These three interlinked dimensions seem to have fallen short of the ambitious objective embraced by the Barcelona declaration twenty-five years ago. While advocating the merits of this objective, the Center for Mediterranean Integration (CMI) three-prong approach recommends eliminating tariffs and non-tariff barriers to trade of goods and services, with a strong emphasis on trade of services. This is due to their positive effects on productivity and job creation that can spillover into agriculture and industry, including through Information, Communications and Technology (ICT).
In parallel, the CMI recommends increasing the mobility of workers and jobs within the region, through regularized migration policies, as well as promoting human capital mobility through, e.g internationalizing education and promoting e-learning.
Finally, fostering investments and private sector businesses, as well as partnerships involving parties from both shores, will be key to the socio- economic transformation of the region. Behind this vision lies the idea that trade liberalization cannot be dissociated from sectoral reforms and that removing tariffs and other trade barriers will only result in economic growth and progress if other trade restrictions, in critical areas such as transport, infrastructure, regulations, logistics, digitalization and financial intermediation, are removed. Such restrictions do not only increase trade costs but also prevent diversification and upscaling, therefore delaying structural transformation which, in turn, decreases opportunities for trade exchanges.
This transformation will also require a coordinated approach to improve the business climate of the region, especially in countries where the public sector still occupies a relatively large percentage of economic activities, crowding out the emergence of smaller privately-owned businesses, preventing competition and triggering institutional failures. Regulatory reforms, as well as fiscal (non-tax) incentives, as opposed to arbitrary tax exemptions, should be envisaged. In this context, co-production schemes involving Small and Medium-sized Enterprises (SMEs) within the region will be essential to contribute to job creation.
In sum, the overall approach suggests enhancing growth through comprehensive trade reforms, while also fostering the mobility of workers through regularized migration schemes, as well as promoting Foreign Direct Investments (FDIs) and cross-country public-private partnerships. In parallel, the provision of regional public goods that benefit the whole region as well as more targeted initiatives aimed at protecting vulnerable income groups (refugees, unprotected children, unemployed, etc.) and less-favored geographic locations (remote, landlocked) will be necessary to reduce income disparities, in line with the goals of achieving social inclusion and territorial cohesion.
This opinion article is based on a report by the Center for Mediterranean Integration, entitled “Enhancing Mediterranean Integration”, to be published in October 2020. Stay tuned: www.cmimarseille.org