<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=Content-Type content="text/html; charset=windows-1255"> <META content="MSHTML 6.00.2600.0" name=GENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=#ffffff> <DIV><FONT face=Arial size=2><FONT size=3>To all economists and economic minded people on the list.</FONT></FONT></DIV> <DIV><FONT face=Arial></FONT> </DIV> <DIV><FONT face=Arial>A friend of mine asked me for some help in gathering decent information in reply to the following assesment given by an Argicultural Economics professor.  </FONT></DIV> <DIV><FONT face=Arial></FONT> </DIV> <DIV><FONT face=Arial>Friends of the Earth Middle East (FoEME) have written a study on the possible Environmental impacts of the MFTZ on the region.  A professor of Agricultural Economics in Israel replied (copy below) to the Executive summary of the Study.  </FONT></DIV> <DIV><FONT face=Arial></FONT> </DIV> <DIV><FONT face=Arial>It would be interesting to get some comments about his take on the Executive summary specifically, and his view on Free Trade and 'Development'.</FONT></DIV> <DIV><FONT face=Arial></FONT> </DIV> <DIV><FONT face=Arial>Thank you in advance for any information and help:</FONT></DIV> <DIV><FONT face=Arial size=2><FONT size=3></FONT></FONT> </DIV> <DIV><FONT face=Arial size=2><FONT size=3>Your trade document can be summarized, I think, in three statements.<BR>>          1. Trade causes development;<BR>>          2. Development is bad for the environment;<BR>>          3. Therefore, stop trade (or slow trade) to save the environment.<BR>><BR>> Statement 1 is true. Moreover, trade is the major way to economic<BR>> development. Let me add: One can prove mathematically--relying on economic<BR>> theory--that trade causes development. But mathematics does not determine<BR>> how important trade is. History shows that trade is essential to economic<BR>> growth. Retardation of trade destroys the chances to develop.<BR>><BR>> Statement 2 is both true and false. Economic development is stress on the<BR>> environment. But also, development brings higher income, higher income is<BR>> slower population growth, fewer people mean less stress on the<BR>environment. </FONT></FONT></DIV> <DIV><FONT face=Arial size=2><FONT size=3>> In addition, societies at higher incomes care more about the environment.<BR>><BR>> Statement 3 is utterly wrong. Environmental problems should be treated on<BR>> their own merit. Trade (free trade) should be encouraged because of its<BR>> beneficial effect on development and income.<BR>><BR>> What to do? I am not familiar with the trade agreements. As far as I<BR>> understood from the document you had sent, the agreement with Europe<BR>> contains elements of assistance from the rich European Union to the<BR>> Mediterranean countries. Let me suggest that Friend of the Earth raise the<BR>> demand that part of this assistance comes in the form of knowledge and<BR>> resources for monitoring the environment, forcing environmental<BR>> regulations, and environmental education. Another element that should be<BR>> encouraged is environmental cooperation. The environment does not<BR>> recognized political borders</FONT></FONT></DIV> <DIV><FONT face=Arial></FONT> </DIV> <DIV><FONT face=Arial size=2>--------------------------------------------------------------------------</FONT></DIV> <DIV><FONT face=Arial size=2>Executive Summary that the Professor speaks of:</FONT></DIV> <DIV><FONT face=Arial size=2></FONT> </DIV> <DIV><FONT face=Arial size=2><A href="http://www.foeme.org/mftz/study/exsumftz.htm">http://www.foeme.org/mftz/study/exsumftz.htm</A></FONT></DIV> <DIV><FONT face=Arial size=2></FONT> </DIV> <DIV><FONT face=Arial size=2>The full study on MFTZ in .pdf:</FONT></DIV> <DIV><FONT face=Arial size=2></FONT> </DIV> <DIV><FONT face=Arial size=2><A href="http://www.foeme.org/mftz/study/MFTZstudies.pdf">http://www.foeme.org/mftz/study/MFTZstudies.pdf</A></FONT></DIV><FONT face=Arial> <DIV><BR><FONT size=2>Reccomendation section of executive summary:</FONT></DIV> <DIV><FONT size=2></FONT> </DIV> <DIV><FONT size=2>RECOMMENDATIONS </FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>The Euro-Mediterranean Partnership’s current economic liberalisation programme is likely to contribute to environmental degradation in the MPCs, especially in the short and medium term.  During the first four years of the Partnership, relatively little has been done to anticipate the environmental stress likely to be caused by the trade policies.  Euro-Med programmes which are responsible for addressing environmental concerns have been slow, overly bureaucratic and ineffective.  If the Euro-Med Partnership is to live up to its stated goal of creating “a zone of shared prosperity,” based on sound, sustainable development, a rethinking and reordering of priorities needs to be undertaken immediately.  </FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>In order to avoid or to mitigate some of the environmental pressures anticipated to result from the Euro-Mediterranean Partnership’s trade policy and to actively promote potential environmental opportunities opened by the Partnership, the following measures are recommended:</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>        ·           Incorporation of Environment in Bilateral and Regional Agreements. As most of the impacts of the Euro-Med economic policy will result from the EU non-EU relations, it is essential that environmental concerns be considered in the negotiation and implementation of the EU-MPC bilateral association agreements, as well as at the regional level.</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>        ·           Specific Targets.  As it does for its trade programme, Euro-Med agreements and policies should designate specific sustainability targets, with reasonable schedules and finances necessary for achieving them.  These targets should be included in Euro-Med trade agreements, in the various sectoral fora, and in development of funding allocations.</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>A strong institution within the Euro-Med Partnership is needed to coordinate environmental programmes and policies and ensure that sustainability concerns are well integrated into overall Euro-Med policy initiatives.</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Sustainability Impact Assessments. An officially sponsored sustainability assessment should be carried out immediately on the planned regional free trade zone and its recommendations incorporated into Euro-Med policies.  Assessments of the bilateral agreements should also be undertaken and data shared among partner countries.</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Environmental Screening of Official Euro-Med Finance.  All significant financing undertaken within the framework of Euro-Med institutions (e.g. MEDA and EIB), or between Euro-Med governments (e.g. via export credit agencies) should undergo sustainability screening, especially that promoting industrial and/or infrastructure expansion.  In cases in which projects receive funding despite limited environmental damage, matching funds should be made available for necessary mitigation and/or compensation measures.</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Capacity Building.  Programmes to develop technical and professional capacity both at the private sector and governmental levels, need to be implemented in order to identify and address trade-environment issues and to facilitate exploitation of environmental opportunities within the Euro-Med system.  </FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Internalisation of Environmental Costs.  Policies to incorporate environmental impacts into pricing should be encouraged, including eco-taxes and the removal or reduction of wasteful subsidies and other price supports for water and electricity.  Such policies both remove market distortions and improve natural resource conservation and pollution prevention.  As these price supports are often important for poorer segments of the population, alternative policies need to be in place to assure provision of basic needs.   Work on developing such a restructuring of policies should be incorporated into MEDA funding for structural adjustment.</FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>        ·Debt Restructuring.  Debt forgiveness or restructuring by EU creditor nations, especially in the form of debt-for-nature swaps, could relieve alleviate the fiscal strain on MPC government revenues, which currently constrains governments from implementing necessary projects.  </FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Sustainability Indicators.  A system of national and regional indicators reflecting progress in terms of sustainability which is specific to issues raised by trade liberalisation should be monitored, so that member countries can evaluate and respond to social and environmental impacts. </FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Multi-stakeholder Participation.  Incorporation of multiple stakeholders into the Euro-Med decision-making process should be developed and integrated throughout the various levels of Euro-Med policies and activities.  Currently, efforts towards significant non-governmental participation are being developed primarily with the private sector.  Participation by civil society and by local populations affected by Euro-Med policies should be developed beyond its current, largely, token levels. </FONT></DIV> <DIV> </DIV> <DIV><FONT size=2>Priority Action.  Given the substantial on-going progress in liberalising trade, within the Euro-Med Partnership, and given that certain general trends in terms of environmental impact are evident or extremely likely, immediate action should be taken to prepare and implement basic measures to ensure environmental protection.  Lack of official studies or accurate data is a serious gap in promoting, effective policies, however, they should not be an excuse for inaction.</FONT></DIV> <DIV><FONT size=2></FONT> </DIV> <DIV> </DIV> <DIV><FONT size=2></FONT></FONT> </DIV></BODY></HTML>