Euro-Euro-Mediterranean Mediterranean Partnership: A Partnership: A

Case-Study in EU Case-Study in EU External TradeExternal Trade

ByByNicholas MackenzieNicholas MackenzieJennifer PenningtonJennifer Pennington

Natasha CarellaNatasha CarellaOliver BevanOliver Bevan

IntroductionIntroduction

Source: http://europa.eu.int/comm/external_relations/med_mideast/intro/index.htm

The EMP is made up of the countries of the EU-25 and 10 Mediterranean Partners (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestinian Authority, Syria, Tunisia and Turkey). Libya has had observer status since 1999.

Recent History of Euro-Recent History of Euro-Mediterranean AgreementsMediterranean Agreements

In 1976, the EC concluded bilateral agreements In 1976, the EC concluded bilateral agreements with three Maghreb countries: Egypt, Morocco with three Maghreb countries: Egypt, Morocco and Tunisiaand Tunisia

In 1977 the EC concluded bilateral agreements In 1977 the EC concluded bilateral agreements with four Mashreq countries: Egypt, Jordan, with four Mashreq countries: Egypt, Jordan, Syria and LebanonSyria and Lebanon

Direct aid and trade agreements formed the Direct aid and trade agreements formed the substance of these arrangements, and governed substance of these arrangements, and governed relationships up until 1996relationships up until 1996

A New Beginning: The A New Beginning: The Barcelona ProcessBarcelona Process

The starting point of the EMP, the Barcelona Process The starting point of the EMP, the Barcelona Process was inaugurated in November 1995was inaugurated in November 1995

The stated aim was ‘The stated aim was ‘to establish a comprehensive partnership to establish a comprehensive partnership among the participants the Euro Mediterranean partnership among the participants the Euro Mediterranean partnership through strengthened political dialogue on a regular basis, the through strengthened political dialogue on a regular basis, the development of economic and financial cooperation and development of economic and financial cooperation and greater emphasis on the social, cultural and human greater emphasis on the social, cultural and human dimension, these being the three aspects of the Euro dimension, these being the three aspects of the Euro Mediterranean partnership.Mediterranean partnership.’’

Source: The Barcelona Declaration, available atSource: The Barcelona Declaration, available at

http://europa.eu.int/comm/external_relations/euromed/bd.htmhttp://europa.eu.int/comm/external_relations/euromed/bd.htm

Structure of the EMPStructure of the EMPEconomicPolitical Cultural and

Social1. Respect for international law and human rights

2. Develop the rule of law, while respecting territorial integrity

3. Respect diversity and promote tolerance

4. Prevent and combat terrorism

5. Attempt to prevent nuclear proliferation

6. Aim to create "area of peace and stability in the Mediterranean"

Creation of a free trade area by 2010

Gradual elimination of barriers and tariffs

Promoting private market mechanisms and the protection of rights

Economic cooperation and concerted action

Encouraging FDI inflows

Promote rural development through modernizing agriculture

Financial cooperation

Aid and developing macroeconomic policies for each country (MEDA)

1. Promoting educational and cultural exchanges

2. Improving the health sector in the Mediterranean Basin

3. Developing the social sector through promotion of human rights

4. Controlling immigration through economic development

5. Conclude agreement on international crime and develop more effective immigration policies

Adapted from The Barcelona Declaration

Progress thus farProgress thus farBilateral Agreements Negotiated:Tunisia (1995), Israel (1995), Morocco (1996) , Jordan (1997), Egypt (2001), Algeria (2002), Lebanon (2002) and Syria (2004).

Bilateral Agreements Ratified: Tunisia (1998), Morocco (2000), Israel (2000), Jordan (2002) and Egypt (2004)

Regional Agreements:Arab Maghreb Union (Morocco, Algeria, Tunisia, Mauritania and Libya) signed in 1989. Seenas a precursor of a North African Common Market.

Agadir Agreement signed in February 2004 by Morocco, Tunisia, Egypt and Jordan. Thisexpressed the intention to set up a free trade area, to meet the 2010 target. The Agadir Declaration was signed in 2001, and was given €4m by the EU to develop.

Source: http://europa.eu.int/comm/external_relations/euromed/free_trade_area.htm

MEDAMEDA Principal financial instrument of EU for Principal financial instrument of EU for

implementation of Euro-Mediterranean Partnership.implementation of Euro-Mediterranean Partnership. Manages co-operation with South-Mediterranean + Manages co-operation with South-Mediterranean +

Middle East countriesMiddle East countries Offers technical + financial support measures to Offers technical + financial support measures to

accompany the reform of economic and social accompany the reform of economic and social structures in the Mediterranean partnersstructures in the Mediterranean partners

Programme applies to States, their local and regional Programme applies to States, their local and regional authorities as well as actors of their civil society authorities as well as actors of their civil society

Implemented by DG EuropAidImplemented by DG EuropAid MEDA: 1995-1999 : €3,435 millionMEDA: 1995-1999 : €3,435 million MEDA II: 2000-2006: €5,350 millionMEDA II: 2000-2006: €5,350 million MEDA programme has a double vocation: bilateral MEDA programme has a double vocation: bilateral

and regionaland regional

Source: Europa website

EMP: A Classic Case of EMP: A Classic Case of ‘Soft Power’?‘Soft Power’?

Given the goals of the EMP, it seems clear that the EU is attempting to use ‘soft power’ through economic and fiscal instruments rather than military power to solve potential problems.

