New pact seeks deeper integration with North African and Middle Eastern countries

The European Union is preparing to unveil a strategic initiative aimed at removing trade barriers with selected Mediterranean countries. This move is part of a broader effort to strengthen economic ties in the region amidst shifting global alliances.

Background on the Pact

The forthcoming Pact for the Mediterranean, expected to be presented by the EU executive in mid-October, seeks to foster deeper integration with countries such as Algeria, Egypt, Israel, and Morocco, among others. This initiative comes as the EU grapples with unstable trade relations with major partners like the United States and China. The European Commission, led by Ursula von der Leyen, has been advocating for diversified trade exchanges, particularly away from Russia and China.

Market Implications

The potential removal of trade barriers could significantly enhance market access and competitiveness for both EU and Mediterranean countries. The proposal includes modernising existing agreements and aligning them with EU Single Market rules. This alignment is expected to cover sectors such as digital, energy, and environmental standards, thereby supporting convergence and creating joint value chains.

The pact also aims to simplify trade procedures, support small and medium enterprises (SMEs), and promote green enterprises. Additionally, there is a focus on regulatory harmonisation and customs modernisation, which are anticipated to attract investment and facilitate cross-border agro-industrial value chains.

Challenges and Opportunities

While the EU has a preferential trade agreement with Mediterranean countries under the Pan-Euro-Mediterranean Preferential Rule of Origin, the new pact seeks to go further by modernising these agreements to reflect current EU trade deals. This includes proposals for adopting amended rules of origin and easing non-tariff barriers. The initiative also considers the perspectives of neighbouring Gulf countries and Türkiye, recognising their strategic interests in the region.

The success of this pact could pave the way for more inclusive trade practices, lower tariffs, and enhanced market access, ultimately benefiting both EU member states and Mediterranean partners.

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