Tunis Conference, October 13th, 2015, The Residence Hotel, Gammarth

Patricia Augier (President of the Scientific Committee and Coordinator of FEMISE)

During a consultation conducted with stakeholders regarding the DCFTA, it was stressed that there was “a need to first conduct an ex-post evaluation of the Trade Agreements that have been already implemented[1]”, which is actually common sense. What lessons can the analysis on the effects of the Association Agreement bring in light of the future DCFTA? Specifically, why did the previous agreement fall short in terms of expected positive effects?

One reason that is commonly brought up in the case of Tunisia is that tariff reduction was followed by the implementation of other protective non-tariff measures that proved to be considerable obstacles and contributed to the Tunisian industry sector remaining relatively closed to foreign competition. Although this explanation is not the only one, it is largely true. However, one should avoid assuming that with the DCFTA, non-tariff measures will be addressed and thus everything will work.

It would be wrong to defend this hypothesis for a number of reasons. (i) First, because the solutions implemented to counteract the process of opening-up go beyond the traditional coverage of non-tariff measures. One should focus on how to resolve this problem by addressing its source, which is an internal matter to Tunisia; (ii) Secondly, because it would be erroneous to suggest that further opening-up will automatically fix everything and give a boost to the economy. We all know that for more openness to bring more growth a number of conditions have to be met.

Specifically, one must remove a number of barriers to enable the private sector to adjust, to adapt and take advantage of the new opportunities that are offered. These barriers are frequently quoted, whether it is the business climate, corruption, governance, access to finance, infrastructure, trade facilitation, the rigidity of the labour market, etc. Understanding and identifying the barriers more concretely (by sector, depending on the size of companies, on whether these companies export or not, depending on their location, etc.) should become a priority. To take advantage of the DCFTA, we must identify the barriers in an operational way. This will allow defining the economic support policies and the reforms that need to be implemented.

Another important point is that the DCFTA goes beyond the Association Agreement, which only consisted of reducing tariffs. The DCFTA is much more than that and the agreement covers the most sensitive and more complex areas. Also, this agreement can be a source of significant gains for Tunisia, but for this to happen, progress must be made after conducting studies, serious and focused analysis in all fields. Firstly, for every step forward, it is necessary that we identify the winners and losers of the process. Secondly, we need to know what to change and adapt at the national level to make the most of this agreement. Let’s just take the example of the harmonization of non-tariff measures on European standards. What will its effects be? The answer will depend not only on the sector of activity but also on the specific situation of each firm. The effects will be different if the firm already exports to the European market or if it produces only for the local market. The adoption of European standards is likely to increase production costs, which will result in an increase in the sale price. Products will be better suited to the European market but firms will also start being less-open towards emerging markets. Therefore, we can ask ourselves whether, irrespective of sectors, is it wise to remain closed towards emerging markets that are the most dynamic in terms of growth rates and have great potential?

Moreover, we must not ignore social issues and the daily life of the Tunisian people. It is not possible to have on one hand, a “sophisticated” system of rules, institutional and legal frameworks that converge towards the « acquis » and on the other hand, have a share of the population whose living conditions are deteriorating or at least do not improve. It will therefore be an absolute priority to involve and especially listen to the civil society as a whole and take into account the concerns and expectations of the Tunisian people.

In summary, the answer to the question of whether the DCFTA can be beneficial for Tunisia, is yes, provided that the agreement is not an objective in itself but is used as a tool that contributes to the economic and social development of the country. The DCFTA must be integrated into Tunisia’s development strategy but should not be the pivot. The DCFTA must be at the service of the development strategy.

[1] Ecorys, 2013, Evaluation de l’impact commercial durable en support des négociations pour un Accord de Libre-Echange Complet et Approfondi entre l’Union Européenne et la Tunisie, Résumé analytique du rapport technique intérimaire, Mai, pp.8.

To know more, you can check the website of the EU delegation in Tunisia, Click here