COMMISSION STAFF WORKING DOCUMENT EVALUATION Impact of trade chapters of the Euro-Mediterranean Association Agreements with six partners: Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia
Date: 2021-11-10
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: Algeria, Egypt, Jordan, Lebanon, Morocco, Tunisia, association agreement (EU), free-trade agreement, liberalisation of trade, trade agreement (EU)

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 10.11.2021  SWD(2021) 319 final  COMMISSION STAFF WORKING DOCUMENT  EVALUATION  Impact of trade chapters of the Euro-Mediterranean Association Agreements with six partners: Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia           {SWD(2021) 322 final}  
 
 
Contents 

1. 

2. 

3. 

INTRODUCTION ................................................................................................................................ 3 

BACKGROUND .................................................................................................................................. 4 

IMPLEMENTATION / STATE OF PLAY .......................................................................................... 8 

4.  METHOD............................................................................................................................................ 10 

5.  ANALYSIS AND ANSWERS TO THE EVALUATION QUESTIONS .......................................... 14 

6. 

CONCLUSIONS ................................................................................................................................. 35 

ANNEXES.................................................................................................................................................... 40 

1 

 
 
 
Glossary 

Term or acronym 

Meaning or definition 

AA 

CGE 

Association Agreements 

Computable general equilibrium 

Euro-Med FTAs 

Euro-Mediterranean Free-Trade Areas 

ENP 

FTA 

GSP 

GVC 

ILO 

LDCs 

NTM 

MFN 

PEM 

RoO 

SMCs 

SPS 

TBT 

WTO 

European Neighbourhood Policy 

Free Trade Area 

General System of Preferences 

Global Value Chain 

International Labour Organisation 

Least developed countries 

Non-tariff measures 

Most favoured nation 

Pan-Euro-Mediterranean preferential rules of origin 

Rules of Origin 

Southern Mediterranean countries 

Sanitary and Phytosanitary 

Technical barriers to trade 

World Trade Organization 

2 

 
 
1. 

INTRODUCTION 

Purpose of the evaluation 

The  current  Association  Agreements  (AAs)  between  Algeria,  Egypt,  Jordan,  Lebanon, 
Morocco and Tunisia (Southern Mediterranean Countries, SMCs) and the EU, were signed 
in  the  late  1990s.  They  were  conceived  to  help  achieve  the  objectives  of  the  1995 
Barcelona  Declaration  signed  by  EU  Member  States  and  Southern  Mediterranean 
countries, including the  six  SMCs covered in  this evaluation.  A key policy instrument  to 
achieve  the  objectives  of  the  Barcelona  Declaration  was  an  establishment  of  a  free-trade 
area:  on    the  one  hand  between  the  EU  and  the  SMCs  through  bilateral  Euro-Med  free-
trade areas (Euro-Med FTAs) as part of the Euro-Mediterranean Association Agreements 
and on the other through free trade areas to be concluded between the SMCs themselves. 

The main objectives of the Euro-Med FTAs were:  

1)  to promote trade between the EU and SMCs by strengthening  

harmonious  economic  and  social  relations  and  establishing  the  conditions  for 
gradual liberalization of trade in goods, services and capital;   

2)  to  encourage  intra-regional  integration  and  cooperation  and  thus,  enhancing 

Intra-Med trade. 

The purpose of this evaluation is to assess the achievement of these main objectives of the 
FTAs  of  the  Euro-Med  AAs  as  well  as  of  the  supplementary  trade-related  protocols 
complementing these. The evaluation aims to identify best practices and lessons learned to 
better inform  further implementation  of the  current  Euro-Med FTAs as  well as to  enable 
cross-fertilization of the gained insights across the various countries in the region to further 
enhance the Euro-Mediterranean partnership. 

The evaluation relies on a study available online1, carried out by an external consultant in 
close  cooperation  with  the  Commission,  further  complemented  by  DG  Trade  economic 
analysis.  The  Final  Report  of  the  study  is  a  source  of  useful  information  and  economic 
analysis but does not represent the Commission’s views. The Commission services present 
in the below section their evaluation as regards the findings and conclusions presented in 
the Final report of the study.  

Scope of the evaluation 

The evaluation of the implementation of the Euro-Med FTAs provides an in-depth analysis 
of  the  performance  of  the  Euro-Med  FTAs.  Regarding  the  geographical  scope,  this 
evaluation  includes  the  impacts  of  the  FTAs  on  the  EU  and  six  SMCs:  Algeria,  Egypt, 
Jordan,  Lebanon,  Morocco  and  Tunisia.2  The  evaluation  also  considers  the  effects  of  the 
FTAs  on  third  countries,  including  relevant  partner  countries,  developing  countries  and 
least developed countries (LDCs). 

1 https://ec.europa.eu/trade/policy/policy-making/analysis/policy-evaluation/ex-post-evaluations/ 

2 Some Southern Mediterranean countries are excluded from certain elements of analysis due to data availability. 

3 

 
 
 
 
 
                                                 
The evaluation generally covers a time period from three years prior to the date the FTAs 
came  into  force  up  to  the  latest  data  available,  although  longer  or  shorter  periods  were 
considered  depending  on  the  availability  of  data  and  methodology  used.  These  dates 
however are different for each country as illustrated in Table 2. 

Table 2. Signing and entry into force of Association Agreements with the six Mediterranean partners 

Country  Association Agreement signed 

Association Agreement coming into force 

Algeria 

2002 

Egypt 

2001 

Jordan 

1997 

Lebanon  2002 

Morocco 

1996 

Tunisia 
Source: Ecorys. 

1995 

2005 

2004 

2002 

2006 

2000 

1998 (but already implemented by Tunisia in 1996) 

The  evaluation  also  takes  into  account  signing  and  entry  into  force  of  Agricultural 
Protocols for three of the six SMCs as shown in Table 2a. 

This evaluation focuses on the extent to which the objectives of the Euro-Med FTAs have 
been  reached  in  terms  of  the  following  four  criteria  listed  in  the  EU’s  Better  Regulation 
guidelines and toolbox: 

  Effectiveness:  the  extent  to  which  the  objectives  of  the  EU’s  FTAs  with  the  six 
partner  countries  have  been  achieved,  as  well  as  the  factors  influencing  the 
achievements  of  those  objectives,  including  identification  of  any  unintended 
consequences; 

  Efficiency:  the extent to which the EU's FTAs with the six partner countries have 
been  efficient  with  respect  to  achieving  their  objectives  (what  costs  have  been 
associated  with  the  achievement  of  these  objectives  and  whether  they  have  been 
proportionate to benefits, what factors influenced these costs and benefits and their 
distribution  across  different  stakeholder  groups  as  well  as  whether  there  are  any 
remaining inefficiencies and regulatory costs related to the FTAs); 

  Coherence: the extent to which the EU's FTAs with the six partner countries have 
been coherent with the Neighbourhood Policy and Association Agreements, Action 
Plans and Partnership Priorities and with current EU trade policy;  

  Relevance: the extent to which the provisions of the EU's FTAs with the six partner 
countries  are  relevant  for  addressing  current  trade  issues  faced  by  the  EU  and  its 
partners. 

2. 

BACKGROUND  

The  Southern  Mediterranean  region  has  occupied  an  important  place  on  the  EU  trade 
agenda  for  decades.  Prior  to  the  signing  of  the  current  EU  Association  Agreements  and 
their trade chapters with Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia in the mid 

4 

 
 
 
 
to late 1990s, these countries already benefitted from a partial or full removal of customs 
duties on many tariff lines under the EU’s General System of Preferences (GSP) and under 
the EU’s Global Mediterranean Policy. 

One of the main elements of the EU’s Global Mediterranean Policy, which was launched 
in  1972,  was  to  harmonise  bilateral  agreements  with  the  countries  in  the  region.  This 
process of harmonisation resulted in a series of Cooperation and Association Agreements 
with  Algeria,  Egypt,  Jordan,  Lebanon,  Morocco,  Syria,  and  Tunisia,  and  a  Trade 
Agreement  with  Israel,  all  concluded  between  1975  and  1978.  The  EU-Mediterranean 
Cooperation  Agreements  provided  for  duty-free  market  access  for  most  of  the  industrial 
goods to the EU, preferential market access in terms of tariff elimination and/or reduction 
for agricultural and fishery products on a non-reciprocal basis and offered cooperation in 
various sectors.  

As a next step, in the 1990s, the EU began to negotiate a series of new Euro-Med AAs with 
all of the Mediterranean countries. The establishment of the Association Agreements was 
part  of  the  Barcelona  Process,  which  was  launched  in  November  1995  and  aimed  at 
establishing  “political  stability  and  security”,  “shared  prosperity”  (through  trade  
chapters),  and  “understanding  between  cultures  and  exchanges  between  civil  societies”. 
The trade chapters of the Association Agreements largely concerned trade in goods, with a 
focus  on  liberalisation  of  import  tariffs  on  industrial  products  and  to  a  lesser  extent 
liberalisation with regard to agricultural products.  

The additional market access concessions negotiated in the Euro-Med FTAs added to the 
significant  preferences  granted  under  the  EU’s  General  Scheme  of  Tariff  Preferences 
(GSP)  and  the  EU-Mediterranean  Cooperation  Agreements.  Under  the  GSP,  out  of 
approximately  10,300  tariff  lines  in  the  EU’s  Common  Customs  Tariff,  the  six  SMCs 
already  enjoyed  duty-free  market  access  on  some  3,700  so-called  non-sensitive  products 
and a 3.5 percentage point reduction from the EU Most-Favoured Nation (MFN) duties on 
some 3,300 so-called sensitive products. This was already on top of the duty-free access for 
some  2,100  products  on  imports  of  which  the  EU  was  already  imposing  zero  MFN  duty 
rates for all trading partners.  

Overall,  this  shows  that  on  the  eve  of  the  signing  of  the  Euro-Med  FTAs  (by  the  mid-
1990s), the EU was already granting duty-free market on more than half of its tariff lines to 
the  SMCs.  However,  tariff  preferences  granted  under  both  the  GSP  and  the  EU-
Mediterranean  Cooperation  Agreements  on  unprocessed  and  processed  agricultural 
products,  especially  thus  deemed  sensitive,  were  in  general  more  limited.  The  average 
remaining  EU  import  tariffs  are  estimated  to  have  ranged  from  2%  to  4%  on  industrial 
products  and  from  6%  to  10%  for  agricultural  products  in  the  mid-1990s  (see  Table  3, 
Panel  A).  However,  within  the  industrial  goods  category,  there  were  groups  of  products 
where  EU  import  duties  remained  more  significant  (e.g.  textiles  and  clothing).  This  was 
also  the  case  with  respect  to  some  agricultural  products.3  At  the  same  time,  while  still 

3 It is estimated, for example, that in 1995, average EU preferential import duties on imports from the SMCs of products such as fruit 
and nuts (HS08) were at or higher than 6%, for sugars and sugar confectionery (HS17) at around 5%, on vehicle products (HS87) close 
to 3% and for articles of apparel and clothing accessories (HS62) above 10%. 

5 

 
 
 
 
 
                                                 
moderately  high  in  some  cases,  these  preferential  tariffs  were  already  providing  SMCs  a 
considerable advantage with respect to MFN rates. For example, as far as industrial tariffs 
were concerned, the tariffs that SMCs were still facing were on average half, or less, than 
those applied by the EU on an MFN basis.  

Therefore, despite the EU having already extended preferential or duty-free access to the 
SMCs  in  the  mid-1990s,  there  was  still  scope  for  further  liberalisation  by  the  EU  on  the 
eve of signing of the Barcelona Declaration and establishment of the subsequent Euro-Med 
FTAs.  The  FTAs  were  expected  to  deliver  further  trade  liberalisation  from  the  EU; 
however,  the  main  gains  were  expected  to  accrue  from  the  reduction  of  SMCs’  import 
duties, which until then were not disciplined by the existing Cooperation Agreements and 
were  relatively  high.  When  the  Euro-Med  FTAs  entered  into  force,  average  duties  on 
imports  from  the  EU  ranged  from  12%  in  Lebanon  to  30%  in  Tunisia  on  industrial 
products  and  from  15%  in  Lebanon  to  35%  in  Jordan  on  agricultural  products  (Table  3, 
Panel B). In result of the Euro-Med FTAs average duties on imports from the EU ranged 
from 0,1% in Tunisia to 6% in Algeria on industrial products and from 6% in Lebanon to 
21% in Egypt on agricultural products (Table 3, Panel B). 

Table 3. Overview of evolution of EU and SMCs import tariffs, 1995-2015 
Panel A. EU tariffs charged on imports from the SMCs  

EU Tariffs 

Partner 

Morocco 

Algeria 

Egypt 

Jordan 

Lebanon 

Tunisia 

1995 

AGR 

IND 

2015 

AGR 

IND 

AHS  MFN 

PRF 

AHS  MFN 

PRF  AHS  MFN 

PRF  AHS  MFN 

PRF 

8.0 

9.9 

4.3 

5.4 

8.1 

6.4 

8.5 

10.2 

10.0 

9.1 

11.1 

6.9 

8.7 

6.8 

8.6 

9.6 

7.7 

8.5 

4.0 

1.9 

3.2 

2.6 

3.7 

3.8 

7.1 

5.3 

6.5 

6.1 

7.1 

7.1 

4.0 

1.8 

3.3 

2.7 

3.9 

3.8 

0.1 

3.8 

0.2 

0.0 

0.3 

3.9 

7.6 

9.8 

7.5 

7.9 

7.3 

7.3 

0.1 

1.9 

0.1 

0.0 

0.2 

2.7 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

4.5 

3.4 

4.3 

4.2 

4.2 

4.5 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

Panel B. SMCs tariffs charged on imports from the EU. 

MED Tariffs 

Importer 

Morocco (1997) 

Algeria (1997) 

Egypt (1995) 

Jordan (2000) 

Lebanon (1999) 

Tunisia (1995) 

1995-2000 

AGR 

AHS 

32.3 

23.2 

33.0 

34.9 

14.4 

31.9 

IND 

2015 

AGR 

IND 

MFN 

PRF  AHS  MFN 

PRF  AHS 

MFN 

PRF  AHS  MFN 

PRF 

32.3 

23.2 

33.0 

34.9 

14.4 

31.9 

- 

- 

- 

- 

- 

- 

18.7 

18.7 

21.9 

21.9 

21.8 

21.8 

21.9 

21.9 

11.8 

11.8 

29.3 

29.3 

- 

- 

- 

- 

- 

- 

8.0 

19.8 

21.7 

10.7 

6.0 

16.6 

20.4 

22.3 

30.7 

21.9 

10.0 

7.6 

0.3 

9.6 

7.1 

2.7 

1.7 

7.4 

6.1 

1.3 

2.1 

2.1 

16.8 

10.0 

10.0 

5.0 

23.3 

3.6 

0.1 

12.2 

0.2 

6.1 

1.4 

3.3 

2.8 

0.0 

Note: Figures in the table present simple average duties calculated across all tariff lines where non-zero trade flows were observed in the 
given years for agricultural (AGR) and industrial (IND) products according to the WTO definitions of these categories. MFN rates are 
the  average  WTO  MFN  rates,  PRF  are  the  average  preferential  rates  accounting  for  all  the  existing  preferential  tariff  rates  within 
preference  schemes  such  as  the  GSP  or  the  already  existing  FTAs.  AHS  denote  the  effectively  applied  rates,  i.e.  a  combination  of 
preferential rates and MFN rates whenever imports entered under this treatment even though preferences were available, i.e. accounting 
in  a  way  for  preference  utilisation.  Note  that  the  case  of  agricultural  products  in  1995  imported  by  the  EU  from  Algeria,  where  the 
average MFN rate is lower than the preferential rate (PRF), does not mean that individual MFN rates at the tariff line level  were lower 
than preferential rates but that averages calculated across a range of agricultural products were lower. 
Source: Ecorys’ calculations using UN TRAINS data accessed through the World Integrated Trade Solution (WITS). 

6 

 
 
 
 
 
Euro-Med FTAs  

In  addition  to  political,  security,  cultural  and  human  partnerships,  the  Euro-Med  FTAs 
were  signed  with  an  aim  to  strengthen  the  economic  and  financial  partnerships  too.  A 
strong emphasis was put on economic liberalisation, integration and reforms, where trade 
played a crucial role. 

