100 | Central and West Asia and North Africa (CWANA) Report

particular. Not only benefits are expected. For example, WTO blue box payments for reducing production and setting land aside will be reduced according to a tiered formula. Under this formula, members having higher levels of tradedistorting domestic support will make greater overall reductions to achieve harmonious results. The same approach will be valid for the total aggregate measure of support and market access. So developing countries, which need more support for their agricultural sector, will be affected by these developments (Zaibel et al., 2003).

Intraindustry trade is also growing among regional trading groups. Such a trend is an indication of economic integration and economic diversification and development. Intraindustry trade within the regional trading blocs occurs mostly between neighboring countries with similar demand structure. Transportation and transaction costs are among the constraints that hamper its development within the region. Policy and institutional changes are required to follow these developments and overcome the current constraints.

Since the EU is an important partner for many CWANA countries (e.g., the Mediterranean countries), its enlargement with the entrance of the Central and Eastern European countries (CEECs) will bring benefits but also threats to the region. There would also be benefits if Turkey were to enter the EU; it would bring the EU boundary closer to CWANA and be an excellent opportunity to increase mutual trade.

We do not expect that enlargement of the EU to the east will divert foreign investments to the newly added countries instead of the countries in the CWANA region, as the incentives to invest in these regions are dissimilar and the foreseen investments in CEECs had begun to be realized even before the expansion. Trade negotiations: more integration

Since the inception of WTO in 1994 efforts have focused on launching a new, comprehensive round of multilateral trade negotiations. From the Seattle ministerial meeting up to the Doha Declaration there have been advances on a number of trade and nontrade issues. The ministerial conference at CancĂșn, Mexico, set a milestone toward achieving the Doha Development Agenda round of trade negotiations as mandated by ministers at the 2001 Doha conference. However, given the few achievements in past negotiations, observers remain skeptical that a new comprehensive round can be completed as planned (Miner, 2001). The big players are expected to make additional policy reforms (e.g., trade legislation in the USA and European Common Agricultural Policy [CAP] reforms in the EU) before undertaking strong concessions and commitments in the upcoming negotiations.

It is somewhat disappointing that benefits from agricultural trade liberalization have not materialized as was predicted. There are at least two reasons why trade benefits were only partial. First, negotiations on agriculture alone do not consider the comparative advantage principle. As a result, the Doha Declaration made provisions for broad-based negotiations extending trade negotiations to further liberalize trade for the industrial products and services of which nations may take advantage (Ingco, 2002). Second, national policies and legislation are creating additional cross-national boundary transaction costs and limiting liberalization efforts. Trade relations remain far denser within nations than


between nations and a lot of trade does not occur according to predictions of the neoclassical model (Gerber, 2000). Accordingly, "deep" economic integration requires that not only border barriers but also domestic policy barriers be removed. More integration is needed to achieve regional cooperation to develop AKST. Recurrent and newer issues

The main issues already identified in the General Agreement on Trade and Tariffs (GATT) on agriculture embodied market access, export competition and domestic support. However, a body of new trade and nontrade concerns are emerging and attracting growing public interest. The agreement on agriculture already included issues of food security, food safety and quality, environment concerns, resource conservation and rural development (Miner, 2001). Additional issues raised in the last negotiation meetings included animal welfare, biotechnology, species preservation, landscape safeguards, poverty reduction and preservation of rural culture (Miner, 2001).

Newer border-trade topics embodied items such as the rules of origin, standards and technical barriers, intellectual property rights, sanitary and phytosanitary (SPS) standards, dispute settlement and the role of small countries (Gerber, 2000). Among the nontrade domestic policy issues are foreign investment, competition policies, and labor and environmental standards. All these issues affect AKST; more investment is required, CWANA seeks more aid in the area of SPS and in general there is a need for research and capacity building. Regional links: the EU-CAP reform

Traditional regional links are shaping export markets and observed trade flows. According to Diao et al. (2002), export markets for many developing countries are concentrated in a few countries in the North because of geographic proximity and historical links. As a result trade negotiations will be shaped by regional blocs. North African and Middle Eastern countries are thus more interested in the EU agricultural markets and consequently in EU agricultural reforms under the 2003 CAP reform.

Indeed, the work program annexed to the Barcelona Declaration cites the following objectives with regard to the countries that have signed the declaration, which are options for AKST development as well (Chioccioli, 2002):

  • Integrated rural development
  • Support for policies implemented by Mediterranean
  • countries to diversify production
  • Reduction of food dependency
  • Promotion of environment-friendly agriculture Food safety and product quality reform

With the decline in the use of traditional trade barriers such as tariffs and quotas, there is evidence that technical and regulatory barriers are increasingly used instead. In industrial countries many firms are moving toward adopting international standards. This move is relatively slow in CWANA countries and might therefore represent an obstacle to international trade. Food safety and quality standards are important for trade and access to markets in industrial countries but also for domestic consumers' health, with a