The impact of FTAs on MENA trade

The present work analyses the impact of free trade agreements (FTAs) on the improvement of trade flows for ten Middle East and North African Countries (MENA) for the period 1990-2010. An extended gravity model is estimated to analyse the average and individual impact of six FTAs (four North-South-FTAs and three South- South-FTAs) on exports and imports of Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Israel, Lebanon, Syria and Turkey. The trade effect of the customs union between Turkey and the EU is also analysed. With the aim of obtaining more information about the real impact of the agreement, the analysis is undertaken not only for aggregated trade but also for trade in industrial products and trade in agricultural products separately. In this way, the fact that the text of such agreements distinguishes between industrial and non-industrial products to establish schedules of liberalization is taken into account. The findings indicate that the Euromed FTA has a positive and significant impact on exports from the EU to MENA countries but not the other way around. The only agreement that has a positive and significant impact on both imports and exports is the customs union between the EU and Turkey.