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EXT/145
MIGRATION AND
FREE TRADE
Brussels, 19 September 1996
INFORMATION REPORT
of the
Section for External Relations, Trade and Development Policy
on
Migration and the creation of a free trade area
(Report drawn up for the Euro-Mediterranean Economic and Social Summit
in Paris - 21 and 22 November 1996)
______
Rapporteur: Mr Giesecke
Co-Rapporteurs: Mrs Cassina and Mr Margalef i Masià
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Memorized textCES 595/96 D/ET/CH/ht…/…
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PROCEDURE
On 27 February 1996 the Economic and Social Committee decided, in accordance with Rule 26 of its Rules of Procedure, to authorize the Section for External Relations, Trade and Development Policy to draw up an information report on
Migration and the creation of a free trade area
(in preparation for the Euro-Mediterranean Summit).
The preparatory work on this report was carried out by the ESC members and Rapporteurs' and Groups' experts listed below:
President:MrBastian
Rapporteur:MrGiesecke
Co-Rapporteurs:MrsCassina
MrMargalef i Masià
Members:MrBarros Vale
MrCal
MrDrilleaud (Rule 54 - Mr Tixier)
MrEtty
MrLustenhouwer (Rule 54 - Mr Pezzini)
MrMeriano
MrSklavounos
MrWalker
Experts
For the Rapporteur:Mr Köhler
For the Co-Rapporteurs:Mr Amato (Mrs Cassina)
Mr Mantovani (Mr Margalef i Masià)
For Group I:Mr Juan
For Group II:Mr Fonteneau
For Group III:Mr Rossini
The Study Group met three times:
- 10 April 1996
- 15 May 1996
- 24 July 1996.
The information report was adopted by the Section on 10 September by a majority vote with two abstentions.
1. Preliminary Comments
1.1. In November 1995 in Barcelona a wide-ranging partnership was agreed between the European Union and 12 southern and eastern Mediterranean countries. Its aim is to encompass political and security aspects as well as social and cultural matters. Enhanced economic cooperation, centred on the creation of a free trade area by the year 2010 covering all the participant countries, is to develop the region into a zone of shared prosperity.
A major effort is needed on both shores of the Mediterranean if these objectives are to be achieved. The funds allocated for this by the EU under the MEDA regulation were approved in July 1996 and may now be disbursed, along with the EIB funds.
This ambitious programme is being compared with the EU's concurrent intensive cooperation with the countries of central and eastern Europe.
1.2. Compared with previous treaties between the EU and third countries, what is new is the express inclusion of the economic and social groups on both sides of the Mediterranean in this new form of partnership and decentralized cooperation. There are now some 200 networks operating between the northern and southern shores of the Mediterranean.
Against the background of the pending reforms, it was clearly recognized that the development and cooperation of the organizations and associations of civil society in the partner countries has a crucial role to play. There was an imbalance in the way the organization of all public life in these relatively young states was concentrated in the hands of a few.
Almost everywhere government structures are in need of democratization and modernization. In this politically sensitive process the loss of influence is generally offset by a gain in political stability; this can in turn have a beneficial effect on the investment climate, which is so important for the country's development.
1.2.1. However, radical reform in both areas - in society and economy - brings with it some painful changes. Experience shows that people would be more inclined to accept these changes if they were informed about the ramifications, the possible alternatives and the back-up measures. The whole process would be more convincing if the reform blueprint, with all its stages and foreseeable consequences, were first debated in public with the involvement of the associations and institutions of civil society in particular. It is, however, the credibility of the reforms - including in the relevant foreign countries - which will determine whether they succeed or not.
1.2.2. This gives the representatives of civil society in Europe the opportunity to provide meaningful support for the measures planned by the EU and the governments of the partner countries. This would take the form of helping them to set up and develop the associations and organizations of a civil society in their own countries and discussing with them the significance and consequences of the reform process.
1.2.3. This dialogue can only be truly workable and successful over the long term if the European side, true to its former tradition, unreservedly recognizes the political, cultural and religious differences of its partner countries. Joint efforts should be made to advance the necessary reforms while safeguarding the fundamental values of these countries.
The Economic and Social Committee of the EU will look at this problem in the future.
1.2.4. A dialogue between partners on the consequences of specific reform measures could, for instance, help to ensure that MEDA funds specially earmarked for social back-up are targeted appropriately.
1.2.5. Ideas emerging from the dialogue between the socio-cultural associations on the two sides of the Mediterranean could influence the political dialogue agreed in Barcelona.
1.3. The economic and social councils and similar organizations of the EU Member States and partner countries and the EU's Economic and Social Committee have understood this challenge and again in Madrid in December 1995 agreed on institutional cooperation. This operational cooperation should be adequately financed under the MEDA budget line for regional purposes.
