Economic Challenges in the Mediterranean Unlocking the Potential for Sustainable Development

PAM 10TH PLENARY SESSION Tirana, Albania, 18-19 February 2016 Economic Challenges in the Mediterranean Unlocking the Potential for Sustainable Development An Overview from Your United Nations Regional Commissions (ECA, ESCWA, UNECE) Ms. Virginia Cram-Martos, Director, Economic Cooperation and Trade United Nations Economic Commission for Europe

United Nations Economic Work and the SDGs Goal 2: End hunger, food security, nutrition, sustainable agriculture Goal 8: Sustainable Economic Growth Goal 3: Healthy Lives Goal 12: Sustainable consumption and production patterns Goal 9: Resilient infrastructure, industrialization and innovation Goal 17: Means of implementation and revitalize global partnership

Unlocking the Potential for Sustainable Development Building Upon Global MegaTrends

Megatrend 1 Global connectedness 2.8 Billion Mobile Broadband Subscriptions 150 Billion Worldwide App Downloads 9,300 ExaByte Worldwide Data Creation $17,900 Billion Worldwide ecommerce Transactions Huawei Global Connectivity Index 2015

Megatrend 1 Global connectedness

Megatrend 2 : Center of economic gravity Merchandise Exports (2013) Over half of merchandise exports from developing economies are sent to other developing economies Merchandise Exports to LDCs (2013) Developing economies exports to least-developed countries (LDCs) in 2013 grew by 8 per cent, compared with 10 per cent in 2012. Developed economies exports to LDCs grew by 3 per cent following stagnation the previous year Commercial Services (2013) Since 2000, exports of commercial services from least-developed countries (LDCs) have grown by 14 per cent per year on average, a much higher growth rate than in other economies (9 per cent on average) Source: World Trade Development (2013): https://www.wto.org/english/res_e/statis_e/its2014_e/its14_highlights1_e.pdf

1995 World Imports Megatrend 2 : Center of Economic Gravity 2013 World Imports 1990 Low and Middle Income Countries = 20% of GDP 2013 Low and Middle Income Countries = 40% of GDP

Megatrend 3: Technological change and its adoption Mobile Phone Subscription (Per 100 habitants) 140.0 120.0 100.0 80.0 60.0 40.0 20.0-2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Per 100 inhabitants Developed Developing World

Megatrend 3: Technological change and its adoption Solar PV generation and projection by region IEA, (2014), Medium-Term Renewable Energy Market Report 2014, OECD/IEA, Paris

Megatrend 4: Urbanization and Demographic Trends

Megatrend 5: The Impact of Human Activity Climate Change Of the 15 hottest years since record keeping began 130 years ago 14 occurred between 2000 and 2015

Unlocking the Potential Looking at Where We Are & What We Can Build Upon

GDP Per Capita, Median Income and Equality Steady, Decreasing or Increasing? In the Same or Different Directions? GDP/capita (U.S.D) PAM Members' GDP per capita 45,000.00 40,000.00 35,000.00 All PAM Members 30,000.00 25,000.00 20,000.00 EU PAM Members 15,000.00 10,000.00 5,000.00 0.00 2007 2008 2009 2010 2011 2012 2013 2014 Time (year) Non-EU PAM Members Note - due to poor data availability Andorra, Monaco, Palestine and Syria are not included

Demographic Trends and Opportunities? More Youth who need jobs AND More Elderly who need services 140,000,000 PAM Members' Youth Population (<15) 60,000,000 PAM Members' Senior Population (>65) 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 All PAM Members EU PAM Members Non-EU PAM Members 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 All PAM Members EU PAM Members Non-EU PAM Members 0 0 20042005200620072008200920102011201220132014 Note - Due to poor data availability Andorra, Monaco and Palestine are not included

The Economic Impact of Uncertainty, Instability and Conflict Is Enlarging The Example of Tourism Tourism revenues in Algeria, Egypt and Tunisia plunged more than 40% between 2010 and 2013 after political upheaval and attacks on tourists. Today, we do not have statistics yet, but it is sure that tourism is suffering in even more countries of the region including France and Turkey.

Observations and a Question Investors require higher returns for higher risk and the number of investments with returns high enough to offset the risks is dramatically shrinking in many countries With greater stability comes greater growth, witness recent improvements in the Egyptian economy due to a relative political stabilization - but will medium to long-term investors see these changes as being reliable and sustainable?? What can Parliamentarians and the International Community do to: Reduce conflict? Provide «stability» insurance to investors? Increase investment in post-conflict areas by compensating investors for the difference between actual returns and returns adjusted for risk?

