DP1226 The WTO, the EU and the Arab World: Trade Policy Priorities and Pitfalls

Author(s): Bernard Hoekman
Publication Date: August 1995
Keyword(s): Regional Integration, Trade Liberalization, Trade Policy
JEL(s): F13
Programme Areas: International Trade and Regional Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1226

A basic tenet of economic reform efforts in much of the Middle East and North Africa region has been gradualism. Partial and slow reform has led to a lack of credibility, limiting private sector supply response. The creation of the World Trade Organization, and the offer from the EU to establish a Euro-Meditteranean Economic Area provide possible institutional frameworks that can greatly enhance the credibility of a gradual reform strategy. Neither option is a panacea, however, and much depends on the willingness of governments to exploit opportunities that are embodied in these institutional options. Both avenues should be pursued simultaneously in order to limit the potential negative trade diversion effects of a preferential agreement with the EU.