Recherches récentes Mes recherches
Vous consultezChapter 17. Agricultural globalization and Mediterranean products
AuteursJosé Maria García Álvarez-Coque du même auteurUniversidad Politécnica de Valencia, Spain
José Maria García Álvarez-Coque is Professor of Agricultural Economics at the Universitat Politécnica de Valencia (UPV, Spain). From 2001 to 2004 he was Head of the Department of Economics at that university. He currently chairs the International Economics Group, a research unit dealing with international agricultural issues. He chaired the Spanish Association of Agricultural Economists from 2001 to 2007. Since 1987 he has frequently acted as a consultant and director of research projects analysing the Common Agricultural Policy for EU institutions (Parliament, Commission) and the Spanish public administration. In 1991, he was visiting researcher at the International Food Policy Research Institute (IFPRI) in Washington D.C. In 1993 and 1994, he chaired the Working Group on Fruit and Vegetables at OECD (Paris). In the last 20 years he has acted as a consultant for international organisations dealing with agriculture, food security and regional integration (FAO, Andean Community, CIHEAM, UN), focusing on Latin America and the Middle East and North Africa region. Since 2010 he has been a member of the steering committee of the SUSTAINMED project “Sustainable agri-food systems and rural development in the Mediterranean Partner Countries” (SUSTAINMED, European Commission).
Since ancient ages, Mediterranean means exchanges. People around the Mediterranean basin have exchanged legal structures, habits, raw materials and agricultural and food products. Focusing on the latter, products like garum, olive oil, wine, cereals, raisins, silk…, have been distributed across the Sea following all the possible directions via barter trade, via colonization and via trade. A set of common habits, illustrated by the Mediterranean Diet, emerged as the result of these exchanges. Over time, the gravity center of the Western world turned westwards; and nowadays, globalization implies exchanges scattered all around the world. Nevertheless, the Mediterranean Sea still witnesses a huge shuffling of goods among its shores.
2 In this chapter, the focus is put in the current situation of Mediterranean agricultural trade. To discuss on this topic and its different matters of interest, the chapter is divided in various sections. First, the current situation of agricultural trade is set as a starting point, highlighting the position of Mediterranean Countries (MCs) and the main developments taking place in several Mediterranean products. After that, the discussion turns to international negotiations, in particular the multilateral trading system and Doha negotiations; the role of Non-Tariff Measures (NTMs), with an illustration affecting several agricultural goods. Later, the focus is put on the bilateral relationships between the two sides of the Mediterranean Sea, and finally the role of EU policies and the CAP on softening impacts of further trade liberalization. Finally, a number of remarks conclude the chapter, with focus on combining trade integration in the region, with active rural development policies that adapt to people’s needs. After all, the European Neighborhood Policy on Agriculture and Rural development is in process of definition by the EU to improve rural livelihoods, to contribute to food security and to develop institutional capacities.
3 This section highlights the main developments affecting trade in agricultural products, with a special emphasis on Mediterranean products. In the next paragraphs, a brief description of agricultural trade is carried out, while the next pages expand on the situation for the Mediterranean interests, namely the description of trade among Mediterranean countries and the most relevant aspects regarding the pattern of trade for a number of Mediterranean products present at the Mediterranean Diet. This section supplies a background for interpreting the role of trade barriers and international trade negotiations, which will be carried out in the following sections.
4 Due to the global crisis, global goods trade decreased in 2009 for the first time since 2001 The figures in this sub-section were collected from the...
suite. The reduction in volume accounted for 12% and it confirmed the declining trend begun in 2007. Overall, merchandise exports (fob) accounted for 11,787 billion US$.
5 This reduction was uneven across the different product categories. In fact agricultural goods suffered the less significant cut as they only declined by 3%. This proved its resiliency to the economic crisis. Major cuts happened to fuels and mining products and, especially to manufactures, which contracted by 15.5%.
6 Another remarkable fact is that the share of agricultural trade in total goods trade remains below 10%. Overall, the value of agricultural exports accounted for 1,168,847 million US$ in 2009 (fob values).
7 Globally, the two main agricultural exporters and importers are the EU and the USA. Considering both intra and extra-EU trade, the EU ranks first both in exports and imports. If only extra-EU trade is considered, the USA are the top world agricultural exporter (119,584 million US$ in 2009, fob values) and the EU is the top world agricultural importer (140,773 million US$ in 2009, fob values). Adding their respective shares as importers or exporters they represent about 20% of current agricultural trade, while in 2000 they accounted for about 25%.
8 This reduction is due to the emergence of a series of countries increasing their participation in global agricultural markets. An outstanding case is China, increasing yearly by 11% its exports and by 16% its imports between 2000 and 2009. Currently China is the fifth agricultural exporter and the third importer. Other countries are more specialized either on exports or either on imports activities. Instances of export-orientated countries are Brazil, Argentina, Thailand, Indonesia and Australia, while Japan, the Republic of Korea, Mexico and India are import-dependent countries.
