07 July 2008

Economic Integration of North Africa Seen to Have Multiple Benefits

Would improve livelihoods and discourage extremism

By Phillip Kurata
Staff Writer

Washington -- Former and current senior U.S. officials have voiced their support for U.S. efforts to link the countries of North Africa together as one trading bloc.

Stuart Eizenstat, a State Department official during the Clinton administration, and Daniel Sullivan, who today holds the same position Eizenstat did, say linking North African countries together as a trading bloc, which they call “economic integration,” would benefit Libya, Tunisia, Algeria, Morocco and Mauritania and discourage the growth of terrorism.  Collectively, those countries are known as the Maghreb.

According to the World Bank, trade among the Maghreb countries amounts to only 1.3 percent of their total merchandise trade.

"This is one of the lowest rates in the world for any region," Eizenstat said.  "Unemployment is high, and economic opportunities for the growing demographic bulge of urban, young men are limited."  

He launched the Maghreb economic integration initiative in 1998 with the idea of creating a trading bloc similar to the Association of Southeast Asian Nations (ASEAN) or the countries in the Central American-Dominican Republic Free Trade Agreement.  He has continued to work on the issue since returning to the private sector in 2001.

"Terrorism and extremism, which is on the rise in the region, may, if unchecked, undermine the stability of the region's moderate, pro-West regimes and hurt the region's ability to attract foreign direct investment and tourism," he said at a recent forum in Washington.

Al-Qaida in the Islamic Maghreb has utilized new, more deadly tactics, including suicide bombings, with the intent of destabilizing North Africa, he said.  He noted that suicide bombers have struck in Morocco, Algeria and Mauritania during the past year.

Eizenstat said that in response, the North African governments have tightened restrictions on the movement of people and goods across borders, bringing the unintended consequence of further reducing cross-border commerce and decreasing economic activity.

"These countries are taking steps to enhance their cooperation on security matters; in my view, these efforts should go hand in hand with cooperation on economic matters in order to create greater long-term stability in the region," Eizenstat said.

Speaking at the same forum, Sullivan said the U.S. government "fully agrees about the importance of regional integration and supports it" through two initiatives advanced by the Bush administration.

The first is the Middle East Partnership Initiative (MEPI), which promotes political, economic, educational and women's empowerment reforms.  The economic pillar of the MEPI encourages investment, entrepreneurship, trade and transparency, with the goal of enhancing competitiveness, Sullivan said.

"The program has been working," Sullivan said.  "There has been success in financial sector reform, especially in Morocco."

The Financial Services Volunteer Corps in collaboration with MEPI has supported the successful conversion of Morocco's central bank into a fully independent private regulatory institution, Sullivan said.  A three-year program in trade reform has helped more than 160 Moroccan companies generate more than $75 million of goods and services.

The second Bush administration initiative that advances Maghreb integration is the Middle East Free Trade Area (MEFTA), Sullivan said.  President Bush declared in 2003 that the United States envisions the creation of a region-wide free trade area by 2013.  He said the MEFTA initiative encourages not only bilateral trade with the United States but also regional integration by knitting together free trade agreements with individual countries.  At present the United States has free trade agreements in force with Israel, Jordan, Morocco and Bahrain.  It has concluded trade negotiations with Oman and has opened trade talks with the United Arab Emirates.

Sullivan said North African economic integration is a stop on the way to the MEFTA.

Shaun Donnelly, former assistant U.S. trade representative for Europe and the Middle East and now a policy expert at the National Association of Manufacturers, said the efforts by Eizenstat to keep interest alive for a Maghreb trading bloc are laudable but unlikely to produce results soon because the North African countries are not committed to integrating their economies.

"It will not happen because the United States or Europe wants it to happen.  It's going to have to come from the countries themselves," he said. 

"The kind of investment that each country is looking for is not likely to come from another North African country.  They are interested in investment in high technology, petroleum and textiles," he said.

On a pragmatic level, Donnelly said, North Africa, especially Tunisia, holds potential for U.S. companies wanting to sell their products in the European market.

"A U.S. company could put up a factory in Tunisia, assemble products using local labor and sell into the European market duty-free," he said.