Ten years after implementing the Barcelona process: what can be learned from the Tunisian experience

Abstract

January 1, 2009 marks the 11th anniversary of the Tunisia–EU Free Trade Agreement (FTA). In its short life, this agreement has instigated major changes in the Tunisian economy and has significant consequences on the conduct of the Tunisian trade policy. Our preliminary assessment of this agreement shows that contrary to expectations, the structure of Tunisian imports of manufactures does not change much. Additionally, our assessment shows that trade diversion was limited to products of the first List of tariff dismantling. This is explained by the depreciation of the US dollar compared to the Euro, the emergence of China and other countries in the world market, and the reform of the Tunisian fiscal policy since the implementation of the agreement. In addition, the FTA was not translated in the development of a new growth regime based on new productive sectors but only helped the existing growth regime based on labour intensive to be more efficient. However, growth accounting analysis shows that the contribution of total factor productivity (TFP) to total economic growth is improved in the post-reform period, which indicates that the country benefited from technological transfers. Simultaneously, Foreign Direct Investment (FDI) increased since Tunisia started the liberalisation of services and the country succeeded in implementing fiscal reforms by reducing over-dependence of the government's budget on tariff revenues.