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Equal Times | 4 October 2021
Tunisia holds off a ‘deep’ free trade agreement with the EU
By Ricard González
Since 1995, Tunisia has been linked to the European Union by a free trade agreement within the framework of the Barcelona Process, which aims to create a highly integrated Euro-Mediterranean region. Tunisia is not the only one; five other countries in the region signed similar deals (Morocco, Lebanon, Algeria, Egypt and Jordan), in addition to Israel and the Palestinian Authority. At the end of 2015, the European Commission launched negotiations aimed at taking a further step in its economic integration with Tunisia, with what is known as a Deep and Comprehensive Free Trade Agreement (DCFTA). Brussels was hoping that it would be the next in a long line of free trade agreements dotted all around the world. But, to its surprise, strong resistance to the deal emerged in Tunisia.
“Politically, the DCFTA has been deadlocked, if not dead, for years. It sparked a great deal of opposition from Tunisian civil society, as well as the public in general,” says Aymen Harbawy, a radio journalist specialising in economics. None of the 20 or so candidates running in the 2019 presidential race supported the completion of the DCFTA negotiations, which was one of the major issues during the campaign. The candidates thus aligned themselves with the stance taken by the UGTT, the most influential trade union in the Arab world, which played a key role in the success of the 2011 revolution. On 1 May 2019, the UGTT led a crowded demonstration against the DCFTA, which it condemns as being a ‘neo-colonial’ project.
However, perhaps because of pressure from Europe – the EU is one of the largest contributors of financial and development aid to Tunisia – the new government formed in the summer of 2020, led by technocrat Hichem Mechichi, expressed its desire to resume negotiations, which had long been progressing at a snail’s pace and were suspended during the election period. “The Mechichi government had planned to continue negotiations in September , but political instability has prevented it,” a senior diplomatic source from a European country told Equal Times.
On 25 July 2021, in an unexpected coup de force, President Kais Saied adopted a series of “exceptional measures”, including dismissing the head of government and assuming full executive powers, and suspending parliament. Although Saied based his decision on a twisted reading of an article of the constitution intended for situations where national security is under “imminent threat”, the majority of the population supported the move – close to 90 per cent, according to polls. This consensus is perhaps best explained by the widespread discontent with the corruption among the political class and the chronic economic stagnation in the country, ten years after the uprising that brought down the dictator, President Zine al-Abidine Ben Ali, and triggered the Arab Spring. Whilst back in 2010 the official unemployment rate was 13 per cent, it has now risen to 18 per cent and is close to 40 per cent among young people.
The main party supporting Saied is the left-wing, pan-Arabist People’s Movement, which is very much committed to national sovereignty and opposed to the DCFTA, as is the president. So, as long as Saied remains in office (which seems likely for now), negotiations are not expected to resume.
Food sovereignty threats and colonial-era sensitivities?
The 1995 agreement removed tariffs on most industrial products, but the new agreement goes a step further and would open up the agricultural and services sectors, as well as public procurement of goods and services, to full and free competition . It also stipulates that, in the event of a dispute between companies from the two countries or between a state and an investor, both should defer to the arbitration of an international tribunal. In other words, Tunisian courts would not be able to settle any disputes arising from the application of the DCFTA.
“We do not feel that the conditions are in place to be able to negotiate an agreement such as the DCFTA, the initial rounds of which excluded civil society organisations opposed to the agreement,” says Abdejelil Bedoui, an economist with the Tunisian Forum for Economic and Social Rights (FTDES). “The result of free competition between the sectors of two economies that do not compete on equal terms would be disastrous for Tunisia. In the service sector, for example, European workers would be able to travel to Tunisia without any problems, while for Tunisians, the process of obtaining a visa is very complicated. How can a Tunisian company be expected to win a public tender in Europe?” asks Bedoui.
He also points to similar problems in the agricultural sector, as most farms in the North African country are small – 75 per cent are under ten hectares – and receive very little in the way of subsidies, in contrast to those received in the EU, under the common agricultural policy, better known as the CAP.
This explains the concerns that the DCFTA risks undermining the country’s food sovereignty. The EU is often, in fact, accused of wanting to institute a neo-colonial model that undermines the country’s sovereignty in many areas.
The EU representatives in Tunisia present a completely different picture. In their view, the agreement constitutes a generous gesture that would help develop the Tunisian economy. “The DCFTA will bring more investment into the country and make Tunisian companies more competitive. They will have to adapt to EU regulatory and quality standards, and that will open the door to new markets,” explains a former senior official of the EU delegation in Tunisia. The European Commission attributes the public’s rejection of the agreement to a lack of knowledge about it, and to sensitivities stemming from the colonial era. “It’s not true that we want to impose one thing or the other. In fact, we have told the Tunisians that if some sectors are not ready for competition, they can exclude them from the agreement. We are offering them an à la carte menu,” added the official, at a meeting with several correspondents.
Opinions on this issue are divided in Tunisian business circles. “The pharmaceutical sector is against the current draft of the DCFTA, especially with regard to the regulations on patents and intellectual property. It favours European companies, which are much stronger in the area of research, and it does not remove any of the barriers we face when it comes to entering the European market,” says Sarra Masmoudi, president of the Chamber of Commerce for the pharmaceutical sector. “We are an exception in the industrial sector because the rest are not affected, as tariffs were already removed with the 1995 agreement. In the service sector, however, there are companies in favour of the DCFTA, such as IT companies,” she adds.
Another point of contention between the Commission and a large part of Tunisian civil society - trade unions, the FTDES, feminist associations such as the ATFD, and development NGOs, etc. – lies in the appraisal of the last 25 years under the existing free trade agreement.
A report commissioned by the EC, published last year by three European consultancy firms, on the agreements with six Euro-Mediterranean countries, gave a very positive diagnosis. “Analysis shows that the removal of customs duties has brought about economic benefits for the SMCs [southern Mediterranean countries] and the EU and that it still does so now,” reads the text, which highlights the increase in Tunisian exports to Europe.
Opponents of the DCFTA, however, question this analysis. “The report is biased, as the consultancy firms are regular clients of the Commission, and they tell it what it wants to hear,” Bedoui notes. In a public statement, the FTDES denounced the methodology used to evaluate the agreement, which is appraised from a “neoliberal perspective”, fails to make a complete assessment of the social impact, and is superficial in its study of each country. “The problem is that, to date, the Tunisian state has not yet carried out a complete examination of the effects of the free trade agreement, so it is difficult to negotiate properly,” says Harbawy. But some social actors have done their own sums, such as the Block ALECA [DCFTA] collective, which maintains that the 1995 agreement resulted in the loss of around 300,000 jobs and the closure of some 3,200 small and medium-sized enterprises.