Objectives 
The  first  main  objective  of  the  Euro-Med  FTAs  was  the  promotion  and  liberalisation  of 
trade  between  the  EU  and  Mediterranean  countries  in  products  directly  covered  by  the 
FTAs  (i.e.  goods).  The  FTAs  also  aimed  at  establishing  conditions  for  the  gradual 
liberalisation  of  trade  in  other  areas  not  liberalised  directly  by  these  FTAs,  but  closely 
interlinked  and  complementary  to  the  liberalised  sectors.  The  latter  included  trade  in 
services, as well as foreign direct investment (FDI), and capital movement more broadly. 
These FTAs also refer to some non-tariff measures (NTMs), such as technical barriers to 
trade (TBT) and sanitary and phytosanitary measures (SPS), but mainly expressed the need 
for transparency and cooperation as well as the need for liberalisation in these areas in the 
future  

In  addition,  all  Euro-Med  FTAs  already  contain  provisions  on  agricultural,  processed 
agricultural and fisheries products. Further reciprocal liberalisation on trade of agricultural, 
processed  agricultural  and  fisheries  products  was  concluded  for  Egypt,  Jordan  and 
Morocco.  

The  second  main  objective  of  the  FTAs  was  to  promote  intra-regional  integration  and 
cooperation  in  the  Southern  Mediterranean  region.  This  objective  is  a  follow-up  on  the 
Barcelona  Declaration  of  1995  that  included  a  commitment  to  establish  a  free-trade  area 
across  the  entire  Euro-Med  region  by  2010.  Regional  agreements  such  as  the  Agadir 
Agreement4  contain  formal  references  to  the  Association  Agreements  and  can  be 
considered as building blocks of this intra-regional integration. The Regional Convention 
on pan-Euro-Mediterranean preferential rules of origin (PEM), signed in 2011 and ratified 
by  all  SMCs,  was  another  step  in  promoting  greater  harmonisation  and  simplification  of 
rules of origin (RoO) in the region. 

Differences 
The  Euro-Med  FTAs,  which  focus  on  further  lowering  import  tariffs  on  industrial  and 
agricultural  goods,  are  considered  ‘first-generation’  FTAs.  Since  approximately  2013,  as 
the  implementation  of  the  Euro-Med  FTAs  with  SMCs  was  getting  close  to  completion, 
and  as  some  provisions  of  these  FTAs  called  for  additional  negotiations  on  deeper 
integration  (e.g.  in  NTMs,  services  trade  and  FDI)  the  EU  started  the  process  of 
negotiating  Deep  and  Comprehensive  Free  Trade  Areas  (DCFTAs)  with  some  of  these 
countries.  

4 The Agadir Agreement is an FTA between Egypt, Jordan, Morocco and Tunisia, which was signed in February 2004 and entered into 
force in March 2007. 

7 

 
 
 
 
 
 
 
                                                 
While  the  existing  FTAs  are  similar  in  terms  of  the  overall  structure,  they  are  not 
homogeneous  and  their  texts  reflect  country  specificities  related  to  different  sizes, 
production  structures,  commercial  interests  and  economic  and  political  situations.  The 
Euro-Med  FTAs have been introduced at  different  points  in  time, had different  baselines 
(in  terms  of  initial  tariff  barriers  with  respect  to  which  the  agreed  tariff  reductions  were 
defined;  see  Table  3)  and  differently  phased  implementation  periods.  The  latter  differed 
from one SMC to another but, in line with the principle of asymmetry, the implementation 
periods  were  in  favour  of  SMCs.  While  the  EU’s  market  was  immediately  opened  to 
SMCs’  exports  of  all  industrial  and  most  agricultural  goods,  the  SMCs  had  transition 
periods  in  place,  on  average  of  12  years,  to  open  up  their  markets  only  gradually  to  EU 
exports. However, as SMCs maintained higher  tariffs than the EU prior to  the  entry into 
force  of  the  Euro-Med  FTAs  (Table  3),  they  were  also  effectively  undertaking  more 
significant tariff reductions during the implementation periods. As a result, the changes in 
conditions of market access implied by these FTAs and the impacts thereof have been quite 
heterogeneous across the six SMCs and they have also varied in time. 

3. 

IMPLEMENTATION / STATE OF PLAY 

The implementation of the Euro-Med FTAs and status of trade relations vary across SMCs. 
It  reflects  a  multitude  of  issues  including  policy  choices  opted  for  by  SMCs  to  create 
conditions  conducive  to  implementation  of  the  FTAs.  In  addition,  the  implementation  of 
the FTAs vary according to the progress of additional negotiations, updates to each of the 
Euro-Med FTAs.   

Context 
Furthermore, the domestic political and economic situation in the six SMCs, as well as the 
political  and  security  situation 
in  neighbouring  countries  (notably  Syria),  have 
considerably  affected  trade  capabilities  and  flows  with  the  EU.  SMCs  have  also  pursued 
additional  trade  liberalisation  between  themselves  (e.g.  within  the  Pan-Arab  Free  Trade 
Area or the Agadir agreement) and with third countries (e.g. agreements of selected SMCs 
with the US, Turkey and other countries in Africa -e.g. the African Continental Free Trade 
Area and across other regions). 

Tariff dismantling  
In terms of tariff dismantling, the remaining EU tariffs on the majority of goods covered by 
the FTAs fell to zero immediately after the start of the entry into force of the FTAs but the 
implementation  of  tariff  dismantling  by  SMCs  varies.  The  implementation  by  SMCs 
reflects: phased liberalisation envisaged for them in the FTAs’ original commitments; the 
additional liberalisation for agricultural, processed agricultural and fisheries products that 
are  in  force  with  Egypt,  Jordan,  and  Morocco;  as  well  as  failures  by  some  SMCs  in 
applying the tariff dismantling schedule. 

8 

 
 
 
 
 
 
 
 
Examples: 

Tunisia 
It is the first SMC that signed an FTA with the EU (prior to its entry into force in 1998) 
and  began  implementing  the  Association  Agreement  in  1996.  All  tariffs  on  industrial 
products  referred  to  in  the  Association  Agreement  were  entirely  dismantled  by  2008, 
which  meant  the  EU-Tunisia  FTA  was  already  entirely  implemented  two  years  ahead  of 
the  envisaged  date.  Nevertheless,  market  access  for  agricultural  products  remains  more 
limited.  

Morocco 
The transition period to reduce Morocco’s tariffs on imports of industrial products to zero 
ended in March 2012. In 2010, the EU and Morocco signed an Agreement on Additional 
Liberalisation of Trade in Agricultural and Fisheries Products, which entered into force in 
2012. As a result, trade for industrial products between Morocco and the EU is now fully 
liberalised,  while  market  access  for  agricultural  products  also  covers  nearly  all  products, 
with only a few categories of products still subject to tariff rate quotas (TRQs) for imports 
from  Morocco  into  the  EU  (e.g.,  tomatoes,  cucumbers  and  courgettes).  The  tariff 
dismantling period for EU agricultural exports to Morocco runs until the end of September 
2021  and  a  higher  number  of  products  will  be  subject  to  TRQs  at  the  end  of  the 
dismantling phase.  

Algeria 
For Algeria the original planned end date for the liberalisation of industrial products was 1 
September 2017, but in 2012 both sides agreed to extend the transitional period for certain 
industrial  products  (i.e.  steel,  textiles,  electronics  and  automobiles)  from  12  to  15  years, 
moving  the  end  date  to  1  September  2020.  This  was  due  to  the  difficulties  that  Algeria 
experienced  when  applying  the  tariff  dismantling  schedule  in  2018.  However  as  of  2015  
Algeria has started introducing a series of trade restrictive measures including prohibitively 
high  import  duties,  import  bans  and  licensing  schemes  as  well  as  new  procedural 
requirements erecting new barriers to trade. As these issues could not be resolved over an 
extended  period  via  bilateral  discussions,  in  June  the  EU  side  initiated  a  formal  Dispute 
Settlement  Procedure  under  the  EU-Algeria  Association  Agreement  to  re-establish 
compliance with legal obligations in bilateral trade and investment relations. The technical 
consultations under the dispute settlement procedure are ongoing with engagement on both 
sides to resolve these long outstanding issues. 

Non-tariff measures  
When it comes to dismantling non-tariff measures (NTMs), especially compared with more 
recent and comprehensive trade agreements concluded by the EU, the trade chapters of the 
Association  Agreements  with  the  six SMCs mainly  express  the  need  for  liberalisation  of 
NTMs  such  as  SPS  or  TBT  in  the  future  rather  than  stipulating  concrete  liberalisation 
commitments  on  NTMs.  Several  other  types  of  NTMs  are  referred  to  in  the  texts  of  the 
Euro-Med  under  the  Title  Payments,  Capital,  Competition  and  Other  Economic 
Provisions.  Similarly,  to  other  NTMs,  the  Euro-Med  FTAs  only  partially  cover  services 

9 

 
 
 
 
 
trade or FDI per se and the related provisions do not go significantly beyond what the SM 
World Trade Organization (WTO) members (Egypt, Morocco, Tunisia and Jordan) and the 
EU  committed  to  under  the  GATS.5  Overall,  most  of  the  NTM  provisions  of  Euro-Med 
FTAs can be described as directional or best-endeavour types of provisions; the FTAs do 
not  contain  specific  or  enforceable  commitments  in  these  areas  but  rather  express  broad 
intensions of the trading parties regarding NTMs. 

Likely,  as  a  consequence  of  relatively  weak  provisions  on  NTMs  contained  in  the  Euro-
Med FTAs, NTMs have been maintained or new measures have been introduced contrary 
to  the  spirit  of  fostering  trade,  which  was  enshrined  in  the  respective  FTAs  .  This  is 
documented  in  the  proceedings  of  respective  Association  Councils  and  their  subsidiary 
bodies.  The  trend  of  increasing  restrictions  in  the  form  of  NTMs  has  also  recently  been 
documented  in  the  European  Commission’s  regular  Reports  on  Trade  and  Investment 
Barriers. For example, the report covering the calendar year 2018, notes that, in 2017 and 
2018, there had been a “trend of growing protectionism” in the Mediterranean region6 and 
refers  to  30  trade  and  investment  barriers  in  Algeria,  Egypt,  Lebanon,  Morocco  and 
Tunisia. Of these, Algeria maintains the largest number of barriers (10), closely followed 
by Egypt (8).  

Additional negotiations and DCFTAs 
The  Association  Agreements  did  not  contain  sufficient  provisions  on  topics  whose 
importance for the EU, SMCs and for international trade has grown in the recent decade, 
only  calling  for  additional  negotiations  in  some  of  these  areas  in  the  future.  These  areas 
include,  inter  alia,  services,  investment,  regulatory  convergence,  public  procurement, 
sustainable  development  or  intellectual  property  rights.  All  these  interrelated  areas  are 
shown  in  the  economic  literature  to  be  important,  given  the  reliance  of  the  modern 
economy on global value chains (GVCs), services trade and FDI. Regulatory co-operation 
is a key element of integration in many of these policy areas.  

With  the  current  DCFTA  approach,  deep  and  comprehensive  trade  relations  are  to  be 
achieved by virtue of, inter alia, aligning a partner country’s trade-related legislation with 
international standards and, when relevant, with the relevant EU rules and regulations, in 
exchange for positive effects in terms of market access and other economic benefits these 
may create. The EU started the process of negotiating DCFTAs with some of the SMCs. 
Negotiations with Tunisia and Morocco started in 2013 but are on hold, while negotiations 
with Egypt and Jordan have not been launched yet.  

4. 

METHOD 

Overview of the approach to the evaluation 

The evaluation examined the extent to which the objectives of the Euro-Med FTAs of six 
SMCs  were  met.  The  objectives  of  the  Euro-Med  FTAs  and  their  links  to  the  objectives 

5 The FTAs with Lebanon and Algeria also refer to the GATS in similar ways to the four latter FTAs  
6  European  Commission,  Report  on  Trade  and  Investment  Barriers  (1  January  2018–31  December  2018),  p.  19,  available  at 
http://trade.ec.europa.eu/doclib/docs/2019/june/tradoc_157929.pdf . 

10 

 
 
 
 
                                                 
pursued by trade policy more broadly are summarised in the overview of the intervention 
logic, provided in  Figure 1 in Annex 3, which shows the links between the objectives of 
the  six  FTAs  and  their  intended  medium  and  long-term  impacts,  as  well  as  channels 
through which the FTAs would be expected to help achieve these objectives. 

Key challenges 

This evaluation assesses the effects of the so-called first-generation FTAs that principally 
entail  reductions  of  import  tariffs  on  goods  and  only  limited  provisions  on  non-tariff 
barriers.  However,  even  when  it  comes  to  tariff  reductions,  these  FTAs  have  been 
introduced  at  different  points  in  time,  had  different  starting  points  (in  terms  of  initial 
barriers) and differently phased implementation periods. They have also influenced tariffs 
on  different  products  in  different  SMCs  to  a  different  degree.  A  considerable  effort  was 
thus devoted to carefully define the scope and extent of the actual trade liberalisation that 
was associated with these FTAs. 

An  additional  challenge  of  this  evaluation  was  to  assess  to  what  extent  the  observed 
historical  changes  in  trade  flows  and  associated  economic  variables  in  the  considered 
period can be attributed to  the FTAs. The objective was to  separate FTA-induced effects 
from the effects of other concurrent developments, such as the effects of the economic and 
financial crisis of 2008-09 or the Arab Spring, as well as the evolution of other economic 
factors not directly related to the FTAs. This disentangling became a particular challenge, 
especially when assessing the more indirect effects of the FTAs, for example in the area of 
sustainability.  

For  all  the  impacts  observed,  an  understanding  was  developed  as  to  how  the  FTA  may 
have led to the obtained results. This is why the evaluation has adopted a framework that 
utilises  a  mix  of  methods.  The  results  of  the  computable  general  equilibrium  (CGE)  and 
partial  equilibrium  (PE)  modelling  were  used  as  means  of  assessing  how  much  of  the 
actual  variation  in  trade  can  be  attributed  to  the  Euro-Med  FTAs  as  opposed  to  other 
factors  that  could  be  driving  these  as  posited  by  economic  theory.7  This  analysis  is 
complemented with a host of other quantitative and qualitative methods to cross-check the 
modelling  results,  to  put  then  in  the  context  of  the  actual  historical  developments  in 
economic  variables  and  to  deepen  the  understanding  of  the  mechanisms  that  may  have 
been at work.  

Elements of the evaluation 
The  evaluation  consisted  of  17  different  evaluation  tasks,  which  were  divided  into  four 
inter-related  work  packages,  namely:  (1)  evaluation  framework;  (2)  consultations;  (3) 
economic analysis and (4) sustainability analysis. 

7  Due  to  data  constraints  CGE  simulations  were  performed  for  Egypt,  Jordan,  Morocco  and  Tunisia,  while  PE  simulations  were 

performed for Algeria and Lebanon  

11 

 
 
 
 
 
 
 
 
                                                 
Evaluation framework 
Development  of  this  crosscutting  work  package  in  the  inception  phase  of  the  evaluation 
consisted  of  the  elaboration  of:  the  intervention  logic  (see  Figure  1  in  Annex  3);  the 
specific  evaluation  questions  from  the  Terms  of  Reference  (ToR);  and  the  evaluation 
matrix  (see  Table  1  in  Annex  3).  Tasks  performed  within  this  work  package  helped  to 
guide the evaluation in all its activities during the implementation phase. 

Consultations 
Stakeholder consultations were an essential element of the evaluation.  

The stakeholder consultation strategy for the evaluation relied on a variety of consultation 
tools  and  a  mix  of  stakeholder  categories  at  different  levels.  The  consultations  were 
focused  on  those  stakeholders  that  were  likely  to  have  been  significantly  involved  in  or 
affected by the Euro-Med FTAs, namely public administrations, business associations, the 
private  sector  and  civil  society  organisations.  Within  the  scope  of  the  evaluation, 
stakeholder consultations were carried out through both remote and local consultations and 
included experts from the EU, as well as experts from the six SMCs.  

The  Open  Public  Consultation  was  an  online  survey  that  has  been  open  for  12  weeks.  It 
was launched on 4 September 2019 and was open until the end of November 2019. A total 
of  50  respondents  participated  in  this  survey,  although  not  all  respondents  answered  all 
questions.  Forty-six  of  them  participated  in  the  regional  version,  whereas  the  other  four 
participated  in  the  country-specific  ones  (i.e.  Jordan  [2]  and  Egypt  [2]).  Therefore, 
participation in the country-specific surveys was rather limited. 

Seven stakeholder workshops were organised in total: in Algeria, Egypt, Jordan, Lebanon, 
Morocco,  Tunisia  and  the  EU.  These  workshops  had  a  dual  purpose  of  presenting  and 
discussing  the  work  conducted  so  far.  They  served  to  share  preliminary  results  and  to 
receive feedback on these, as well as to gather additional input for the evaluation. Table 4 
provides an overview of the seven workshops and the number of workshop participants in 
each country. 