9 Referring to agricultural trade in MCs, the most outstanding feature is their reliance on imports. In fact, out of all the CIHEAM member states, only France and Spain show clearly a positive agricultural net balance in the recent years, accounted in monetary terms. While Turkish situation is nowadays more or less balanced, the rest of countries show persistent imbalances along the second half of the last decade. Moreover, for the most of the countries i.e. Albania, Algeria, Egypt, Greece, Lebanon, Malta, Morocco, Portugal, Tunisia and Turkey the net trade balance has worsened over the period 2005-2008. The Table 1 depicts the main figures on agricultural trade for CIHEAM countries.
Table 1 - Agricultural net trade balance in CIHEAM countries (in thousand US$)
10 The bilateral balance between the EU and the MCs has also tended to be more and more favorable to the EU in the last couple of years (Abis and Tamlilti, 2011). In the field of EU-MCs trade, a discussion on the role of the Euro-Mediterranean Agreements and the trade preferences for Mediterranean countries is made in subsequent sections of this chapter.
11 Another remarkable fact to highlight is the concentration of agricultural trade around the Mediterranean Basin. The MCs suppliers of agricultural products to the EU are Turkey, Morocco, Israel and to a lesser extent Egypt and Tunisia. These five countries supplied over 90% of EU agricultural imports from the MCs in the last decade, being Turkey the major origin. On the other hand, Algeria is by far the EU’s top customer: it alone absorbed about 25% of EU agricultural exports to the MCs in the same period.
12 Extra-EU actors are significant suppliers in the fast growing import market in the MCs (CIHEAM, 2010; Abis, 2011a). The United States ranks the leading trading partner as a source of agricultural products at Turkey, Egypt, Jordan, Morocco and Algeria, mainly based on grains, in particular wheat, maize and soybeans. Imports are also growing from Brazil, which exported around 6 billion dollars in 2008 to the Arab region (mainly beef, soybeans and sugar); and from Russia and Ukraine, which are forecasted to become major partners in the Mediterranean regions, in wheat trade. Dependency in the Mediterranean region on cereal imports is fostered by demography, by a dramatic change in consumption patterns (with a trend to withdraw from the Mediterranean Diet) and by the supply constrains (water scarcity and low productivity in rain-fed areas).
13 Let us consider the trade evolution and main trends of two typical Mediterranean products, namely fruits and vegetables and olive oil. These products are relevant for the exporting interests of Southern Mediterranean Countries, in particular in the EU markets. We wonder about the complementarity of MCs and the EU in the supply of such products, given the fact that they are usually shown as sensitive in the bilateral trade negotiations, within the Barcelona Process-Union for the Mediterranean.
14 Following Wu Huang (2004), fruits and vegetables (F&V) have claimed an increasing share of world agricultural trade, from a nominal value of $3.4 billion (10.6%) in 1961 to nearly $70 billion (16.9%) in the early 21st Century. Besides, the variety of products has increased. Bananas, apples, oranges, and tomatoes accounted for over 30 percent of the total fruit and vegetable trade in the 1960s and 1970s, but by the end of the 1990s they accounted for less than 20 percent. Fresh grapes, fresh vegetables, frozen potatoes, tree nuts, and other fruit and vegetable products are entering world trade channels in increasing quantities.
15 A geographic segmentation of global trade in these products is also noticeable. Most trade in F&V occurs within a few geographic regions the European Union (EU), the North American Free Trade Agreement (NAFTA) countries, and Asia. Typically, each one of these regions has high-income consumer countries, with nearby supplier countries be it developing or developed having suitable climates or other factors for producing. For example, imports within the EU flow mostly to the United Kingdom, France and Germany, and the largest exporters are Spain (for its produce) and the Netherlands (through whose seaports many of the exports are shipped).
16 There are also remarkable F&V trade flows from MCs such as Morocco or Turkey. To complete the picture of trade for these products, it may be worthwhile to refer again to the discussion on trade preferences and also to the discussion on the specific commercial policies implemented by the EU in some goods. These discussions are carried out in next subsections of this chapter.
17 Apart from intra-EU supplies, the EU principally buys vegetables from its Euro-Mediterranean partners. As an instance, in the period 2005-2009 the MCs supplied in average about over 40% of the vegetables imported by the EU. With regard to fruits, for the same period close to 17% of fruits imported by the EU were originated in the MCs.
18 There are a number of F&V to which the MCs are in fact the only suppliers of the EU, according to Comext data corresponding to the period 2006-2009. Virtually all the potatoes imported into the EU are originated in the Euro-Mediterranean partners, mainly Egypt, Israel and Morocco; the same holds for tomatoes, product to which Morocco alone holds more than 60% of EU imports in value. With the addition of the other MCs, the percentage rises to 95%. In the case of cucumbers, the joint Euro-Mediterranean partners’ share into the European imports market goes to 90%, being Turkey on top with about two thirds of total imports.
19 Turning into fruits, the preponderance of Mediterranean products out of all the extra-EU imports is not so outstanding, although there are several marked exceptions. For instance, Tunisia holds about 50% of dates’ imports value, and the ten Euro-Mediterranean partners jointly account for 83% of dates’ imports value. For figs, Turkey is the main EU provider with above 90% of market share. However, in the case of citrus fruits, MCs do not dominate the European market so clearly, mostly due to off-season imports from the Southern Hemisphere. In fresh oranges and fresh grapefruits, about 30% of extra-EU imports are originated in Euro-Mediterranean countries. For lemons and limes, the percentage lowers to 20%. Yet, in the case of fresh mandarins and clementines, the total Euro-Mediterranean market share rises to 50%.
