IP/08/542

Brussels, 8 April 2008

Investment summit aims to boost regional integration and EU investment in Southern Mediterranean

Leaders from the signatories of the Agadir Agreement (Morocco, Tunisia, Egypt and Jordan) are today meeting senior EU policy-makers and business representatives for talks designed to sharply increase EU investment in the Southern Mediterranean. The forum focuses on improving legal frameworks for investment, encouraging joint partnerships between EU and Southern Mediterranean businesses and boosting EU investment in the region, which is among the lowest for any such region globally. The Forum was opened by EU Trade Commissioner Peter Mandelson.

Peter Mandelson said: "Although they increasingly trade with the EU, it is just as important to help the countries of the Agadir Agreement to develop their trade with each other. The countries of the Agadir Agreement have taken a big step in creating a free trade agreement. We need to reinforce that by boosting EU investment in the region. Despite their closeness to Europe and their promising growth, the countries of the Southern Mediterranean have attracted only 1% of EU foreign investment since 2000. We need to change that."

Background

The EU is a strong supporter of the 'Agadir Agreement', which was signed in 2004, establishing a free trade agreement between Morocco, Tunisia, Egypt and Jordan. After a long ratification process the agreement became operational in April 2007. The goal of the EU and the Southern Mediterranean countries remains an EU-Mediterranean free trade area by 2010.

• The Agadir Agreement liberalises all industrial trade between signatory countries and a large part of their agricultural trade.
• The Agadir agreement provides a useful framework for future work harmonising technical standards between the signatories, which is necessary to encourage trade.
• The Agadir agreement ensures businesses in signatory countries can produce goods in more than one of their economies without losing their preferential tariff rates for the EU market. This means a shirt can be made with Egyptian cotton and finished in Morocco and still exported to the EU at a highly preferential tariff rate.
• The European Commission has provided technical and financial as well as political backing for the process. The Agadir Technical Unit in Amman, which acts as the secretariat for the Agreement , has been supported with €4million in EU financing. This support is expected to continue.
• Southern Mediterranean countries stand to make substantial gains from attracting new investment. Foreign investment flows into the Mediterranean region are still very low. The share of this region in the EU’s total direct investment abroad in 2006 was €4.9billion – around 2% of EU FDI. Since 2000, the Mediterranean countries have attracted on average only 1% of the EU outward Foreign Direct Investment. Liberalisation of investment regimes, coupled with the creation of an integrated regional market, will have a positive impact on the level of domestic and foreign investment in the Mediterranean region. According to an OECD study from 2001, these gains are at least of the same magnitude as those derived from trade liberalisation, if not greater.
• Investment is particularly important for the growing services sectors of the Agadir countries. The services sector is key to the economies of the Southern Mediterranean countries. Services accounted in 2005 for about 47% of GDP in Egypt, 55% in Morocco, 72% of GDP in Jordan and 59% of GDP for Tunisia.

For complete programme and list of participants see: http://www.agadiragreement-events.org/