To allow for a more detailed and personal feedback from stakeholders, personal interviews 
and roundtable sessions involving close to 140 stakeholders were held. An overview of the 
number of interviewees consulted in each country is provided in the last column of Table 
4. 

12 

 
 
 
 
 
 
 
 
 
 
Table 4. Overview of stakeholder workshops and number of additional interviews 

Country 

Workshop date 

Number of 
workshop 
participants 

EU 

Algeria 

Egypt 

Jordan 

30 April 2020 

26 February 2020 

16-17 October 2019 

20 November 2019 

Lebanon 

9 March 2020 

34 

50 

54 

60 

47 

Morocco 

2 October 2019 

106 

Tunisia 

26 September 2019 

57 

Number of additional 
interviewees in personal 
interviews and 
roundtables 
20 

15 

19 

17 

20 

28 

20 

The  interviews  were  spread  over  the  following  categories:  public  sector  (32%),  business 
associations (24%), large enterprises (2%), SMEs (14%), social stakeholders (9%), human 
rights  stakeholders  (3%),  environmental  stakeholders  (6%),  and  think  tanks  /  academia 
(10%). 

The Civil Society Dialogue on 30 April 2020 provided an additional opportunity to receive 
further inputs from civil society on the preliminary findings.  

Different information dissemination tools were used for the distribution of information and 
for  maximising  outreach  during  the  evaluation.  These  included  an  e-mail  account, 
newsletters, a dedicated website as well as communications through Twitter and LinkedIn 
accounts.  Through  these  channels,  the  evaluation  team  reached  out  to  stakeholders,  kept 
them up to date and invited them to participate in the consultation activities. 

Economic Analysis 
The  economic  analysis  studied  in  detail  the  reductions  in  trade  barriers  stipulated  by  the 
FTAs and assessed their economic effects.  

The organisation  of  the  economic  analysis of the evaluation  followed a standard view of 
the different sources of gains from trade liberalisation and the conditions that must be met 
for them to materialise, accompanied by additional elements of analysis suggested by the 
economic literature: 

  Review of existing studies and reports; 
  Statistical description of characteristics of Euro-Med FTAs and of the associated 

trade developments;  

  Description and interpretation of the CGE and PE modelling exercises used to 
discern the trade effects of the Euro-Med FTAs and to assess their broader 
economic effects; 

  Analysis of factors that help explain and put in the context the results of descriptive 
statistical analysis and CGE/PE modelling, as well as of factors determining the 

13 

 
 
 
 
degree to which SMCs could use the opportunities stemming from the FTAs, in 
particular; 

o  Rules of origin  
o  Customs-related matters Trade-related assistance  
o  Non-tariff measures Role of FDI and services trade  
o  Business environment Exchange rate policies  
o  Industrial policies Competitiveness  
o  Diversification, technology and economic complexity  
o  SMEs  

Case Studies  
The case studies focused on the following sectors: agriculture; chemicals; machinery and 
transport  equipment;  and  textiles  and  clothing.  The  sectoral  case  studies  combined 
different  methods  (e.g.  literature  review,  data  analysis,  assessment  of  modelling  results, 
stakeholder  consultations)  and  allowed  to  gain  a  more  detailed  understanding  of  the 
different factors (enablers and bottlenecks) at play. 

Sustainability Analysis  
The  sustainability  analysis  informed  and  complemented  the  consultations  and  economic 
analysis  to  identify  the  most  significant  impacts  on  sustainable  development,  covering 
social, human rights, environmental and third-country effects.  

There have been many developments in the four sustainability impact areas in each of the 
countries being analysed, which were not related directly to the Euro-Med FTAs, and the 
challenge  was  to  link  these  developments  to  the  relevant  FTAs,  establishing  possible 
causal  relations.  In  order  to  keep  focus  on  the  specific  effects  of  the  FTAs,  the 
sustainability analysis has encompassed: 

  Analysis of trade chapters of the Association Agreements as regards the specific 

parts of the  texts linked to the four areas; 
  Literature review on sustainability impacts; 
  Consultations on sustainability impacts; 
  Analysis of results of the CGE model relevant for sustainability; 
 

In total, four case studies have been conducted, on the following topics:  
  Employment in the Chemicals and Textiles and Clothing sectors; 
  Female employment in Agriculture; 
  Trade in environmental goods; 
  Air emissions. 

5. 

ANALYSIS AND ANSWERS TO THE EVALUATION QUESTIONS 

The  evaluation  replies  to  five  evaluation  questions  (EQs)  related  to  the  four 
evaluation criteria of effectiveness, efficiency, coherence and relevance: 

  EQ1: To what extent have the objectives of the EU FTAs with the six SMCs 
been  achieved?  What  are  the  factors  influencing  the  achievement  of  those 
objectives? To what extent are those factors linked to the EU intervention? 
14 

 
 
 
 
  EQ2: Have the EU FTAs with the six SMCs given rise to other (including 

unintended) consequences? If so, which ones? 

  EQ3: To what extent have the EU FTAs with the six SMCs been efficient in 

achieving their objectives? 

  EQ4: To what extent have the EU FTAs with the six SMCs been coherent 
with the European Neighbourhood Policy (ENP), Association Agreements, 
action plans, Partnership Priorities, and current EU trade policy? 

  EQ5: To what extent are the provisions of the Euro-Med FTAs with the six 
SMCs relevant for addressing current trade issues faced by the EU and these 
partners? 

Effectiveness of the FTAs 

The effectiveness of the FTAs is assessed based on the following EQ:  

EQ1:  To  what  extent  have  the  objectives  of  the  EU  FTAs  with  the  six  partner 
countries (SMCs) been achieved? What are the factors influencing the achievement of 
those objectives? To what extent are those factors linked to the EU intervention? 

Answering this evaluation question involves answering three separate sub-questions:  

  Have 

the  Euro-Med  FTAs  generated 

intended  market-access 
improvements  for  the  EU  and  the  SMCs?  (EQ1.a)  Asking  this  question  is 
important because the main objective of the Euro-Med FTAs was the liberalisation 
of bilateral trade between the EU and SMCs through liberalisation of the remaining 
bilateral import tariffs.  

the 

  Have  the  market-access  improvements  associated  with  the  Euro-Med  FTAs 
resulted  in  increased  trade  exchanges  and  the  associated  wider  economic 
effects?  (EQ1.b)  Posing  this  question  follows  straightforwardly  from  EQ1.a  as  it 
asks whether there is evidence that the market-access improvements related to the 
Euro-Med FTAs resulted in  increased trade flows, which were expected to  be the 
main source of economic gains from these FTAs; 

  What are the factors influencing the achievement of those objectives? To what 
extent  are  those  factors  linked  to  the  EU  intervention?  (EQ1.c)  In  case  the 
achievement of the trade liberalisation objective was impeded, answering these two 
questions helps to determine why the trading partners may have been unable to take 
full  advantage  of  the  market-access  improvements  stipulated  by  the  texts  of  the 
Euro-Med  FTAs,  and  to  what  extent  this  was  related  to  the  scope  and  nature  of 
these FTAs? (EQ1.c) 

EQ1.a:  Have  the  Euro-Med  FTAs  generated  the 
improvements for the EU and the SMCs? 

intended  market  access 

15 

 
 
 
 
 
The evolution of effective preferential market access conditions was determined not only 
by  the  implementation  of  tariff  reductions  negotiated  in  the  Euro-Med  FTAs,  but  the 
effects of tariff reductions due to other agreements signed in the meantime by both the EU 
and the SMCs with third countries. To that extent, the analysis looked at the evolution of 
effective preference margins8 determined by the Euro-Med FTAs and other agreements of 
the EU and SMCs.  

Since  the  conclusion  of  the  Euro-Med  FTAs  various  changes  in  preferences  available  to 
other  countries  have  been  made,  such  as  in  the  EU  GSP  scheme,  or  conclusion  of  other 
FTAs.  This  implies  that  even  if  access  to  the  EU  market  has  improved  for  SMCs  in 
absolute terms, it is not necessarily the case relative to other countries.  

Together with the Euro-Med FTAs, these FTAs determined the effective preferential tariff 
margins  faced  in  the  EU  and  SMC  markets  and  thus  influenced  the  balance  of  their 
economic and social effects stemming from the Euro-Med FTAs. Moreover, since the entry 
into  force  of  the  Euro-Med  FTAs,  13  countries,  which  often  had  similar  comparative 
advantages  to  those  of  SMCs  (e.g.  in  labor-intensive  activities),  acceded  to  the  EU  and 
became  part  of  the  EU  Single  Market.  At  the  same  time,  enlargements  of  the  EU  also 
expanded  the  size  of  the  EU  market  covered  by  Euro-Med  FTAs  as,  after  these 
enlargements, SMCs could access approximately 140 million consumers more than when 
the Euro-Med FTAs were signed. In terms of effective preferential tariff margins and other 
factors influencing access to the EU goods market, both the entry into force of FTAs with 
third countries as well as the EU enlargements can be seen as contributing to an effective 
erosion of the value of tariff preferences the EU and SMCs gave to each other through the 
Euro-Med FTAs. 

As a result, the analysis showed that while effective preference margins associated with the 
Euro-Med FTAs remain positive and generate economic benefits, they have decreased on 
average for Algeria, Morocco and Tunisia and improved only marginally for Egypt, Jordan 
and Lebanon since the entry into force of the FTAs (Figure 2). This is because while most 
favoured  nation  (MFN)  and  preferential  tariffs  mandated  by  the  Euro-Med  FTAs  have 
remained  constant,  the  EU  has  since  entered  into  FTAs  with  many  other  countries.  EU 
exporters saw increasing effective preferential tariff margins in all six SMCs (Figure 3).  
It should be noted, though, that the erosion of preferential margins is not a feature of the 
FTAs,  but  of  the  baseline.  EU  enlargement  and  conclusion  of  other  FTAs  have 
materialised  independently  of  the  Euro-Med  FTAs  and  they  would  have  increased 
competitive pressure in the same way as in case of no Euro-Med FTAs. In other words, if a 
competitor country is granted better terms, this is always a disadvantage, regardless of the 
conditions under which a country can access the market.  

Figure  2.  Change  in  effective  preference  margins  for  SMC  exporters  accessing  the  EU  market, 
comparing the initial year and 2018  

8  Effective  preference  margins  are  defined  in  this  evaluation  as  differences  between  average  tariffs  charged  on  imports  from  third 
countries and average preferential tariffs charged on imports from a given Euro-Med FTA partner.  

16 

 
 
 
 
 
 
                                                 
3

2,5

2

1,5

1

0,5

0

Algeria

Egypt

Jordan

Lebanon Morocco

Tunisia

AA Entry into force

2018

Note: The figure depicts the difference between the EU simple average tariffs applied on imports from the rest of the world and simple 
average  tariffs  applied  on  imports  from  SMCs  (percentage  points).  These  simple  average  tariffs  are  calculated  based  on  Harmonised 
System  6-digit  tariff  data  and  concern  only  tariff  lines  that  have  positive  import  values.  Hence,  the  observed  differences  are  a 
combination of different tariff rates and the composition of trade that actually occurs. 
Source: Authors’ calculations based on tariff data extracted from the World Integrated Trade Solution (WITS) portal. 

Figure 3. Change in effective preference margins for EU exporters accessing SMC markets, comparing 
the initial year and last available year  

10
9
8
7
6
5
4
3
2
1
0

Algeria

Egypt

Jordan

Lebanon Morocco

Tunisia

Year of entry into force of AA

Last available year

Note:  The  picture  depicts  the  difference  between  tariffs  applied  by  SMCs  on  imports  from  the  rest  of  the  world  and  simple  average 
tariffs applied on imports from the EU (percentage points). These simple average tariffs are calculated based on Harmonised System 6-
digit tariff data and concern only tariff  lines, which have positive import values. Hence, the observed differences are a combination of 
different tariff rates and the composition of trade that actually occurs. 
Source: authors’ calculations based on tariff data extracted from the World Integrated Trade Solution (WITS) portal. 

EQ1.b:  Have  the  market  access  improvements  associated  with  the  Euro-Med  FTAs 
resulted in increased trade flows and the associated wider economic effects?  

The  analysis  showed  that  the  main  objective  of  the  FTAs  in  terms  of  increased  trade 
exchange between the EU and each of the SMCs have been largely achieved (Figure 7).  In 
addition,  the  effects  on  GDP  and  welfare,  as  quantified  by  the  CGE  and  PE  model 
simulations, have been positive and benefitted SMCs proportionally more than they did the 
EU (Figure 8).  
The tariff reductions associated with the bilateral Euro-Med FTAs were not as effective in 
advancing  the  objective  of  promotion  of  intra-Med  trade  as  they  were  in  advancing  the 
Euro-Med trade. However, the impacts on intra-Med trade could not have been expected to 

17 

 
 
 
 
 
 
 
 
be major as the Euro-Med FTAs did not contain provisions to lower trade barriers among 
SMCs and the most tangible liberalisation brought about by the Euro-Med FTAs was the 
reduction  of  bilateral  tariffs  between  the  EU  and  each  SMC.  Nevertheless,  the  regional 
agreements  such  as  the  Agadir  Agreement  and  the  Regional  Convention  on  pan-Euro-
Mediterranean  preferential  rules  of  origin,  which  was  a  step  in  promoting  greater 
harmonisation  and  simplification  of  rules  of  origin  in  the  region,  were  inspired  by  the 
Euro-Med  FTAs  and  supported  by  the  EU,  and  were  building  blocks  in  the  process  of 
promoting intra-Med trade. 

There is also evidence that the impacts on trade and other economic indicators could have 
been more significant if bilateral trade was not impeded by other factors. As the answers to 
the next evaluation question show, some of these other factors were related to the policy 
intervention at hand and some were not. These factors are discussed in the answers to the 
next evaluation sub-question. 

In addition to the impact of the FTAs on trade, the evaluation assessed the possible impact 
of the Euro-Med FTAs on diversification and economic complexity9. This was relevant to 
analyze, as access to technology and know-how and innovative methods of value creation 
in today’s complex GVCs have become some of the key drivers of economic development. 

Analysis of indicators of diversification and economic complexity of exports of SMCs to 
the EU and other countries show improvements since the entry into force of the Euro-Med 
FTAs for all SMCs except Algeria (Figure 9). Tunisia, for example, which signed its FTA 
with  the  EU  the  earliest,  has  also  seen  the  most  pronounced  gains  in  diversification  and 
complexity  and  its  exports,  which  have  evolved  significantly  from  being  concentrated  in 
articles  of  apparel  in  the  mid-1990s  to  being  concentrated  in  electrical  and  electronic 
equipment.    The  analysis  showed  also  that  the  EU  market  remains  challenging  for  SMC 
producers when it comes to diversifying their export structures and competing in markets 
for more complex products (Figure 10). 

Non-trade objectives 
While fostering bilateral trade and trade within the SM region were the primary objectives 
of the FTAs, the Barcelona Declaration and the FTAs also referred to other objectives: 

  Fostering harmonious economic and social relations was one of the objectives of 
the FTAs but these concepts are not further defined therein and their realisation is 
therefore  difficult  to  assess.  It  can  be  argued,  however,  that  on  the  one  hand,  the 
increases  in  commercial  exchanges  between  the  partners  help  to  strengthen 
economic  relations.  On  the  other  hand,  disappointment  and  discussions  over 
remaining trade and investment barriers affect harmony in relations; 

9 Complexity in the meaning of theory of economic complexity used in this evaluation captures the amount of tacit skills and other 

knowledge embodied products countries produce. The theory of economic complexity posits that the knowledge and productive 
capabilities of countries are revealed by what they trade and that they are capable predictors of future economic growth where 
economies with higher ECIs have better growth prospects. (See the on-line Atlas of Economic Complexity: Available at: 
https://atlas.cid.harvard.edu/explore). For more see Section 3.5.10 of the full report. 

18 

 
 
 
 
 
 
                                                 
  Another objective was establishing the conditions for the gradual liberalisation 
of  trade  in  goods,  services,  and  capital  between  the  EU  and  the  SMCs  and  the 
FTAs  contain  broad  provisions  for  further  liberalisation  in  certain  areas.  Overall, 
the  analysis  concludes  that  only  limited  further  liberalisation  has  been  achieved. 
While  Egypt,  Jordan  and  Morocco  have  concluded  additional  protocols  on 
agriculture  no  further  tangible  liberalisation  has  been  achieved  on  other  goods, 
services  and  capital.  As  already  mentioned,  Tunisia  and  Morocco  started 
negotiations  in  2013  for  so-called  Deep  and  Comprehensive  Free  Trade  Areas, 
although  these  negotiations  are  currently  on  hold.  Negotiations  with  Egypt  and 
Jordan have not yet been launched. For Algeria and Lebanon, there are currently no 
plans to change the existing FTAs with the EU.  