Realist explanations for the nature of EMP:• Countering US influence in the region• Controlling the region through the creation of asymmetrical dependency

relationships• Containing the emergence of political Islam

BUT cannot explain linking of the three aspects (constructivists do better), though realism is more convincing in explaining the lack of progress thus far

A Theoretical Perspective

Source: Crawford, B. ‘Why the Euro-Med Partnership? European Union Strategies in the Mediterranean Region’

Empirical Evidence: Empirical Evidence: TradeTrade

1985 1990 1995 2000

40

45

50

55

60

Mediterranean Imports from EU, %

Year

Ave

rag

e Im

po

rts to

EU

, %

of T

ota

l

MCsW/o Turk,Isr

1985 1990 1995 2000

02

00

04

00

06

00

08

00

01

00

00

12

00

0

Mediterranean Exports to EU

Year

Ave

rag

e E

xp

ort

s to

EU

, $

m

MCsW/o Turk,Isr

1985 1990 1995 2000

02

00

04

00

06

00

08

00

01

00

00

12

00

0Mediterranean Imports from EU

Year

Ave

rag

e Im

po

rts to

EU

, $

m

MCsW/o Turk,Isr

1985 1990 1995 2000

40

45

50

55

60

Mediterranean Exports to EU, %

Year

Ave

rag

e E

xp

ort

s to

EU

, %

of T

ota

l

MCsW/o Turk,Isr

Source: UNCTAD Handbook of Statistics 2005 http://stats.unctad.org/Handbook/

Empirical Evidence: Empirical Evidence: Freedom Freedom

House RankingsHouse Rankings

1985 1990 1995 2000

4.0

4.5

5.0

5.5

6.0

Freedom of EMP Countries

Year

Co

mb

ine

d F

H A

ve

rag

e

MCsW/o Turk,Isr

Source: Freedom House, Freedom in the World Rankingshttp://www.freedomhouse.org/template.cfm?page=15&year=2005

Case Study: AlgeriaCase Study: AlgeriaTrade Details59.2% of trade, with EU Just less than two thirds of trade with EU.7.6% increase in bilateral trade volumes between 2000 and 2004Exports [2004] 71.8% mineral fuels: Oil.Only sector with positive trade balance with EUImports: [2004]: machinery (30.8%), transport equipment (20.5%),

agricultural products (14.1%) and chemical products (13.7%).

Exports to Algeria as total of EU exports grew 2000 2004

Imports dropped

Association agreement in process of ratification.

Social effects

http://europa.eu.int/comm/trade/issues/bilateral/countries/algeria/index_en.htm

Case Study: TunisiaCase Study: TunisiaTrade DetailsTrade total value trade with EU of €14.3 billion in 2004.2004, trade with the EU accounted for 81% of Tunisia's exports and 72.4% of its imports. Type:Imports: textiles and clothing, 42.2%, machinery 16.8%, energy, 9%.Exports: textiles 23.6% machinery 24.4% and transport material 9.6%

Services- tourism.

Vanguard of pursuing trading ties.

First to sign association agreement.

Agriculture.

Social effects

http://europa.eu.int/comm/trade/issues/bilateral/countries/tunisia/index_en.htm

Case Study: IsraelCase Study: IsraelTrade Details2004: total bilateral trade = €15bn33% of Israel’s exports went to the EU, 40% of Israel’s imports from the EUMain exports: (machinery = €1.8bn, chemical products = 1.5bn, agriculture = €0.9bn,

textiles and clothing = €0.3bn)FDI outflows to Israel: 0.2% of EU total

Bilateral Trade agreements:EU/Israel Action Plan (entered in March 2005)Informal Consultation Method

Middle East Peace Process:Case of soft power: Establishing recognition as part of the Quartet.Joint Israel-Palestinian Energy and Transport OfficesEU-Israel-Palestine trilateral trade group.Since 1995 – EU commission allocated €88.8m to M-E peace projects.

MEDA:Israel – high national income so not eligible for bilateral funding.

Source: http://europa.eu.int/comm/trade/issues/bilateral/countries/israel/index_en.htm

Barcelona 2005Barcelona 2005•Sense that politics have slowed down the rate of economic achievement

•Trade relations extremely one-sided

•Bilateralism having ‘killed’ Mediterranean Regional Association

•Emphasis placed on security and changes to global politics

•Future liberalisation of trade in agriculture

Source: Europa website

Has EMP Been Has EMP Been Successful?Successful?•Limited cooperation between the Mediterranean countries amongst

themselves

•Creation of dependencies on the EU, rather than bilateral processes: lack of MNMC representation

•CEE enlargement has led to a squeeze on the potential goods and FDI investment. Originally a problem with Spain, Portugal and Greece, and potentially Turkey as well.

•CAP prevents trade in agriculture, one of the key areas for the Mediterranean Basin countries

•EU and Mediterranean region still progresses on the basis of bilateral rather than regional basis

•Mediterranean region still heavily dependent on EU, suggesting that liberalization of the markets has not been fully achieved

SummarySummary

‘‘In their search for a more effective In their search for a more effective Mediterranean policy, EU countries Mediterranean policy, EU countries have faced the old dilemma of how to have faced the old dilemma of how to reconcile essentially political and reconcile essentially political and security objectives with limited trade security objectives with limited trade and financial instruments.’ and financial instruments.’

Source: Tsoukalis, L. Source: Tsoukalis, L. The New European Economy Revisited The New European Economy Revisited Oxford: OUP Oxford: OUP (1997) p.245(1997) p.245

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Translation : Lucy CollinsTranslation : Lucy CollinsAccessed: http://www.cafebabel.com/en/dossierprintversion.asp?Id=234Accessed: http://www.cafebabel.com/en/dossierprintversion.asp?Id=234