In this connection the economic and social councils of France and Algeria have undertaken to formulate proposals on the complex problems of energy and the environment and on excessive debt.
The Economic and Social Committee of the EU has declared its willingness to look at the themes revolving around "free trade and migration"; it will do so against a background in which liberalization of the trade in goods and services is raising expectations, including with respect to the free movement of individuals, which could make the problems of migration even more pressing.
A working group was set up in April 1996 with the task of presenting operational proposals for the next meeting of the economic and social councils in Paris in November 1996.
1.4. In the ESC's view, dialogue between the organizations and associations of civil society would seem to be particularly effective, and hence strategically sensible, in those areas where government policy in the partner countries aims to effect a fundamental reform of established socio-economic structures. A wide range of social groups must be induced to change their behaviour.
1.4.1. A sensible dialogue at this politically explosive interface - which the various opponents of modernization policy, including the Islamic militants, seek to exploit - can help to elucidate, moderate and calm. While the experience of structural change accumulated in Europe itself over recent years, especially in the former GDR and central and eastern European countries, is not directly transferable, it can contribute important ideas and impetus to local discussions.
1.5. This informal level of dialogue has many advantages: it is flexible and can target problems systematically with the help of the national and regional partners - and this in a manner and with a persuasiveness not normally available to government bodies.
1.5.1. The critical themes can be discussed from all angles and from the perspective of employers, workers, and representatives of other interest groups besides the social partners, e.g. consumers', environmental or charitable associations.
1.6. There are many reasons why this level of dialogue can only be successful if the individual dialogues are pursued continually and with the "right" interlocutors.
1.6.1. In many cases, discussion partners in the partner countries can be chosen on the basis of existing ties. It should, however, be borne in mind that existing associations and institutions may not always be able to shed very easily the role assigned to them in the past by the state (not by society).
They mostly reflected the specialization model which has hitherto dominated the economy. As the market opens up, however, new interest groupings automatically form that also want to have a say in policymaking. To meet the new needs, they are also linking up and cooperating with each other more and more.
1.6.2. The European partners can play a valuable advisory role in all these processes. Above all it is important that cooperation with the government is sought at an early stage.
1.7. The problems will, initially at least, be very different from one partner country to another because structures have evolved differently and they are at very different stages of development. Europe is therefore recommended to examine carefully (similarly to the EU's treaty procedure) which issues would be better first approached bilaterally and which perhaps regionally or by sector. The situation varies greatly between the Maghreb and Mashrek countries.
As experience and credibility grow, bilateral relations could be extended to regional level where there are common problems to be solved.
1.8. In order to further enhance the role of civil society and to integrate its ideas and experience even better into the process launched in Barcelona, it is proposed to organize, before the inter-ministerial follow-up conference in 1997 (under the chairmanship of the Netherlands), a Mediterranean conference of the Economic and Social Committee of the EU, the EU Member States and the Mediterranean partner countries.
2. Starting point on the road to free trade in the southern and eastern Mediterranean
2.1. Since winning their independence, our partners have passed through various phases of growth. Despite the highest birth rates in the world, at the time of the oil boom this region had the highest per capita growth rates, fully comparable with the present growth in South-East Asia. As in that region, trade between the southern and eastern Mediterranean countries fell short of its potential, mostly for political reasons.
At that time the most important shaper of public life and by far the biggest employer was the state. It was the state which strongly stimulated growth: impressive progress was made in the struggle against widespread illiteracy, a major effort was made to develop higher education, and the physical infrastructure was considerably expanded. Both the latter were frequently geared to the needs of the new state growth industries.
2.2. In the meantime the oil boom has petered out and, in the global economy, competition has become ever more fierce on the capital, goods and services markets. Political events have also altered the picture: the collapse of the Eastern Bloc (which has had a major impact on the region), the Iraq war, the faltering peace process in the Near East, the rise of militant Islamism.
2.2.1. Our partner region, despite the considerable differences between individual countries, has dropped to near the bottom of the world economic league. The brakes have barely been applied to population growth; the compensatory impact of emigration has contracted sharply. Significant parts of their internal markets have remained underdeveloped as a result of a policy which put cities before the country and state enterprises and major exporters before small and medium-sized businesses. Frequently the latter have merely led an unproductive existence in the informal sector. In some cases wages have fallen sharply. At the same time, unemployment rates top the international table; a large number of - in part well educated - young people are crowding onto a shrinking labour market. Private capital - insofar as it has been possible to accumulate it - turns abroad for better investment opportunities. Overall, labour productivity is stagnant. In particular a bloated public sector and the tariff-protected state industries are overmanned and have driven wage levels and social security benefits over the top. In several countries the burgeoning tourist industry is threatened by attacks from radical groups.
