Features

Eurojar Feature - Egypt, biggest beneficiary of the Agadir Agreement

13-07-2010

Free Trade Agreements between Morocco, Tunisia, Jordan and Egypt increased trade exchange volume by 45% between 2007 and 2008. That being said, with 115% increase in its exports and 131% in its imports with its 3 partners, Egypt appears to have succeeded in achieving the best performance.

Julien Théron - Eurojar
 
Originally named the Arab Mediterranean Free Trade Agreement, the Agadir Agreement was initiated in 2001 with the objective of boosting trade between its member states, fostering economic development and integration through the implementation of rules of origin, and attracting EU and international Foreign Direct Investments (FDI). The textile and motor industries were first targeted. Later on, the Agreement is also covering both the transportation and leather sectors.
 
Supported by the European Union, the Agreement was signed in 2004 and entered into force in 2007. Enjoying strong trade ties with Europe, the member states of the Agadir Agreement decided to leave the doors open for all Arab-Mediterranean countries that have signed an Association Agreement with the EU, which is not yet the case, unfortunately for those who are not included in the zone, in view of its successful performance.
 
An effective Agreement for all
According to the person in charge of the Agadir Agreement at the Egyptian Ministry of Trade and Industry, Rania Nabil, the four member countries of the Agadir Agreement have already benefited from the Agreement. The figures prove it. Each country’s export and import volume has increased, which helped some of them reduce their negative balance of trade, while others managed to increase their positive balance of trade. Everyone is a winner; especially that South-South cooperation is considered the main growth factor in the 21st century. Not to mention that the EU offers large trade and investment opportunities, hence the importance of the Agadir Agreement.
 
The reasons behind success
While the Union for the Mediterranean faces the same political difficulties like its predecessor "The Barcelona Process", the Agadir Agreement is intended to achieve prosaic progress, even though limited to the four member countries. The aim is to progressively strengthen the Agreement on the basis of realistic and tangible development opportunities, which corresponds to the European policy of “small steps”. Thus, instead of deploring that trade exchanges between Arab countries have always been limited (4 to 6% of the volume of trade exchanges between Arab countries and the rest of the world according to www.econostrum.info), the four member states decided to bet on this source of growth. They did, and thanks to their cooperative strategy, they achieved a shared objective and won. This is the first reason behind the success of the Agadir Agreement.
 
Secondly, Rania Nabil says that the principle of cumulation is the Agreement’s most distinctive point, as it allows member countries to cumulate their respective production and export to EU. Such possibility leads to the egalitarian principle, allowing each of the four member countries to benefit from its partners’ production, transformation and export capacities. As Rania Nabil points out, Egypt is known for its leather and tannery sectors, whereas Tunisia is known for its shoes and leather finished products.
 
Thirdly, the Agadir Agreement provided Jordan and Egypt with large free trade opportunities with the EU, through the modification of rules of origin linking the EU with its trading partners. The establishment of Euro-Mediterranean trade standards has undoubtedly facilitated the implementation of the Agreement. The “EUR-MED movement certificate” allows identifying a product manufactured within the zone, which facilitates exchanges. This rule was annexed to the initial Agreement text.
 
Egypt, best student
Instead of being driven by chauvinism, Rania Nabil prefers to diplomatically shed light on the great achievements accomplished by the four participating countries. And yet, her country is getting the best results. While insisting on the numerous advantages offered for Egypt and its partners, Rania Nabil stresses on the importance of the Egyptian market. Indeed, in addition to all advantages provided by the Agreement, Egypt offers a wide market with 80 million people, which will generate growth and development opportunities in many sectors.
 
Refusing to comment on other countries’ less important achievements, which after all remain highly positive, Mrs. Nabil insists on Egypt voluntarism: The Egyptian government is working on eliminating all barriers which might hinder the expansion of trade between Egypt and countries of the Agadir agreement.
 
Finally and that is an important reason behind Egypt’s successful results, Rania Nabil considers that Egypt has a comparative advantage in the two targeted sectors, especially in textile production.
 
Wide market, voluntarism, trade-related advantages… these are the reasons behind Egypt’s excellent performance. The country has doubled its imports and exports with member states of the Agadir Agreement. At the same time, Rania Nabil insists on the cooperative aspects of this agreement: open trade in other sectors would probably be more useful to its 3 partners, she said. Not to mention that thanks to the cooperative spirit, Egypt is entirely benefiting from this “win-win agreement”. If each member state is able to make progress individually, it’s basically because it is widening its open trade policy with others.
 
 

 


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