Dr. Mona El Garf وزارة التجارة والصناعة Ministry of Trade and Industry Associate Professor, Faculty of Economics and Political Science, Cairo University Lead Economist, Minister’s Technical Office

وزارة التجارة والصناعة Ministry of Trade and Industry جمهورية مصر العربية وزارة التجارة والصناعة Ministry of Trade and Industry Regional Integration and Development: A Possible Framework for the Mediterranean Region FCM Conference on “Integration and Development in the Mediterranean Region: the Role of the Accountancy Profession” Paris 28th of November 2008

Main Points I. Facts II. Why Deepening the Euro-Mediterranean Relation is Important? III. What is the Framework of Mediterranean – EU Relationship? IV. What are the Implications of Egypt-EU Economic Relations in Figures? V. What’s New? VI. Where You Can Fit?

I. Facts Egypt and EU have long standing relationship. Egypt believes that there remains room for deepening existing relations. The government cannot act alone. Other stakeholders should be strongly involved. Hence, launching the FCM Conference reinforces this vision.

II. Why Deepening Euro-Mediterranean Relation is Important II. Why Deepening Euro-Mediterranean Relation is Important? It is a Win – Win Situation From the European Side The Mediterranean frontier poses enormous demographic and geostrategic advantages. This region has the potential to act as a nexus of cultural dialouge between the East and the West. Europe's security and prosperity can only be assured if the countries bordering the Mediterranean also enjoy security and prosperity. A healthy and prosperous Mediterranean will reinforce the position of Europe in the world.

From the Mediterranean Side II. Why Deepening Euro-Mediterranean Relation is Important? It is a Win – Win Situation From the Mediterranean Side Importance of the EU on the global Market (27 members) 28% of the world GDP; 40% of the world merchandise and services trade; 51% out of the world foreign direct investment outflows during 2006; Ranks 2nd after ASEAN bloc in terms of the population, with 7% out of the world population; Different free trade agreements between the EU and other countries and blocs, 26 of these agreements have entered into force More than 50% of the Mediterranean countries’ trade is with the EU, 70% of the exports of some Mediterranean countries are directed to the EU.

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Cooperation Agreement 1977 Barcelona Process 1995 Association Agreement: entered into force 2004 European Neighborhood Policy: March 6th 2007, adopting Egypt-EU Action Plan Union for the Mediterranean 2008 2008 Union For Mediterranean 1995 Barcelona Process 2007 ENP 1977 Cooperation Agreement 2004 Association Agreement

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Cooperation Agreement (1977-2004) Economic co-operation between the parties; Non-reciprocal trade liberalisation and market access for industrial goods. Partial preferential treatment for some specific agricultural exports. Four financial Protocols (EC funding for programmes and projects in Egypt - 661 million euros). Barcelona Process (1995) Objective: creating an area of dialogue, exchange and co-operation guaranteeing peace, stability and prosperity. Two instruments: Bilateral level (the Association Agreement); Regional level (the Euro-Mediterranean conferences at the Ministerial Level).

Services Sector with the EU? III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) The AA has three main pillars: the Political and Security pillar; the Economic and Financial pillar and the Social and Cultural pillar. Association Agreement - AA (2004 - present) Objective: establishing a Free Trade Area for industrial goods in 12 years with some exceptions. January 2004, the Trade Component entered into force June 2004, Social, Political and Security components entered into force. Why Liberalizing the Services Sector with the EU? Built in agenda in AA, article 30, Goal of the Barcelona Process, Istanbul & Marrakech Ministerial Declaration, ENP Action Plan, Egypt’s National Strategy Liberalization of Trade in Services and Right of Establishment July 2003, the Istanbul protocol paved the way towards the liberalization of trade in services. March 2006, Regional Euro-Med negotiations launched. In 2008, Bilateral negotiations launched between the EU and Egypt, Morocco and Tunisia as well.

