Free trade and the Mediterranean

The lack of industrial diversification of the Mediterranean non-EU countries is a real obstacle to the development of the Euro-Mediterranean free trade area. However, there are some opportunities to increase horizontal trade between these Mediterranean non-member countries (MNMCs), both in the Maghreb and in the Middle East countries. The potential could be exploited by making use of comparative advantages in the agricultural and agribusiness sectors. The exchange of agri-foods products could benefit from the EU's openness and also from horizontal free trade, especially if this exchange were related to the transfer of technology from the more developed MNMCs to the less developed ones, which have a comparative advantage in agriculture. The launch of the Euro could lead to a new exchange rate policy, structural adjustment and a macro-economic policy of stabilization, while the MEDA programme should help to prevent the more negative effects of stabilization policies and contribute to promoting the partnership between the EU and the MNMCs.