Figure 7. The simulated long-run effects of Euro-med preferences on bilateral trade between the EU 
and SMCs (% change)  

%
n

i

e
s
a
b
e
h
t

m
o
r
f
e
g
n
a
h
c

60%

50%

40%

30%

20%

10%

0%

Exports to the EU

Imports from the EU

Egypt

Jordan

Morocco

Tunisia

Algeria

Lebanon

Sources: DG Trade, European Commission using the MIRAGE and the Commission’s PE model. 

Figure 8. Estimated impacts of Euro-med FTAs on GDP, welfare and wages (% change) 

%
n
i
e
g
n
a
h
C

3,5

3

2,5

2

1,5

1

0,5

0

-0,5

-1

GDP

Welfare

Low-skilled

High-skilled

CPI

Jordan

Egypt Morocco

Tunisia

EU

Note: Algeria and Lebanon were not included in the CGE modelling because of data constrains. 

19 

 
 
 
 
 
 
 
 
 
 
 
 
Variable 
GDP 

GDP gain 

(% 

change) 
(€ billion) 

change) 
(€ billion)  

low 

skilled 
high 

skilled 
% 

(% 

change) 
(€ billion) 

(% 

change) 
(€ billion) 

gain 
Welfare 

gain 
Wages 

Consumer 

prices 
EU 

bilateral 
EU 
imports 
bilateral 
EU 
imports 
bilateral 
EU 
exports 
bilateral 
CO2 
exports 
emissions 
CO2 

Source: DG Trade, European Commission using the MIRAGE model. 

Table 6. Summary of main results from the CGE and PE models  

EU28  Jordan  Egypt  Morocco  Tunisia  Algeria  Lebanon  Turkey  LDCs 
-0.01% 
0.02% 

-0.02% 

0.4% 

0.6% 

1.5% 

0.4% 

Welfare 

(%) 

0.03% 

0.1% 

0.4% 

0.4% 

1.5% 

2.6 

0.1 

0.9 

0.5 

0.6 

3.7 

0.04 

0.8 

0.3 

0.5 

0.07% 

0.09% 

0.55% 

1.52% 

3.30% 

0.07% 

0.11% 

0.59% 

1.09% 

3.40% 

0.04% 

-0.44% 

-0.05% 

-0.01% 

-0.28% 

-0.14 

-0.06 

-0.03% 

-0.01% 

-0.22 

-0.08 

-0.09% 

-0.03% 

-0.09% 

-0.03% 

-0.07% 

-0.02% 

3% 

11% 

23% 

25% 

21% 

15% 

0.2% 

-0.3% 

0.05 

1.5 

3.1 

2.6 

22% 

34% 

43% 

57% 

0.9 

4.5 

5.6 

4.2 

3.1 

1% 

0.3 

0.9 

0.15 

-0.14 

24% 

-0.4% 

-0.3% 

0.1 

-0.34 

-0.14 

% change 

0.05% 

-0.90% 

-0.50% 

-2.20% 

-3.40% 

million t 

2.0 

-0.2 

-1.0 

-1.5 

-0.9 

emissions 
bilateral 

(% 

exports to 

change) 
(€ billion) 

the 
bilateral 
EUROMED 
imports 
countries 
from the 

EUROMED 

(% 

change) 
(€ billion) 

Source: DG Trade, European Commission using the MIRAGE model. 

-11.1% 

-3.1% 

-0.79 

-0.04 

2.9% 

2.2% 

0.06 

0.07 

countries 

Figure 9. Economic Complexity Indices for SMCs and the EU

2,5

2

1,5

1

0,5

0

-0,5

-1

-1,5

-2

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

Algeria

Morocco

Egypt

Tunisia

Jordan

EU3

Lebanon

South Korea

Note: lines show economic complexity indices (ECIs), which range from -2.8 to 2.8 with higher values indicating higher levels of 
economic complexity. For greater clarity of the graphic, these are 3-year moving averages, the EUs denotes an average for Germany, 
France and Italy. 
Source: Ecorys’ calculations based on the data from The Atlas of Economic Complexity, 2020 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 10. Average concentration of SMC exports to the EU and all countries 

0,2

0,18

0,16

0,14

0,12

0,1

0,08

0,06

0,04

0,02

0

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

EU27 Members

World

Note: average Herfindahl-Hirschmann index of export diversification for exports of all six SMCs the EU27 and all countries calculated 
across products at the 3-digit level of SITC Rev 3 product classification, 1 denotes a complete concentration while 0 a complete 
diversification. Source: Ecorys’ calculations based on the data from The Atlas of Economic Complexity, 2020. 

EQ1.c: What are the factors influencing the achievement of those objectives? To what 
extent are those factors linked to the EU intervention (the scope of Euro-Med FTAs)?  

The  extent  to  which  the  trading  partners  could  take  advantage  of  the  market  access 
improvements  varies  by  country  and  sector.  The  comparison  of  the  CGE and  PE  results, 
suggests  that  taking  advantage  of  the  newly  created  market  access  opportunities  was 
impeded  by  other,  non-tariff  factors.  There  have  been  various  factors  at  play  that  have 
made  it  difficult  to  seize  these  opportunities.  As  per  the  evaluation  questions,  the 
evaluation  divided  them  into  aspects  of  the  EU  intervention  (the  scope  of  the  Euro-Med 
FTAs) and other factors.  

Role of the Euro-Med FTA in seizing the opportunities of improved market access  
The results of this evaluation suggest that that the FTAs have affected the extent to which 
parties could take advantage of the market access opportunities, in three ways:  

  Remaining  barriers.  As  the  Euro-Med  FTAs  focused  on  tariff  reductions,  many 
non-tariff  measures  were  not  addressed  in  these  FTAs,  while  these  NTMs  can  be 
more  important  for  market  access  than  tariffs.  Additionally,  other  factors  related 
closely  to  trade  in  goods  such  as  services  and  FDI  have  only  been  covered  to  a 
limited extent; 

  Limited  effectiveness  with  which  the  institutional  structures  of  the  FTAs  were 
able to address the remaining or arising concerns. While the EU and the SMCs’ 
governments meet on a bilateral basis to discuss barriers, both barriers that violate 
the Euro-Med FTAs (e.g. the import tariff increase in Algeria) or are outside of the 
strict  provisions  of  the  Euro-Med  FTAs  (e.g.  a  registration  of  EU  exporters  in 
Egypt), the problems are often not easily solved; 

21 

 
 
 
 
 
 
 
 
 
  The  rules  of  origin.  Rules  of  origin  (RoO)  are  an  integral  part  of  FTAs,  to 
determine under which conditions a product can be considered as being produced in 
the  FTA  partner  country.  The  evaluation  found  limited  evidence  for  this  element 
being a major barrier for SMC exports. The double-transformation rule applicable 
in  the  textiles  and  clothing  sector  was  flagged  by  several  regional  industry 
representatives  during  the  consultations.  They  claimed  it  undermined  their 
competitiveness  in  the  EU  market  vis-à-vis  third-country  producers,  notably  from 
Asia, which can use cheaper inputs. It should be noted that it is difficult to assess 
how  much  this  affects  their  competitiveness,  as  a  single  transformation  method 
could  have  other  implications  (e.g.  it  could  potentially  lead  to  a  decrease  of  EU 
investment in the SMCs). 

Other factors limiting the opportunities of increased market access 
While  aspects  of  the  FTAs  play  a  role  in  seizing  the  opportunities  stemming  from  the 
increased market access, many other factors are at play outside of the FTAs , including: 

 

Increased  access  of  third  countries  to  the  EU  market.  Some  third  countries  have 
competitive advantages over the SMCs, reflected in lower production costs, which 
are  a  result  of,  for  example,  lower  wages  and  economies  of  scale  and  making  it 
difficult for SMCs to maintain or increase their market shares; 

  Constraints  in  the  business  environment  as  barrier  to  structural  adjustment  and 
trade. Institutional development and the functioning of product and factor (labour 
and capital) markets in SMCs remains a challenge. The literature suggests that this 
has a significant impact on the ability to take advantage of changes implied by trade 
liberalisation,  to  attract  FDI  and  the  ability  to  integrate  with  international  supply 
chains; 

  Entrepreneurship and competitiveness. A lack of entrepreneurship could be a factor 
affecting  the  extent  to  which  opportunities  are  seized.  Nevertheless,  selected 
measures  of  competitiveness  considered  in  the  evaluation  suggest  that  it  has 
stagnated or even worsened over time in some SMCs, which is also related to the 
business  environment.  Competitiveness  and  business  environment  performance 
tend  to  be  more  directly  influenced  by  the  individual  policy  choices  made  by 
national  governments  to  reform  their  economies;  these  developmental  and 
institutional  challenges  determine  SMCs’  structural  adjustment  abilities.  These 
challenges may also explain why the gains from trade may not materialise or take 
much time; 

  Opportunities  in  other  markets.  The  consultations  and  sector  case  studies  also 
showed that exporters look for the best opportunities. Entering a new market comes 
with  costs,  and  these  costs  are  weighed  against  the  expected  benefits.  Several 
business  representatives  considered  the  costs  of  entering  the  EU  market  as 
relatively high given the high standards and technical requirements.  

Overall, the relatively narrow scope of the Euro-Med FTAs has to some extent affected the 
degree  to  which  parties  could  take  advantage  of  the  new  market  access  opportunities. 
22 

 
 
There were, however, other factors at play outside of the Euro-Med FTAs that influenced 
the achievement of their objectives. 

technical  barriers 

Non-tariff measures (NTMs) 
Overall, NTM provisions in Euro-Med FTAs are much more limited than commitments on 
NTMs seen in the EU’s more advanced trade agreements. The latter contain more specific 
technical  cooperation  and 
provisions  on 
approximation  of  technical  regulations  and  standards  and  conformity  assessment  or 
marking  and labelling  as well as  definitions, and provisions on regulatory  approximation 
recognition  and  determination  of  equivalence  in  the  area  of  sanitary  and  phytosanitary 
measures. The Euro-Med FTAs only encourage cooperation in this area and provide only a 
broad guidance. 

trade  concerning 

to 

The evaluation found that NTMs have likely been a significant factor in impeding trading 
partners from taking advantage of tariff liberalisation due to the Euro-Med FTAs:  

  The analysis suggests that NTMs  which apply to EU-SMC trade may have larger 
effects on trade flows than tariffs (which, after the implementation of the Euro-Med 
FTAs, are low);  

  The public consultations revealed that NTMs, because of their lesser transparency 
and  higher  trade  restrictiveness,  are  indeed  still  a  major  factor  constraining  the 
realisation of gains from tariff liberalization as a result of the Euro-Med FTAs; 

  The  NTMs  tend  to  be  a  relatively  frequent  element  of  the  trade  picture  and  they 

tend to concentrate in the category of technical measures (SPS and TBT).  

Overall, the assessed impact of NTMs on Euro-Med trade suggests that an implementation 
of a trade-friendly NTM policy could be conducive to more Euro-Med trade.  

Barriers to FDI and trade in services 
While  the  Euro-Med  FTAs  only  partially  cover  services  trade  or  FDI  and  the  impact  of 
these direct provisions seems limited, both of these activities are related in important ways 
to trade in goods, which is subject to significant liberalisation in these Euro-Med FTAs. To 
the extent the FTAs influence trade in goods through tariff reductions, they influence the 
level of FDI and services trade in the Euro-Med region. In addition, developments in FDI 
and  services  trade,  which  may  be  not  directly  caused  by  tariffs  or  trade  in  goods,  may 
shape the effects of Euro-Med FTA tariff reductions. 

The  analysis  of  restrictiveness  of  FDI  and  trade  in  services  as  well  as  FDI  and  services 
trade  flows  in  SMCs  suggests  that  while  some  regulations  in  these  areas  have  been 
liberalised10, the remaining restrictions and the overall economic and political situation in 
the region have impeded the realisation of gains from liberalisation of trade in goods.  

10  The  OECD  FDI  Regulatory  Restrictiveness  Index:  https://www.oecd.org/investment/fdiindex.htm.  and  WTO-World  Bank  Services 

Trade Restrictions Index (STRI):  https://www.worldbank.org/en/research/brief/services-trade-restrictions-database 

23 

 
 
 
 
 
                                                 
For both FDI and trade in services, the collected evidence thus suggests that the FTAs were 
likely one of the important factors that helped SMCs in expanding their FDI and services 
trade,  although  they  were  likely  not  the  only  factor.  However,  important  barriers  to  FDI 
and services trade persist in the SMCs and impede the gains from the Euro-Med FTAs 

Rules of origin  
Rules  of  origin  are  integral  elements  of  FTAs.  They  can  nevertheless  differ  from  one 
product  to  another  and  from  one  trade  agreement  to  another,  and  some  RoO  are  more 
restrictive than others. Particularly when production occurs in international supply chains, 
where  products  from  countries  outside  of  the  FTA  serve  as  inputs  to  products  of  partner 
countries, more restrictive RoO can have an impact on both extra- and intra-FTA trade.  

RoO  were  one  of  the  main  factors  raised  in  public  consultations  as  factors  lowering  the 
degree  to  which  the  six  SMCs  could  use  the  opportunities  stemming  from  the  FTAs. 
Nevertheless,  this  claim  finds  limited  support  in  the  economic  analysis  in  this  area 
conducted as part of this evaluation.  

Observed preference utilisation rates11 are already high and increasing for SMCs’ exports 
to  the  EU  market  (rates  ranging  from  76%  in  the  case  of  Jordan  to  98%  in  the  case  of 
Morocco,  Figure  16),  meaning  that  most  economic  operators  are  able  to  meet  the  RoO 
requirements  to  qualify  for  preferential  tariff  treatment  offered  by  the  Euro-Med  FTAs. 
Utilisation rates for EU exports to SMCs are lower (ranging from 24% in Tunisia to 77% 
in Morocco, Figure 17) but they have been increasing. The more modern RoO proposed in 
the  negotiations  for  a  modernized  Pan-Euro-Mediterranean  (PEM)  Convention  could 
further boost trade and preference utilisation. 

Figure 16. Preference utilisation rates for exports from SMCs to EU (%) 

100
90
80
70
60
50
40
30
20
10
0

Algeria

Egypt

Jordan

Lebanon

Morocco

Tunisia

Other
European
countries*

Other
countries
not
European**

* Other European countries: Iceland, Switzerland, Turkey, Macedonia, Albania, Bosnia Herzegovina, Montenegro, Serbia. 
* Other countries not European: Mexico, Chile, South Korea, Nicaragua. 

2009

2018

11  Preference  utilisation  rate  is  typically  calculated  as  the  share  of  the  value  of  trade  that  enters  the  market  under  the  preferential 
treatment in the overall value of trade that enters the market and is in principle eligible for preferential treatment. In order to benefit from 
a preference under a given FTA, entities engaged in trade must prove the origin of traded goods, which may be difficult or costly. For 
example, information on preferential tariffs may be not easily accessible, but difficulties may be faced in preparing and submitting the 
necessary documentation, also due to overly complex and long administrative procedures. All these factors add to costs of complying 
with RoO. If the difference between the non-preferential and preferential tariff rates is not large enough to compensate for these costs, 
traders may decide not to claim the preferential market access under the FTA but rather ship their products under the non-preferential 
treatment. Therefore, preference utilisation rates are indicators of both the size of the preferential margin associated with the FTA and 
the  costs  associated  with  proving  origin,  i.e.  they  are  indicators  of  the  overall  ‘value’  of  preferences.  However,  they  are  not  a 
straightforward indication of restrictiveness of RoO. 

24 

 
 
 
 
                                                 
Source: The Use of the EU’s Free Trade Areas, UNCTAD (2018), except the data for SMCs in 2018 for which data was sourced from 
the  Individual  reports  and  info  sheets  on  implementation  of  EU  Free  Trade  Areas,  published  by  the  European  Commission  on  31 
October 2018.12  

Figure 17. Preference utilisation rate EU exports to SMCs (%) 

90
80
70
60
50
40
30
20
10
0

Algeria

Egypt

Jordan

Lebanon

Morocco

Tunisia

Other
European
countries*

Other
countries
not
European**

2009

2018 (or the most recent year)

* Other European countries: Iceland, Switzerland, Turkey, Macedonia, Albania, Bosnia Herzegovina, Montenegro, Serbia. 
* Other countries not European: Mexico, Chile, South Korea, Nicaragua. 
The last recent year: 2013 for Algeria, Tunisia and all other countries; 2018 for Egypt, Jordan and Lebanon, 2017 for Morocco. 
Source: The Use of the EU’s Free Trade Areas, UNCTAD (2018), except the data for Egypt, Jordan, Lebanon and Morocco in the most 
recent for which data was sourced from the Individual reports and info sheets on implementation of EU Free Trade Areas, published by 
the European Commission on 31 October 2018. 

