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Tunisia : 6 years 1/2 of EU-Tunisia Association

Tunisia has a population of 9.8 million, with 29.6% of under 15. Demographic transition is well under way, and the natural growth rate reached 1.12% in 2000. Working population is at 3.2 million people, 25% of them women. It should grow by 80.000 units per year on average during the 10th Plan (2002-2006).

Economic growth, at an annual average of 4.5% over the period 1993-2001, reached 5.1% in the period 1996-2001 during which the Association Agreement was implemented. Per capita income amounted to € 2,300 in 2001. Life expectancy is at 72.4 years. 62.4% of the population live in cities, and 78.2% of households own their home.
The poverty rate was brought down to 4.2% in 2001, but illiteracy among women and girls over 10 is still at 36.9% as against 17.6% among men, and unemployment remains structurally high (15.6% in 2000). Since 1996 the share of Tunisian imports originating in the EU has been at 72%, and 80% on average of Tunisian exports have gone to the EU.

The country received 14% of bilateral funds committed under the MEDA I Programme (1995-1999) i.e. € 428 million while accounting for only 4.1% of the total population of the 9 Mediterranean Partners benefitting from the Programme. Tunisia has also received 12% of European Investment Bank (EIB) loans, i.e. € 525 million.

Tunisia’s share of MEDA II funding for the period 2000-2004 is 13% of the total, i.e. € 412.8 million. EIB commitments for Tunisia totalled € 380 million in 2000-2001, more than twice the average annual commitment under the Euromed I mandate (1997-1999).

Grants to Tunisia from both EU Member States and the European Commission totalled an annual average of € 197 million from 1995 to 2000 while total commitments (grants and loans) were at an annual average of € 365 over the same period, accounting for 54.5% of total funding from donors. Twenty-three MEDA Projects are currently managed in Tunisia for a total of € 466.4 million. A new National Indicative Programme (NIP) was signed on 18 March, 2002 for an amount of € 248.6 million.

Manfredo Fanti has been acting Head of the European Commission Delegation in Tunis since 1 June, 2002. Euromed Special Feature asked him to assess the implementation of the Agreement, and to draw up the prospects.


Euromed Special Feature: Tunisia shows a measure of success and prosperity in the economic and social fields, all the more so when compared to other Mediterranean Partners, including those in the Maghreb. To what extent has the Association Agreement with the EU contributed to this achievement ?

Manfredo Fanti: In fact Tunisia started to implement the Association Agreement in January 1996, that is 6 years 1/2 ago. Over the whole period political commitment for opening up to the outside world, and the current transition towards integration into the European economic area have certainly caused energies to be summoned up, and brought about some modernisation of the production system. Co-operation programmes which supported the transition made significant contributions to national policies bent on strengthening the competitiveness of businesses, and improving quality of the labour factor.

Moreover those programmes supported structural reforms crucial to improving the general economic background, and to harmonising regulations, which has no doubt impacted positively on overall efficiency, the volume and quality of investment, and the creation of sustainable productive employment.

After 1997 the average growth rate has shown a 0.6% increase (5.2% between 1997 and 2001) relative to the period 1992-1996 (8th Plan – 4.6% average growth). It is therefore a fact that the dynamics created by the Association Agreement’s ambitions played an important part in the strengthened performance of the Tunisian economy. Such Partnership dynamics is already seen to work to-day to full capacity in view of the challenges the Euro-Mediterranean economic bloc will have to face in future, notably the one arising from China’s accession to the WTO.

Tunisia is the only Mediterranean Partner to have gone (on paper) half way down the road to free trade with the European Union. Is the situation in practice fully satisfying? Are delays to be expected on services ?

On tariffs the Agreement is fully respected as regards the agreed pace of dismantling. Specific meetings on mutual agricultural preferences, services, and monopolies have so far been held without any delays. On services in particular a preparatory meeting will take place by the end of 2002 on the Commission’s initiative. This is to keep to the timetable in article 31 of the Association Agreement, which provides for negotiations on services to start in March, 2003.