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Euro-Mediterranean Road Map for Agriculture In 2004, the Roadmap for liberalizing trade in agriculture, processed agriculture and fishery products was formulated. In 2008, Egypt-EU finalized their agreement to fully liberalize agricultural products, with very short list of sensitive products. Dispute Settlement Mechanism (DSM) Since 2006, negotiations was launched on the establishment of a DSM. European Neighborhood Policy (ENP) In 2004, the ENP is based on sharing common values such as democracy and human rights, rule of law, good governance, market economy principles and sustainable development. The ENP compliments the Barcelona Process (free trade Euro-Med area by 2010). On March 6th, 2007, Egypt adopted the Action Plan which reflects Egypt’s reform agenda during the period 2007-2010. ENP Members The ENP covers 16 countries; the 10 Mediterranean countries Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, the Palestinian Authority, Syria and Tunisia. In addition to Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

? However………… It is no secret that the European Union’s policies toward the Mediterranean basin are not dynamic enough to instigate development. The Barcelona process did not achieve expected results in addition that the private sector and the region’s populace were not engaged in it. Problematic areas of cooperation such as immigration, energy, security and political stability were not properly addressed. Mediterranean countries expect more constructive cooperation from EU. Calls for other alternatives or strategies soon emerged from within Europe Itself

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Barcelona Process: The Union for the Mediterranean Launched by Nicolas Sarkozy during his Presidential campaign in 2007. On 3 March 2008: Franco-German agreement paved the way for the European agreement on the Union for the Mediterranean. On the 13/14 March 2008: The European Council approved the principle of a Union for the Mediterranean and invited the Commission to present proposals defining the modalities of what will be called “Barcelona Process: Union for the Mediterranean. On July 13 2008 (Paris Summit for the Mediterranean – Heads of State): The first summit took place in Paris under the co-presidency of The President of France AND The President of Egypt.

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Barcelona Process: Union for the Mediterranean as agreed upon in the 10th Euro-Med Ministerial Conference of Ministers of Foreign Affairs (Marseilles 3-4 Nov.) Objective: build on and reinforce the successful elements of the existing Barcelona Process based on the following: Enhance multilateral relations, Increase co-ownership of the process, Set governance on the basis of equal footing and translate it into concrete projects, more visible to citizens. Members: 27 Member States of the European Union, 10 Mediterranean countries which are members of the Barcelona Process Other six countries bordering the Mediterranean (Albania, Croatia, Bosnia and Herzegovina, Montenegro, Monaco and Turkey).

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Barcelona Process: Union for the Mediterranean (Cont’d) Institutional Framework Joint Secretariat (Barcelona) Joint Permanent Committee (Brussels) Senior Officials Co-Presidency 2 directors (one from EU and one from the Med. countries). Apply to Summits, all Ministerial meetings, Senior Officials meetings, the Joint Permanent Committee. Biennial summits of Heads of Government will be held. The 1st summit took place in Paris on 13 July 2008. Ministers reached a unanimous agreement on the participation of the Arab League at all the meetings and at all levels of the Union for the Mediterranean.

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Projects: The Summit on 13 July 2008 has identified 6 areas for cooperation: De-pollution of the Mediterranean; Maritime and Land Highways; Civil Protection, Alternative Energies - Mediterranean Solar Energy Plan; Higher Education and Research; The Mediterranean Business Development Initiative; Funding Funding for regional projects and activities should come mainly from the EU and its Member States; private sector; contributions from Mediterranean partners; International financial institutions; regional banks; FEMIP; ENPI

III. What is the Framework of the Mediterranean – EU Relationship III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration) Agreed Upon Issues in the Conference of the Ministers for Industry of the Barcelona Process: Union for the Mediterranean (Nice, 5 and 6 November 2008) “Ministers welcomed the initiative of the Egyptian and French co-Presidents and the European Investment Bank to convene a high level meeting of Arab, European and Mediterranean financial institutions in Cairo in January 2009 to discuss ways and means to ensure the availability of funds for the UpM projects, notably in the field of energy preservation, solar energy, transportation, vocational training, as well as promoting SMEs.”

