Analysis of the Effects of the Euro-Mediterranean Free Trade Agreement on Freight Transport: an Input-output Based Approach



Analysis of the Effects of the Euro-Mediterranean Free Trade Agreement on Freight Transport: an Input-output Based Approach

Authors

V Marzano, A Papola, Università di Napoli ?Federico II? , IT

Description

This paper proposes the development of an input-output based European model for freight simulation, applied for assessing the effects of the EMFTA on freight flows and identifying the most promising transport corridors.

Abstract

In the Barcelona Declaration (1995), the Euro-Mediterranean Partners agreed on the establishment of a Euro-Mediterranean Free Trade Area (EMFTA) by the target date of 2010. The new generation of Euro-Mediterranean Association Agreements provides for the gradual implementation of bilateral free trade zones (FTZ). The Euro-Mediterranean Free-Trade Area foresees free trade in manufactured goods and progressive liberalisation of trade in agricultural products.
It is therefore of interest analyzing the FTZ effects on freight flows and on the national economy of the involved countries, both for identifying a list of priorities in infrastructural and service improvements of transport connection and for defining threats and opportunities for European firms. Some studies have already dealt with this issue: for instance, Lorca Corrons (2000) analyzed the impacts of FTZ between EU and Morocco, Egypt, Turkey and Tunisia for the agricultural sector, while Russo and Assumma (2005) improved the Italian national freight DSS in order to simulate, in a relatively aggregate way, changes in international trade due to the FTZ. European funded projects have also been carried out for understanding economical and administrative implications of the FTZ: see for instance the SIA-EMFTA and the FREEMED projects.
In spite of these studies, an exhaustive analysis of the FTZ effects on the overall European economy has not been carried out yet, and the development of an input-output based simulation model at European level seems to be the key aspect for a thorough analysis of those economic impacts and for the identification of multiplicative effects as well as which good sectors may gain from this FTZ.
Therefore, starting from the modelling framework discussed in Marzano and Papola (2004), a MRIO European model has been developed on the basis of macroeconomic data collected by several sources (Eurostat, National Bureaus of Statistics, International trade offices, World Bank and so on). Moreover, trade data between EU and FTZ involved countries, collected on the basis of sources available in those countries in the context of the FREEMED project, have been also used. It is worth mentioning that the Eurostat i-o tables for the EU countries allows also knowing directly the transport margins, which represent a modelling opportunity for integrating transport level-of-service attributes within the developed MRIO model. Transport level-of-service attributes for the study area have been in turn calculated through a transport supply model, which takes into account road and short-sea shipping, allowing calculation of the shortest travel time for each o-d pair. VTTS estimates available in the literature have been then used for turning those times into monetary values.
The system of models has been therefore applied in the context of FTZ effects appraisal. In more detail, some policy scenarios, chosen among those provided by the FREEMED project on the basis of the analysis of the agreements between EU and third part countries involved in the EMFTA, have been simulated. For those countries, the increase in demand and/or in trade with reference to specific good sectors due to the FTZ has been firstly estimated through a procedure suggested by Trecozzi (2004) and Russo and Assumma (2005). Then, this change has been used as input for the implemented MRIO model, which the effects on European trade and economies has been checked through. Those analyses will allow understanding which countries will mostly benefit from FTZ ? including in this analysis the previously mentioned multiplicative effects ? and also identifying a list of priorities for supporting the corresponding increase in freight flows.

Publisher

Association for European Transport