External Trade: THE EU AND THE MEDITERRANEAN

1. An introduction to the Euro-Med partnership… The Euro-Med Partnership involves the EU countries and Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, Tunisia and Turkey. The Euro-Med Partnership involves the EU countries and Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, Tunisia and Turkey.

The ‘Barcelona Process’ started at the Euro- Mediterranean Conference of Ministers of Foreign Affairs, 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 countries: Mediterranean countries: –In an unstable region –Lack education and training institutions. - Lack financial structures to attract foreign capital

2. How will Mediterranean countries be affected by a Free Trade Area with the EU? Mediterranean countries may benefit in the long-run. Mediterranean countries may benefit in the long-run. –Increased FDI (potentially). –Workers become more skilled (more productive). –More jobs, with higher wages. Stand to lose out in the short-medium term Stand to lose out in the short-medium term –Lower custom duties  higher domestic tax rates. –Deteriorating trade deficits ( Δ imports > Δ exports) –Job losses, resulting from the opening of the heavily protected industrial markets of the Arab countries to EU exporters.

3. How will the EU be affected by a Free Trade Area with the Med? Israeli-Palestinian conflict viewed as primary concern, viewed as a source of terrorism. Israeli-Palestinian conflict viewed as primary concern, viewed as a source of terrorism. Lack of coherent EU wide approach to foreign policy, different countries have different agendas. See Common Foreign and Security Policy (CFSP – seems to be simply lip service to UN charter… aspirations with no substance) Lack of coherent EU wide approach to foreign policy, different countries have different agendas. See Common Foreign and Security Policy (CFSP – seems to be simply lip service to UN charter… aspirations with no substance) Long and complex historical relations with the Mediterranean block due to Europe’s colonial past in the region. Example of France and colonial relations with Lebanon Long and complex historical relations with the Mediterranean block due to Europe’s colonial past in the region. Example of France and colonial relations with Lebanon

Geographical factors: European claim that the Mediterranean block is in ‘Europe’s neighbourhood’. This proximity makes economic and political stability in the region a key objective, for fear that it would have spill over effects in Europe. Geographical factors: European claim that the Mediterranean block is in ‘Europe’s neighbourhood’. This proximity makes economic and political stability in the region a key objective, for fear that it would have spill over effects in Europe. E.g. - It has claimed that acts of terrorism over the past three decades on European soil have mostly stemmed from the Israeli-Palestinian conflict. E.g. - It has claimed that acts of terrorism over the past three decades on European soil have mostly stemmed from the Israeli-Palestinian conflict.

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

Although in the end it can be argued EU policy framework is subservient to US imperialism, hence for explanation of EU states policies relevant clauses can be found in the National Security Strategy (document prepared periodically by the U.S government to highlight national security concerns for congress and how the administration plans to deal with them) Although in the end it can be argued EU policy framework is subservient to US imperialism, hence for explanation of EU states policies relevant clauses can be found in the National Security Strategy (document prepared periodically by the U.S government to highlight national security concerns for congress and how the administration plans to deal with them) Ex: Javier Solana (EU high representative for the CFSP) recommendations on EU foreign policy – Ex: Javier Solana (EU high representative for the CFSP) recommendations on EU foreign policy – “The policy paper says states which violate international norms should realise there will be a price to pay in terms of their relations with the EU. “The policy paper says states which violate international norms should realise there will be a price to pay in terms of their relations with the EU. It also appears to align European policy more closely with that of the current US administration, saying that trans-Atlantic relations are irreplaceable as a foundation for world security’’ It also appears to align European policy more closely with that of the current US administration, saying that trans-Atlantic relations are irreplaceable as a foundation for world security’’

4. Levels and types of trade between the EU and the Med The Euro-Mediterranean Partnership comprises two complementary dimensions: The Euro-Mediterranean Partnership comprises two complementary dimensions: Bilateral dimension Bilateral dimension Euro-Mediterranean Association Agreements Euro-Mediterranean Association Agreements Reflect the general principles Reflect the general principles Contain specific characteristics Contain specific characteristics Regional dimension Regional dimension Deal with common problems Deal with common problems Strategic impact Strategic impact

There is a clear contrast in the Mediterranean between those countries which focus on particular products (in particular, energy products) and those which are more diversified, with a greater emphasis on industrial products. There is a clear contrast in the Mediterranean between those countries which focus on particular products (in particular, energy products) and those which are more diversified, with a greater emphasis on industrial products. Turkey, Algeria, Israel and Morocco account for more than 75% of trade between the EU and the Mediterranean. Turkey, Algeria, Israel and Morocco account for more than 75% of trade between the EU and the Mediterranean.