Further Challenges Calling for Innovation-Driven Growth Deficits that remain high despite efforts to reduce them Some countries, especially in North Africa and West Asia, suffer from: Volatile commodity-based resource base Low economic diversification Low tax resources/gdp Persistent inflation High unemployment, especially among youth Growth which does not generate enough jobs to absorb new entrants in the labor market

Promoting Innovation and Competitiveness Innovation enables stronger economic growth with less ecological impact => Sustainable Development Goal 9 (and others) BUT: innovation needs a nurturing eco-system => policy support for it to emerge

Innovation and Competitiveness Policies Exchanges of Experience Good Practices & Policy Recommendations Policy Advice & Capacity Building

There is a Wide Range of Ongoing Regional Economic Integration Initiatives and Processes A few examples of ongoing issues/activities -The Euro-Med process -The WTO system resolving the status of Arab countries - The Pan African FTA - FTAs with the USA, Turkey, EFTA - Negotiations between GCC and China, GCC and India - Arab economic integration: from PAFTA to ACU Observation these processes are too slow and one result has been the erosion of market advantages for regional goods within the region Conclusion Integration within the region and with other regions should be accelerated to maximize gains 20

There are many existing regional and bilateral trade agreements With limited impact on intra-regional trade Source: World Bank (2008) 21

Intra-Arab (and intra-regional trade generally) remains limited Intra-Arab trade as a share of total trade 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 Arab intra-imports Arab intra-exports Arab intra-trade Source: ESCWA calculations based on BACI 22

Governance, a key issue for growth Across the region Public Regulation Quality Index 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 Source : www.govindicators.org ALGERIE EGYPTE MAROC MAURITANIE SOUDAN TUNISIE State Efficiency Index 70 60 50 40 30 20 10 ALGERIE MAURITANIE EGYPTE SOUDAN MAROC Corruption Perception Index 0 2010 2011 2012 2013 2014 Source : www.govindicators.org TUNISIE T M E A 4.0 3.9 3.7 3.6 M 3.0 S 1.1 Source : Transparency International

UNECE Trade: 3 Priorities Facilitating trade flows Simplifying and harmonizing regulations Implementing standards-based agricultural trade

United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Outputs Over 40 Global Trade Facilitation and Electronic Business Recommendations and a wide range of International Standards Objectives o o Simple, transparent and effective processes for global business Efficient and automated exchange of information Means o Public Private Sector Partnership over 200 experts from government and business o Meet virtually every week plus two Forums per year Global Remit

TRADE FACILITATION RECOMMENDATIONS, STANDARDS AND TOOLS Policy Rec.s UN/CEFACT UNECE Standards UN/CEFACT Outreach and Support Guidelines, Briefs, Case Studies, Many w/partners

Single Window Est. No. Recommendation 2004 33 Single Window Recommendation 2011 34 Data Simplification and Standardization for International Trade 2011 35 Establishing a legal framework for international trade Single Window 2016 36 Interoperability of Single Window Systems 37? Interoperability of Systems within a Single Window Environment?

Current topics Revision of Recommendation 1 on UN Layout Key for Trade Documents Electronic Management and Exchange of Fishery Information (FLUX) Track and Trace for Animals and Fish MultiModal Transport Reference Data Model

Agricultural Quality Standards Fresh Fruit and Vegetables Dry and Dried Produce More than 100 international agricultural quality standards Seed potatoes Meat

UNECE STANDARDS ensure consistent quality and help establish lasting trade relations Why Agricultural Quality Standards? To provide a common trading language To create market transparency and facilitate fair international trade To guide producers, improve and ensure the level of product quality To increase profitability of the sector (Profitability depends on trading volume and price which are influenced by quality) To protect consumers interests

UNECE s Agri Standards In Use Worldwide UNECE standards are used globally on a voluntary basis to make trading easier UNECE standards can be incorporated into national legislation As an export requirement to ensure produce quality levels or as a requirement for the domestic, export and import markets UNECE Standards are reflected in EU legislation EU standards are fully harmonized with UNECE standards e.g.10 product specific EU standards & optional use for other products

Regulatory Cooperation and Standardization Regulatory cooperation Market surveillance More than 15 recommendations on standardization and regulatory cooperation Risk Management in Regulatory Frameworks Education on standardsrelated issues

