In June, Morocco entered into fresh free trade agreement talks to add Canada to its growing number of close commercial partners. The list of Morocco’s free trade allies already includes the European Union, the United States, the United Arab Emirates, Turkey and Jordan, alongside North African neighbors Tunisia and Egypt. Rabat hopes to diversify its markets and capabilities, which are currently focused on a small number of European partners, by dismantling tariffs with new partners like Canada. Meanwhile, Morocco’s new port facilities and burgeoning IT development are opening never-before-seen trade routes and commercial opportunities, allowing the country to reconsider its economic and political global alliances.
European countries have been Morocco’s principal trading partners since independence, with France, at 21 percent, and Spain, at 20 percent, the two countries with the largest volume of bilateral trade. In 2007, more than 60 percent of Moroccan exports were sent to the EU, while 58 percent of Moroccan imports came from the EU, for a total trade amounting to nearly $30 billion.
Beyond Europe
In a move set to significantly divert Moroccan trade away from dependence on EU markets, Morocco became the second Arab country (after Jordan in 2000) to sign a free trade agreement with the US. The US-Morocco agreement, which went into effect on January 1, 2006, has a particularly sweeping scope that took two years for negotiators to settle. It includes industrial products, agricultural products, services and public works contracts, in addition to measures relating to intellectual property, environment, workforce and governance.
Bilateral trade more than doubled in just three years, mostly to the benefit of the US, which now sells Morocco products ranging from Washington apples to drilling and oil field equipment. In 2008, US exports rose to $1.4 billion, from $480 million in 2005, while Moroccan exports during the same period climbed from $445 million to $878 million, according to the US Census Bureau’s Foreign Trade Division.
But in spite of a few isolated success stories, Moroccan producers are finding it difficult to penetrate the American market.
New reports are showing that Morocco’s traditional exports like textiles, fish, citrus, flowers, and artisanal handicrafts are not making it across the Atlantic. The Minister of Foreign Commerce declared in a February report that the US FTA has not succeeded in stimulating national exports. He cited the lack of diversification and sophistication of Moroccan exports as the main obstacles to entering newly opened markets.
Ahmed Reda Chami, Morocco’s minister of commerce, industry and new technologies, said there are fundamental incompatibilities between Moroccan products and the American consumer market.
“The cultural and linguistic barrier… complexity of US distribution…[and] production that requires Moroccan companies to manage very important orders while at the same time ensuring a constant quality on the whole product line, and the devaluation of the dollar compared to the dirham, all reduce the competitiveness of our products,” Chami said in an interview with Oxford Business Group.
While national export levels are disappointing Moroccan administration officials, local press and watchdog groups warn that the US trade agreement undermines access to affordable medicines for Moroccan consumers, allows US companies to patent seeds and charge small-scale farmers royalties for planting crops, and sets back environmental and workforce standards.
So why open domestic markets to fierce competition if the benefits are so seemingly asymmetrical?
First, agriculture is still the backbone of the Moroccan economy. In order to advance from the vulnerability of depending on weather conditions for economic security, the administration is investing to diversify its economy and raise productivity. Foreign partners are essential to industrial modernization. The North African country is also looking to capitalize on its geographical positioning and political stability by becoming a competitive regional hub and platform for other countries to reach a wide range of international markets.
More than 160 high-tech western companies have recently set up shop in Casablanca and Tangiers
Future tech
Morocco’s national industrial strategy to develop high-potential aeronautics, automotive and electronics sectors, as well as nanotechnology, biotechnology and microelectronics — called “Plan Emergence” — has already helped attract more than 160 equipment manufacturers from Japan, France, the US and Spain in special zones in Casablanca and Tangiers. These companies are expected to generate 60,000 to 70,000 industrial jobs by 2015, according to Industry Minister Chami.
“Morocco signed many FTAs with several regions across the world: the EU, US, Turkey… These agreements have permitted our country to position itself as a ‘hub’ for the Mediterranean and a platform to reach the world,” said Saad Benabdellah, who heads the Moroccan Center for Promoting Exports, in an interview with local paper l’Economiste. “Just a few years ago, it would have been difficult to imagine that emblematic enterprises like Renault, Tata Group, Cap Gemini, Airbus and Safran would now be implanted in Morocco.”
Moroccan rapprochement with new international markets in North America, Asia and the Gulf does not seem to be hurting its relationship with the EU. The 27-country bloc overrode heated political objections to the status of the disputed Western Sahara territory and bestowed the coveted ‘advanced status’ designation on Morocco in December 2008. The ‘advanced status’ designation — a first in the southern Mediterranean region — makes Morocco less than a member but more than a partner to the EU, and is designed to integrate Morocco into EU policies and deepen free trade agreements.
