MOROCCO – The Moroccan Government Council has approved the amended free trade agreement with Turkey which is aimed at correcting the drawbacks of the 2004 free trade agreement signed between the two countries.
The amendment aims to impose customs duties, for a five-year period, on certain Turkish industrial products listed in the agreement to reach 90% of the value of products from the most-favored-nation.
A most-favored-nation clause requires a country to provide any concessions, privileges, or immunities that it grants to one nation to all member states of the World Trade Organization. In short, the clause compels a state to respect the equal treatment of all countries.
The agreement stipulates that Morocco “will not apply any other duty having a similar effect to customs duties on imports from Turkey to measures in accordance with Free Trade Agreement between Rabat and Istanbul.”
Morocco and Turkey signed a Free Trade Agreement in 2004. The agreement took effect in 2006.
The deal has however caused controversy in Morocco with businessmen and other stakeholders in the country arguing that the trade agreement promoted Turkey businesses at the expense of the local economy.
In January, Minister of Industry Moulay Hafid Elalamy said Morocco loses $2 billion annually through its trade deal with Turkey. He added that the Turkish textile industry cost Morocco 44,000 jobs in 2017.
Early this year, Morocco nearly walked away from the trade agreement with Turkey in an effort to protect its local economy from further damage.
In trying to address the situation and protect its economy, Morocco almost walked away from the 2004 trade agreement.
In the amended 2020 Finance Bill, which the Moroccan government and Parliament approved in July, an import tax of 36% was imposed on Turkish textile and clothing products.
This development worried Turkey businessmen and its government engaged its Moroccan counterpart so as to reach an amicable solution.
Talks began in earnest but were however halted due to COVID-19. They finally resumed after the pandemic slowed and ended in the drafting of a new trade agreement to replace the previous agreement which had been active for the past 14 years.
The amendment is renewable for another five years and aims to reduce $1.2 billion trade deficit with Turkey and fix trade imbalances.
The Moroccan tax increase will apply to Turkish imports mainly textiles and clothing, leather, automotive, metallurgy, wood and electricity.
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