FEMISE is proud to launch its latest series of policy briefs, stemming from insightful conference papers presented at the FEMISE annual conference. These briefs are rooted in scientific research and offer actionable political recommendations to address critical challenges in the Euro-Mediterranean region.

The objective if this new series of Policy Briefs is to provide policy makers, international organisers, researchers and stakeholders in the EU-Med region with research-based policy recommendations that: advocate a better EU-Med integration;  promote mobilization of investments towards green transition and sustainable economies; empower young people through innovation and entrepreneurship advocacy; and facilitate a better and more equal integration of youth and women, aiming to create pathways for decent employment.

These Policy Briefs aspires to drive impactful dialogue and action across the EU-Med region.

Context

This policy brief explores the trade dynamics and integration pathways for Tunisia and Egypt within the Euro-Mediterranean and South-East African regions. Tunisia and Egypt stand at a strategic crossroads, connecting the economic forces of Europe, the Mediterranean, and Africa.

This brief delves into their potential as pivotal players in fostering triangular trade and economic cooperation through their integration with the European Union (Association and Bilateral Agreement), COMESA and Turkiye. It highlights both the successes and challenges of existing trade agreements, offering actionable recommendations to enhance market diversification, streamline logistics, and strengthen integration into global value chains.

Summary

Tunisia and Egypt have liberalized their foreign trade through various trade agreements with a number of partners around the world. In this framework, both countries signed Association Agreements (AAs) with the European Union (EU) respectively in years 1995 and 2001 for the implementation of bilateral Free Trade Areas (FTAs) that cover industrial products. Such AAs as part of the Barcelona Process, replace the former tariff advantages shared by both sides for decades.

Also, in the Euro-Mediterranean region, the two countries have signed up to other integration agreements, such as the bilateral FTAs established with Türkiye respectively in 2004 and 2005. In a way to further reinforce their trade ties with Eastern and Southern African countries, the two countries entered the COMESA (Common Market for Eastern and Southern Africa) agreement respectively in 2018 and 1998, which consists of a Customs Union that brings together 21 African member countries.

The aim of this Policy Brief is to examine the integration of Tunisia and Egypt into the Euro-Mediterranean and South-East African regions. Emphasis is on the three mentioned trade agreements, i.e. the AAs with the EU, the COMESA and the FTAs with Türkiye. In order to determine the factors acting on the two countries’ trade with their partners that are members of the aforementioned agreements, the usefulness was to use the gravity equation. The exogenous variables included in this equation could rise or reduce exports and imports of both countries with their selected partners according to the estimates conducted in this work. Still based on these estimates, the aim would also be to predict whether Tunisia and Egypt could assume intermediary roles easing triangular trade relations between the EU, Southern Mediterranean and South-East African regions.

The outcomes approve the expected influences of the traditional exogenous variables as included in the gravity equations (GDPs, distances, etc.). The effects of the considered trade agreements were also in conformity with expectations, particularly in view of the export and import data of both countries with their reported partners.

Recommendations take account of estimates, the state of existing trade and, in particular, the objectives to be achieved for a better integration of Tunisia and Egypt within the three trade agreements. In this respect, the suggestions also point in the direction of greater fluidity, diversification and fairness in trade between the EU, the southern Mediterranean and South-East African regions, notably through active gateway roles that both countries could assume.

Read the full Policy Brief no.4 here

This Policy Brief is part of the FEMISE Policy Brief Series and is based on the FEMISE Conference Paper no.5. entitled: «Estimation of the Integration of Tunisia and Egypt in the Euro-Mediterranean and South-East African regions using the Gravity Equation» with the same authors.

The opinions and contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of FEMISE, IEMED, ERF or the AECID