As to a general appraisal of Tunisia’s transition towards free trade with Europe, it is certainly premature to talk about an assessment, even though Tunisia has so far experienced nothing but positive effects from the Euro-Mediterranean Partnership. But we must not forget that we are on a journey. We therefore have to give each other at any time the means to get round or over any obstacle that can crop up. This is the rationale for the dialogue and co-operation put in place by provisions in the Association Agreement. Obstacles can be diverse in their nature, so financial co-operation must be given maximum flexibility.

The Association Council in January 2002 discussed creating an experts’ group who would look at how to promote and diversify Tunisian exports, which is also one of the NIP’s objectives. What is the problem, and how can it be solved ?

An EU-Tunisia experts’ group on trade has been set up to look at how to promote and diversify Tunisian exports. The problem is that the Tunisian government and the European Commission can only work on the general framework of private productive activities, that is indirectly through institutional, legislative, and regulatory provisions favourable to private investment. The question of diversifying exports is asked in terms of how public authorities can create conditions for a genuinely innovative knowledge-based economy to emerge. That presupposes that public and private communication services work in a transparent and user-oriented way, and that civil society and the media actively and openly take part in economic debates and decision-making. Issues such as innovation, and the necessary diversification and external competitiveness of the productive base cannot be viewed separately from that of attracting quality foreign direct investment (FDI). Making Tunisia more attractive to quality FDI requires speeding up and deepening such reforms as will 1. Disengage the State from activities and sectors where from now on it must only act as a referee; 2. Reduce trading costs for private and public organisations; 3. Create attractive conditions for the privatisation of utilities whose nature makes them likely to be privatised.

Also on agriculture Tunisia is the most advanced Partner as sectoral provisions have been negotiated and fitted into the Association Agreement. Can relations in this area be said to be perfectly smooth ?

On agriculture, the provisions in the Association Agreement have been absolutely respected. Mutually profitable concessions were negotiated during 2000 as foreseen in the Agreement, and signed in November of the same year. Concessions from the European side have been on products important to Tunisia such as olive oil. Customs duties on olive oil have been reduced to 0%, and the quota has been brought to a permanent (non periodical) 50,000 tonnes, going up in stages from 1,500 tonnes to 56,000 tonnes in 2005. Other exemptions from duties have replaced existing low duties; the quota on tomato purée will be brought to 4,000 tonnes; and 6 further concessions have been granted (table olives; pomegranates; flowers; etc.). So there is no cloud in relations with the EU in this field.

What can be done by the EU against the drought under the Agreement ?

There is nothing the EU can do against drought. The EU can only contribute to reflections launched in Tunisia on revising the national development strategy for agriculture as the sector still accounts for 22% of jobs, 13% of investments, and 12% of added value and of the value of exports. What is to be done is not to fight climatic phenomena, but rather to set the farming sector within a working framework conducive to an optimal allocation of available resources, and to create conditions for maximum attraction of domestic and foreign investment, which remains a distant goal. Tunisia’s farming sector is still very protected and directed by the State.

Although it has remained lower than in other Med Partners, unemployment in Tunisia has been at 15-16% , and redundancies are foreseen within the next steps of market liberalisation. Is it a weak point of the Association with the EU ?

The aim of the Association Agreement is to create an area of shared prosperity between Tunisia and Europe, which means gradual catching up in terms of standard of living between the two human and economic entities concerned. Such catching up can only be considered if the Tunisian economy is set on a path of sustained growth, at a level sufficient for the gap in per capita income to be reduced at a significant rate. An average real growth of 7% would allow the gap to decrease by at least 5% annually. By aiming at high and sustained growth the Association Agreement is clearly looking to a rapid decrease in unemployment. If you ask me whether reduction in effective tariff protection is threatening jobs I will say “no”. Tunisia’s existing comparative advantages must allow for the strengthening of the country’s international competitiveness, provided that at the same time government policies create comprehensive conditions for both the efficient working of competitive markets, and effective legal protection of investments and trade-related rights. And no wave of redundancies has so far been recorded as a result of the liberalisation process carried out for 15 years.

