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OVERVIEW OF SELECTED MENA ECONOMIES 27


trade policies, and both rank 49, indicating some progress in trade reforms (World Bank 2005).


Among the protection instruments used by MENA countries, in addition to standard tariffs there are paratariff measures (customs surcharges, additional taxes and surcharges, stamp taxes, statistics taxes, and sales taxes levied on imports) and nontariff barriers (quantitative restrictions and technical requirements). A recent study by Kee, Nicita, and Olarreaga (2006) provides indicators of trade restrictiveness that include measures of both tariff and nontariff barriers for 91 developing and developed countries. One of these authors’ main observations is the contribution to the level of trade restric- tiveness by nontariff barriers (NTBs): on average, 70 percent in addition to tariffs. In Egypt and Tunisia, NTBs add an additional 50 percent to tariff restrictiveness. In Jordan and Morocco, measures with NTBs are twice the equivalent tariffs indexes, and in Lebanon the contribution of NTBs is higher than that of tariffs (Kee, Nicita, and Olarreaga 2006).


NTBs are usually not addressed by trade liberalization policies, but they represent institutional constraints that would lower the ability of MENA countries to benefit fully from trade liberalization. For example, the elimi- nation of tariffs among the partners in the Greater Arab Free Trade Area (GAFTA) by 2005 has not led to free intraregional trade in practice because of the requirement of import permits for exporting countries to benefit from the trade preferences. These permits are often not granted if it is felt that import-competing industries can be harmed by imports (World Bank 2009).


Trade Agreements


Trade reform in the MENA countries has been motivated in part by the region’s participation in multilateral negotiations in the context of the WTO framework and in North–South regional agreements with the E.U. and the United States. Most countries in the region also participate in South–South regional and bilateral integration.


In most cases, regional and bilateral trade accords are driven by politi- cal interests. For example, the creation of associations agreements (AAs) within the EMP is seen as a key element in support of peace and stability in the region because these agreements both promote the security of the E.U. and reduce the problem of illegal immigration (McQueen 2002). These agreements are usually limited by lack of coverage (agriculture and services are effectively excluded), lack of depth (technical barriers to trade remain because of differences in regulatory requirements and the need to duplicate testing), and restrictive rules of origin that limit the degree of effective mar- ket access (Zarrouk and Zallio 2000; World Bank 2005). Next we briefly cover the main trade agreements pertinent to the region.


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