EU Market Access for Mediterranean fruit and vegetables: Annual Meeting Eu-Med Agpol 17-20 May 2006-Montpellier EU Market Access for Mediterranean fruit and vegetables: A gravity model assessment EMLINGER Charlotte IAMM / UMR MOISA

Outline of the talk 1. My PhD Project in the EUMED Agpol Project 2. The Gravity model 4. First Results 5. Conclusion and discussion

My PhD Project in the EUMED Agpol Project 1.1. Problematic of my work Context : Better EU market access for Fruit and Vegetables (F&V) exports : main issue of the liberalisation process for the Mediterranean Countries What would be the impact of a greater liberalization on EU import of F&V from the Mediterranean countries ? Questions of the PhD Study:  To what extent EU protections influence the F&V exports of Med countries ? Do exist trade costs other than tariffs and transportation, accessing EU market for Mediterranean F&V? What are their impact?

My PhD Project in the EUMED Agpol Project 1.2. My approach International economics approach Use of a Gravity model : Common tool in trade analysis, focusing on trade costs Bilateral trade determinants analysis Ex post model World model Econometric methodology

My PhD Project in the EUMED Agpol Project 1.3. Links with the project Use of WP 3 output: MEDITAR and Deliverable 13 analysis Complementary work with other approach in the project : WP 5 : DELPHI Method (assess Export and production potential) WP 6 : Ex Ante models (CAPRI, TASM, MCGE) Contribution to WP 7 : interaction with World market = we take into account all the EU suppliers of F&V in the model Comparison of Med Countries/ Rest of the World

2. The Gravity Model 2.1. Principle Equation derived from Anderson van Wincoop 2004 An equation explaining bilateral trade between two countries by : production of exporting country consumption of importing country relative prices of partners : competitiveness trade costs : transportation cost (proxied by distance) tariffs (ad valorem equivalent) other border costs (caught by dummy variable)

2. The Gravity Model 2.1. Principle i Importing country j exporting country m imports x production w world k product Home effect : countries trade more with themselves than with others countries Border effect methodology : comparison imports from foreign countries to imports from domestic (EU) producers : benchmark of the best market access possible

2. The Gravity Model 2.2. Data (1) Annual data model (2002) Data base : Production and price : FAOSTAT Bilateral trade : COMTRADE Applied Tariffs : MEDITAR Distance, contiguity and historic variables : CEPII Problem of harmonisation and consistency of data base : Computation of balance sheet between supply and demand Re-exportation issue

2. The Gravity Model 2.2. Data (2) Applied tarrifs : Ad Valorem Equivalent computation For entry price products: use of 92% of the trigger price for import price Applied tarrifs : Aggregation Aggregation of monthly data calculated at the 10-digit level of the combined nomenclature in annual data defined in the FAO nomenclature

3. First results (1) Coefficient Std err significance j price competitiveness on i's market -0,178 0,026 *** Distance -0,998 0,074 Perishability 2 (Dummy) -2,091 0,129 Perishability 3 (Dummy) -3,27 0,126 Perishability 4 (Dummy) -2,306 0,14 Exotic good (Dummy) 1,245 0,2 Colony (Dummy) 0,886 0,171 Common Border (Dummy) 0,41 0,168 ** Tariffs applied (reference) -0,921 0,063 Tariffs Med Countries 0,119 0,092 NS Tariffs New Member States 0,266 0,114 Tariffs Southern Hemisphere countries 1,123 0,107 European Union effect (reference) (Dummy) 1,108 0,205 Med Countries (Dummy) 0,685 0,219 New Member State (Dummy) 0,483 0,28 * South Hemisphere Countries (Dummy) 1,567 0,264 Home effect (Dummy) 5,605 0,376 Constant 8,285 0,659

3. First results (1) Results for classical variables in line with expectation from gravity model Competitiveness, Distance, colony, common border Important Home effect and EU border effect Role of Perishability in transport costs Mediterranean area as a block : Tariffs elasticity similar than the Rest of the World (ROW) Trade Resistance lower than those of ROW : non price competitive advantage/ROW

Other trade resistance 3. First results (2) Heterogeneity of the Mediterranean area, comparison of Med countries -3,77 0,14 Tunisia -8,50 0,01 Syria -0,26 -0,38 Morocco -0,42 Turkey -1,32 -0,78 Jordan 2,44 Israel -0,24 -1,22 Egypt -2,88 Lebanon -3,62 Algeria Rest of World Other trade resistance Tariffs Elasticity

5. Discussion 5.1. Impact of liberalization Impact of liberalisation can be discussed, considering : Tariffs elasticies Other trade resistance or advantage Tariffs applied Impacts of perissability and distance

Low Tariff sensitivity High Tariff sensitivity 5. Discussion 5.1. Impacts of liberalization Lebanon Algeria Jordan Low Tariff sensitivity <ROW High Tariff sensitivity ≥ROW Tunisia Syria Turkey Morocco   Egypt Israel non price competitive advantage compared to ROW Trade Resistance Compared to EU suppliers compared to EU disadvantage low EU tariffs High EU tariffs Middle EU tariffs

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