Joining forces for a renewed process of Regional Integration: monitoring and progress

Trade is an important part of the UfM region’s economy, and the intra-regional market continues to be one of the most relevant global markets. However, the distribution of trade remains concentrated in the Northern Shore, and while trade agreements in the region have focused on reducing tariffs in the trade of agricultural and manufactured goods, there is a lack of ambitious regulation on services trade, which could be a key engine for economic development.

To further improve trade integration, the report suggests to Member States to enhance collaboration on trade regulations, including the adoption of more ambitious trade-in-services agreements. Increased political and administrative cooperation could reduce trade costs, enhance regulatory transparency, and simplify and digitalise procedures. It is also important to support industrial diversification, including skills development and a digitalisation agenda, to promote more South-South trading links.

Financial integration in the UfM region cannot overlook the diverse levels of financial development across member countries. Within the UfM region, EU countries are the main senders and receivers of foreign direct investment (FDI). There is significant untapped potential for investment within the MENA and Western Balkans regions, and between the two sub-regions, which share limited FDI flows.

Intra-UfM remittance flows are significant, and in several MENA and Balkan states, remittances represent a significant share of GDP, although it is likely that estimates fall short of the real value due to money sent through informal channels. Establishing effective frameworks for transferring remittances through formal channels could avoid losses to informal channels and support greater financial literacy and inclusion.

Infrastructure integration remains insufficient or incomplete in the Southern and Eastern Mediterranean. Current levels of investment are not enough to meet the growing connectivity needs between countries; challenges include not only the lack of proper infrastructure but also a lack of a harmonised regulatory framework at the national and sub-regional levels. Economies in the Southern Mediterranean region are well endowed with renewable energy sources, but power supplies remain undiversified, and energy relations with Europe are still based on oil and gas.

• To improve infrastructure integration, it is vital to increase investments in the development of high-quality transport and energy infrastructure, and to co-operate on international tools and instruments to ensure quality, compatibility and inter-operability of networks across the region. The report recommends that the capacity and efficiency of ports be improved to boost their role as national or regional gateways, linking them with inland areas, special economic zones, and research centres and universities.

Movement of people in the UfM region has improved, with easing of visa requirements, bilateral and regional agreements on labour and education mobility. However, this progress has been unequal across countries in the region, especially in South-South movements. The EU continues to play a central role in migration patterns in the region, including labour migrations.

To fully unlock the potential of human mobility as a driver of growth, the report recommends that states design circular migration schemes that put migrants’ rights at the centre and ensure the attractiveness of circularity for all parties. Investing in skills development and transferability, harmonizing national qualifications frameworks, and developing cooperation between institutions could enable greater participation of Southern Mediterranean youth in mobility schemes between UfM countries, and could be expanded to target new categories of migrants, including tertiary education students and young, highly skilled professionals.

Integration in higher education and research has increased unevenly in line with the growing but unequal capacity in education and research in Southern and Eastern Mediterranean countries. Integration of research and higher education needs to be linked with industry, including manufacturing and services, within national economic systems, in order to ensure that regional collaboration among scientists and universities effectively contributes to economic development.

To ensure effective regional integration in higher education and research, investment must be made into research infrastructure at the national level. States could encourage student mobility as a vehicle for directing research towards common problems, and could facilitate the diffusion and uptake of digital technologies for science and education, such as open science platforms, in order to enable countries to take advantage of new opportunities for regional cooperation, especially in the current context of the COVID-19 pandemic.

In January 2017, the UfM Ministers of Foreign Affairs adopted the “UfM Roadmap for Action” aimed at strengthening the role of the UfM in driving enhanced regional cooperation and integration in the Mediterranean. The Roadmap identified the need for a Progress Report on Regional Integration to monitor trends, assess progress over time, and inform policy-making.

The 2021 Progress Report on Regional Integration in the Union for the Mediterranean was prepared by the Organization for Economic Co-operation and Development (OECD), with the financial support of the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) on behalf of the Federal Ministry for Economic Cooperation and Development of Germany (BMZ)