Business environment 
Institutional  development  and  the  functioning  of  product  and  factor  (labour  and  capital) 
markets  in  SMCs  lag behind  the EU, as  well as  other countries with  comparable income 
per  capita  levels.  The  evaluation  and  analysed  literature  suggests  that  these  have  a 
significant  impact  on  the  ability  to  adjust  and  take  advantage  of  trade  liberalisation, 
particularly when it comes to integration with international supply chains. 

The  constraints  in  the  business  environment  were  confirmed  in  the  stakeholder 
consultations  and  sector  case  studies.  Business  representatives  from  SMCs  pointed  for 
example  to  the  high  level  of  bureaucracy,  lack  of  access  to  finance  or  lack  of  internal 
government  support  policies.  The  case  studies  showed  that  government  support  policies 
can  be  an  important  explanatory  factor  for  the  success  (or  lack  thereof)  of  exporting 
industries.  For  example,  the  government  policies  in  Morocco  that  have  promoted  inward 
FDI  and  innovation  have  played  a  role  in  the  development  of  exports  of  machinery  and 
equipment. In contrast, Lebanon has had almost no specific supportive policies.  

Challenges to taking advantage of market access improvements: evidence from sector case 
studies 
The sector cases studies of the Textiles and clothing, Machinery and transport equipment, 
Agriculture  as  well  as  Chemicals  were  conducted  to  better  understand  the  impact  of  the 
FTAs. While large differences were found among the studied countries and sectors, some 
global trends help explain the extent to which the countries could benefit from the FTAs.  

12 Commission Staff Working Document, Individual reports and info sheets on implementation of EU Free Trade Areas, Accompanying 
the document, Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and 
the  Committee  of  the  Regions  on  Implementation  of  Free  Trade  Areas,  1  January  2017  -  31  December  2017,  COM(2018)  728  final, 
available  at  https://ec.europa.eu/transparency/regdoc/rep/1/2018/EN/COM-2018-728-F1-EN-MAIN-PART-1.PDF  (accessed  19  August 
2019). 

25 

 
 
 
 
 
 
                                                 
All Textiles and Clothing industries in the selected countries were affected by exogenous 
factors  such  as  the  ending  of  the  Multi  Fibre  Agreement13  and  rising  competition  from 
labour-abundant  countries  in  Asia,  whereas  some  of  them  also  had  to  deal  with  the 
economic consequences of the Arab Spring (e.g. labour unrest, limited FDI inflow).  

The  impact  of  the  FTAs  on  the  Machinery  and  transport  equipment  sector  in  Algeria, 
Egypt,  Morocco  and  Tunisia  is  mixed.  Intra-industry  trade  with  the  EU  in  this  largely 
differentiated sector is important, but most of SMCs have not been able to diversify their 
exports.  

The  analysis  of  the  Chemicals  industry  shows  that  while  trade  flows  increased,  most 
exports  from  the  SMCs  are  concentrated  in  basic  chemicals  and  little  diversification  has 
taken place.  

In Agriculture, SMCs have been able to increase their exports to the EU, especially in the 
fruits and vegetable subsector.  

EQ2: Have the EU FTAs with the Euro-Med countries (the six SMCs) given rise to 
other (including unintended) consequences? If so, which ones? 

The  evaluation  investigated  the  social,  human  rights  and  environmental  impacts  of  the 
FTAs, as well as their effects on LDCs and developing countries. Sustainable growth was 
one of the main objectives of the Barcelona Declaration. The Euro-Med FTAs themselves 
do  not  have  specific  objectives  for  social  issues,  human  rights,  environmental  matters  or 
third countries. Social and environmental issues are dealt with in the other chapters of the 
Association Agreements, especially in terms of cooperation on these topics. The way the 
evaluation approached sustainability effects was therefore as ‘accompanying’ effects of the 
FTAs, where special focus was placed on detecting any unintended negative effects of the 
FTAs. 

The results of the analysis generally find that the impacts in these areas have been limited. 
The detailed case studies conducted as part of the sustainability  analysis showed that the 
role of the FTAs in developments in these areas was small compared with other factors. 

Social and human rights impact 
Impact areas that were identified as particularly relevant in relation to the FTAs in terms of 
social and human rights were employment, income, labour conditions, gender and the right 
to food.14 

13  Under  the  Multi  Fibre  Agreement,  industrial  countries  imposed  quota  restrictions  on  textile  and  clothing  exports  from  developing 
countries.  With  the  phasing  out  of  this  agreement,  opportunities  emerged  for  exporting  countries,  and  as  a  result,  a  worldwide 
reallocation of production took place. 
14 While other areas (e.g. social protection, social dialogue, poverty reduction, vulnerable groups, as well as other economic, social and 
cultural rights)14 have also been investigated through literature review and consultations, no evidence on a link with the FTA was 
identified. 

26 

 
 
 
 
 
 
 
 
 
 
                                                 
The impact of the FTAs have been found positive with respect to social indicators, both in 
the  EU  and  the  SMCs,  with  higher  welfare,  higher  wages  for  both  low-skilled  and  high-
skilled labour, and lower consumer prices.15  

A  case  study  of  employment  effects  of  the  FTAs  focusing  on  Textiles  and  clothing  and 
Chemicals,  plastics  and rubber  in  the  SMCs  has  estimated  that  the  Euro-Med  FTAs  had 
only a small effect on employment.  

Gender-related  impacts  were  examined  via  an  analysis  of  female  employment  in  the 
agricultural sector. The case study on female employment in the agricultural sector showed 
that women face particular challenges (e.g. due to lack of education or access to specific 
networks). Moreover, access to finance tends to be identified as a key issue linked to lower 
wages  or  employment.  With  respect  to  female  employment  in  the  sector,  the  case  study 
observed that it went down in all SMCs except in Morocco and Egypt. The trends in SMCs 
are  difficult  to  link  to  changes  in  agricultural  trade  with  the  EU,  but  appear  to  be  more 
associated with structural changes in the SMC economies. It is therefore difficult to draw 
strong conclusions on FTA-related effects on gender. 

Impact of the Euro-Med FTAs on working conditions has been either neutral (e.g. because 
EU  investors  only  complied  with  local  regulations)  or  positive  (conditions  improved  in 
response to demand of EU buyers). 

The  FTAs  have  also  helped  improve  access  to  food,  as  staple  foods  such  as  cereals  can 
now be imported from the EU at lower prices.  

Environmental impact 
The CGE modelling results show that despite the economic growth predicted by the model, 
CO2 emissions in the SMCs are estimated to be lower with the Euro-Med FTAs in place 
than  without  them.  This  is  largely  due  to  a  change  in  sector  structures,  where  more 
polluting sectors in SMCs (notably other manufacturing) contracted as a result of the FTA.  

A  case  study  on  air  emissions  looked  at  air  pollutants  Carbon  monoxide  (CO),  nitrogen 
oxides (NOx), fine particulates and dust (PM), sulphur dioxide (SO2), and volatile organic 
compounds  (VOCs))  as  well  as  CO2  effects  in  Egypt,  Jordan,  Morocco  and  Tunisia. 
Emissions have clearly increased over the evaluation period, but the impact of the FTA on 
air pollutants and greenhouse gas (GHG) emissions is estimated to be overall small (Table 
7  and  8).  The  analysis  shows  the  FTA  contributed  to  a  reduction  in  some  air  pollutants 
(e.g.  a  reduction  of  SO2  emissions  in  the  four  countries  analysed)  and  to  an  increase  in 
others (e.g. an increase in NOx emissions in Egypt and Jordan), depending on the country 
and the pollutant.  

The same case study also showed increased production of energy from renewable sources 
(solar, wind) and energy efficiency in the SMCs over the evaluation period.  

15 With the exception of consumer prices in the EU, which have very marginally increased based on CGE results.  

27 

 
 
 
 
 
 
 
 
 
                                                 
Table 7. Relative importance of FTA induced reduction/increase of emissions  

Emission (EORA data 
2013) 
JO 
EG 
MA  TN 
0.4 
0.1 
313  218  752  215 
NOx emissions (Gg) 
-0.6  0.0 
185  157  273  139 
PM10 emissions (Gg) 
SO2 emissions (Gg) 
-0.8 
-0.6 
473  254  750  230 
Source: authors’ own calculations based on CGE results provided by DG Trade, European Commission using 
the MIRAGE model and EORA database. 

FTA effect as % of total 
emissions 
TN 
-0.3 
1.6 
-2.4 

JO  MA 
-4.6 
-4.7 
-11.5 

EG 

Table 8. Relative importance of FTA induced reduction/increase of GHG (CH4, N2O, 
CO2) emissions 

Total GHG 
emissions 2015 
(CO2eq) GG 

FTA effect as 
% of total 
emissions 

Morocco 
Tunisia 
Egypt 
Jordan 
Source: Ecorys calculations based on CGE results provided DG Trade, European Commission using the 
MIRAGE model and EORA database. 

84,102  
41,236  
322,743  
33,027  

-5.4 
-1.8 
-1.5 
-0.4 

An analysis of trade in  environmental  goods16  revealed that the FTAs facilitated trade in 
these  goods,  and  thereby  indirectly  contributed  to  the  greening  of  the  economy  in  the 
SMCs. Imports to SMCs of environmental goods from the EU have expanded significantly 
over the period examined in this evaluation (Figure 18); 

Figure 18. SMCs trade in environmental goods (EG), global and with the EU, 1998-2017 (US$m) 

18.000
16.000
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0

TOTAL imports from the EU

TOTAL exports to the EU

TOTAL imports from the World

TOTAL exports to the World

Linear (TOTAL imports from the EU)

Linear (TOTAL imports from the World)

Source: Ecorys analysis using UN Comtrade data and the WTO definition of environmental goods. 

With  respect  to  water  and  waste,  the  SMCs  clearly  face  challenges,  but  based  on 
stakeholder  consultations,  the  effect  of  the  FTAs  is  mixed.  While  the  increase  in 

16 Please note there is no consensus on what environmental goods are. The definition of environmental goods used in this evaluation is 
the  WTO  “Friends  list”  (see  WTO  document  “JOB(07)/54”)  which  has  been  elaborated  with  countries  participating  to  the  WTO 
negotiations on the Environmental Goods Agreement (EGA). 

28 

 
 
  
 
 
 
 
                                                 
production  as  a  result  of  the  FTA  is  likely  to  have  had  a  negative  impact,  changes  in 
production  structures  could  have  positive  impacts.  Stakeholders  pointed  to  the  positive 
effects  of  interaction  with  the  EU,  e.g.  through  technology  improvements  as  well  as 
through regulations and requirements in this area. 

Some stakeholders have also pointed to negative impacts on animal welfare of the FTAs, 
as  the  FTAs  have  contributed  to  increased  EU  exports  of  live  animals,  which  face  poor 
conditions in SMCs both during their lifetimes, as well as transport and slaughtering.  

Effects on developing countries and LDCs 
As far as effects on developing countries and LDCs are concerned, imports of SMCs from 
China and Turkey were  found to  have decreased the most as a result of the FTAs, while 
other countries in  the North African  and the Gulf regions  also  saw decreases. The sector 
case studies did not identify a major negative impact on trade with LDCs. 

Overall,  according  to  the  modelling  results,  imports  from  LDCs  into  SMCs  and  the  EU 
show a decrease, but, for most FTAs, this decrease is small (reduction of €35m of exports 
to SMCs (-3.1%), and a reduction of €139m of export to the EU (-0.3%), for all four FTAs 
combined)  compared  to  the  effects  on  other  trade  partners  (Figure  20).  The  sector  case 
studies did not identify a major impact on direct trade with LDCs either. In terms of value-
chain effects, an increase in imports of SMCs from LDCs (notably Bangladesh) has been 
observed  in  the  textile  and  clothing  sector,  as  these  imports  provide  low-cost  inputs  and 
therefore help the sector to remain competitive. 

Figure 20. Absolute simulated effects of Euro-med FTAs on the SMC’s imports (other than between 
Egypt, Jordan, Morocco and Tunisia) (€bn) 

Turkey

LDC

Rest of
Northern
Africa

Rest of
Western
Asia

Israel

Gulf
countries

China

Rest of the
world

Jordan

Egypt Morocco

Tunisia

n
o
i
l
l
i
b
,
€

0

-0,2

-0,4

-0,6

-0,8

-1

-1,2

-1,4

-1,6

Source: Ecorys 

Efficiency 

EQ3: To what extent have the EU FTAs with the six partner countries been efficient 
in achieving their objectives?  

29 

 
 
 
 
 
 
 
 
 
 
 
 
EQ3.a:  To  what  extent  are  the  costs  associated  with  the  FTAs  proportionate  to  the 
benefits they have generated? What factors influence those costs and benefits? How 
proportionate  were  those  costs  borne  by  different  stakeholder  groups,  taking  into 
account the distribution of benefits? 

Direct costs of compliance 
Costs  of  compliance  of  these  first-generation  FTAs  (e.g.  adjusting  the  collected  import 
duty  rates)  have  not  been  large  and  are  not  a  major  issue  currently.  The  preference 
utilisation  rates,  for  example,  are  usually  taken  as  an  indication  of  costs  of  compliance 
(including complying with RoO) and these show that the take up of preferences by SMCs 
exporters is widespread and has generally grown over the last decade. Utilisation rates of 
Euro-Med FTA tariff preferences used by EU exporters when accessing SMC markets are 
lower but have also grown (see Figures 16 and 17).  

Structural adjustment costs: reallocations or labour and capital across sectors 
The qualitative analysis and consultations have not identified specific (vulnerable) groups 
that have been clearly negatively affected. Nevertheless, the CGE and PE simulations show 
that some sectors, such as textiles and wearing apparel, expanded their output while others 
(Figure 21), including chemical, rubber and plastics, and other manufactures, contracted in 
SMCs.  

Figure 21. Absolute estimated effects of Euro-med FTAs on sectorial output (€m, 2018) 

8
1
0
2
,
n
o
i
l
l
i

m

,
€

1200

1000

800

600

400

200

0

-200

-400

-600

-800

Source: DG Trade, European Commission using the MIRAGE model.  

Jordan

Egypt Morocco

Tunisia

Indirect economic costs: trade balance  
The analysis showed deteriorating bilateral  trade  balances for SMCs  (see  Figures 22 and 
23).  The  question  is,  however,  whether  these  deteriorating  trade  balances  can  be 
considered  as  economic  costs.  It  is  widely  agreed  that  bilateral  trade  balances  are  not 
meaningful  and  that  it  is  the  intertemporal  consumption  and  investment  preferences  and 
imbalances  between  savings  and  investment  or,  alternatively,  production  (income)  and 
consumption,  which  are  the  primary  drivers  of  trade  balances.  Consequently,  fiscal, 
monetary and structural  policies are considered their primary  policy levers as they  shape 
national saving-investment relations.  

30 

 
 
 
 
 
 
 
 
 
Overall trade balances and more generally current account balances (including other cross 
border  transactions  than  just  goods  trade)  are  widely  agreed  to  be  determined  by 
macroeconomic  factors  such  as  savings  and  investment  decisions  rather  than  by  trade 
policy. In the case of countries with large ex-patriate communities working in jobs abroad, 
remittances sent to their families at home are an additional important factor contributing to 
a negative current account balance. Bilateral trade policies such as the Euro-Med FTAs can 
have  an  influence  on  how  the  overall  current  account  balance  is  distributed  over  a 
country’s trading partners, but do not meaningfully change its total value. 

Trade data show also  that in  the cases of Egypt, Jordan, Lebanon, Morocco and Tunisia, 
while  the  overall  trade  balances  have  deteriorated,  bilateral  balances  with  the  EU  either 
improved  or  deteriorated  less  rapidly  since  the  entry  into  force  of  the  Euro-Med  FTAs, 
suggesting that trade with the EU might have been a mitigating factor.  

Figure 22. The simulated effects of Euro-Med FTAs on bilateral trade balances: EU & SMCs (€bn) 

6

5

4

3

2

1

0

-1

-2

-3

Egypt

Jordan

Morocco

Tunisia

Algeria

Lebanon

Note: X - exports to EU M - imports from EU and X-M - trade balance. 
Source: DG Trade, European Commission using the MIRAGE model. 

