The free‐trade agreement between Tunisia and the European Union

Abstract

In December 1990 the European Union adopted the new or renovated Mediterranean policy which defined its relations with the Mediterranean non‐member countries (MNCs). The new policy called for agreements that would replace the co‐operation agreements that were due to expire in 1996, and that would include new features such as a political dialogue with the southern partners, co‐operation in the social, economic and cultural areas, and the creation of a free‐trade area. This study examines the first association agreement concluded under this new framework and signed by Tunisia and the EU It then extends the conclusions drawn from that examination to other MNCs that have signed or are expected to sign similar agreements. The study concludes that the Agreement with Tunisia will at best bring no benefits to Tunisia, and at worst could cause major economic difficulties for the country. This conclusion is based on several arguments: free‐trade areas between unequally developed countries are generally harmful to the weaker ones; the neoclassical model of development which calls for free trade at the global level, liberalisation of economic activities, domination of the private sector and the free play of market forces, is not conducive to sustainable development; and lastly, Europe is not able and/or willing to offer MNCs sufficient funds to compensate for the expected losses and to help create proper conditions that would allow MNCs to compete with Europe in a free trade environment. MNCs would be better advised to create a free‐trade area among themselves in which they would institute a planned, integrated industrialisation program. The partnership agreements would have a political value if Europe were willing to use them to encourage present ruling regimes to abandon authoritarian rule and adopt more open, pluralist systems so as to prevent the rise of Fundamentalism which is only waiting for the economic situation to worsen (as it is likely to if the Agreements are implemented as they are) to make a serious bid for power.