20 From these figures one could wonder about the degree of complementarity between the EU and its Southern partners Trade complementarity can be measured by the cosine measure...
suite. Previous researches have calculated the MCs-EU complementarity and shown that it is stronger for Belgium, Germany, Holland and France (Dell’Aquila and Velazquez, 2004). More recently, Martinez-Gomez and Arrieta (2009) assess the complementarity between Morocco and the EU. Some remarkable facts may be highlighted. First of all, considering all the agricultural trade Morocco does not show the same complementarity with all the countries of EU. In fact, the authors identify four “categories” or groups of countries within the EU, according to their affinity with Morocco. The highest affinity occurs between Morocco and France, probably because of historical causes. Another group could be called “EU Northern Countries”, which exhibit a large complementarity, but less than in the French case. The following category is formed by the European Mediterranean countries (Spain, Italy, Portugal and Greece) registering the lesser complementarity. Finally we can place in the intermediate situation the group of new EU countries after mid 2000’s enlargement. The Chart 1 plots the complementarity index for agricultural trade.
21 A second fact to highlight is that when complementarity is measured only for F&V trade, the complementarity index results in a very high value. Moreover, the group formed by Mediterranean countries climbs to a higher position, paradoxically, at similar level that France. Perhaps such findings could be explained by some entrepreneurial strategies consisting on the diversification of purchases to keep a good portfolio of products, to fill out domestic supply.
22 Another crucial element to take into account regarding trade in fruits and vegetables in the Mediterranean area is the role played by Non-Tariff Measures. In section 4 we discuss about their implications.
The EU protects some of its fruits and vegetables through the entry price (EP) system. In many cases, the system is applied on a seasonal basis and is subject to special provisions for certain suppliers, such as EP reductions and tariff-rate quotas (TRQ). The EP system itself has received a certain degree of attention in the literature related to the implementation of the Uruguay Round agreements (Swinbank and Ritson, 1995), as well as in the analysis of bilateral preferences granted by the EU to Southern Mediterranean Countries (Grethe et al., 2006). Discussions of the EP system have renewed interest in the context of multilateral trade negotiations, as it is still considered an instrument not fully in line with the spirit of tariffication.
The EP system consists of a two-tiered tariff. When the border price of exports to the EU is above or equal to the EP, an ad valorem duty is charged; whereas exports priced below the EP level must pay a supplementary specific tariff after being taxed by the ad valorem tariff. The amount of the specific tariff depends on the relationship between the EP level and the border price for the consignment. For some products and origins, reduced EP are applied. Thus, Jordan and Morocco have agreed with the EU to a reduction of the EP for tomatoes, cucumbers, zucchini, artichokes, oranges, and clementines; while both Egypt and Israel have been granted an EP reduction for their exports of oranges. It is worth mentioning that, except for Jordan, the EP reduction only applies to a given quantity, and the preferential EP is accompanied by a reduction (often elimination) of the ad valorem component of the tariff. The review of the EU-Morocco agricultural protocol, not...
suite Table below shows estimates of the ad valorem tariff equivalents of the EP system for tomato as applied in the period 2004-2006 on Moroccan tomatoes (García Álvarez-Coque et al., 2010).
Calculated ad valorem equivalents for Morocco (in percentages)
The aforementioned paper by García Álvarez-Coque et al. (2010) assessed the impact of eliminating EP constraints applied to tomato. The proposed model was of a partial equilibrium nature and took seasonality into account. The impact of phasing out the EP system was measured in terms of the loss in domestic EU sales resulting from the elimination of the system. A significant impact was found for some periods of the year, in particular for tomato imports from Morocco. This was true for the period between October and April, with the greatest impact occurring in October, when EP elimination would reduce EU domestic tomato sales by 12%. At the same time, third-country export gains are also concentrated in specific periods: notably, Moroccan tomato exports in November, 1-20 December, January to April, and 15-31 May. The simulation results indicate that EP could be significantly lowered in several periods of the marketing year without substantially affecting trade. Nevertheless, this conclusion does not contradict the hypothesis that the system helps to stabilize prices in certain periods of the marketing year. The most recent review of the Agricultural Protocol between Morocco and the EU, agreed by the end of 2010, foresees the maintenance of the EP for tomato, though TRQ are significantly increased.
23 While olive is currently grown in many regions of the world, it is the Mediterranean area where it is grown the most. Close to 90% of olive oil production comes from the Mediterranean basin: Spain, Tunisia, Greece, Turkey, Italy and Syria are its main producers. Besides, it has an intrinsic and traditional link with the Mediterranean area and probably olive oil is the most typical food in the Mediterranean Diet.
24 In spite of the recent widespread interest in the Mediterranean Diet, a noteworthy fact is the loss of market share of olive oil out of the total trade in agricultural fats and oils. In value, olive oil accounted for about the 13% of fats and oils market share in 2004, while in 2008 this weight lowered to 7.4%. In terms of quantities traded, the other main vegetable oils experienced a two-digit growth whereas olive oil volume traded reduced by about 10% for the same period 2004-2008.
