{"id":6417,"date":"2014-06-18T16:30:37","date_gmt":"2014-06-18T15:30:37","guid":{"rendered":"https:\/\/www.femise.org\/non-classe\/pdf-gb-190-p-3-7-mb\/"},"modified":"2014-06-18T16:38:49","modified_gmt":"2014-06-18T15:38:49","slug":"pdf-gb-190-p-3-7-mb","status":"publish","type":"post","link":"https:\/\/www.femise.org\/en\/non-classe-en\/pdf-gb-190-p-3-7-mb\/","title":{"rendered":"Decision Tree of the Roadmap For Agricultural Liberalization in The Euro-Mediterranean Zone"},"content":{"rendered":"

The EU Ministers of Foreign Affairs granted in The Hague (November 2004) the development of a\u00a0Road Map<\/em>\u00a0for the liberalization of agricultural trade between the EU and the Mediterranean Partner Countries (MPC\u2019s), including its non-commercial aspects (rural development, quality policies, improvement of productivity, institutional reforms, etc.). The adoption of a Road Map is related to the logic of the European Neighbourhood Policy (ENP), and implies that the adopted measures must be negotiated with the MPC\u2019s. Its aim is to achieve a bigger participation of MPC\u2019s in the European Single Market.<\/p>\n

In fact, it implies a Euro-Mediterranean Agricultural Pact, as the AGREEM (2002, 2003) and FEMISE (2003) have been proposing for years. The FEMISE report (2003) on agricultural trade liberalization incorporated an important part of the AGREEM proposals, adopting a broad vision of the problem and bringing up alternative sc\u00e9narios for Euro-Mediterranean agricultural trade liberalization. As the EU Ministers of Foreign Affairs recognised in The Hague, any Euro-Mediterranean Agricultural Pact must combine an asymmetric and reciprocal trade liberalization, as well as accompanying measures in order to modernise the agricultural sector of the MPC\u2019s. These accompanying measures should be included in the Action Plans and be monitored by the ENP, so to face the competition with European producers in continental agriculture. The framework of limited inclusion of agricultural trade in the EMFTA changed after the launching of the ENP, which implies a much broader perspective than a FTA.<\/p>\n

For sure, full participation of MPC\u2019s in an agricultural ESM is not politically nor economically feasible in the short-medium run. Let\u2019s consider the political economy effect of a more open EU-MPC\u2019s agricultural trade in the latter group of countries. With unrestricted and fully reciprocal agricultural trade liberalization, the winners will be agricultural exporters of Mediterranean products and urban consumers, while the losers will be traditional agricultural producers and rural population in general (we could include migrants working in the EU Mediterranean agricultural sector, who will be forced to return to their home countries or to move to different activities). So, full reciprocal liberalization does not seem advisable. On the contrary, asymmetrical liberalization complemented with, or made conditional to, rural development programs, can minimize the losses of rural population and traditional agricultural producers, while preserving winners support (FEMISE, 2003).<\/p>\n

This research pretend to analyse the consistency of agricultural policy measures as presented in ENP Action Plans with the priorities that a comprehensive and integral Road Map for agricultural liberalization in the Mediterranean should consider. In offers a new methodology that can easily be applied in the identification of reform priorities for different countries in different policy and institutional areas. Our conclusions point to the fact that agricultural reform and accompanying measures are not being taken into account in an operative manner in the ENP Action Plans, while they are according to our results high priority issues when compared with mere trade liberalization and facilitation measures. Furthermore, the results obtained by the methodology used in this research are reinforced by the Turkish case study presented in chapter 3. The main conclusions of the study are summarized following its chapter structure in the remaining of this executive summary.<\/p>\n

1. The\u00a0Road Map<\/em>\u00a0for Euro-Mediterranean Agricultural Trade Liberalization and the European Neighbourhood Policy<\/strong><\/p>\n

With the only exception of the FEMISE (2003) paper on agricultural liberalization, there have not been to date much, if any, discussion on the implications of ENP on agriculture. As we have seen, agricultural trade inclusion in the EMFTA has certainly been limited. So, completion of EMFTA by introducing agricultural trade would be the first step towards MPC\u2019s gradual participation in the agricultural chapter of the ESM. There may be some ambiguities in the Commission\u2019s proposal of \u201cobtaining a stake in the EU\u2019s Internal Market\u201d, but the means to achieve such a stake are clearly defined: legislative convergence towards EU\u2019s\u00a0acquis communautaire<\/em>. This is why we have conceptualised the ENP for MPC\u2019s as a policy agenda aiming at the europeanisation of MPC\u2019s\u00a0formal<\/em>\u00a0economic institutions, and insisted that including agriculture in a sensible way is essential for the sustainability and completeness of the EMFTA (Escribano, 2006).<\/p>\n

