Assessing EU-Syrian Association Agreement (AA) in agriculture Damascus 12 January 2002 GCP/SYR/006/ITA - FAO-Italy Government Cooperative Program “Assistance In Institutional Strengthening And Agricultural Policy” José Mª García-Alvarez-Coque Professor of Agricultural Economics

Some facts of Syrian-EU agricultural trade A “North-South” pattern of trade: –Only 15 percent of Syrian exports to EU are processed products. Over 87 percent of Syrian imports from the EU are processed products. Little specialisation on the EU –Agricultural exports account for only 5 percent of Syrian exports to the EU. –15 percent of Syrian agricultural exports go to the EU, 50 percent to Arab countries.

Some facts of Syrian-EU agricultural trade Little product diversification: – 5 products account for 90 percent of Syrian exports to the EU. Out of them only potatoes show a positive development. Little presence of high-value products: –Of Syrian agricultural exports to EU: 73% cotton, 5,8% fruit and vegetables, 0,4% olive oil. –Other Mediterranean countries: 55% fruit and vegetables, 8% olive oil. Syrian export composition is consistent to a distorted EU tariff structure.

Agriculture and the Association: potential gains Syria shows comparative advantages in a number of products compared to other Mediterranean Countries. But Syria is under-represented in EU markets. Any departure from the “traditional flows” could entail significant gains for Syrian agricultural trade. There is a large margin of increase of European Investment in the Syrian Agri-food sector.

Some issues of the Association The special treatment of agriculture in the Barcelona process. The potential costs of the “reciprocity”. The political constraints: –22 Southern European regions specialized on Mediterranean products with relatively low levels of EU support. –Eastern Enlargement and financial constrains. The Association should be envisaged as a long-term process of constant negotiations.

Imperfect liberalisation or what other AAs show Tariff reduction without restrictions. Tariff reduction within tariff quota or fixed reference quantities. Possibility to increase tariff-quota and reference quantities in the five years after signature. Possibility to implement reference quantities if imports “threaten to cause difficulties”. Exceptions to the “entry price” system applicable for fruit and vegetables. “Flexible” seasons.

Large market access and low costs are not a guarantee for export success Competitiveness depend on: –Quality standards and grading – Human skills – Marketing organisation – Macroeconomic impacts on trade and investment – General regulatory framework 10 retailers account for 40 per cent of food distribution in the EU. Marketing costs account for 2/3 of the final price

Policy implications Options for negotiation Trade reform does not imply full trade liberalisation. Transition can be long but clearly scheduled. Joining international cooperation networks  Clear commitment for MEDA program. Agricultural support program. Agricultural policy unit supported by the Institutional and Sector Modernisation Facility (ISMF) Strengthening technical capacities. Trade reform and rules of origin. Preparation of international negotiations. Environmental and quality Standards. Management of the foreign marketing.

Beyond the fears Association as a process that goes beyond trade liberalisation. Future plays in favour of globalisation: –CAP reform and new role of rural regions. –Finding opportunities according to levels of development.