25 The evolution of the values globally imported of different vegetable oils is depicted in the Chart 3. The plot shows the sharp growth of the value traded in vegetable oils other than olive oil, chiefly in the case of palm oil.
26 In the international market of olive oil, a small group of countries dominates the global market. Considering the average of the period 2006-2008, Spain (over 40% of exports share) and Italy (about 25% of exports share) account for around two thirds of worldwide exports. With the addition of Tunisia and Greece, close to 90% of total exports are originated in these four Mediterranean countries. In the imports side, Italy itself is the destination of one third of total imports, whereas the United States share is over 15%. The rest of major importers are split geographically in and out of the Mediterranean basin, such as Spain, France and Portugal, and Japan, United Kingdom and Germany.
27 Following Lazzeri (2011), a noteworthy fact in this market is that the per capita consumption declines in virtually all Mediterranean countries while increases in other non-traditional consumer countries. For instance, in the emerging Chinese market imports in 2012 will amount to nearly 63,000 tons and the most optimistic forecasts for the period up to 2015 are as high as 100,000 tons per year. For these countries, the healthy properties of the products are the key determinants of the growing demand and therefore an effort shall be made to ensure quality and to properly inform consumers about the different properties, varieties, origins and applications to a healthy diet. It will allow clearly differenting olive oil from other vegetable oils.
28 The previous section highlighted the role of MCs as a market for basic agricultural products and as a source of exports of certain specialty crops. A question emerges on the participation of MCs in the world trading system. Are they adopting a pro-trade position? Most countries in the Mediterranean region have shared a strong interest in taking part in the multilateral trading system. Such willingness reflects a common growth strategy based on an open economy. All the MCs are taking steps to implement the WTO Agreements. This includes the WTO Agreement on Agriculture (AoA) and its commitments to reduce export subsidies, domestic support and import barriers on agricultural products. The analysis of trade negotiations and its implications...
29 The current multilateral trade negotiations began under Article 20 of the AoA, aimed at achieving “substantial progressive reductions in support and protection resulting in fundamental reform”. The Doha Declaration (November 2001) confirmed this goal pointing to “establish a fair and market-oriented trading system” inserted into a comprehensive Development Agenda. In July 2004, a new deal was agreed in Geneva (the “July Package”) that included an outline (or “Framework”) to be used to complete the “modalities” on agriculture. The Hong Kong Declaration (December 2005) recorded the progress made in the year and a half since then. The July 2008 package was a new milestone on the way to concluding the Doha Round, still under long negotiations. The main task since then is to settle a range of questions that would shape the final agreement of the Doha Development Agenda. Consultations take place among a group of ministers representing all interests in the negotiations.
30 In spite of the wide range of shared problems in the Mediterranean region, MCs have not followed a single approach as to how framing agricultural and food products in the WTO. Differences in trade policies have been the result of the leeway permitted by the AoA for countries to design their own agricultural policies. The experience of agricultural negotiations shows a variety of positions among MCs with respect the Doha Agenda. While developed MCs, namely the EU member states, argue the need to easy farm reform through maintaining support but reallocating it towards policies of a less distorting nature, developing MCs seem to withstand against farm subsidies and border protection in OECD countries, in particular the EU. In spite of the existence of negotiating groups, the analysis of positions in the agricultural negotiations remains complex:
- A group of MCs (Cyprus, France, Greece, Italy, Malta, Portugal, Slovenia and Spain) is part of the European Union and they coordinate their position in the WTO with the rest of the EU Members States. This group of countries belong to what represents the positions defending a “strong CAP”, including softening the transition to less distorting subsidies. It is likely that this position remains strong in the next CAP reforms, in spite of the budget and international pressures on farm subsidies and of the pro-market view in some Northern European countries such as UK and Sweden.
- Israel belongs to the G-10, a group of countries (Norway, Japan, Switzerland…) that gives substantial weight to multifunctional role of agriculture sector in meeting nontrade objectives, with implies reluctance against trade liberalization.
- Egypt is a member of the G-20 group formed by developing countries including China, India and Brazil, among others. They in general favour agricultural liberalisation and reduction of farm support in OECD economies. Some countries in the group believe that improvement in market access should be cautious in poor countries.
- Turkey is a member of another group, the G-33, led by Indonesia, which is focused on proposals for special and differential treatment for developing countries and limited trade liberalization for special products.
- Morocco and Tunisia share some of the objectives of the G-20 and the G-33. However, their participation in country groupings has been mainly through the African Union (which also includes Egypt) and through the G-90. This is an alliance including most members of the African Union, ACP and LDCs grouping. It shares with the G-20 and the G-33 the idea that agriculture plays a critical role in economic development and poverty alleviation. They in general invoke free access to developed countries’ markets.
- New members who joined very recently the WTO (FYR of Macedonia and Albania) would make very little cuts in domestic support.