However, not every part of the relevant agricultural\u00a0acquis communautaire<\/em>\u00a0needs to be adopted. In fact, agriculture is not included even in the European Economic Area (EEA). So, the stake in the ESM will clearly not automatically include free access to EU agricultural markets, a central issue for many MPC\u2019s. However, trade liberalization (asymmetric, gradual and reciprocal) and legislative approximation in standards is not sufficient to achieve integration of Euro-Mediterranean agricultural markets. Supporting measures are also important in order to prepare MPC\u2019s agriculture to face increasing competition from EU producers in continental products, and to unleash MPC\u2019s export potential in Mediterranean agriculture. These measures should be designed to foster modernization of the agricultural sector in MPC\u2019s, and require the reform of agricultural policies and institutions. These reforms should face the low productivity levels in traditional agriculture, but also bottlenecks in MPC\u2019s export agriculture related to supply infrastructures.<\/p>\n

All of these dimensions (trade liberalization, legislative approximation in standards, agricultural reforms and rural development) are included in most ENP Action Plans with MPC\u2019s. However, agricultural measures identified and proposed in the Action Plans are fragmentary and biased towards trade facilitation. As happens with other areas of the Action Plans, they provide vaguely defined \u2018wish lists\u2019 which monitoring and implementation are not well specified, and where progress is difficult to asses. They do not form a coherent framework for agricultural reform in MPC\u2019s, nor a clear and well specified strategy towards the integration of MPC\u2019s and EU\u2019s agricultural sectors.<\/p>\n

ENP Action Plans for Mediterranean countries include four kind of measures related to agriculture. Most are focused on trade issues, like agricultural trade liberalization and technical regulations and standards. By contrast, wider agricultural policy reform is only contemplated in the Lebanese and Moroccan Action Plans. Rural development is decoupled from agriculture to be considered as a \u2018regional\u2019 issue, and it appears superficially in ENP Action Plans more like a mantra than as a concrete and well defined strategy. To achieve its objectives, Action Plans contemplates some loosely specified trade reforms for countries like Jordan, Lebanon and Morocco. For the rest of the countries these reforms are not even mentioned. The Moroccan and the Lebanese Action Plans are the only ones that link trade liberalization with agricultural policy reform and rural development.<\/p>\n

Perhaps the better defined path of reform is found in the Moroccan Action Plan, but in practice, the commercial elements continue to be the central ones, and there are no significant innovations on the rural development or the agricultural policy reform fronts. So, concerning agricultural policy reform and rural development as necessary accompanying measures to the agricultural deepening of the FTA, the commitments by the Action Plans are scarce. In most cases, Action Plans include an impressive list of policy reforms, but they do not mention how to achieve these reforms, how to finance it, or what are the priorities and its timing.<\/p>\n

One of the main set of measures concerning agricultural trade included in the ENP Action Plans refers to Sanitary and Phyto-Sanitary (SPS) issues. The shared objective is \u201cto promote food safety and facilitate trade\u201d. In order to attain these goals, they mention the need to work towards full implementation of the WTO agreement on the application of the SPS measures and an active participation in relevant international bodies (OIE, IPPC, Codex Alimentarius). They also call for a gradual legislative approximation towards the principles of the EU legislation on SPS, food and animal traceability and hygiene. They consider as well strengthening regulation to prevent the placing on the market of unauthorized substances, including plant protection products, and ensure the monitoring of residues of these substances. However, there are also country-specific measures.<\/p>\n

As can be seen, the best specified measures are directly related to facilitate agricultural trade by the completion of the EMFTA in agricultural matters, and its deepening by including the convergence of MPC\u2019s technical regulations towards the Community acquis. References to rural development or agricultural policy reform are scarce, with the only exception of Lebanon and Morocco. So, the agricultural coverage of the Action Plans is far from incorporating the elements of the proposed Euro-Mediterranean Agricultural Pact or mentioned as the principles of the Rabat Road Map. The ENP Action Plans do not establish a coherent and comprehensive agricultural strategy, on which needed trade promotion issues are not complemented by concrete action towards the modernisation of MPC\u2019s agricultural sectors, nor by agreed policy reform measures.<\/p>\n

2. Qualitative Aspects of the Turkish Experience on the Adaptation of Agricultural and Agro-Industrial Acquis<\/strong><\/p>\n

The aim of this part of the research is to obtain some possible implications of adopting the EU\u00a0acquis<\/em>\u00a0in agriculture by third Mediterranean Countries from the Turkish experience. As regarding Turkey\u2019s position in this framework, one of its significant experiences is the implementation of a strong reform program for restructuring agricultural policies. This program provides a transition from the traditional agriculture scheme to the modern structure of farming with rural policy development. Turkey\u2019s Agricultural Reform Implementation Programme (ARIP) was designed to increase the efficiency of the sector and economy at large, thereby helping it meet one of the most basic pre-conditions set down by the EU: efficiency, competitiveness and sustainability in a unified agricultural market.<\/p>\n

ARIP, as a whole, established a framework for implementation of a modern, a market oriented agricultural policy in Turkey by abolition of administered prices and of input and credit subsidies, restructuring of agricultural state-owned enterprises and agricultural sales cooperatives, and also introducing of the direct income support scheme. Concerning market integration in Turkey, complying with the CAP support regime first started with the cereal sector. All price and trade distorting support policies were abolished and a nationwide Direct Income Support (DIS) scheme was adopted. Payments were on a hectare basis. There has been a downward trend in the cereal area since 2000.<\/p>\n