As a partner in the Agadir Process Tunisia is one of the pioneers of sub-regional or ‘South-South’ integration, but its trade with other Mediterranean Partners remains low. As the Mediterranean country with the oldest Association with the EU, can Tunisia play a specific role, notably within the Maghreb ?

There are a number of reasons why Tunisia can play a special role. First the Association Agreements signed with 8 Mediterranean Partners are themselves trade integration factors, and a driving force for institutional and regulatory harmonisation between those countries and territories (through bilateral transition towards the European Single Market). Being the most advanced Partner in this transition, Tunisia can become a model and even, if it so wishes, a catalyst for the integration process.

Another reason is that Tunisia has an obvious interest in being integrated into a broader economic bloc given the relatively small size of its internal market, the diverse character of its production in manufactures, its energy dependency, and the scarcity of its water resources. The latter limits agricultural production capacity. Through these factors the possibility of using on a much larger scale the room for manoeuvre provided for by the cumulation of origin is made all the more attractive for Tunisia that 80% of its exports go to Europe. Within a free trade framework such as the Agadir Process Tunisia will have an advantage in using cotton originating in Egypt in its textile products, adding Moroccan and Jordanian accessories, and exporting the finished product to the EU as originating in Tunisia.

At a technical level Tunisia’s comparatively advanced experience in integrating and interconnecting IT systems for tax, particularly their customs applications, could be shared with other Partners.

With regard to the country’s political system the 26 May referendum, and the provisions it has put in place have heightened worries on this side of the Mediterranean amid existing concern in Europe over human rights. Is there a risk that these developments run counter to the Association between the EU and Tunisia ?

The Association Agreement clearly establishes principles on Democracy and Human Rights. Concerns over these matters are thus part of the Dialogue provided for in the Agreement, and are discussed at Association Council Meetings. EU representatives never hesitated to raise those issues with Tunisian authorities as they saw fit.

As regards the constitutional reform endorsed through the 26 May referendum, any prejudiced interpretation must be avoided. The new rules are not restricted to allowing the presidential mandate to be renewed. They also include positive legal arrangements such as making custody subject to judicial control, and protecting personal data. The impact of constitutional reform can be assessed later on the basis of how the new rules will be implemented by the Tunisian authorities.

How far have you got with projects of support to journalists’ training, and to Tunisian NGOs? In a more general way, how can the Association with the EU be used to advance the country’s ‘civil society’?

These projects are very important. We are now discussing how to implement them. We believe they can be of great advantage to the press and to civil society. They are sensitive projects that touch on tricky issues. A degree of openness is demonstrated by the fact that Tunisia has accepted their implementation on principle. As regards civil society in particular some very positive experiences have been recorded as social projects of NGOs have long received funding from the European Commission.

What are the prospects for social dialogue, and for dialogue between cultures, which it seems have been launched rather late (only last year)?

Social Dialogue between employers and workers is well established in Tunisia. The country is well advanced in this respect. There is a large Trade Union with solid international relations. Sensitivity to social issues is there. When companies are restructured, efforts are made to avoid layoffs, and unemployment. Moreover preparations for social reforms in Tunisia are always the subject of wide consultations of all interested parties. Dialogue between cultures is political, and linked to the September 11 attacks. Initiatives have been launched. Dialogue must be developed at all levels (political leaders, businesspeople, intellectuals, and teaching institutions. The situation in the Middle East is a threat to the dialogue between the Muslim and the Western worlds. The problem must not be underrated. We had rather look at how the message can be put across. Every component of our operations must reinforce the Partnership and make people feel that it is a true association, at citizens’ level as well (particularly civil society; and research and teaching communities).

Bruxelles,07 22 2002
European union
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