A point in common in the Mediterranean basin is that no country in the region is pushing for a full trade liberalisation of agricultural markets. Instead, many countries in the region raise the issue of flexible rules for trade liberalization as most countries in the region have vulnerable agricultural regions. Most MCs are under pressure in this respect, but developing MCs also want to export and therefore would like to see the EU markets opened. The Euro-Mediterranean process is a step forward in such direction. In addition, developing MCs aim at achieving the removal of trade-distorting support in OECD countries. EU direct payments have been seen by developing MCs as a signal of the double standard in the interpretation of the world trading system that favours EU farmers with respect to farmers in the South and East of the Mediterranean basin.
31 The maintenance of agricultural support through minimally distorting policies ( “green box”, in the WTO terminology) is a key factor for the continuation of agricultural policies in the region, aimed at rural development and poverty reduction. Once this is accepted, there could be a sign of consensus of interests between the Northern and Southern shores of the Mediterranean basin:
- MCs would like to introduce policies addressed to solve problems of poor rural areas, and which could meet the test of at most minimal trade-distorting support.
- Northern developed countries, basically the EU, are embarked on deep reform towards decoupled support. The current EU debate includes the reform of CAP’ single payment scheme (European Commission, 2010). This may have been helpful to soften the social impacts of adjustments but it is not very effective to promote a sustainable development in rural areas. Territorial policies supporting environmental contracts for sustainable agriculture and knowledge creation keep being advisable in the Southern EU areas.
The “modalities” texts discussed in the WTO commits members to substantial improvements in market access for all products and everyone except least-developed countries will have to contribute by improving market access for all products. This means that all WTO Members in the Mediterranean region will have to make concessions in market access. A question remains on the implementation of the principle of flexibility, to address sensitive products and special products based on criteria of food security, livelihood security and rural development needs. The number of products under such categories remains an issue of the agricultural negotiations.
32 During 2011 the progress in Doha Round was slow. WTO parties are discussing the chances for a December package that will actually represent a set of partial agreements, far beyond the comprehensive scope that inspired the Round after its launching in 2001. In addition, Doha Round will have little effect on the spread of Non-Tariff Measures, that show growing in trade among MCs.
33 Consolidating a free trade area in the Euro-Mediterranean region will require a better harmonization of non-tariff measures in order to favour that they foster trade rather than restricting it. The Non-Tariff Measures (NTM) depend on public regulations. A broad classification of NTMs elaborated by UNCTAD can be found in the Table 2. NTMs are often considered to be trade barriers and they are gaining importance as tariffs tend to be eliminated, as it is the case in the Euro-Mediterranean free trade area. NTMs do not necessarily present barriers, which reduce trade as many standards are precisely needed to facilitate trade. For example, the existence of Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) measures is critical for international trade between countries since risks and information issues can be tackled and the resulting benefits potentially lead to welfare gains, in addition to health and safety benefits. In fact, the costs and benefits of the measures need to be considered in order to ensure a balanced analysis of their impact.
Table 2 - UNCTAD classification of NTMs
34 The MCs are in different stages of harmonization of their standards with the EU. It appears that stringency of applying measures by the own MCs seems to be relatively stronger at the borders as compared to a less effective monitoring in the domestic market (De Wulf et al., 2009). In the case of SPS measures there are a number of general problems that affect exporters to the MCs such as ad hoc application of shelf life procedures or multiplicity of documents and regulations required in each country. As a result of reforms under the umbrella of the Euro-Mediterranean integration, the average clearance time in most MCs has dropped significantly, but further reduction is needed to enhance economic integration.
35 Recent research has clearly illustrated the importance of NTMs in trade. Hoekman and Nicita (2008) show that the trade restrictiveness of NTMs plus tariffs is at times twice as high as that of tariffs alone. The importance of the trade restrictiveness of the NTMs therefore suggests that initiatives towards implementing deep integration between the EU and the MCs should pay special attention to reducing these NTMs. Border rejections are indicators of exporting countries to comply with food safety and quality requirements imposed by importing countries. During the period 2003-2008, the Rapid Alert System for Food and Feed (RASFF) reported a total of 1,123 border rejection notifications concerning fruit and vegetables imported from the MCs to the EU (Grazia et al., 2009). This represents an average border rejection frequency of 0.0493 rejections per 1000 tons of imported goods, which does not seem a dramatic figure. The next table illustrates the main products affected by border rejections and the main risk sources for each country of origin. The highest number of border rejections concerns groundnuts in the case of Egypt and Israel, and edible nuts for Morocco, Syria and Turkey.
Table 3 - The absolute number of border rejections per country of origin and hazard category (2003-2008)
36 According to the quoted authors, the main exporting sectors from MCs are less affected by border rejections as a consequence of a higher compliance effort undertaken by exporting countries, including infrastructure, skills, human resources, control and test procedures. In fact, while there are NTMs affecting negatively the trade, the compliance with certain private standards (e.g. GlobalGAP) can bring to producers significant benefits, such as reduced agrochemical use and a framework that guides good agricultural and management practices. Unit costs of compliance decrease overtime, probably caused by economies of scale (Gonzalez-Mellado et al., 2010). When export supply chains are characterized by a high level of atomization, and a scarce degree of vertical integration exports seem to be particularly addressed to low-value markets, which are less exigent in terms of food safety and quality requirements. Some producers are not prepared or willing to change their production system to comply. The lack of qualified laboratories to analyse SPS requirements limits the exporters’ ability to guarantee their supplies to the European market. The main effects of these NTMs are increasing direct and indirect costs in production and exports. Due to NTMs set on the EU market, some olive companies re-orientate their exports to other regions, where standards are not so restrictive and expensive. Therefore, the ability for exporting countries to meet food safety standards imposed by importing countries is endogenously determined by the supply chain organization. When it is well organised, the probable impact of NTMs is lower and probably positive to help export products to comply with requirements of EU markets.
