The Liberalization of Tunisian Agriculture and the European Union : A Prospective Analysis

In the year 2000, Tunisia and the European Union are to begin negotiations on the liberalization of agricultural trade between them under the terms of a partnership agreement signed in 1995. The political attachment of Tunisia to Europe will provide an opportunity for it to leave behind the agricultural policy pursued hitherto, a policy aimed essentially at achieving self-sufficiency in food production. This has proved to be costly for the country since it has led to poor resource allocation. The issue is therefore one of how to reform Tunisian agriculture at the least possible cost, especially for rural households, and to determine to what extent Europe can be of help in the move to a more dynamic agricultural system. The present paper analyzes various prospective scenarios for Tunisian agriculture to the 2010 horizon, using dynamic general equilibrium modelling. The outcome is that in the absence of reciprocal concessions from the European Union, possibly in the form of a lifting of tariff quotas, Tunisia would have little incentive to reduce either its assistance to the agricultural sector or its protective barriers against outside pressure. Tunisian agriculture would in this case continue to show lacklustre performance, but the welfare of rural households would be more or less preserved. Conversely, increased access to the European market for export products for which Tunisia has a competitive edge would greatly facilitate the transition and help improve resource reallocation. Some of the gains made could then be redistributed to rural communities in order to offset marginal losses. By granting the same trade privileges to its other partners, Tunisia would however maximize its growth potential and reduce still further its losses in the agricultural sector. The European Union would lose in terms of outlets for its exports but would gain overall in terms of the economic development of Tunisia