh fruit and veg and olive oil in 5 countries  + Specific studies on processed products in EU and Med countries

Key Findings 1) In general, impacts of EU liberalization of trade in fruits, vegetables, and olive oil with Mediterranean countries are expected to be small( Expert Surveys and CAPRI) 2) Even though the overall impacts of partial or full trade liberalization are expected to be small, there are certain EU regions and certain products for which there will be important impacts. (RVI +CAPRI), Processed Tomato sector industry

Key Findings 3) Trade liberalization between the EU and Mediterranean countries will result in winners in losers in the Mediterranean countries just as in the EU (Morocco and Turkey Models).

Key Findings 4) We see that there can be some interaction between EU-Med liberalization and possible WTO liberalization, with some potential preference erosion for the Med countries.(CAPRI)

Key Findings 5) The expert opinion (Delphi) analysis demonstrates clearly that producers and exporters are likely to respond to incentives that would come about due to trade liberalization. The WP5 expert opinion analysis turned out to be a rich component of our project.

Key Findings 6) Trade among the Mediterranean countries and the EU is not only constrained by quotas and tariffs, but also by other factors such as distance, production cost, and other factors. (Gravity Model Analysis) 7) Consumer impacts are also important to consider in evaluating trade policy changes. (CAPRI + Morocco and Turkey models)

Key Findings 8) There is a large heterogeneity among Mediterranean countries in terms of constraints to their access to EU markets – both tariff and non-tariff. (Delphi + Gravity Model) 9) There is also a large heterogeneity among fruit and vegetable protection across fruit and vegetable products as illustrated in the outputs of our WP3.(EU Protection Analysis)

Key Findings 10) To do this kind of analysis, it is absolutely essential to have micro based value chain type analyses plus Sector and General Equilibrium analyses.  We need to micro-level analyses to get the detail and depth needed for disaggregated products like fruits, vegetables, and olive oil.  We need the more aggregate analyses to capture substitution in production and consumption.

Some examples of Results for the Fruit and Vegetables Sector

WP5- Expert Surveys in Five countries (Delphi Method) Fruit and Veg Exports Potential in case of Liberalization

Selected countries and products Liberalization scenarios, on the basis of detailed protection analysis done in WP3  Partial Lib : increase in quotas, in windows and reduction in tariffs (consistent with the EuroMed negociations “road map”) : Ad’hoc rules depending of current level of tarifs, level of exports/quotas, etc.  Full Liberalization : remove quotas, tariffs and entry prices Experts surveys about the potential and the constraints. Liberalization Scenarios

Selected countries and products

Countries Surveys

Limiting factors : Egypt :  Delivered product cost  Infrastructure constraints (post harvest facilities, cooling, transport)  Quality (pesticide use, variety)/ Compliance with EU standards Morocco:  Water (tomatoes)  Production efficiency, yields (clementines) Israel:  Small impacts of production constraints  More impacted by EU tariffs and minimum entry prices Turkey :  Quality n°1, tariffs n°2, organizational problems

Gravity Model Results  Impact of tariff differ from one country to another: Israel, Egypt : High impact of tariff Morocco : intermediate Turkey : Lower impact  Tariffs are not the only constraint to trade : Distance Production costs Other constraints (could be Infrastructure, quality,etc..)  Israel  Morocco  Egypt, Turkey  Syria, Lebanon, Jordan  Tunisia  Algeria

WP2+WP8- Regional Vulnerability Indicators Vulnerability of Fruit and Veg European Region

RVI

Regional Vulnerability Index and Per Capita GDP Valencia Languedoc-Roussillon Piemonte Veneto Centro-Ribatejo Sicilia Lazio Campania Andalucia Emilia-Romagna Cataluna Rhône-Alpes Ipiros-Peloponissos Bretagne Murcia Trentino Puglia Pays Loire PACA Sterea Ellias Average 30 regions Midi-Pyrénées Toscana Liguria Alentejo-Algarve Norte-Douro Castilla la Mancha Calabria Thessalia Anatoliki Makedonia 5,000 10,000 15,000 20,000 25,000 30,000 1,002,003,004,005,006,007,008,009,0010,00 RVI GDP per capita (€) Aragon Source: EU-MED Agpol, Rastoin- Montigaud 2006

CAPRI Regional Impact Results  F&Veg Production Value and Income per Region.  Changes between liberalization scenario vs baseline are very small.  Compare the Regional Baseline/ base period data (Change for the period to 2013 resulting from exogeneous parameter : GDP, technical progress, policies ) to the RVI.

Convergence of Capri/RVI indicators Number of regions Good15 Medium8 Poor11 Total34 Comparing Ranking of the EU F&Veg Regions

Results 8 high-vulnerability regions (Capri index represented by a decrease between -20% and -60% in value production of fruit and vegetables for the period and RVI between 0.4 and 1.6): Thessalia, Alentejo, Anatoliki-Makedonia-Thraki, Toscana, Sicilia, Algarve, Castilla-La Mancha, Aragon. 3 mid-vulnerability regions (Capri between – 50 % and 0 % and RVI between 0 and 0.4): Azores, Campania, Cataluna. 12 low-vulnerability regions (Capri between 0 and + 60 %, RVI between 0 and 0.4): Piemonte, Canarias, Lazio, Andalucia, Murcia, Trentino-Alto Adige, Emilia-Romagna, Languedoc-Roussillon, Calabria, Bretagne, Midi-Pyrénées, Rhône-Alpes. 11 high-uncertainly regions resulting from the divergence of Capri and RVI: Lisboa, Liguria, Puglia, PACA, Veneto, Norte (P), Centro (P), Comunidad Valenciana, Peloponnissos, Pays de la Loire, Sterea Ellada.