X-M X M

31 

 
 
Figure 23. Trade balance with the EU and the Rest of World (€m) 

Algeria 

Trade balance

R
U
E

s
n
o

i
l
l
i

M

40

20

0

-20

Egypt 

R
U
E

s
n
o

i
l
l
i

M

Trade balance

0
-10
-20
-30
-40
-50

Lebanon 

R
U
E

s
n
o

i
l
l
i

M

1995

2000

2005

2010

2015

2020

1995 2000 2005 2010 2015 2020

European Union

Rest of World

European Union

Rest of World

Lebanon Trade balance

Trade balance

Morocco 

0

-5

-10

-15

R
U
E

s
n
o

i
l
l
i

M

0

-5

-10

-15

-20

-25

1995 2000 2005 2010 2015 2020

European Union

Rest of World

1995 2000 2005 2010 2015 2020

European Union

Rest of World

Source: Ecorys calculation based on data from UN-Comtrade Database, extracted from WITS. 

32 

Jordan 

R
U
E

s
n
o

i
l
l
i

M

Tunisia 

R
U
E

s
n
o

i
l
l
i

M

Trade balance

0
-2
-4
-6
-8
-10
-12
-14
-16

1995 2000 2005 2010 2015 2020

European Union

Rest of World

Trade balance

0

-5

-10

-15

1995 2000 2005 2010 2015 2020

European Union

Rest of World

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indirect economic costs: tariff revenues 
The loss of tariff revenues could be considered as another type of economic cost. Overall, 
the impacts on tariff revenue both in SMCs and in the EU have to be seen in the context 
of the discussed impacts on GDP and welfare, which already ‘net out’ the effect of tariff 
revenue reductions, and are positive on balance.  

Sustainability costs 
The  preceding  discussion  of  effects  in  the  areas  of  social  and  human  rights  and 
environment suggests that overall, these effects are small.  

EQ3.b What are the main inefficiencies and unnecessary regulatory costs (including 
administrative burden)? What is the potential for simplification? 

The  evaluation  found  that  inefficiencies  and  outstanding  regulatory  costs  mainly  stem 
from remaining barriers and some estimates in the economic literature suggest these costs 
may  be  larger  in  terms  of  their  negative  impact  on  trade  than  the  effects  of  tariff 
liberalisation brought about by the FTAs.  

Coherence 

EQ4: To what extent have the EU FTAs with the six SMCs been coherent with the 
European Neighbourhood Policy (ENP), Association Agreements, action plans and 
Partnership Priorities and with the current EU trade policy? 

Coherence with other parts of the Association Agreements 
The Euro-Med FTAs have been most coherent with the following wider objectives of the 
Association Agreements: 

  Political  dialogue  (to  the  extent  that  stronger  commercial  relations  facilitate 

political co-operation); 

  Regional  cooperation,  especially  on  issues  related  to  fostering  intra-Med  trade 

and on customs matters (e.g. in the area of RoO); 

  Development of economic infrastructure (e.g. through the FTAs’ effects on trade 

and FDI); 

  Research  in  science  and  technology,  education  and  training  and  scientific  and 
technological  co-operation  (to  the  extent  that  this  is  fostered  through  trade  and 
FDI-related  knowledge  technology  transfer  and  supported  by  trade-related 
technical assistance); 

  Environment (e.g. through trade in environmental goods, reductions in emissions 

and co-operation on environmental matters); 

  Cooperation  in  standardisation  and  conformity  assessment,  development  of 
the  establishment  of  common  or  harmonised 
regional 
programmes  and  policies;  and  approximation  of  legislation  (to  the  extent  that 

institutions  and 

33 

 
 
 
 
 
 
trade  fosters the incentives to  do so,  for  example in  the area of  co-operation  on 
NTMs and other regulations,); 

  Cooperation 

in 

the  areas  of  Agriculture  and 

fisheries;  Transport; 
Telecommunications  and  information  technology;  Energy  and  Tourism  (also  to 
the  extent  that  commercial  exchanges  in  these  areas  are  fostered  through  trade 
and FDI and trade-related knowledge technology transfer). 

Coherence with the ENP and Action Plans 
In addition  to  the Euro-Med FTAs, as  part of the European Neighbourhood Policy, the 
EU had developed Action Plans for the cooperation with its partners in the Mediterranean 
region. The Action Plans are political documents providing the strategic objectives of the 
cooperation  between  the  Mediterranean  countries  and  the  EU.  The  specific  Partnership 
Priorities  are  different  for  each  SMC,  but  they  are  concentrated  around  a  number  of 
common broad themes such as: 

  Political dialogue, governance, the rule of law and the promotion of fundamental 

rights; 

  Cooperation, socio-economic development, including employment, as well as 

trade and investment; 

  The green transition, energy, the environment and sustainable development; 

  Enhancing stability and strategic and security dialogue, as co-operation in the 

area of foreign policy, co-operation on counter-terrorism; 

  Human development, including education, and migration and mobility. 

As was the case with the wider provisions of the Association Agreements, the Euro-Med 
FTAs  are  coherent  with  these  priorities  because  trade  relations  foster  economic  co-
operation  and  boost  productivity,  inclusion,  and  income.  The  latter  generally  facilitates 
the  achievement  of  the  wider  objectives  such  as  those  specified  in  the  European 
Neighbourhood Policy and the associated Partnership Priorities agreed with the SMCs.  

Relevance 

EQ5: To what extent are the provisions of the EU FTAs with the six SMCs relevant 
for addressing current trade issues faced by the EU and these partners? 

The Euro-Med FTAs removed the costs of trade associated with tariffs and in this regard, 
they  have  played  a  significant  role  in  fostering  Euro-Med  trade.  However,  given  the 
nature  of  trade  relations  in  modern  GVCs,  which  rely  on  the  ability  to  minimise  also 
other costs incurred along the whole value chain, the Euro-Med FTAs have become less 
relevant  for  addressing  current  trade  barriers.  The  limited  coverage  of  barriers  that  are 
relevant  for  current  trade,  namely  those  related  to  NTMs,  services  and  FDI,  and  the 
limited provisions on sustainability, imply that these FTAs are no longer  fully coherent 
with the current trade issues faced by the EU and the SM partners. The evaluation shows 
also that participation in European supply chains is of growing importance in the SMCs 
and that it brings about significant gains from trade. 

34 

 
 
 
6. 

CONCLUSIONS 

The evaluation found that the Euro-Med FTAs have largely delivered the objectives set 
for  them.  They  created  new  opportunities  for  Euro-Med  trade,  enhanced  the  economic 
performance  in  both  the  EU  and  SMCs  and  were  also  an  important  factor  supporting 
intra-Med  trade  initiatives  (i.e.  the  Agadir  Agreement  and  the  Regional  Convention  on 
Pan-Euro-Mediterranean preferential  rules of origin). They contributed to achieving the 
broader  goals  of  the  European  Neighbourhood  Policy,  the  Association  Agreements, 
Action  Plans  and  Partnership  Priorities.  They  also  had  a  positive  impact  on  social 
indicators, with no major unintended consequences in this area. Likewise, environmental 
impacts  appear  to  have  been  small  and  mixed,  while  the  FTAs  are  found  to  have 
facilitated trade in environmental goods. 

As far as the overall context is concerned, the impact of COVID-19 on value chains has 
shed new light on Euro-Med FTAs and on the need to address current trade barriers and 
trade  challenges  faced  by  the  EU  and  the  SMCs.  The  current  framework  of  Euro-Med 
FTAs is no longer fully coherent with the Communication on EU Trade Policy Review 
from  18  February  202117  and  the  revised  objectives  stated  in  the  Communication  on 
Renewed  EU  Partnership  with  the  countries  of  the  Southern  Neighbourhood18.  In  line 
with  these  Communications  the  EU  is  ready  to  modernise  the  trade  and  investment 
relations with the interested SMCs, to better adapt them to today’s challenges. 

Effectiveness 
The analysis of the impact on trade and selected other economic indicators shows that the 
overall effects of the Euro-Med FTAs on trade, GDP, welfare, consumers and workers in 
the  EU  and  in  the  SMCs  have  been  positive.  All  SMCs  have  been  estimated  to  have 
gained in terms of welfare and income. However, due to differences in initial tariff levels 
and  because  of  the  gradual  erosion  of  the  effective  Euro-Med  tariff  preferences  due  to 
external  factors,  the  Euro-Med  FTAs  have  generated  fewer  new  market  access 
opportunities than may have been intended at their conception. Nevertheless, the goals of 
the  Euro-Med  FTAs  to  expand  the  trade  relationship  and  to  safeguard  existing  market 
access  for the SMCs to the EU, which would have been lost without these  FTAs, have 
been achieved.  

Diversification  and  economic  complexity  of  exports  of  SMCs  have  recorded 
improvements since the entry into force of the Euro-Med FTAs although the EU market 
is  still  challenging  for  SMC  producers  when  it  comes  to  diversifying  their  export 
structures and competing in markets for more complex products.  

17 https://trade.ec.europa.eu/doclib/docs/2021/february/tradoc_159438.pdf 

18 https://eeas.europa.eu/sites/default/files/joint_communication_renewed_partnership_southern_neighbourhood.pdf 

35 

 
 
  
 
 
 
                                                 
 
The  tariff  reductions  associated  with  the  Euro-Med  FTAs  were  not  as  effective  in 
advancing the objective of promotion of intra-Med trade as they were in advancing the 
Euro-Med trade. However, the regional agreements, such as the Agadir Agreement and 
the Regional Convention on pan-Euro-Mediterranean preferential rules of origin, which 
was a step in promoting greater harmonisation and simplification of rules of origin  in the 
region, were inspired by the Euro-Med FTAs and were building blocks in the process of 
promoting intra-Med trade. 

The  relatively  narrow  scope  of  the  Euro-Med  FTAs  has  affected  the  degree  to  which 
partners could take advantage of the new market access opportunities. The analysis has 
shown that while tariffs have largely been eliminated on trade between the EU and the 
SMCs, many barriers related to non-tariff measures still remain. To take full advantage of 
the  opportunities  offered  by  the  FTAs,  reduction  of  barriers  stemming  from  non-tariff 
measures, with a focus on the most pressing ones (such as non-automatic import licences; 
unnotified technical regulations, which cause unpredictability and seriously distort local 
business operations) would be important. This involves considering simpler procedures, 
agreeing on internationally recognised standards and avoiding unnecessary duplication of 
conformity assessments or other administrative procedures.  

Other factors related closely to trade in goods such as services and FDI have only been 
covered  to  a  limited  extent  in  the  current  Euro-Med  FTAs.  Moreover,  full  and  correct 
implementation  of  the  Euro-Med  FTAs  remains  key  for  the  expected  benefits  of  the 
FTAs to come into effect for both sides. However, the implementation status varies from 
one  Euro-Med  FTA  to  another.  While  the  EU  and  the  SMCs’  governments  meet  on  a 
bilateral basis to discuss the removal of existing barriers that violate the Euro-Med FTAs 
or are outside of the provisions of these FTAs, the problems are often not easily solved. 
Underperforming business environments as well as insufficient competitiveness in SMCs 
also  were  found  to  have  impeded  the  benefits  of  trade  liberalisation  and  lowered  the 
gains from the Euro-Med FTAs.  

The overall impact of the FTAs on social indicators was found to be rather positive,  in 
both the EU and the SMCs, with higher welfare, higher wages for both low skilled and 
high  skilled  labour,  and  lower  consumer  prices.    Some  small  negative  effects  on 
employment  were  found  in  certain  sensitive  sectors  such  as  Textiles  and  Clothing,  but 
macro-level  effects  on  employment  were  found  to  be  small.  The  FTAs  appear  to  have 
had no impact on the challenges faced by women in SMCs’ labour markets. The impact 
of  FTAs  on  working  conditions  has  been  neutral  or  positive,  as  conditions  generally 
improved  in  response  to  demand  of  EU  buyers.  The  FTAs  have  also  helped  improve 
access to food, as staple foods, like cereals can be imported from the EU at lower prices. 
No  major  unintended  consequences  of  the  FTAs  were  found  in  the  areas  of  social  and 
human rights or environment.  

In  the  area  of  environment,  despite  the  economic  growth  due  to  the  FTAs,  CO2 
emissions  in  the  SMCs  were  estimated  to  be  lower  with  the  Euro-Med  FTAs  in  place 
than  without  them.  Likewise,  the  impact  of  the  FTA  on  other  air  pollutants  and  GHG 

36 

 
 
 
 
 
emissions  was  estimated  to  be  overall  small.  Production  of  energy  from  renewable 
sources  has  been  growing  and  energy  efficiency  has  improved  in  the  SMCs  since  the 
entry  into  force  of  the  FTAs,  although  fossil  fuel  has  increased  faster  than  renewable 
energy  in  the  energy  mix.  The  FTAs  were  also  found  to  have  facilitated  trade  in 
environmental  goods and, thereby, to  have indirectly  contributed to  the  greening of the 
economy in the SMCs. 

Efficiency 
The  evaluations  suggests  that  the  Euro-Med  FTAs  had  an  impact  on  bilateral  trade 
balances.  However,  bilateral  balances  are  not  a  meaningful  indicator  of  balance  of 
payment  adjustment  issues.  Fiscal,  monetary  and  structural  policies  are  considered 
primary  determinants  of  the  overall  balances  as  they  shape  national  saving-investment 
relations.  Moreover,  historical  trade  data  showed  that  while  the  overall  trade  balances 
have deteriorated for five SMCs, their bilateral balances with the EU either improved or 
deteriorated  less  rapidly  than  the  overall  balances,  suggesting  that  trade  with  the  EU 
might have in fact been a mitigating factor. 

The impacts on tariff revenue both in SMCs and in the EU have to be seen in the context 
of the positive impacts on GDP and welfare, which ‘net out’ the effect of tariff revenue 
reductions and which are positive on balance. 

The analysis of effects in the areas of social and human rights and environment showed 
that the costs of the FTAs related to sustainability born by different stakeholder groups, 
where they occurred, were either proportionate to benefits or smaller. 

Direct  costs  of  compliance  of  the  Euro-Med  FTAs  have  not  been  found  to  be  a  major 
issue either. This is best exemplified by preference utilisation rates, which show that the 
take up of preferences by SMCs exporters is  widespread  and has  generally  grown over 
the  last  decade.  Utilisation  rates  of  Euro-Med  FTA  tariff  preferences  used  by  EU 
exporters when accessing SMC markets are lower but have also grown. 

However,  other  inefficiencies  and  remaining  regulatory  costs  in  areas  covered  only 
partially  by  the  FTAs  remain  high  and  some  estimates  suggest  they  may  have  larger 
impacts than the tariff liberalisation brought about by the Euro-Med FTAs. This concerns 
mainly  regulatory  NTMs  as  well  as  barriers  to  FDI,  services  trade  restrictions  and 
inefficient  business  and  institutional  environments.  This  suggest  that  the  remaining 
NTMs  and  other  regulations  are  relevant  as  they  create  inefficiencies  and  costs,  which 
affect the functioning of the Euro-Med FTAs. The Commission is taking effective steps 
to  unlock  the  benefits  of  the  EU’s  trade  agreements  for  individuals  and  companies  by 
tackling these shortcomings, including existing trade barriers and by preventing new ones 
from emerging. Regulatory co-operation is a key element of integration in many of these 
policy  areas.  Deep  and  comprehensive  trade  relations  can  be  achieved  by  virtue  of 
aligning  a  partner  country’s  trade-related  legislation  with  international  standards  and, 
when  relevant,  with  the  relevant  EU  rules  and  regulations,  in  exchange  for  positive 
effects in terms of market access and other economic benefits these may create. 

37 

 
 
 
 
 
 
Coherence 
The  achievement  of  the  objectives  of  the  Euro-Med  FTAs  has  supported  the  wider 
objectives of the Association Agreements and Partnership Priorities agreed with SMCs in 
the context of the revised European Neighbourhood Policy and the EU Global Strategy 
for  Foreign and Security Policy. This  was particularly  the  case in  areas  where stronger 
commercial  relations  provided  strong  incentives  to  cooperate  (e.g.  political  dialogue, 
regional  co-operation,  economic  infrastructure,  research  in  science  and  technology, 
education and training and scientific and technological co-operation). 

At  the  same  time,  co-operation  in  the  other  areas  identified  in  the  Association 
Agreements  and  Partnership  Priorities,  were  it  occurred,  has  helped  to  achieve  the 
objectives of the FTAs (e.g. technical assistance projects on industrial modernisation) or 
helped  to  ensure  they  benefit  the  society  at  large  (e.g.  technical  assistance  projects  on 
consumer protection). In addition, social and environmental co-operation have helped to 
strengthen these areas and helped to avoid potential negative effects of the FTAs (e.g. in 
area  of  water,  waste).  This  underlines  the  importance  of  relevant  wider  policies  that 
should accompany tariff liberalisation. 

