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EU Market Access for Mediterranean fruit and vegetables: A gravity model assessment

Annual Meeting Eu-Med Agpol 17-20 May 2006-Montpellier. EU Market Access for Mediterranean fruit and vegetables: A gravity model assessment. EMLINGER Charlotte IAMM / UMR MOISA. Outline of the talk. 1. My PhD Project in the EUMED Agpol Project 2. The Gravity model 4. First Results

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EU Market Access for Mediterranean fruit and vegetables: A gravity model assessment

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  1. Annual Meeting Eu-Med Agpol 17-20 May 2006-Montpellier EU Market Access for Mediterranean fruit and vegetables: A gravity model assessment EMLINGER Charlotte IAMM / UMR MOISA

  2. Outline of the talk 1. My PhD Project in the EUMED Agpol Project 2. The Gravity model 4. First Results 5. Conclusion and discussion

  3. My PhD Project in the EUMED Agpol Project1.1.Problematic of my work • Context : Better EU market access for Fruit and Vegetables (F&V) exports : main issue of the liberalisation process for the Mediterranean Countries • What would be the impact of a greater liberalization on EU import of F&V from the Mediterranean countries ? • Questions of the PhD Study:  To what extent EU protections influence the F&V exports of Med countries ? • Do exist trade costs other than tariffs and transportation, accessing EU market for Mediterranean F&V? What are their impact?

  4. My PhD Project in the EUMED Agpol Project1.2.My approach • International economics approach • Use of a Gravity model : Common tool in trade analysis, focusing on trade costs Bilateral trade determinants analysis Ex post model World model Econometric methodology

  5. My PhD Project in the EUMED Agpol Project1.3.Links with the project • Use of WP 3 output: MEDITAR and Deliverable 13 analysis • Complementary work with other approach in the project : WP 5 : DELPHI Method (assess Export and production potential) WP 6 : Ex Ante models (CAPRI, TASM, MCGE) • Contribution to WP 7 : interaction with World market = we take into account all the EU suppliers of F&V in the model Comparison of Med Countries/ Rest of the World

  6. 2. The Gravity Model2.1.Principle • Equation derived from Anderson van Wincoop 2004 • An equation explaining bilateral trade between two countries by : production of exporting country consumption of importing country relative prices of partners : competitiveness trade costs : transportation cost (proxied by distance) tariffs (ad valorem equivalent) other border costs (caught by dummy variable)

  7. 2. The Gravity Model2.1.Principle i Importing country j exporting country m imports x production w world k product Home effect : countries trade more with themselves than with others countries Border effect methodology : comparison imports from foreign countries to imports from domestic (EU) producers : benchmark of the best market access possible

  8. 2. The Gravity Model 2.2.Data (1) Annual data model (2002) Data base : • Production and price : FAOSTAT • Bilateral trade : COMTRADE • Applied Tariffs : MEDITAR • Distance, contiguity and historic variables : CEPII Problem of harmonisation and consistency of data base : • Computation of balance sheet between supply and demand • Re-exportation issue

  9. 2. The Gravity Model 2.2.Data (2) • Applied tarrifs : Ad Valorem Equivalent computation For entry price products: use of 92% of the trigger price for import price • Applied tarrifs : Aggregation Aggregation of monthly data calculated at the 10-digit level of the combined nomenclature in annual data defined in the FAO nomenclature

  10. 3. First results (1)

  11. 3. First results (1) • Results for classical variables in line with expectation from gravity model Competitiveness, Distance, colony, common border • Important Home effect and EU border effect • Role of Perishability in transport costs • Mediterranean area as a block : Tariffs elasticity similar than the Rest of the World (ROW) Trade Resistance lower than those of ROW : non price competitive advantage/ROW

  12. Tariffs Elasticity Other trade resistance Rest of World -0,78 -1,32 Algeria -3,62 -1,32 Lebanon -2,88 -1,32 Egypt -1,22 -0,24 Israel -0,78 2,44 Jordan -0,78 -1,32 Turkey -0,42 -0,42 Morocco -0,38 -0,26 Syria 0,01 -8,50 Tunisia 0,14 -3,77 3. First results (2) Heterogeneity of the Mediterranean area, comparison of Med countries

  13. 5. Discussion5.1.Impact of liberalization Impact of liberalisation can be discussed, considering : • Tariffs elasticies • Other trade resistance or advantage • Tariffs applied • Impacts of perissability and distance

  14. 5. Discussion5.1.Impacts of liberalization non price competitive advantage compared to EU Trade Resistance Compared to EU suppliers non price competitive advantage compared to ROW disadvantage compared to ROW High Tariff sensitivity ≥ROW Israel Egypt Lebanon Algeria Jordan Low Tariff sensitivity <ROW Turkey Morocco Tunisia Syria low EU tariffs High EU tariffs Middle EU tariffs

  15. Groupe 1 Groupe 2 Amandes Noisettes Pistache Pommes Poires Coings Pamplemousses Citrons Oranges Mandarines Haricots secs Fèves pois chiches ail lentilles pois secs Pommes de terre Patates douces kiwis Bananes Avocats Oignons Echalotes Ananas Dates Figues Pêches Abricots Artichauts Asperges Haricots verts Choux Choux fleurs Petits pois Epinards Salades Champignons Groseilles Framboises Fraises Myrtilles Mangues Papayes Poivrons verts Concombres Tomates Pastèques Melons Groupe 4 Groupe 3

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