Regulatory Cooperation and Standardization Policies (WP 6) Forum for Dialogue between UN & Standards Community Enable and empower both Governments and UN initiatives with a knowledge base as regards standards Sectoral Initiatives Remove technical barriers to trade Market Surveillance Risk Management in Regulatory Frameworks Education on Standardsrelated Issues Fight proliferation of counterfeit and non-compliant goods on the markets Safer and more resilient communities and eco-systems Bring toolbox of standards to the lay person

Studies on Regulatory and Procedural Barriers to Trade Completed: Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. Follow-up ongoing Ongoing: Albania and Moldova Plans: Turkmenistan and the Customs Union

First Analytical Framework Trade Facilitation and transport BUY SHIP PAY Prepare for export Transport Receive payment Import Commercial Procedures Transport Procedures Regulatory Procedures Financial Procedures

Second Analytical Framework Standardisation and Technical Regulation

Evidence based Desk research and face-to-face interviews Desk study Face-to-face interviews: representatives of Government & trade support institutions Face-to-Face interviews: traders Previous studies Laws, policy documents and government decisions Development plans Officials from the National Advisory Working Group Logistics service providers, transport operations, trade and enterprise support associations 30 traders from priority sectors 37

THANK YOU You are invited to contact us UNECE at trade@unece.org ECA at skaringi@uneca.org ESCAP at elhacene@un.org

The following Slides Were not part of the presentation given at the PAM annual Assembly in Tirana on 18 February 2016 They contain additional content relevant to the discussion and, particularly, specific examples from Mediterranean countries in North Africa or Western Asia Are included in order to provide you with additional information that we believe may be helpful to you in your work

Budget deficits Budget deficit as share of GDP (%), North Africa, 2011-2015 5.0 0.0-5.0-10.0 2010 2011 2012 2013 2014 2015 (p) Deficits remain high despite efforts to reduce them The region is suffering from: volatile resources: low economic diversification Low tax resources/gdp Tax resources/gdp, North Africa, 2011-2015 -15.0-20.0-25.0 Algérie Egypte Maroc Mauritanie Soudan Tunisie Algérie 19 Egypte 19,1 Maroc 19,2 Mauritanie 19,3 Tunisie 19,8 Soudan 7,3 Sources: National Data (Ministries of Finance and Central Banks)) Sources : National Data (Ministries of Finance and Central Banks)

Unemployment issues Unemployment Rates (%), North Africa, 2011-2015 2010 2011 2012 2013 2014 2015 (e) Algeria 10,0 10,0 11,0 9,8 10,6 11,2 Mauritania 10,1 12,9 Morocco 9,1 8,9 9,0 9,2 9,9 10,1 Sudan* 14,8 14,8 14,8 15,3 15,4 Tunisia 13,0 18,9 16,7 15,3 15,0 Unemployment remains high Growth does not generate enough jobs to absorb new entrants in the labor market Sources : National Data and ILO Youth unemployment (%), North Africa, 2011-2015 2010 2011 2012 2013 2014 Algeria 21,5 22,4 27,5 24,8 25,2 Egypt 24,8 29,7 34,7 34,3 Mauritania 28,3 Morocco 17,6 17,9 18,6 19,3 Sudan (*) 23,7 23,7 24 24,9 24,9 Tunisia 29,4 42,3 37,6 34,7 35,0 Sources : National Data and ILO

Trade balance Trade balance/gdp (%) North Africa, 2011-2015 2011 2012 2013 2014 2015 (p) Algeria 8,9 5,9 0,5-4,4-7,7 Egypt -2,6-3,9-2,4-0,8-3,4 Structural trade deficits Weak exports diversification Low regional economic integration Share of main exported products in total exports (%) Mauritania -5,1-26,1-25,1-29,0-25,8 Algeria hydrocarbons 95 Morocco -8,0-9,7-6,7-5,8-5,3 Egypt fuel oil, oil and derived products 48 Sudan -1,9-9,6-8,7-8,4-6,8 Mauritania gold, fisheries, iron 78 Tunisia -7,4-8,2-8,3-8,9-6,0 Sudan oil, gold, cattle 77 Sources : National data Sources : National data

Governance, a key issue for growth Across the region Example - North Africa Rating according to the Mo Ibrahim Index of Governance, 2011-2015 Algeria Egypt Mauritania Morocco Sodan Tunisia 24 41 16 51 8 Safety and Rule of Law 32 34 41 18 51 13 Participation and Human Rights 33 41 39 42 50 11 Sustainable Economic Opportunity 27 11 35 3 42 8 Human Development 7 14 33 12 50 5 Source : http://www.moibrahimfoundation.org, rating covering 54 african countries