Relevance 
Given  the  nature  of  trade  relations  in  modern  GVCs,  which  rely  on  the  ability  to 
minimise  also  other  costs  incurred  along  the  whole  value  chain,  the  Euro-Med  FTAs 
have nevertheless become less relevant for addressing current trade barriers.  

The EU has built a strong position in GVCs. Through FDI, services trade (including the 
movement  of  personnel)  and  technology  transfer,  it  established  and  co-ordinated  the 
more  labour  and  natural-intensive  activities  in  the  neighbouring  developing  regions, 
including the SM. Like many other countries, SMCs have been increasingly involved in 
GVCs, notably with EU partners, and this has generated for them economic benefits in 
terms  of  enhanced  productivity,  sophistication  and  diversification  of  economic  activity. 
Nevertheless,  they  still  show  lower  degrees  of  GVC  participation  than  developing  and 
emerging  economies  in  South-East  Asia  and  wider  Europe  and  Central  Asia.  The 
evaluation  collected  several  pieces  of  evidence,  which  indicate  that  the  ability  of  SM 
firms  to  beneficially  participate  in  European  supply  chains  is  of  growing  importance. 
Supporting  initiatives  to  assist  partners  in  attracting  and  retaining  value  chains 
diversification opportunities in selected sectors, aligned with good governance, is one of 
the key objectives of the renewed partnership with the SMCc19.  

Import  tariffs  are  estimated  to  be  responsible  for  a  small  portion  (10%)  of  trade  costs 
relevant  to  GVCs  participation.  The  bulk  of  such  costs  (60-80%)  is  estimated  to  be 
related  to  indirect  costs  of  trade  (e.g.  NTMs,  procedures,  maritime  connectivity  and 
services, business environment and other regulatory barriers, availability and use of ICT 
services,  etc.).  The  EU’s  newer  FTAs  are  increasingly  ambitious  when  it  comes  to  the 
deep provisions that aim to reducing costs associated with participation in GVCs. These 

19 https://eeas.europa.eu/sites/default/files/joint_communication_renewed_partnership_southern_neighbourhood.pdf 

38 

 
 
 
 
 
                                                 
agreements also pay more attention to the regulatory approximation or alignment as well 
as to sustainability.  

The  overall  findings  of  the  evaluation,  grouped  under  the  four  evaluation  criteria  that 
guided  the  analysis  (effectiveness,  efficiency,  coherence  and  relevance)  demonstrated 
therefore that the Euro-Med FTAs worked quite well in terms of achieving their specific 
objectives.  They  seem  also  on  track  to  achieve  their  overarching  objectives.  The  FTAs 
have played a significant role in fostering Euro-Med trade and they remain relevant for 
trade in  goods between the EU  and SMCs. However, there are also  issues, which have 
been identified as affecting the performance of these FTAs and where additional efforts 
are needed to enhance the FTAs relevance for current trade challenges faced by the EU 
and  SMC  partners  (e.g.  addressing  non-tariff  measures,  reinforcing  Euro-Med  FTAs 
implementation,  improving the business environment in  SMCs, reviewing the  coverage 
of the FTAs and enhancing sustainable development and regulatory cooperation). 

These issues continue to be of key importance in order to bring the expected benefits of 
the Euro-Med FTAs to both sides. They have been included as key subjects of the EU-
SMC dialogue.  

39 

 
 
 
ANNEXES 

Annex 1: Procedural information 

1.  Lead DG, Decide Planning/CWP references 

Lead DG: European Commission Directorate-General for Trade, DG Trade 

2.  ORGANISATION AND TIMING 

The  Inter-Service  Steering  Group  (ISSG)  was  set  up  in  February  2019  and  gathered 
representatives from the Commission's Secretariat General and European External Action 
Service,  13  Directorates-General:  AGRI,  TAXUD,  JUST,  MARE,  ECFIN,  GROW, 
NEAR, EMPL,SANTE,  CLIMA, CNECT, ENER and ENV and the EU Delegations in 
the region. The ISSG was consulted on the Roadmap and the Consultation Strategy, the 
summary report of the open public consultation, the inception, interim and final report, as 
well as on organisational aspects in relation to the workshops.  

The  Terms  of  Reference  presented  17  tasks  that  had  to  be  performed  as  part  of  this 
evaluation.  

Table 1 provides an overview of the tasks were performed and where the results of the 
different tasks were incorporated.   

Tasks  1-6  were  carried  out  in  the  inception  phase.  The  results  are  available  in  the 
inception report. In the interim phase, important progress has been made on tasks 7-15. In 
the final phase, tasks 7-15 were completed and the final two tasks 16 and 17 were added.  

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Section of the main report 
1.5 + Annex B 
2,  3,  4,  5,  Annex  D,  Annex 
E (+Inception Report) 
2  
1.5,  Annex  B  (+Inception 
Report) 
Annex G 
Annex 
Report) 
1.5 

(+Inception 

G 

2 (legal analysis) 
3 (economic analysis) 
4 (sectoral analysis) 
3.5.5, 3.5.7 
3.4.4.3, 3.5.2, 3.5.6 
3.4.4.6 
5.3.4 
Annex D 
5 

1.5, Annex G 
6  
6  

Table 1 Overview of tasks of this evaluation 
Task   Description 
1 
2 

Refine intervention hypothesis 
Literature review 

3 
4 

5 
6 

7 
8 

9 
10 
11 
12 
13 
14 

15 
16 
17 

Description of the Euro-Med FTAs 
Develop methodological approach 

Create a website 
Develop the consultation strategy 

Implement the consultation strategy 
Economic and legal analysis, including: 
  The implementation of FTAs; 
  Evolution of trade; 
  Sector case studies. 

Impact analysis on competitiveness and SMEs 
Impact analysis on consumers 
Impact analysis on EU budget 
Impact analysis on informal economy 
Impact analysis on outermost regions 
Impact  analysis  on  social  aspects,  environmental 
aspects, human rights and third countries 
Organising local workshops  
Answering evaluation questions 
Providing conclusions and recommendations 

41 

 
 
 
 
 
 
Annex 2: Stakeholder consultation 

1. Introduction  

Stakeholder consultations have been an essential element of this evaluation of the impact 
of  trade  chapters  of  the  Euro-Mediterranean  Association  Agreements  with  six  partners: 
Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia. The consultations did not apply 
to  one single  area of analysis but  fed into all parts of the evaluation (economic, social, 
environmental,  human  rights,  and  sectoral  analyses,  as  well  as  horizontal  issues).  The 
consultation  process  served  to  engage  with  all  interested  parties,  contribute  to  the 
transparency of the evaluation, and identify priority areas and key issues. 

In order to have a balanced view from across society, stakeholders that participated in the 
consultations were selected taking into account:  
1.  Different roles and functions they perform, including government representatives and 
related  government  agencies,  businesses  and  business  associations  (exporters,  trade-
related services, etc.), trade unions, NGOs, academia, civil society, and think tanks; 

2.  Different thematic areas in which they have expertise: labour and social issues, human 
rights,  environmental  issues,  sectoral  (agriculture,  textiles,  machinery,  chemicals, 
etc.). 

2. Overview of overall stakeholder involvement 

This section describes the different consultation tools applied in the evaluation, as well as 
the  number  of  stakeholders/participants  per  consultations  tool  and  per  country  and 
potential challenges experienced during implementation of the consultation strategy.  

Open Public Consultation 

The Open Public Consultation was an online survey that has been open for 12 weeks. It 
was launched on 4 September 2019 and was open until the end of November 2019. The 
questionnaire was available in English, French, German, and Arabic. It not only included 
a general survey of the targeted region (the regional survey), but also six country-specific 
surveys.  Further,  the  public  consultation  had  stakeholder-specific  and  topic-specific 
questions, which allowed stakeholders to only answer those questions that were relevant 
to them. A total of 50 respondents participated in this survey, though not all respondents 
answered  all  questions.  Forty-six  of  these  respondents  participated  in  the  regional 
version, whereas the other four participated in the country-specific ones (i.e. Jordan (2) 
and  Egypt  (2)).  The  countries  of  origin  of  the  respondents  included  Algeria,  Egypt, 
Jordan, and Morocco, as well as Austria, Belgium, Cyprus, Denmark, Germany, France, 
The Netherlands, Poland, Romania Spain, and Ukraine. 

Workshops 

The  consortium  has  organised  seven  stakeholder  workshops  in  total: in  Algeria,  Egypt, 
Jordan, Lebanon, Morocco, Tunisia, and the EU. These workshops had a dual purpose of 

42 

 
 
 
 
 
presenting  and  discussing  the  work  conducted  so  far.  They  served  to  share  preliminary 
results  and  to  receive  feedback  on  these,  as  well  as  to  gather  additional  input  for  the 
evaluation.  Most  of  these  workshops  lasted  for  a  full  day  and  were  hosted  at  easily 
accessible locations for attendees. The workshop for EU stakeholders was scheduled to 
take  place  in  Brussels,  but  the  COVID-19  pandemic  prevented  the  consortium  from 
organising a physical meeting. Instead, an online Webex meeting was organised with the 
stakeholders, which lasted for three hours. 

In  each  of  the  workshops,  a  balanced  number  and  type  of  participants  was  targeted  to 
ensure  a  good representation of the different  types of stakeholders.  Typically, the local 
workshops  included  representatives  from  the  government,  the  private  sector,  civil 
society, labour unions, exporters associations, SMEs and academia.  

Furthermore, locally recognised speakers provided more information of the local context 
(economy, competitiveness, environment, human rights, and other issues) to both attract 
attendees and to start the discussion during the workshop itself. Sufficient time was made 
available for an interactive discussion with participants, and a discussion leader ensured 
that  the  discussion  was  balanced,  and  different  views  were  heard.  The  table  below 
provides an overview of the seven workshops and the number of workshop participants 
in each country. 

Table 1 Overview of stakeholder workshops 
Country 

Workshop data 

EU 
Algeria 
Egypt 
Jordan 
Lebanon 
Morocco 
Tunisia 

30 April 2020 
26 February 2020 
16-17 October 2019 
20 November 2019 
9 March 2020 
2 October 2019 
26 September 2019 

workshop 

of 

Number 
participants 
34 
50 
46 + 8 
60 
47 
106 
57 

The local workshop in Egypt was split into two events following discussions with local 
stakeholders.  A  workshop  discussing  the  economic,  environmental  and  sectoral  impact 
was held on 16 October 2019 and a workshop focusing on the social and human rights 
impact was held on 17 October 2019. In order to avoid confusion, this second workshop 
was  renamed  as  a  roundtable  session  with  invitations  extended  only  to  civil  society 
stakeholders. 

While the number of participants in Lebanon was lower than initially anticipated, it was 
still  a  good  result  given  the  outbreak  of  COVID-19  and  the  severe  economic  and 
financial situation in Lebanon at the moment of the workshop. While many events in the 
country, including the ones organised by the EU Delegation, had been cancelled already, 
the stakeholder workshop could fortunately still take place a few days before the country 
went in lockdown. 

43 

 
 
 
 
 
 
 
Interviews 

For  more  detailed  discussions  with  stakeholders,  the  consortium  has  also  conducted 
personal  interviews  with  stakeholders.  These  interviews  helped  to  obtain  more  detailed 
information  on  the  impact  of  the  trade  chapters  of  the  AAs.  While  the  majority  of 
interviews were conducted one-to-one, on some occasions, these took place in the form 
of  group  interviews  (group  meeting,  focus  group  discussion  or  small  roundtables).  The 
interviews  complemented  the  economic,  sectoral  and  sustainability  analyses.  The 
interviews  were  conducted  with  a  balanced  representation  of  the  different  types  of 
stakeholders,  including  representatives  of  trade  and  industry  associations,  companies 
including  SMEs,  civil  society  and  environmental  organisations,  government  academics 
and  other  (sector  and/or  local)  experts.  The  table  below  provides  an  overview  of  the 
number of interviews conducted in each country. 

Table 2 Overview of interviews in each country 
Country 
EU 
Algeria 
Egypt 
Jordan 
Lebanon 
Morocco 
Tunisia 

Number of interviewees 
2320 
15 
19 
17 
20 
28 
20 

The interviews were spread over the following categories: public sector (32%), business 
associations  (24%),  large  enterprises  (2%),  SMEs  (14%),  social  stakeholders  (9%), 
human  rights  stakeholders  (3%),  environmental  stakeholders  (6%),  and  think  tanks  / 
academia (10%). 

Several  challenges  were  experienced  when  organising  the  stakeholder  interviews.  In 
general,  in  all  countries  there  was  a  lack  of  knowledge  and  awareness  of  the  AAs  and 
FTAs,  including  among  EU  stakeholders.  This  made  stakeholders  targeted  hesitant  to 
participate.  While  actively  reaching  out  to  stakeholders  with  anticipated  knowledge  on 
social,  human  rights  and  environmental  impacts  of  the  Euro-Med  FTAs,  the  awareness 
and interest of these stakeholders turned out to be particularly limited. Furthermore, the 
political instability in Algeria, the economic and financial situation in Lebanon, political 
sensitivity of the topic in Morocco and Tunisia, and the COVID-19 pandemic in 2020 did 
hamper a smooth interview process. 

Civil Society Dialogue 

The Civil Society Dialogue provided an additional opportunity to receive further  inputs 
from civil society on the preliminary findings. The Civil Society Dialogue was organised 
on 30 April 2020 and lasted for two hours. Unfortunately, a physical meeting in Brussels 
was  not  feasible  due  to  COVID-19  restrictions,  so  it  was  organised  virtually  through 
WebEx. 

20 This number includes roundtable sessions with trade counsellors of EU Member State embassies. 

44 

 
 
 
 
 
 
                                                 
Website, email and social media 

Different  consultation  tools  were  used  for  the  dissemination  of  information  and  for 
maximizing  our  outreach.  These  include  an  e-mail  account,  newsletters,  a  dedicated 
website as well as a Twitter account. Through these multiple channels, we reached out to 
stakeholders,  kept  them  up  to  date  and  invited  them  to  participate  in  the  consultation 
activities. 

45 

 
 
Annex 3: Methods and analytical models 

1. Approach and methodology 

The  evaluation  focuses  on  the  so-called  first-generation  FTAs  that  principally  entail 
reductions  of  import  tariff  on  goods.  However,  these  FTAs  have  been  introduced  at 
different  points  in  time,  had  different  starting  points  (in  terms  of  initial  barriers)  and 
differently  phased implementation  periods. They have also  influenced tariffs on different 
products in different SMCs to a different degree.  
In addition to establishing the actual parameters of trade liberalisation, the main challenge 
for this evaluation was to assess to what extent the observed changes over each given time 
period  can  be  attributed  to  the  FTA.  The  objective  was  to  separate  FTA-induced  effects 
from the effects of other concurrent processes, such as for example trade propelled by the 
economic  growth  (inspired  by  changes  in  other  non-trade  sources)  of  respective  trading 
partners.  This  disentangling  becomes  a  challenge,  especially  when  we  attempt  to  assess 
more indirect effects of the FTA (e.g. sustainability impacts).  

For all the impacts we observed, there needed to be an understanding on how the FTA may 
have led to the obtained results, e.g. was it related to specific provisions or to the way it 
has  been  implemented  (or  not).  This  is  why  this  evaluation  has  adopted  an  evaluation 
framework, which utilises a mix of methods. For example, computable general equilibrium 
(CGE) and partial equilibrium (PE) techniques were used in this evaluation to attribute the 
observed  variation  in  trade  to  a  host  of  driving  factors  posited  by  economic  theory.  This 
analysis  was  complemented  with  quantitative  and  qualitative  methods  to  verify  the 
modelling results and to deepen the understanding of the mechanisms at work.  

Our overall approach to this evaluation consisted of 17 different tasks which were divided 
into four inter-related work packages. These are the following:  
Work package 1 – Evaluation framework 
Work package 2 – Consultations 
Work package 3 – Economic Analysis 
Work Package 4 – Sustainability Analysis 

In the next section, these work packages are described in more detail.  

2. Work package 1 – Evaluation Framework 

The  cross-cutting  Work  Package  1  –  Evaluation  Framework  is  based  on  the  specific 
evaluation  questions  from  the  Terms  of  Reference  (ToR).  This  framework  has  been 
developed in the inception phase of this evaluation and was an important guidepost in all 
evaluation activities during implementation. 

The evaluation framework for this evaluation was defined by four elements:  

 

the scope of the evaluation;  

46 

 
 
 
 
 
 
 

the definition of the baseline scenario;  

 

the intervention logic; and  

 

the evaluation matrix.  

