Pan-Arab free trade area: goals, directions and results of formation

Abstract

This article deals with the problem of integration processes in the Middle East and North Africa, which is considered the least integrated region in the world due to the objective economic and political reasons. Nevertheless, there are well known integration associations in the region, among which is the Pan-Arab Free Trade Area (PAFTA). It is formed of 18 countries of the Arab League. Since 2005, a free trade zone operates within the duty-free trade regime, i.e. in the form of a classical free trade zone. Taking this into account, the effect of creating the area is not substantial, but it promotes bilateral trade and increases investment attractiveness of the participating countries. However, the level of integration of the countries is still low and the share of mutual trade in total trade is 8.5%. Improvement could be achieved by applying the rules of liberalization to non-tariff barriers and by promoting services and investment liberalization.