IV. What are the Implications of Egypt-EU Economic Relations in Figures? The Importance of EU to Egypt in 2007/08 EU is considered Egypt’s main trading partner, constituting 33.7 % of Egypt’s total trade volume. EU is a main source for Egypt’s FDI inflows reaching 5.1 billion$ EU is considered one of the main sources for financial and technical aid to Egypt. EU is a main source for tourism inflows in Egypt. In 2007, 49.7% of the incoming tourism came from EU Source: Central Bank of Egypt Ministry of Tourism

Total Trade between Egypt and EU IV. What are the Implications of Egypt-EU Economic Relations in Figures? Total Trade between Egypt and EU Total Exports and Imports between Egypt and EU EU represents 33.7 % of Egypt’s total trade volume Source: Central Bank of Egypt

IV. What are the Implications of Egypt-EU Economic Relations in Figures? The Evolution of Net FDI Inflows from EU Number of EU visitors to Egypt Source: Central Bank of Egypt Source: Ministry of Tourism

EU Financial and Technical Assistance Instruments IV. What are the Implications of Egypt-EU Economic Relations in Figures? EU Financial and Technical Assistance Instruments Financial Instruments European Neighborhood and Partnership Instrument (ENPI) Facility for Euro-Mediterranean Investment and Partnership (FEMIP) Neighborhood Investment Fund Technical Assistance Instruments Technical Assistance & Information Exchange (TAIEX) Twinning Mechanism Competitive and Innovation Program (CIP) 7th Research Framework Program – (FP7)

Ministry of Trade and Industry-EU Cooperation Programs IV. What are the Implications of Egypt-EU Economic Relations in Figures? Ministry of Trade and Industry-EU Cooperation Programs Summary Overview of Major Technical Assistance & International Cooperation Programs Status as of 20 November, 2008 Instrument and Status End Date Start Value Policy Area Project /Intervention Title Technical Assistance TBD – Q4/2013 TBD – Q2/2010 € 74,000,000 TBD (20% from GoE) Trade, Internal Market and Industry Technical Assistance to Support the Implementation of the Action Plan (TASIAP) ONGOING 30.06.11 01.07.05 € 66,000,000 (50% from GoE) Industry Technical Vocational and Educational Training (TVET) Twinning Awarded to UK 04.08 31.08.10 01.09.08 TBD € 1,300,000 Building the Capacity of the Egyptian Accreditation Council to Deliver Accreditation Services (EGAC) TBD – Q4/2012 Q1/2010 Building Capacity of the Egyptian Consumer Protection Agency (ECPA) TBD – Q1/2013 Building the Capacity of the EOS to Award the “CE” Mark (EOS) TAIEX TBD – NA Trade Special Workshops on EU Acquis for Trade in Services TBD: To Be Determined Source: Ministry of Trade and Industry

There is room to enhance and deepen the relation On the Other Hand, The Mediterranean EU Trade with Mediterranean Partners in 2007 represents 1.6% of total EU trade The annual growth of total Mediterranean trade of goods with the EU during 2000-2007 represents 4% Trade in Services between Mediterranean Countries and EU represents 5% of the EU total services trade. EU investment flows into the Mediterranean region represents 2.3% of EU’s total FDI in 2005. Egypt EU Trade with Egypt in 2007 represents 0.67% of total EU trade Trade in Services between Egypt and EU represents 1.2% of the EU total services trade. Egypt ranked the 34th among the main Merchandise trading partners with the EU in 2007 There is room to enhance and deepen the relation

V. What Is New? Step Forward: EU-Med Roadmap up to 2010 and Beyond During the 7th Euro-Med Trade Ministerial meeting held in Marseille on July 2008, the Euro-Med Ministers reiterated the importance of establishing a Euro-Med Free Trade Area at the horizon of 2010. Trade Ministers instructed the Senior Officials Working Group (SWOG) to work on finalizing a Euro-Med Trade Roadmap up to 2010 and beyond at the 2009 Trade Ministerial meeting. The main objectives of the Trade Roadmap are: Diversify and enhance trade, Encourage industrial integration Increase European investments in the Mediterranean countries.

V. What Is New? Step Forward: EU-Med Roadmap up to 2010 and Beyond EU Proposed Areas for Deep Integration (Convergence and Approximation): Non Tariff Barriers (NTBs) Investment Trade facilitation Public Procurement (PP) Intellectual Property Rights (IPR) Competition policy Sustainable Development concerns Technical Barriers to Trade (TBT) - technical regulation on industrial products SPS Standards & Conformity Assessment - expand the ACAA process to areas which are not covered by the ACAA Rules of Origin (ROO) Dispute Settlement Mechanism

VI. Where Do You Fit? Investment Convergence Mutual Recognition Facilitating Accountants’ Movement Liberalizing Accounting Services

Thank you