The scope of the evaluation identifies what is evaluated, over what period and for which 
geographical area. This is based on the ToR. 

The baseline or counterfactual scenario is the situation if the FTA under examination was 
not  actually  in  place.  This  scenario  thus  defines  the  baseline  against  which  all  results, 
which have been actually observed, may be assessed, in order to tease out the impact of the 
FTA.  The  ToR  clearly  specify  that  the  baseline  scenario  would  be  that  bilateral  trade 
would  fall  under  the  following  regimes:  1)  EU  exporters  would  export  to  SMCs  under 
MFN tariffs and in line with WTO rules; 2) SMCs’ exports to the EU would face a similar 
regime, although where  relevant  (depending on location, time and product) these exports 
could also fall under the GSP regime. 

In addition to creation of the baseline, an important element of the evaluation framework is 
the  intervention  logic:  what  were  the  objectives  of  the  six  FTAs,  and  through  which 
channels  would  the  FTAs  help  to  achieve  these  objectives?  Framing  the  question  in  this 
manner allowed us to see an FTA would lead to certain intermediate results, which could 
then  lead  to  subsequent  outcomes  and  ultimately  to  the  achievement  of  objectives. 
Furthermore,  the  intervention  logic  included  important  implicit  assumptions,  which  were 
assessed during the evaluation as well. For example, a part of the stakeholder consultations 
focused  on  the  extent  to  which  barriers  to  trade  have  been  removed  and  whether  other 
barriers have persisted. This information helped to understand why the effects of the FTAs 
materialised or not.  

The  evaluation  matrix,  in  turn,  includes  the  evaluation  questions,  grouped  under  four 
evaluation  criteria:  effectiveness,  efficiency,  coherence  and  relevance.  These  evaluation 
questions  guide  the  analysis  in  the  evaluation,  as  these  are  the  questions  that  ultimately 
needed to be answered. For each of the evaluation questions, we defined information needs 
that helped to answer these questions.  

47 

 
 
 
 
 
Figure 1 Intervention logic  

48 

Policy InstrumentObjectivesImmediate effectsOutcomeMedium term impactLong-term impactTo promote trade and expansion of harmonious economic and social relationsbetween the EU and the SMCTo establish the conditions for the gradual liberalization of trade in goods, services,and capital between the EU and the SMCTo encourage intra-regional integration by promoting trade and cooperation bothwithin the region and between it and the Community and its Member StatesTrade provisions of the Association Agreements between the EU and partner countryReduction of barriers to trade of goods and servicesIncreased bilateral trade and investment flowsIncreased intra-regional trade and investment flows in SMCsFaster growth and higher employment in SMCsDevelopmental progress and increased prosperity for partner countriesExpanded export and investment opportunities for EU business operatorsSustainable economic and social development in partner countriesReduced economic and social development gap between EU and SMCsAssumptions Producers and traders are aware of the agreement Producers are competitive (able to meet market requirements) Producers and traders see increased opportunities in the region and bilaterally as a result of the FTA Trade provisions of AA are implemented as planned Barriers reduced by the agreement are not replaced with alternative barriersSet up of institutional structures to monitor implementation and discuss other trade issuesIncreased export diversification 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 1 Evaluation matrix 

Evaluation questions 

Effectiveness 

Judgement criteria 

Example of information needs 

Sources/methods 

  EQ1: To what extent have the objectives of the EU 

The extent to which trade has expanded between the EU and each 

Change in bilateral trade flows, in total, and by sector 

Trade flow analysis; 

FTAs with the six partner countries (SMCs) been 

of the six FTA partner countries; 

between the EU and each partner country; 

CGE modelling; 

achieved? What are the factors influencing the 

The extent to which harmonious economic relations have 

Change in bilateral investment, in total, and by sector 

Gravity analysis; 

achievement of those objectives? To what extent 

expanded as a result of the FTAs; 

between the EU and each partner country; 

Desk study (e.g. MADB, WTO 

are those factors linked to the EU intervention? 

The extent to which harmonious social relations have expanded 

Trends in introduction/removal of barriers; 

notifications, implementation 

as a result of the FTAs; 

Implementation of the FTAs; 

reports); 

The extent to which the FTAs have established the conditions for 

Number of trade disputes/ conflicts over the time period 

Sectoral analysis; 

the gradual liberalisation of trade in goods, services and 

examined; 

Interviews; 

capital; 

Number of types of additional trade-related agreements (e.g. 

Survey; 

The extent to which the FTAs have increased trade and co-

on agriculture-related products); 

Workshop/CSD/ roundtables; 

operation in the Euro-Med region; 

Extent to which institutional structures like sub-committees 

Case studies. 

The extent to which the FTAs have increased trade and co-

and working groups have been able to address 

operation between the Euro-Med region, on the one hand, 

remaining barriers to trade; 

and the EU and its member states, on the other hand? 

Change in bilateral trade and investment flows between each 

of the six Euro-med partner countries and other Euro-

Med partner countries. 

  EQ2: Have the EU FTAs with the Euro-Med 

No judgement criteria (descriptive). 

Impact of the FTAs on overall welfare; 

CGE modelling; 

countries (the six SMCs) given rise to unintended 

consequences? If so, which ones? 

Changes in domestic policies as a result of the FTAs; 

Case studies under sustainability 

Identification of unintended economic impacts in the EU 

analysis; 

and/or partner countries; 

Stakeholder consultations; 

Identification of unintended social impacts in the EU and/or 

Sectoral analysis. 

partner countries; 

Identification of unintended environmental impacts in the 

EU and/or partner countries; 

Identification of unintended human rights impacts in the EU 

and/or partner countries; 

Identification of unintended consequences by stakeholder 

group (e.g. vulnerable groups, etc.); 

Identification of unintended economic, social, 

49 

 
 
 
 
Evaluation questions 

Judgement criteria 

Example of information needs 

Sources/methods 

environmental and human rights impacts in third 

countries, with focus on developing countries and 

LDCs. 

Efficiency 

  EQ3: To what extent have the EU FTAs with the 

Extent to which benefits outweigh the costs, overall and for 

Costs related to the implementation of the agreement like 

Desk study (e.g. ministerial budgets; 

six partner countries been efficient in achieving 

specific groups; 

required investments and foregone tariff revenue 

implementation reports); 

their objectives?  

Extent to which remaining barriers could be reduced. 

(impacting authorities); 

Survey; 

  To what extent are the costs associated with the 

Costs related to the use of the FTAs (tariff preferences, 

Sectoral studies; 

FTAs proportionate to the benefits they have 

generated? What factors influence those costs and 

benefits? How proportionate were those costs 

borne by different stakeholder groups, taking into 

account the distribution of benefits? 

  What are the main inefficiencies and unnecessary 

regulatory costs (including administrative burden)? 

What is the potential for simplification? 

quota) by companies; 

Interviews (e.g. local MAP, business, 

Identification of other (types of) costs and benefits; 

NGOs); 

Positive impacts and negative impacts compared (cost-

CGE modelling; 

benefit analysis) 

Gravity analysis. 

Distribution of benefits and costs for different stakeholder 

groups; 

The time needed to realise the objectives compared to the 

original plan; 

Remaining inefficiencies and regulatory costs; 

The costs of trade promotion and cooperation in relation to 

the progress made in intra-regional integration both 

within the Euro-Med region and between it and the EU 

Community and its MS. 

Coherence 

  EQ4: To what extent have the EU FTAs with the 

Extent to which objectives of EU FTAs align with those of the 

Number and type of contradictions; 

Desk study of relevant documents; 

six SMCs been coherent with the European 

ENP, Association Agreements, Action plans and Partnership 

Number and type of synergies. 

Neighbourhood Policy (ENP), Association 

Priorities and current EU trade policy? 

Survey; 

Interviews; 

Agreements, action plans and Partnership 

Extent to which there are contradictions between the six FTAs 

Other stakeholder consultations. 

Priorities and current EU trade policy? 

and the ENP, Association Agreements, Action plans and 

Partnership Priorities and with current EU trade policy? 

Extent to which there are synergies between the six FTAs and 

ENP, Association Agreements, Action plans and Partnership 

Priorities and current EU trade policy? 

50 

 
 
 
 
 
 
 
Evaluation questions 

  Relevance 

Judgement criteria 

Example of information needs 

Sources/methods 

  EQ5: To what extent are the provisions of the EU 

Extent to which current trade issues can be addressed on the basis 

Identification of current trade barriers (not arising from non-

Desk study (e.g. MADB, MAP, 

FTAs with the six SMCs relevant for addressing 

of the EU FTAs with the six SMCs; 

implementation), by sector and type of barrier; 

implementation reports); 

current trade issues faced by the EU and these 

Extent to which new or more ambitious provisions are needed to 

Extent to which tariff preferences or quota are used and what 

Gravity analysis; 

partners? 

address current trade issues. 

are the problems encountered in their use; 

Sectoral analysis; 

Extent to which current trade barriers could be solved with 

Stakeholder consultations. 

current and/or more ambitious EU FTA with the six 

SMCs. 

51 

 
 
 
 
 
3. Work package 2 – Consultations 

Stakeholder  consultations  were  an  essential  element  of  this  evaluation  and  the  specific 
activities and their outcomes are summarised in Annex 2.  

4. Work package 3 – Economic Analysis  

The  third  work  package  studied  in  detail  the  reductions  in  trade  barriers  stipulated  by  the 
FTAs. It assessed their implementation by first examining the legal aspects and the degree of 
implementation of the FTAs. It reviewed the existing literature and employed qualitative and 
quantitative  descriptive  analyses  of  historical  data.  In  addition,  a  number  of  quantitative 
methods  such  as  the  CGE,  partial  equilibrium  (PE)  and  descriptive  statistics  -  along  with 
sectoral  case  studies  concerning  agriculture,  textiles,  motor  vehicles  and  chemicals  -  were 
used  to  reconcile  changes  in  trade  and  other  relevant  economic  aggregates  with  the  FTA-
related reductions in tariff barriers. 

From an economic perspective, similarly to other preferential trade agreements, the Euro-Med 
FTAs are overall expected to bring about economic and social gains for the following reasons: 
  Freer  trade  results  in  a  better  alignment  of  economic  incentives  with  international 
price signals. In the context of this report, this allows realisation of SMC economies’ 
and  EU’s  comparative  advantage  where  productive  resources  are  allocated  more 
efficiently  across  trading  economies  (also  referred  to  in  the  literature  as  ‘allocative 
efficiency’). This results in higher productivity and higher per capita incomes; 

  Trade  openness  also  results  in  greater  competition  which  also  translates  into  higher 

productivity and higher per capita incomes; 

  With  access  to  larger  market  greater  economies  of  scale  can  be  realised,  lowering 

average costs of production, boosting productivity and per capita incomes;  

  Higher  productivity  stemming  from  the  above  effects  helps  in  attracting  more 
domestic  investment  and  FDI  as  well  as  labour  (i.e.,  through  migration)  boosting 
further productivity and per capita incomes; 

  All of the above effects are expected to combine and reinforce each other and create a 
more creative and innovation-driven economy, which also boosts productivity and per 
capita incomes in a more sustainable manner. 

However,  as  is  the  case  with  other  FTAs,  a  key  reality  is  that  the  above-mentioned  effects 
may  not  materialise  if  the  structural  change  does  not  take  place  or  is  impeded.  Instead, 
negative  effects,  including,  for  example,  output  or  employment  reductions,  may  appear  and 
persist  in  time.  For  the  positive  effects  of  trade  liberalisation  to  materialise,  the  economic 
agents  must  be  able  to  act  and  adjust  production,  employment  and  investment  levels  across 
the  economy  in  response  to  the  new  market  access  conditions.  This  involves  upscaling 
economic  activity  in  competitive,  and  downscaling  it  in  uncompetitive,  sectors.  A  host  of 
factors related to  the functioning of product  and  factor markets  and institutions, such as the 

52 

 
 
 
 
ability to start or close a business, get credit, register and protect property, hire skilled staff, 
enforce  contacts,  etc.,  determine  countries’  structural  adjustment  abilities.  Other  reasons  for 
why  trade-related  structural  adjustment  and  the  gains  from  trade  may  fail  to  materialise 
include emergence of other  barriers, which  are either not  covered or insufficiently so in  the 
agreements.  This  is  sometimes the case with  NTMs,  which are  erected under pressure from 
interest groups to counterbalance the effects of tariff liberalisation.  

The  fact  that  the  gains  from  trade  are  predicated  on  relative  price  changes  and  structural 
change  means  that  FTAs  may  also  be  associated  with  certain  adjustment  costs  and 
distributional effects such as:  

  Unequal  sectoral  effects  on  output,  employment  and  capital  stocks  which  refers  to 

more pronounced reallocations with potentially negative social implications; 

  FTAs  may  have  negative  or  positive  distributional  effects  as  well  as  environmental 
effects, which may require accompanying policies, often from beyond the traditional 
‘trade policy toolkit’. 

Generally,  to  maximise  the  chance  that  trade  liberalisation  has  positive  social  and 
environmental effects, relevant labour and environmental standards need to be in place and be 
effectively  enforced.  In  the  context  of  trade  agreements  which  do  not  have  advanced 
provisions  in  these  areas,  as  is  the  case  with  the  Euro-Med  FTAs,  these  standards  are 
necessarily the  relevant  national  standards as well as any international  standards the trading 
partners may have committed to  in  other contexts (e.g. the international  labour standards of 
the International Labour Organisation (ILO) and related domestic legislation. 
The economic impact  analysis builds on this overview of expected  effects of the Euro-Med 
FTAs and combines the following elements: 

  Description of the Euro-Med FTAs and assessment of their implementation; 
  Review of existing studies and reports; 
  Review of characteristics of Euro-Med FTAs and of subsequent trade developments;  

  Description  and  interpretation  of  the  computable  general  equilibrium  (CGE)  and 
partial  equilibrium  (PE)  modelling  exercises  used  to  discern  the  trade  effects  of  the 
Euro-Med FTAs and to assess their broader economic effects; 

  Analysis of factors that can help explain and put in the context the CGE/PE modelling 
results  and  as  well  as  factors  determining  the  degree  to  which  SMCs  could  use  the 
opportunities stemming from the FTAs in particular: 
o  Rules of origin  
o  Non-tariff measures  
o  Role of FDI and services trade  
o  Business environment  
o  Competitiveness  
o  Diversification, technology and economic complexity  
o  SMEs. 

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o  Sectoral case studies of enablers and bottlenecks in achieving FTA objectives in 

specific sectors 

5. Work package 4 – Sustainability Analysis  

This  work  package  informs  and  complements  the  consultations  and  economic  analysis  to 
identify  the  most  significant  impacts  on  sustainable  development,  covering  social,  human 
rights, environmental and third country effects.  

As  with  other  parts  of  the  analysis,  there  have  been  many  developments  in  the  four  impact 
areas in each of the countries being analysed, and the challenge is to link these developments 
to  the  relevant  FTA,  establishing  causal  relations.  In  order  to  keep  focus  on  the  specific 
effects of the FTAs, the sustainability analysis encompasses: 

  Analysis of trade chapters of the association agreements as regards texts linked to the 
four  areas.  This  allows  us  to  assess  the  extent  to  which  the  trade  chapters  contain 
provisions  that  could  directly  affect  the  situation  in  the  four  areas  (next  to  indirect 
effects that stems from the economic changes brought about by the FTAs); 

  Literature review on sustainability impacts. This started with a literature review in the 
inception phase to identify FTA-related literature that is linked to the different topics 
within the four impact areas. Subsequently, in the case studies additional literature was 
used to gain a better understanding of the specific topics and how trade can be linked 
to it. This also includes analysis of relevant data sets; 

  Consultations  on  sustainability  impacts.  In  all  consultations  activities,  attention  was 
paid to sustainability impacts. It should be noted that relatively few stakeholders were 
aware  of  the  agreement  and/or  interested  to  participate.  Inputs  were  often  not  very 
specific  

  Analysis of results of the CGE model. This includes an identification and assessment 
of indicators relevant to the sustainability indicators (e.g. wages, CO2 emissions, trade 
with third countries); 

  Sustainability case studies. To get some more in-depth insights of the link between a 
certain topic within the sustainability areas, we selected four case studies for more in-
depth  research. The methodology used for these case studies consist  of  a mix of the 
above.  Where  relevant,  Annex  F  contains  more  background  on  the  methodology  for 
specific (parts of the) case studies. The four case studies are:  
o  Employment in the chemicals and textiles and clothing sectors; 
o  Female employment the agriculture; 
o  Trade in environmental goods; 
o  Air emissions other than CO2 emissions. 

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