Économie et Statistique n° 363-364-365 - Firms on The Global Markets Labour Market - Attractiveness - Debt - Enlargement toward East en South
Enlargement: towards closer relations between Europe and the Mediterranean countries?
The medium-run effect of free trade agreements (association agreements) between the European Union and the Mediterranean countries as part of European enlargement is studied using a calculable general equilibrium model. Three trade liberalisation scenarios are considered. Firstly, we simulate the effects of enlargement separately. Then we simulate the effects of the association agreements, which combine with the effects of enlargement in two different ways depending on whether the dismantlement of customs barriers is limited to industry or whether it extends to the food sectors. Based on the model's assumptions, enlargement would have no notable effect on the well-being of the Mediterranean countries. However, its trade repercussions would be significant in terms of the increase in trade between acceding countries and Mediterranean countries, especially Turkey. The association agreements with the European Union would lead to a deterioration in the North African countries' terms of trade due to the asymmetrical nature of these agreements, since complete liberalisation entails concessions from the North African countries more than from an already-open Europe. Things would be different for Turkey, which already has an industrial customs union arrangement with the European Union. Moreover, regional links would be more intense at the cost of trade with the rest of the world (diversion of trade).