NEGOTIATING EUROPEAN INTEGRATION ON THE SOUTHERN PERIPHERY: DEMOCRACY DEFICITS AND BARGAINING POWER IN THE MAGHREB by Carl Dawson B.A., Victoria University of Wellington, New Zealand, 1991 M.P.S., Cornell University, 1996 Submitted to the Graduate Faculty of the Graduate School of Public and International Affairs in partial fulfillment of the requirements for the degree of Doctor of Philosophy University of Pittsburgh 2007 © Copyright by Carl Dawson 2007 ii COMMITTEE SIGNATURE PAGE Professor Martin Staniland, Dissertation Advisor _______________________ Professor Clyde Mitchell-Weaver, Dissertation Advisor _______________________ Professor Alberta Sbragia, Committee Member Professor Phyllis Coontz, Committee Member iii NEGOTIATING EUROPEAN INTEGRATION ON THE SOUTHERN PERIPHERY: DEMOCRACY DEFICITS AND BARGAINING POWER IN THE MAGHREB Carl Dawson, PhD University of Pittsburgh, 2007 From 1992 until 1995, Morocco and the European Union (EU) were in negotiations for an Association Agreement as part of a regional initiative, the Euro-Mediterranean Partnership (or “Barcelona process”). The free trade provisions of the agreement seemed unfavorable for Morocco: they largely excluded agriculture, and, therefore, many products in which Morocco could have made significant gains, they opened the Moroccan market to competition from EU non-agricultural products (Morocco had achieved equivalent access to EU markets decades earlier), and EU funding for Moroccan company upgrading fell far short of expectations. This research sought to determine how the respective political systems of Morocco and the European Union led to the EU proposing, and Morocco accepting, a sub-optimal agreement. These issues were explored through recorded and transcribed interviews with key Moroccan and EU players, and through document analysis, and the resulting data were analyzed primarily in terms of Putnam’s two-level game model of international negotiation. The principal findings are that Morocco may have achieved a better free trade deal had it been an open and democratic system during the period of negotiations. The closed and elitist nature of the Moroccan negotiation and ratification process meant that the official negotiating position did not account for the full range of interests affected by trade liberalization, and that the hand of the Moroccan negotiators in advocating even that less demanding position could not be strengthened by the threat of ratification failure – the prospect that dissident groups might reject the final agreement in Parliament, in a referendum, or in the streets. The European Union negotiation and ratification process, although open and democratic, was skewed by the lack of significant participation by most member States. Only France, Spain and Italy participated intensively, a situation that ensured the protection of powerful national lobbies (primarily Spanish farmers and fishermen) at the expense of Morocco and of EU economic development objectives for North Africa. The convergence of minimal participation in Morocco and significant but wholly inadequate participation in the European Union led to an agreement favoring narrow European sectoral interests at the expense of the broader vision of the Euro- Mediterranean partnership. iv ACKNOWLEDGEMENTS I would like to thank the members of my dissertation committee at the Graduate School of Public and International Affairs (GSPIA), University of Pittsburgh, Professors Clyde Mitchell-Weaver, Martin Staniland, Alberta Sbragia, Phyllis Coontz and Lou Picard, as well as the School itself for the financial and intellectual support that made this entire project possible. I would also like to express my gratitude to the interviewed stakeholders, both Moroccan and European, whose openness and honesty was so valuable to the research, and to all those who provided documents, useful comments and advice, and referrals to other sources of expertise. This work, which is the distillation of 12 years of life in Morocco, is dedicated to the fulfillment of the potential of that country. Carl Dawson Rabat, Morocco th 17P P December 2006 ABOUT THE AUTHOR Carl Dawson was appointed Executive Director of the American Chamber of Commerce in Morocco in 2002, and has played a key role in the implementation of the free trade agreement between Morocco and the United States, and in the creation of the Council of American Chambers of Commerce of the Middle East and North Africa. He previously worked as an economic and political analyst for a Moroccan investment bank, and as special projects coordinator for the Fulbright Commission in Morocco. Carl Dawson has been based in Morocco for 12 years. He holds an M.P.S. in communication from Cornell University (with a research focus on HIV/AIDS prevention in Côte d’Ivoire), a B.A. in political science from Victoria University of Wellington, New Zealand, and a Certificate in Journalism. v TABLE OF CONTENTS Page 1. REFLECTIONS AND EXPECTED FINDINGS ON TRADE LIBERAL- IZATION BETWEEN MOROCCO AND THE EUROPEAN UNION ……... 