Overlapping Trade Agreements: Status and Challenges for Morocco - Economic Research Forum (ERF)

Overlapping Trade Agreements: Status and Challenges for Morocco

Lahcen Achy and Khalid Sekkat


Date:
October, 2004

NO.
0427

Length:
99 pages

Topic:
F6. Economic Impacts of Globalization
F2. International Factor Movements and International Business
F. International Economics

Signing multiple trade agreements has become the rule for most countries, and Morocco is no exception to that rule. The Kingdom is therefore now involved in a complex network of trade agreements that range from multilateral organizations to regional treaties and bilateral trade concessions. This addition of overlapping agreements not only liberalizes Morocco’s trade policy, but also makes it more complex, and, in turn, makes its effects more complex to assess. In fact, some may wonder whether Morocco’s many commitments may not be a source of unintended trade distortions.

This question is presently gaining increased momentum because Morocco is in the process of simultaneously applying what may appear to be its two most important steps toward regional trade integration. With its Northern partners, the Kingdom has signed the Euromed Agreement, which provides for a gradual liberalization of its trade relations with the European Union. With its Arab partners, Morocco is implementing the Greater Arab Free Trade Area, which aims at creating a free trade zone with fourteen members of the Arab League. Morocco’s simultaneous participation in two processes of trade liberalization constitutes a shock of considerable importance to its economy. The question that naturally follows is to determine the effects of that shock. One may in particular be interested in knowing whether the effects of the two processes of trade liberalization in which Morocco is involved are additive. In other words, one may wonder whether it is equivalent to taking part in two processes of trade liberalization subsequently or at the same time. The answer to that question hinges on the debate on the consequences of what is now referred to as “spaghetti regionalism”.

The present report aims at assessing the implementation of Morocco’s Regional Trade Agreements and the implications of their overlapping. It is divided into three parts. The first one provides a comprehensive description of the country’s commitments and the status of their implementation. In the second part, we examine the potential conflict between Morocco’s various trade agreements. The third part focuses on the possible effects of the two main agreements (i.e. the Euromed process and of the Greater Arab Free Trade Area) in which Morocco participates. It first reviews the possible effects of multiple regional trade agreements. Then, it provides an assessment of the possible effects of the two main agreements. Whenever possible, it provides quantitative estimates of the effects of those agreements on the Moroccan economy.

Research Fellows

Lahcen Achy

Senior Economist, International Monetary Fund


Research Fellows

Khalid Sekkat

Full Professor of Economics, University of Brussels


Project

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