37 Emlinger (2010) analyses the implications of NTMs in the entry of fruits and vegetables from different sources into the European markets. She points out that Israel’s ability to fulfill these requirements is the best, even compared with EU countries. On the other extreme, Tunisia, Syria, Jordan, Algeria and Lebanon show the worst performance in this field.
38 As indicated before, the EU and most of the MCs are members of the WTO. Therefore, they participate in the multilateral trading system and assume the obligations of the AoA (including commitments to reduce export subsidies, domestic support and import duties on agricultural products). But, at the same time, the EU and each one of the MCs have also bilateral agreements within the framework of the Euro-Mediterranean Partnership. These Association Agreements include a scope of agricultural trade liberalization. At present, there is more progress of agricultural trade liberalization under the Euro-Mediterranean Partnership than under the multilateral round of negotiations promoted by the WTO.
39 The Euro-Mediterranean integration process in agriculture has witnessed difficulties towards its progression. The main reason is that agriculture, and particularly the F&V sector, has been and keeps on being one of the most conflictive aspects in the relationships between the EU and the MCs (García Álvarez-Coque and Jordán Galduf, 2006; García Álvarez-Coque et al., 2008). Restrictions to agricultural trade flows persist nowadays in the Mediterranean region. Farming organizations in the North are against further market concessions to the South, as they fear that a higher international competition may endanger the subsistence of European Mediterranean farmers.
40 The strategy followed in the Euro-Mediterranean Agreements includes a series of reciprocal agricultural concessions with the compromise to negotiate, later on, greater concessions on the basis of a product-by-product assessment, while planning their revision targeted at a higher liberalization of agricultural exchanges. Meanwhile a number of intra-Mediterranean arrangements have been activated throughout the Mediterranean region (see table 4). Examples are the Agadir process, the FTA between Turkey and other MCs partners, apart from the other agreements including developing countries outside the Mediterranean region. Until now, the process is far from giving results, as MCs show a little diversified export structure and intra-Med trade is still around 5% of total exchanges.
Table 4 - FTA between Mediterranean countries
41 One of the potential advantages of the intra-Med integration is the attraction of FDI, which is still low (1% of total EU’s FDI). Such lack of investment attraction seems related to the fragmentation of the regional market as well as the weak business environment and lack of transparency of the regulatory framework.
42 North-South integration has seemed another appealing strategy for some governments in the Mediterranean region, which includes not only the EuroMed process but also the integration with the USA. This has been the case of Jordan (2001) and Morocco (2006). Since then, the US trade surplus with Morocco has risen from 79 million dollars in 2005 to over 1 billion dollars in 2009, opening a market for US fats, dairy products and cereals. The Box below briefly summarizes remarkable aspects of the USA-Morocco agreement.
USA represents a small share of Moroccan agricultural exports. Nevertheless, a strong political commitment between the two countries led to the signature in 2002 and implementation of the Agreement in 2006.
In the case of agricultural goods, the liberalization process is based on different lists of products with different periods for the phasing out of tariffs. They range from immediate elimination to other products liberalized over a period of 25 years. Certain exceptions mainly soft wheat will be out of the elimination scheme. On the other hand, Moroccan goods face no tariff at USA borders. However, NTMs for entering into the USA markets remain.
In figures, between 2005 and 2009, exports from the USA to Morocco increased threefold from 6.1 to 18.8 billion dirhams, whereas those from Morocco to the USA United States rose only very slightly from 2.5 to 3.6 billion dirhams. The boom in American exports to Morocco is mainly due to increased export of agricultural goods, such as maize and oilseeds.
43 Tariff concessions imply significant price advantages for the preference-receiving countries (Martinez-Gomez, 2007). However, after the experience of 25 years of commercial preferences, they have not translated into a great impulse for the exports dynamic of the MCs, but simply a continuation of the traditional trade flows from these countries to the EU. In fact, there has been a limited impact of the Barcelona Process on agricultural trade (Abis, 2011b). For instance, in 2009, the agricultural exports from MCs to the EU increased only 7%, although Morocco was an exception, with an increase in exports of 19%. In any case, further consideration can be taken about the potential impact of a deepening of the trade liberalization process, by means of the progressive increase of zero-rated tariff quotas and the reduction of other agricultural trade protection mechanisms.
44 In theory, progressing in the reciprocal trade openness, as stated in the “road-map” established in the Euro-Mediterranean Conference held in Barcelona in November 2005, will imply an increase of trade flows both in North-South and South-North directions, generating new opportunities to the actors of both sides of the Mediterranean. Clearly there are risks involved in such openness, due to the social consequences arisen from the adjustment required in the less competitive sectors, both in the North and in the South of the region, including the growing risk of food dependency on imports of basic products in MCs. It is, therefore, necessary to modulate in time the opening process and to apply other accompanying policies that can attenuate the social costs.
