Trade Offers Path to Growth and Integration: Maghreb Countries Committed to Increasing Regional Trade

June 14, 2012

Rabat, June 14, 2012 - The five countries of the Maghreb region have agreed on a comprehensive plan to boost lagging regional trade, with investments in critical infrastructure, the harmonization of customs procedures and the cross border expansion of logistics and transport services. The agreement, which came at the conclusion of a ministerial workshop on trade facilitation in Rabat, Morocco, is a formula for further economic integration, with the promise of efficiency gains for local producers, and the creation of a regional market of more than 90 million consumers.

The Maghreb countries all face similar challenges of growing populations and high unemployment, especially among the young, coupled with low growth rates and low foreign direct investment,” says Jonathan Walters, Regional Director for Programs and Partnerships at the World Bank, one of the sponsors of the trade workshop along with the Moroccan Ministry of Equipment and Transport and the Arab Maghreb Union. “Lowering the barriers to trade would be an effective, common approach to these shared challenges, which would lay the foundations for future growth by making the region more competitive and more attractive to both domestic and foreign investors.”

The workshop represents the final stage of a two year process of extensive research and consultations, including two previous conferences last year hosted by Algeria and Tunisia, and culminating with the release of the new World Bank report, A Regional Study on Trade Facilitation and Infrastructure for the Maghreb Countries. The report, prepared with the participation of the five Maghreb countries (Algeria, Libya, Mauritania, Morocco and Tunisia) and in collaboration with the Secretariat of the Arab Maghreb Union, identifies the specific barriers to trade, and proposes a detailed plan to overcome them. The goal of the most recent ministerial workshop was to review the proposed plan, decide on a joint course of action, and learn from the experiences of other regions that have successfully implemented similar projects to facilitate trade and deepen economic integration.

At the conclusion of this important process, as we now move from diagnosis to solutions, we are pleased to have the opportunity of bringing together our fellow ministers from the Maghreb with representatives of the global development community and international experts on trade.” says Abdelaziz Rabbah, Minister of Equipment and Transport of the Kingdom of Morocco. “The lessons from international experience are clear, that for us to realize the immense potential inherent in regional trade, we need to forge a consensus on facilitating trade with measures such as customs cooperation and the integration of logistics services and transport infrastructure.”

Trade among the countries of the Maghreb was less than three percent of the region’s total trade in 2008. In contrast, trade within the European Union for the same time period was 63.6 percent of the region’s total trade, 24.6 percent within the Association of Southeast Asian Nations, and 15 percent within Latin America’s Common Southern Market. The low levels of trade within the Maghreb persist despite the existence of overlapping institutional frameworks for regional integration, such as the Arab Maghreb Union, and the Greater Arab Free Trade Area. A 2006 World Bank study estimated the loss due to weak trade integration as equal to two to three percent of the annual Gross Domestic Product of the Maghreb.

A method for comparing the effects of various constraints on trade was developed for the report, which revealed that, due to a weak transportation network and a series of non-tariff barriers, intra-Maghreb trade costs for agricultural and industrial products were practically three times higher than intra-European Union (EU) costs. Costs for trade with the EU were uniformly lower than those associated with regional trade, as the countries of the Maghreb have made extensive investments to ensure ease of access to the large market to the north. These investments have delivered benefits, with Morocco and Tunisia now fully integrated into European supply chains, but they are not a substitute for concerted actions to overcome the multiple obstacles to regional trade.

The proposed action plan calls for the raising of institutional capacities across the Maghreb, by countries sharing knowledge and expertise, and investments in critical infrastructure to create trade corridors, governed by international agreements on customs and regulations to ease the crossing of borders. These efforts would lead to the development of another important source of economic growth, and would complement rather than compete with current EU trade, by allowing the Maghreb to establish its own supply chains and its exports to move up the value added chain. As the countries of Central America have shown, who conduct 17 percent of their total trade with each other, economic integration is a complement to trade with large, nearby markets, in this case the United States and Mexico.         

“The countries of the Maghreb are bound by shared language and traditions,” says Habib Ben Yahia, General Secretary of the Arab Maghreb Union. “Our people are highly mobile, moving freely across borders throughout our history, but economic integration has always been a step away – a commitment to regional trade could be the answer to that long awaited goal.”

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2012/JUNE 14/MNA