The Challenges of Free Trade with the European Union for Tunisia

Abstract

International economic integration is a complex process of cooperation and diffusion between the national economies of different countries, aimed at creating a unified economic entity. Like many developing countries, Tunisia has adopted unprecedented reforms to facilitate the integration of its economy into the world market.  From 1986 to 1995, numerous economic measures involving trade liberalization were undertaken. Tunisia adopted the Structural Adjustment Program (SAP), it joined the General Agreement on Tariffs and Trade (GATT), and the World Trade Organization (WTO) in 1994. In 1995 the Association Agreement (AA) concluded between Tunisia and the European Union (EU), which launched and established a free trade zone (FTA) covering industrial products. the European Union has begun negotiations in Tunis on a Comprehensive and In-depth Free Trade Agreement (CAFTA). This project aims to broaden and consolidate their economic cooperation. The paper aims is to explore the advantages and disadvantages of integrating a small country into a large economic region. It attempts to analyze the gains and losses of the trade integration agreements established between Tunisia and the European Union. He also referred to the European Union (EU's) recent proposal to Tunisia for a deep and comprehensive free trade agreement (DCFTA). Although the impact of integration is uncertain, the risks are significant and can be avoided by adopting appropriate trade policies. This article contributes to the existing literature studying the impact of the Association Agreement between Tunisia and the European Union (EU).

Received: 8 January 2024 / Accepted: 24 February 2024 / Published: xx March 2024