45 Quantitative exercises (such as García Álvarez-Coque et al., 2010) suggest that impacts of trade liberalization on F&V market will depend on the nature of the negotiations (bilateral and multilateral); the extent that the European products differentiates with respect to imported products; the season within the marketing year when tariff reductions take place, and the relative competitiveness of the domestic supply, related to a variety of factors. Even though the concessions granted have not yet implied considerable trade flows, certain saturation problems have already appeared in the Community markets. Their severity has been increased by the perishable nature of many of the Mediterranean products, even with occasional temporary price crashes that affect the profitability of a whole marketing year.
46 It is difficult to deny that many producing agricultural areas in Southern Europe are in trouble. Rural economies are not exempt of challenges, in many cases due to the aged labor force, the weak entrepreneurship, and the environmental effects related to the preservation of landscape and the management of territory.
47 With this broad picture of rural areas, the argument of an agricultural liberalization impoverishing Southern European agriculture losses power. It is true that international delocalization of production is taking place outwards the EU. However, this should not be a long-term problem for the European countries as long as their agro-food economy is reoriented to activities that offer a higher added value and are intensive in technology. On a long-term basis, the agro-industrial system of the Mediterranean regions in the EU would profit from exporting technology and services to the MCs and from the integration of the whole Mediterranean food and agricultural system in the European markets. This is a future picture that makes sense to the younger generations.
48 This economy-wide perspective does not hide the income difficulties currently faced by the agricultural areas specialized in F&V, many of them located in Italy and Spain. The crisis is largely explained by, firstly, a fall in F&V consumption related to changes in life style towards convenience; and secondly, the lagged response of supply when assets are specific and lack flexibility (permanent crops, small farms). This equation results in overproduction. However, there is a third factor of crisis that makes the marketing of horticultural products to be increasingly different from what it was just a decade ago. This factor refers to the growing relevance of the negotiation capability of modern food retailing. Under its power, the producers (farmers, traders and food processors) tend to adjust their production to the strategies of the leading groups.
49 Most of the effects of globalization can be managed through territorial policies equipped with adequate instruments, like the specific aid scheme supporting Producer Organizations (POs). In following pages we refer to two case studies of policies adopted in the EU with significant impact on small and medium farms. The first example looks at the specific support given by the CAP to producer organizations as a way to improve supply coordination and farmers’ insertion into the value chain. The second case refers to the role of the direct aid scheme, which is under continuous discussion.
50 Coordination and organisation are key words when policies tailored to the F&V sector are considered. The F&V Common Market Organisation (CMO), reformed in 2007, draws its support to horticultural farmers on the creation and enhancement of producer organisations. These can be seen as engines to concentrate production given the low level of sales per farm cooperative in Italy and Spain in comparison with other countries in Northern Europe. Still, supply concentration is not enough.
51 Producer organisations should be considered as an effective way to increase collaboration between growers and other members of the supply chain. All stakeholders share interests in cost reduction, quality upgrading and risk management. If this is recognized, there is a need for policies orientated to undertake collective action approaches within supply chain agribusiness.
52 The productive and commercial structure of the F&V industry in the EU is not adapting well to the changing market conditions, requiring different products and improved guarantees of quality and environmental standards (García Álvarez-Coque et al., 2007). Nevertheless, situation varies among EU member states. For instance, the Netherlands and Spain illustrate two different situations. Nowadays, 92% of horticultural production in the Netherlands is sold through 22 producer organizations. By contrast, in Spain there are 625 producer organizations that only account for 44% of Spanish F&V production.
53 Most F&V cooperatives in Spain were created to channel contracting between growers and wholesalers or retailers. This was supposed to reduce the information asymmetry bias against growers and to provide them with insurance against the failure to receive payments, which is still seen as one of the most important concerns for independent growers. However, producer organizations in Spain account for a relatively low total percentage of total marketed production.
54 Thus, fruit and vegetables cooperatives in Spain have not been very effective in improving growers’ market power. Moreover, lack of trust remains a factor in both the relationship between farmers and cooperatives, and between individual cooperatives and the second-tier cooperatives. While normally the cooperative was a solution to the information asymmetry problem, it can re-emerge within a cooperative when there is a lack of trust between the members and the managers of the cooperative.
55 What remains to be answered is, therefore, the effectiveness of those incentives to encourage a culture of collective action in producing areas. As seen in the Spanish case, the behavior of many cooperatives does not contribute to strengthening their negotiating power vis-à-vis retailers. Among the reasons for this situation is the lack of professional management in cooperatives, which leads to “supply oriented” strategies, strong competition among cooperatives, and lack of transparency in the decision-making process within the cooperatives. Very often, coop members receive pool payments as a residual of the producer organizations earnings net of operational costs and grower payments. They are, thus, disconnected from market prices and price differentials due to quality. Market efficiency is not enhanced by a public scheme that favors structures that can be seen as formed to “crop the aids” instead of to capture benefits from grouping the supply, and by the fact that many private stakeholders that do not belong to associations are not eligible for public support.