1 2. METHODOLOGY ……………………………………………………………. 15 3. THE THEORETICAL FRAMEWORK: A BRIEF ANALYSIS OF NEGOTIATION……………………………………………………………….. 19 4. A RECENT HISTORY OF RELATIONS BETWEEN THE MAGHREB AND THE EUROPEAN UNION ………………………………. 28 5. A RECENT HISTORY OF RELATIONS BETWEEN MOROCCO AND THE EUROPEAN UNION …………………………………………….. 55 6. IDENTIFYING THE MOROCCAN ELITES ………………………………. 70 7. TESTIMONY FROM KEY STAKEHOLDERS IN NEGOTIATIONS FOR THE MOROCCO/EUROPEAN UNION ASSOCIATION AND FREE TRADE AGREEMENT OF 1995 ……………………………………. 84 8. THE POLITICS OF THE LOWEST COMMON DENOMINATOR IN EUROPE AND DEMOCRACY DEFICITS IN THE MAGHREB ………. 119 9. CONCLUSION ……………………………………………………………….. 135 APPENDIX ……………………………………………………………………….. 141 REFERENCES ………………………………………………………………….. 150 vi CHAPTER ONE Reflections and Expected Findings on Trade Liberalization between Morocco and the European Union In early May 2002, at the Ministry of Finance in Rabat, Morocco, a meeting was held between a visiting delegation of U.S. trade officials and the representatives of numerous Moroccan businesses and locally-based American companies, including the author. The purpose of the meeting was to obtain feedback on the possibility of a bilateral free trade agreement (FTA) that would, in general terms, be similar to the U.S./Jordan FTA that had taken effect at the end of the previous year. Following introductory remarks by Finance Minister Fathallah Oualalou, and an outline of the U.S. vision of free trade by the leader of the visiting delegation, Assistant U.S. Trade Representative Catherine Novelli, the assembled business people were asked for their reaction. U.S. company representatives were predictably outspoken in their support for free trade, but reaction on the Moroccan side was considerably more reserved. Several officials of the Moroccan Employers Federation (CGEM) stated their support for free trade, but went on to express serious concerns about the ability of Moroccan firms to withstand heightened competition, satisfy U.S. norms and standards, and break into the U.S. export market. The wariness of the Moroccan speakers did not delay the subsequent decision to open negotiations for an FTA, but it did cause some surprise amongst members of the U.S. delegation. The origins of the Moroccan reticence can be traced back seven years to an earlier free trade experience with the European Union, which is by far Morocco’s largest trading partner. 1 2 The Morocco/EU FTA: A sub-optimal agreement for both parties Between 1992 and 1995, Morocco had negotiated a wide-ranging Association Agreement with the European Union (EU) that included a free trade agreement to be phased in over a 12-year period, from 1998 to 2010. Due to delays in ratification by the member States of the EU, the implementation period actually began in 2000 and will end in 2012. Both accords were part of a wider EU attempt to promote the economic prosperity and stability of the Middle East and North Africa region that was launched at the Barcelona Conference in late 1995. The Morocco/EU FTA largely excludes agriculture – one of the sectors in which Morocco could most benefit from selective trade liberalization – as well as the services sector, and even at the early stage of its implementation prevailing in 2002, the accord had shaken the free trade commitment of the Moroccan business community. At the time that negotiations for the Morocco/EU FTA began, there was relatively little awareness within governmental circles and the business community of the possible extent of negative short and medium term impacts of free trade: the failure of uncompetitive firms and the resulting economic and social dislocation. There were also unrealistic expectations about the amount of financial aid that the EU would devote to upgrading the Moroccan economy and businesses in advance of free trade, and about the ability of small and medium-sized firms (often family-owned) to recognize the need for upgrading and accept the resulting external involvement in their affairs. The negotiation and signing of the agreement launched an ongoing public and academic debate on the costs and benefits of free trade, and the inevitability of substantial damage in the short term quickly became apparent. Further, although such damage is an inevitable initial consequence of any trade liberalization, the Morocco/EU agreement in particular increasingly appeared to be a poor deal for Morocco due to the minimal agricultural concessions. In the seven years since the signing of the accord, it