The region is still insufficiently integrated into the world economy. The transition from import substitution to export promotion and improved competitiveness is still patchy.
2.3. The state as shaper and employer must budget more carefully today than ever before. In some countries the debt burden is excessive. External financial help has become a rarity. The parameters of social policy and economic policy need urgently to be reset if further impoverishment is to be avoided. A rethink of the role of the state and social institutions should form the heart of the reforms. The retreat of the state from a position of omnipotence should however be paralleled by the assumption of new tasks: a, in many respects modernized, administration should see its primary duty as to quicken economic and social energies. In this connection, the constitutions and economic laws need adjusting - in some cases considerably - to the new tasks. At the same time the pluralistic, democratic institutions of society should be strengthened.
2.3.1. To avoid a power vacuum during this difficult transitional process, substantial importance should be attached to a simultaneous strengthening of the pluralistic, democratic institutions of society. They should be groomed for their future role as pillars of the state and gradually involved in the decisionmaking process. Under no circumstances, however, should this take place in opposition to the government, but in agreement with the ruling circles.
2.3.2. However necessary the modernization may be, it must be ensured that fundamental national values are not prejudiced, but are fully safeguarded.
2.4. On the economic front, the most important thing is to strive for international competitiveness in all viable sectors of agriculture, industry and services, since both the new world trade order - where several of our partner countries held back on tariff reductions - and the bilateral EU treaties require a gradual opening-up of hitherto largely protected national markets. In many cases the road to competitiveness starts by allowing first local, then regional and national competition. There must of course also be a corresponding reorientation of the government's support policy, often against powerful interests.
2.4.1. Support for the most efficient SMEs in the informal sector will be particularly important in this process. The most frequently used instruments are credit provision, management and vocational training, business advice and marketing help, introduction to industrial networks, cooperation and the division of labour (subcontracting).
Experience in other parts of the world shows that the gradual transition to the formal sector requires years, not months.
2.4.2. Because of its importance in some partner countries, the textile industry has a special role to play. The expiry of the multifibres agreement means less protection, and an overall fall in textiles prices has to be reckoned with. National economic policy will benefit from putting an extra effort into this sector.
2.4.3. The same applies to the expansion of tourism where demand would seem to indicate that rich opportunities exist. The important thing here is to avoid the environmental mistakes made on the northern shores of the Mediterranean, to bring service quality up to a high standard and - in view of the increasing threats and attacks by extremists - to ensure the safety of visitors.
2.4.4. The development of new industrial and services structures will mean further opportunities for access to European markets. This places these countries in a - not to be underestimated - preferential position compared with the South-East Asian and Latin American countries which are penetrating the European markets and on an equal footing with the reformed Eastern European countries.
2.5. Overall it may be stated that the course followed by the EU to date, namely of continuing to conclude bilateral agreements within the framework of the Barcelona process, is well-founded. However, this procedure runs the risk that the partner countries will concentrate their trading arrangements on the "northern" markets without at the same time expanding their mutual trade. This would, however, run counter to the objective agreed in Barcelona, i.e. a uniform economic area. Here too the representatives of civil society have a lot of explaining to do to alert the authorities to these shortcomings. In conclusion, the competitiveness acquired in trade with the North should also enable these countries to benefit from the real opportunities for trade with their neighbours.
3. Challenge: competitiveness and employment
3.1. In order to create stable new jobs as rapidly as possible, everything must be done to encourage, in all areas of legislation and administration, a climate which is propitious to the setting-up of private firms. It is a fact that tax legislation, labour and social legislation, and the whole system of production licences are frequently tailored to the particular needs of the extensive public-sector authorities and industry, often large companies. To avoid these desirable new businesses continuing to be established mainly in the informal sector, the relevant legislation must be heavily amended. The authorities, too, should adopt a new role of encouraging and advising private small businesses especially, rather than, as in the past, acting mainly as policeman. At a practical level this requires changes in personnel and organization, but above all a change of heart in the administration.
3.1.1. A better balance between centralization and decentralization, by shifting responsibilities to administrative districts and local authorities, could be expected to give the economy a real boost. Partnership between towns would have a special role here.
3.1.2. Economic policy has, however, to overcome a further handicap: as a result of the different emphasis of support policy in the past, SMEs are in general a long way short of world market standards.
A particularly acute problem is the lack of entrepreneurs who have experience of competition, are constantly on the look out for improvements in products and procedures, and who are constantly concerned to motivate their staff. In the past, the heads of businesses needed other qualities.
3.1.3. This ties in with the massive gap to be found between large state companies and the multiplicity of small and very small businesses in the informal sector. Between these two there is a lack of small and medium-sized businesses with their own particular markets, hence there is no overall, integrated industrial system. The new support policy will have its work cut out here.