Concerning farm structure, in Turkey, family owned farm is the basic unit of agricultural production, and family members provide most of the farm labour. The fragmented farmland in consequence of the heritage law, have a very negative effect on the agricultural productivity and quality. These characteristics are broadly shared with the MPC\u2019s. The large farmers benefit more from the support policies than the smaller farmers.\u00a0 Consequently, the lack of economy of scale on the farming structure makes clear that poorer farming could not resists to the strong competition coming from the EU internal market in which average farm size is 5 time bigger than domestic farms. The full elimination of internal support or sharp decrease on input subsidies would cause important losses of welfare to these subsistence ( self-sufficient ) farming. A special rural project has to be developed for attempting to an average optimal farming size in the country. Similarly, problem remains and needs to be encountered by the future rural policy scheme and it is familiar to some MPCs.<\/p>\n

As regard the rural development policy for reducing poverty in rural areas, a framework for the existing and prospective Agriculture and Rural Development Policies is laid down in several development plans. They focus on resolving rural problems of human resources, inefficient development and maintenance of physical, social and cultural infrastructure, high rate of hidden unemployment, insufficient diversification of agricultural and non\u2013agricultural income generating activities, a high rate of dependence on agricultural subsistence and also low income level and relatively low quality of life for rural population and migration. It is obvious that from a political economy perspective, rural development can be considered as a \u201cpublic good\u201d and the necessary institutional mechanism has to be set up also in MPCs in order to provide it. In fact, the future of the small farms and their competitiveness in the potential single market need to be considered locally in MPCs.<\/p>\n

As regard the export performance in the highly competitive single European market, Turkey must follow and fulfil all requirements made by the European Commission on the food quality policy. On this issue, many projects and programmes have been implemented in Turkey since 2000. Food exporters of MPCs have to meet all these standards and their products have to be fully in compliance with marking, labelling, certification, compliance regulations and market requirements of the EU internal market.<\/p>\n

As regard to the institutional reforms, Turkey is in a continuous progress in adapting the EU\u2019s institutional framework to bring Turkey\u2019s formal institutions and institutional bodies closer into line with EU\u2019s\u00a0acquis communautaire.<\/em>\u00a0As regards the agricultural and food sectors, progress in adopting legislation and formal rules need to be accompanied by the enforcement capacity. This is also a crucial issue for MPCs, which emphasized to by EU to improve their domestic food market.<\/p>\n

3. Analysis of Relative Similarity between the Structure of Exports of the Mediterranean Countries and the European Union (ISREE)<\/strong><\/p>\n

As we have shown above, the Road Map for agricultural liberalization mainly consists on two vectors: trade liberalization and trade facilitation measures. In order to analyse the consequences of an eventual process of agricultural liberalization between the European Union and the Mediterranean Partner Countries, and to develop a useful tool for establishing an operative and comprehensive negotiation procedure, it is essential to observe the similarity of the exports among the two regions. A bigger similarity in the structure of agricultural exports between the European Union and each one of the MPC\u2019s reveals, to some extent, a higher degree of potential competition. So it is relevant to obtain a mechanism that allows policy-makers to draw a detailed \u2018agricultural competition map\u2019 of countries within the Euro-mediterranean region.<\/p>\n

With the aim of overcoming the shortcomings of existing indicators, we recur to a new approach carried out by the application of a Cluster analysis. In our view, this technique could be helpful in deepening policy-makers\u2019 insight on the characteristics of Euro-mediterranean agricultural trade when contemplating any agricultural trade liberalization process. The contribution of our analysis is the construction of a quantitative index of relative exposure for each MPC\u2019s\u00a0vis-\u00e0-vis<\/em>\u00a0each EU member state, and with the rest of the MPC\u2019s. In this regard, we find it a useful instrument in order to identify paths to be explored by agricultural negotiations on the trade facilitation and liberalization domain in the context of a Road Map for agricultural liberalization. It can be applied not only to identify items to prioritise in a liberalizing agenda, but also sectors and sub-sectors to be tackled by any institutional or productive support, either by the EU or the MPC\u2019s concerned.<\/p>\n

This index presents some advantages regarding those developed by others authors in regard to our research:<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It takes into account a multivariate structure as for products and countries.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It doesn\u2019t present results of difficult or confused interpretation.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is an starting point to discriminate among the most outstanding country-to-country relationships when beginning processes of agricultural trade liberalization (or of any other type) between the EU and other countries.<\/p>\n

It is a useful indicator for helping the policy-makers in assessing the positive and adverse effects in a liberalization process that concerns different states with very different agricultural structures, endowing him with an easy to interpret tool to frame necessarily asymmetric negotiations, in the North-South commercial concessions dimension, as well as in eventual North-North compensatory measures, such the one proposed in the Agricultural Euro-Mediterranean Pact (Lorca et al., 2006).<\/p>\n

Our results point out to some relevant conclusions in the formulation of a Road Map for agricultural trade liberalization:<\/p>\n