وزارة التجارة والصناعة ministry of trade and industry dr. mona el garf associate...

والصناعة التجارة وزارةMinistry of Trade and Industry

Dr. Mona El GarfAssociate Professor, Faculty of Economics and

Political Science, Cairo UniversityLead Economist, Minister’s Technical Office

Regional Integration and Regional Integration and Development: A Possible Development: A Possible

Framework for the Framework for the Mediterranean RegionMediterranean Region

العربية مصر جمهوريةوالصناعة التجارة وزارة

Ministry of Trade and Industry

Paris 28th of November 2008

FCM Conference on “Integration and Development in the Mediterranean Region: the

Role of the Accountancy Profession”

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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?

Main Points

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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.

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II. Why Deepening Euro-Mediterranean Relation is Important? It is a Win – Win Situation

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 European Side

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1. 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

2. 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.

From the Mediterranean Side

II. Why Deepening Euro-Mediterranean Relation is Important? It is a Win – Win Situation

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III. What is the Framework of the Mediterranean – EU Relationship? Egypt Case (From Shallow to Deep Integration)

1. Cooperation Agreement 1977

2. 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

2007ENP

2008Union For

Mediterranean

1977Cooperation Agreement

1995Barcelona

Process

2004Association Agreement

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1. 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).

2. 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).


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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.

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.

The AA has three main pillars: the

Political and Security pillar; the Economic and Financial pillar and the Social and

Cultural pillar.

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


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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 MembersThe 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.


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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 Calls for other alternatives or strategies soon emerged from within strategies soon emerged from within

Europe ItselfEurope Itself

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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.

Barcelona Process: The Union for the Mediterranean


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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).


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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.

Barcelona Process: Union for the Mediterranean (Cont’d)

Institutional Framework

1. Joint Secretariat (Barcelona)

2. Joint Permanent Committee (Brussels)

3. Senior Officials

Ministers reached a unanimous agreement on the Ministers reached a unanimous agreement on the participation of the Arab Leagueparticipation of the Arab League at all the meetings and at all the meetings and at all levels of the Union for the Mediterraneanat all levels of the Union for the Mediterranean..


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Projects: The Summit on 13 July 2008 has identified 6 areas for cooperation:

De-pollution of the Mediterranean; 2. Maritime and Land Highways; 3. Civil Protection, 4. Alternative Energies - Mediterranean Solar Energy Plan;

5. Higher Education and Research; 6. 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


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Agreed Upon Issues in the Agreed Upon Issues in the Conference of the Conference of the Ministers for IndustryMinisters for Industry of the Barcelona Process: of the Barcelona Process: Union for the Mediterranean 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.”


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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

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Total Trade between Egypt and EU

Source: Central Bank of Egypt

Total Exports and Imports between Egypt and EU

2797

5109

3535

59235144

78496948

11289

7441

13006

9808

18007

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Mil

lio

n $

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Egypt's Exports Egypt's Imports

79069458

12993

1823720446

27816

0

5000

10000

15000

20000

25000

30000

Mil

lio

n $

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

EU represents 33.7 % of Egypt’s total trade volume


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584

43

813

2954

4061

5114

0

1000

2000

3000

4000

5000

6000

Milli

on $

2002/ 03 2003/ 04 2004/ 05 2005/ 06 2006/ 07 2007/ 08

The Evolution of Net FDI Inflows from EU

Source: Central Bank of Egypt

Number of EU visitors to Egypt

Source: Ministry of Tourism


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1. Financial Instruments

European Neighborhood and Partnership Instrument (ENPI)

Facility for Euro-Mediterranean Investment and Partnership (FEMIP)

Neighborhood Investment Fund

2.Technical Assistance Instruments

Technical Assistance & Information Exchange

(TAIEX)

Twinning Mechanism

Competitive and Innovation Program (CIP)

7th Research Framework Program – (FP7)

EU Financial and Technical Assistance Instruments


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Ministry of Trade and Industry-EU Cooperation Programs

Summary Overview of Major Technical Assistance & International Cooperation ProgramsStatus as of 20 November, 2008

Project /InterventionTitle

Policy Area

ValueStart Date

End Date

Instrument and Status

Technical Assistance to Support the Implementation of the Action Plan (TASIAP)

Trade, Internal Market and

Industry

€ 74,000,000 TBD

(20% from GoE)

TBD – Q2/2010

TBD – Q4/201

3Technical Assistance

Technical Vocational and Educational Training (TVET)

Industry€ 66,000,000 (50% from

GoE)01.07.05

30.06.11

Technical AssistanceONGOING

Building the Capacity of the Egyptian Accreditation Council to Deliver Accreditation Services (EGAC)

IndustryTBD

€ 1,300,000 01.09.08

31.08.10

TwinningAwarded to UK 04.08

ONGOING

Building Capacity of the Egyptian Consumer Protection Agency (ECPA)

IndustryTBDTBD –

Q1/2010

TBD –Q4/201

2Twinning

Building the Capacity of the EOS to Award the “CE” Mark (EOS)

IndustryTBDTBD –

Q2/2010

TBD – Q1/201

3Twinning

Special Workshops on EU Acquis for Trade in Services

TradeTBD – NATBDTBDTAIEX TBD: To Be Determined

Source: Ministry of Trade and Industry


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On the Other Hand,

There is room to enhance and deepen the relation

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.

The Mediterranean

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

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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.

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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

V. What Is New? Step Forward: EU-Med Roadmap up to 2010 and Beyond

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Investment

Convergence

Mutual Recognition

Facilitating Accountants’

Movement

Liberalizing Accounting Services

VI. Where Do You Fit?

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Thank you

وزارة التجارة والصناعة ministry of trade and industry dr. mona el garf associate...

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