56 Finally, we shall point out that the CAP reform process should facilitate the structural adaptation of the areas that could be more affected by the agricultural liberalization, hence promoting a stronger impulse of the Euro-Mediterranean Partnership. The idea is to define a CAP that could make compatible the support to the rural world with a wider external openness, including the products from the MCs. Such approach for rural development would have many precise objectives based in the improvement of the commercial and production structures, the quality of food and the environment. Southern Europe receives a considerable amount of public resources that could be spent with more efficiency and equity, even if that would mean a higher degree of co-financing by national and regional administrations. Regarding this subject, the agricultural policy could be integrated as one more component of the regional policy.
57 Indeed, since the CAP reform in 2003, producer support in the EU is becoming, to a large extent, decoupled from production (and included in a single payment scheme) and this process has been confirmed by the so-called “Health Check” of the CAP in 2008, with the possibility to transfer resources to envelopes considering territorial and environmental payments as well as the strengthening of rural development policies. But further reform of the CAP is needed to address public concerns (such as environment and extensive mountain systems). The transition has to be completed from “decoupling” to “targeting”, and policies to promote strong producers’ organizations and a value chain approach are very much required. The CAP reform proposals for 2013 are referring to a more even distribution of the basic support and the reallocation of the budget to environmental payments, more adapted to the challenges faced by agriculture in the present century (European Commission, 2010).
58 The progress in the process of creation of a Euro-Mediterranean free trade area should logically incorporate the liberalization of agricultural exchanges. If EU countries currently have a competitive advantage in many industrial sectors and in the continental agriculture itself, Mediterranean Partner Countries also have this advantage for some fruit and vegetable products, so it does not seem reasonable to restrain the reciprocal openness to the manufacture market.
59 However, a strategic long-term view of Mediterranean agriculture would allow for synergies between both shores of the Mediterranean (IPEMED, 2009). This includes: 1) supporting synergies between both shores of the Mediterranean enhancing cooperation between POs in the North with stakeholders in the South; 2) A careful process to trade liberalization that assesses its impacts on traditional farming systems before further moves are carried out; 3) Territorial policies supporting organization, business oriented practices, knowledge creation towards sustainable practices keep being advisable in the F&V sector.
60 The Euro-Mediterranean integration cannot be seen as a simple Free Trade Area. In fact, the agricultural issues refer to the social and cultural implications of the rural systems across the Mediterranean region, which go beyond trade. A growing concern refers to the negative impacts of trade liberalisation on the farming systems, in particular if liberalisation is not gradual and lacks accompanying policies to support the adaptation of the farming systems. An issue is that of volatility in the global markets of basic products. This can be tackled with an agricultural policy that not only focus on agro-exporting agriculture but also on improving local systems to allow certain self-reliance and avoid growing food dependency. Strengthened risk management tools have to be devised to soften the effects of price instability on consumers and producers.
61 By closing its markets the EU hardly contributes to help developing countries in their escape from poverty. The EU can favor policies that combine increased market access for Mediterranean products with the development of domestic capacities in the MCs. Rural people in both sides of the Mediterranean basin are affected by a great deal of common problems, with different intensities but needed of similar approaches. Some of these problems are of a special concern, such as the water scarcity, the opportunity for improving quality and the lack of adequate organisation. Agro-food policies must address to the specificities of the supply chain, which relate to risk management, quality assurance, human capital, logistics and information technology, promotion of consumption and other characteristics that cannot be tackled through traditional subsidies. The EU has a chance in the definition of a future European Neighbourhood Policy for Agriculture and Rural Development (ENPARD) of enhancing the cooperation with Mediterranean Partner Countries, targeting on rural citizens. Not only trade but also international cooperation, with focus on added value, training, innovation and civil society’s participation are mostly needed.
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 The figures in this sub-section were collected from the International Trade Statistics (WTO) in December 2010 and January 2011.
 Trade complementarity can be measured by the cosine measure COSij (Linnemann and Van Beers, 1988). In this indicator, value “1” indicates maximum of complementarity level; on the contrary, value “0” means the minimum level of complementarity. It is calculated combining the trade data vectors (imports to country j and exports from country i) for two trade partners; the two vectors are compared by determining the cosine of the angle between them in the n-dimensional commodity space. The underlying concept consists on checking to what extent the imports from one partner mirror the other partner’s exports.
 The review of the EU-Morocco agricultural protocol, not in force at the time of writing this chapter, eliminates TRQs for Moroccan artichokes and oranges, and agrees to a reduction of the EP for three new products: peaches, apricots and table grapes. No TRQ is foreseen for them.
 The analysis of trade negotiations and its implications on Mediterranean agriculture has been covered in previous CIHEAM reports. See Akesbi and García Álvarez-Coque (2001) and García Álvarez-Coque (2006).
PLAN DE L'ARTICLE
- Agricultural trade in the world and in the Mediterranean region
- The WTO response
- Non-tariff measures
- Agriculture and the Euro-Mediterranean Partnership
- The role of policies
POUR CITER CET ARTICLE
José Maria García Álvarez-Coque et al. « Chapter 17. Agricultural globalization and Mediterranean products », in MediTERRA 2012 (english), Presses de Sciences Po, 2012, p. 345-367.
URL : www.cairn.info/mediterra-2012-english--9782724612486-page-345.htm.