Intra-Arab trade remains limited Intra-Arab trade as a share of total trade 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 Arab intra-imports Arab intra-exports Arab intra-trade Source: ESCWA calculations based on BACI 44

particularly compared with other regions 0.6 Share of intra-regional in total trade 0.5 0.4 0.3 0.2 0.1 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 Arab intra-trade EU intra-trade ASEAN intra-trade Source: ESCWA calculations based on BACI 45

UNECE Trade within the IGO Trade Landscape UNECE - UN/CEFACT WP.6, WP.7 UNECE in partnership with other organizations UNCTAD, WB, UNIDO, UNDP, others Recommendations/ Standards Development and Maintenance (These are instruments that can be used for compliance with WTO rules) Capacity Building and Coordination (such as helping governments elaborate strategies for implementing ECE recommendations or coordinating AfT activities with others) Technical Assistance (To implement national strategies - Done by other agencies UNECE does not provide long term TA) WTO, ISO, IEC, WCO Dev elop rules such as those f or minimum transparency, equal treatment and, perhaps in the f uture, f or simplified procedures, quality and saftey standards (UNECE dev elops the recommendations and instruments needed f or implementation)

UNECE Trade: How we work Technical Assistance Evidence-based research Advisory services Training Supporting institutionbuilding in cooperation with other organizations (UNCTAD, ITC, WB and others) Recommendations & Standards Trade Facilitation Regulatory Cooperation Agricultural Standards Partnerships Broad based participatory approaches Involving private sector trade support and research institutions in implementation Continuous support beyond the international funding cycle Multilateral Trading System Transparency, Consumer and Environmental Safety, Equal Treatment & Simplified Procedures

UNECE Trade Expert Groups Steering Committee on Trade Capacity and Standards UN/CEFACT United Nations Centre for Trade Facilitation and Electronic Business WP.6 Regulatory Cooperation and Standardisation WP.7 Agricultural Quality Standards

UN Trade Facilitation Implementation Guide www.tfig.unece.org A web-based interactive tool in a wikipedia style available in Arabic, English, French, Russian and Spanish Purpose: Present concepts, standards and recommendations that can help simplify trade throughout the International Supply Chain. Target: Policymakers, technical experts, from governments, businesses and international organizations

Agricultural Quality Standards (WP 7) Fresh Fruit and Vegetables (51 standards; explanatory brochures) Meat (15 illustrated standards) & Eggs (2 standards) Seed Potatoes (1 standard; inspection guide) Dry and Dried Produce (27 standards; explanatory brochures; colour scales)

WP 6 Deliverables Regulatory Harmonization/Sectoral Initiatives: A common regulatory framework for Equipment Used in Environments with Explosive Atmospheres Model is being used worldwide (US Coast Guards) Cooperation with EEC in the development of recommendations for regulatory harmonization with EU Market surveillance: Common terminology/glossary Database of market surveillance authorities Recommendation on Market Surveillance best practice Risk Management: Recommendations on effective regulatory frameworks & contingency planning Publication «Risk Management in Regulatory Frameworks» A panel on «Disaster Risk Management Standards» at the Global Platform on Disaster Risk Reduction (Geneva 23 May) Participation in the development of ISO 31004 guidelines for authorities

Comprehensive Evaluation Methodology Trade Facilitation Conditions Transport Standardisation & Technical Regulation Impact on behind and at the borders regulations and procedures Cost of trade (financial and time wise)

Some Results of Our Work EU agricultural quality legislation is fully harmonized with UNECE standards for most traded fresh-fruits Countries on four continents base their agricultural quality standards on UNECE s work Recommendation L is basis for regulatory agreements EU-Russia, EurAsEc, etc.; The Model is being used worldwide Recommendation M is a part of normal market surveillance operations in many countries in CIS Belarus, Tajikistan, Kazakhstan and Kyrgyzstan adopted and integrated UNECE recommendations into their UNDAFs and National Action Plans for Trade Development

Example: Greece UNECE Technical Assistance for Trade Facilitation Implementation Since 2012, Greece has improved its ranking in the World Bank Doing Business study by 39 positions from position 100 to 61 in 2014. The competitive position of Greece in the Logistic Performance Index has improved by 25 positions. The concrete results for Customs are overwhelming with an improvement by 52 positions, from 94 to 42. The time to export and import has been reduced by 25% and 44% respectively. The cost to export and import has gone down by approximately 10%.