Assessing EU-Syrian Association Agreement (AA) in agriculture

Damascus

12 January 2002

GCP/SYR/006/ITA - FAO-Italy Government Cooperative Program

“Assistance In Institutional Strengthening And Agricultural Policy”

José Mª García-Alvarez-Coque

Professor of Agricultural Economics

Some facts of Syrian-EU agricultural trade

A “North-South” pattern of trade: – Only 15 percent of Syrian exports to EU are processed

products. Over 87 percent of Syrian imports from the EU are processed products.

Little specialisation on the EU

– Agricultural exports account for only 5 percent of Syrian exports to the EU.

– 15 percent of Syrian agricultural exports go to the EU, 50 percent to Arab countries.

Some facts of Syrian-EU agricultural trade

Little product diversification:– 5 products account for 90 percent of Syrian exports to

the EU. Out of them only potatoes show a positive development.

Little presence of high-value products:– Of Syrian agricultural exports to EU: 73% cotton, 5,8%

fruit and vegetables, 0,4% olive oil. – Other Mediterranean countries: 55% fruit and

vegetables, 8% olive oil.

Syrian export composition is consistent to a distorted EU tariff structure.

A negative balance of agricultural trade

-250000

-200000

-150000

-100000

-50000

0

50000

100000

150000

200000

1995 1996 1997 1998 1999

Year

000

EU

R

Basic agricultural products

Processed products

Total agricultural trade

Agriculture and the Association: potential gains Syria shows comparative advantages in a number of

products compared to other Mediterranean Countries.

But Syria is under-represented in EU markets.

Any departure from the “traditional flows” could entail significant gains for Syrian agricultural trade.

There is a large margin of increase of European Investment in the Syrian Agri-food sector .

Some issues of the Association The special treatment of agriculture in the Barcelona

process. The potential costs of the “reciprocity”. The political constraints:

– 22 Southern European regions specialized on Mediterranean products with relatively low levels of EU support.

– Eastern Enlargement and financial constrains. The Association should be envisaged as a long-term

process of constant negotiations.

Imperfect liberalisation or what other AAs show

Tariff reduction without restrictions.

Tariff reduction within tariff quota or fixed reference quantities.

Possibility to increase tariff-quota and reference quantities in the five years after signature.

Possibility to implement reference quantities if imports “threaten to cause difficulties”.

Exceptions to the “entry price” system applicable for fruit and vegetables.

“Flexible” seasons.

Oranges: EU import prices after duties

0

100

200

300

400

500

600

700

0 100 200 300 400 500 600CIF prices (Eur/t)

Eu

r/t

Non preferential country

Mediterranean countries

Morocco

Entry price system

Potatoes - Share in EU imports

0,0

20,0

40,0

60,0

80,0

100,0

1 jan - 15 may 16 May - 30 jul Old potatoes

Product - season

Pe

rce

nt

Italy

Other EU

Egypt

Morocco

Other extra-EU

Understanding seasonality

Clementines - Share in EU imports

0,010,020,030,040,050,060,070,080,090,0

1jan - endfeb

1 mar -31oct

1nov- 31dec

Season

Pe

rce

nt Spain

Other EU

Morocco

Other Extra EU

Understanding seasonality

0,0

10,0

20,0

30,0

40,0

50,0

60,0

1 2 3 4 5 6 7 8 9 10 11 12

Month

Eu

r/10

0 K

g Spain

Aleppo

Producer Prices: Early Potatoes

Large market access and low costs are not a guarantee for export success

Competitiveness depend on:

– Quality standards and grading

– Human skills

– Marketing organisation

– Macroeconomic impacts on trade and investment

– General regulatory framework

10 retailers account for 40 per cent of food distribution in the EU. Marketing costs account for 2/3 of the final price

Policy implications Options for negotiation Trade reform does not imply full trade liberalisation. Transition can be long but clearly scheduled. Joining international cooperation networks Clear commitment for MEDA program. Agricultural

support program. Agricultural policy unit supported by the Institutional and Sector Modernisation Facility (ISMF)

Strengthening technical capacities. Trade reform and rules of origin. Preparation of international negotiations. Environmental and quality Standards. Management of the foreign marketing.

Beyond the fears

Association as a process that goes beyond trade liberalisation.

Future plays in favour of globalisation:– CAP reform and new role of rural

regions. – Finding opportunities according to

levels of development.