What has the EU done to encourage trade with the Med? Tariff dismantling, providing greater market access and regulatory policies Tariff dismantling, providing greater market access and regulatory policies Mediterranean countries now enjoy duty-free access to the EU market for manufactured goods Mediterranean countries now enjoy duty-free access to the EU market for manufactured goods One of the key objectives of the Association Agreements is the liberalisation of trade in services and investment as well as the liberalization of agriculture One of the key objectives of the Association Agreements is the liberalisation of trade in services and investment as well as the liberalization of agriculture

 How important is Mediterranean trade to the EU? Most of Europe’s external trade is with rest of the world - the entire North African market is only equivalent to the internal Portuguese market Most of Europe’s external trade is with rest of the world - the entire North African market is only equivalent to the internal Portuguese market Total Euromed trade with the EU (excluding Turkey) reached 120 billion euro in -2006, which represents just over 5% of total EU external trade. Total Euromed trade with the EU (excluding Turkey) reached 120 billion euro in -2006, which represents just over 5% of total EU external trade. In the EU, France, German and Italy are the In 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 industrial products (59.4% in 2005) and energy products (25.2%). EU imports from the Mediterranean were mainly industrial products (59.4% in 2005) and energy products (25.2%).

 How important is EU trade for the Mediterranean? 50% of the exports of Mediterranean countries goes to the EU. However, this is only an average and specific figures vary greatly between countries. 83% of Tunisian exports go to the EU but only 3.2% of exports from Jordan go to the EU. 50% of the exports of Mediterranean countries goes to the EU. However, this is only an average and specific figures vary greatly between countries. 83% of Tunisian exports go to the EU but only 3.2% of exports from Jordan go to the EU. 55% of FDI in the Mediterranean is from the EU. 55% of FDI in the Mediterranean is from the EU.

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

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

Economic chasm between the North and the South Mediterranean Economic chasm between the North and the South Mediterranean ‘Fragmegration’ ‘Fragmegration’ Four sub-regions encompassing the Mediterranean: Southern Europe, the Balkans, the Maghreb, and the Mashreq Four sub-regions encompassing the Mediterranean: Southern Europe, the Balkans, the Maghreb, and the Mashreq

Barcelona Process- 3 criteria. Regional integration- e.g. Agadir FTA agreement, Arab Maghreb Union. Regional integration- e.g. Agadir FTA agreement, Arab Maghreb Union. Association Agreements Association Agreements Financial Assistance-e.g.MEDA Financial Assistance-e.g.MEDA

Success or Failure? Exports from the region to EU27 have increased by 10% per year ( ). Exports from the region to EU27 have increased by 10% per year ( ). Imports from the EU to region have risen by 4%. ( ) Imports from the EU to region have risen by 4%. ( ) Trade between the two regions reached 120 billion euros in Trade between the two regions reached 120 billion euros in 2006.

Success or Failure? Trade dependence of region on EU has increased by 52%( ) Trade dependence of region on EU has increased by 52%( ) Growing poverty of East Med. states Growing poverty of East Med. states Negligible dependence of EU on region. Negligible dependence of EU on region. EU Enlargement alleviates EU dependency on energy supplies EU Enlargement alleviates EU dependency on energy supplies

Conclusion – Weak partnership Serves interests of the EU. Serves interests of the EU. Lack of legitimacy. Lack of legitimacy. Rejection of liberalization and conditionality e.g. Syria Rejection of liberalization and conditionality e.g. Syria Asymmetrical interdependence Asymmetrical interdependence Middle Eastern conflict Middle Eastern conflict

By Laura Meadowcroft Valerie Noury Lucy Reynolds Kate Chadwick Sam Davis Rhian Johnson