Morocco amends trade agreement to curtail Turkish imports

Turkish exporters suspected of fraudulent practices aimed at flooding market.
Thursday 15/10/2020
A cargo ship moored at the Tanger-Med port complex in Ksar Sghir, near the northeastern Moroccan port city of Tangiers. (AFP)
A cargo ship moored at the Tanger-Med port complex in Ksar Sghir, near the northeastern Moroccan port city of Tangiers. (AFP)

RABAT- The Moroccan government imposed further restrictions on products manufactured in Turkey for a period of five years. It also imposed strict restrictions on Turkish store chains in Morocco, and warned it would close them if they do not comply with measures aimed at promoting Moroccan industry.

Under the new measures, customs duties on textiles bearing Turkish seals will increase by 90%.

An employee of Still Nua’s fashion works at a textiles factory in an industrial park connected to a free-trade zone in the Moroccan city of Tangiers. (AFP)
An employee of Still Nua’s fashion works at a textiles factory in an industrial park connected to a free-trade zone in the Moroccan city of Tangiers. (AFP)

The agreement also stipulates that the Moroccan side will not apply any other duties on imports of Turkish origin, except those covered under articles 18 and 19 of the free trade agreement between the two countries.

The Moroccan trade ministry also required Turkish store-chain BIM, which sells Turkish products all over Morocco, to have half of its displayed merchandise be Moroccan-made. It warned that if it does not comply, the 500 stores owned by the chain will be closed.

Moroccan Minister of Industry, Trade, Green and Digital Economy Hafid El Alami announced at the beginning of this year that Morocco had a $2 billion annual deficit in commercial relations with Turkey. He said the deficit had prompted Rabat to look for ways to reconfigure commercial relations between the two countries.

He acknowledged that his ministry is fighting companies that want to flood the Moroccan market, and that there is a problem in the Moroccan textile sector caused by Turkey. The minister accused Turkey of flooding the Moroccan market with clothing items, suppressing job opportunities for Moroccans.

Mohamed Yaouhi, a professor of economic sciences, told  The Arab Weekly that Morocco has suffered from fraudulent activity by Turkish companies that export products from third countries. This has flooded the Moroccan market, as Turkey benefits from exporting goods to Morocco without duties within the framework of the free exchange agreement between the two countries.

Yaouhi pointed out that the new version of the agreement seeks to avoid possible fraud by paying attention to the product’s country of origin. He also noted that the gradual elimination of customs duties should give Moroccan industries time to adapt to the competition.

The agreement concluded with Turkey stipulates that the Moroccan-Turkish joint committee should convene 3 months before the expiration date of the first five-year period to assess whether there is a need to extend the agreement an additional 5 years.

Article 17 of the free trade agreement between the two countries has been amended to enable the two parties to take temporary evaluation measures for a limited period, in the form of an increase in customs duties.

In this regard, the ministry of economy, finance and administrative reform confirmed on Sunday a decline in imports of ready-made clothing merchandise from Turkey and some European and Asian countries. The imported quantities amounted to approximately 6,655 tonnes, with a total financial value of 1.24 billion dirhams ($154 million) for the first eight months of 2020, compared to 10,000 tonnes during the same period last year, with a total financial value of more than 1.63 billion dirhams ($176 million).

Moroccan imports of Turkish ready-to-wear clothes, which have inflicted great damage on the local ready-to-wear industry, have been greatly affected as a result of the almost total halt in commercial exchange due to the outbreak of the COVID-19 pandemic.

That is why the amended agreement approved by the Moroccan government stipulates that the total value of imports of products subject to these measures should not exceed 15% of total imports of manufactured products from the other party.

Morocco is linked by free trade agreements to 56 countries.

Yaouhi emphasised that the national economy has suffered great losses due to free trade agreements with a group of countries or economic groupings, including Turkey, due to weak competition within the national economy and Moroccan companies’ reliance on the protectionist ISO umbrella, including customs duties, import licenses and a host of protectionist measures.

In this context, the Moroccan minister of industry, trade and green and digital economy committed to protecting the Moroccan economy and job opportunities in the country from being flooded with Turkish textiles through the window of the free exchange agreement between Morocco and Turkey, saying this will never be allowed.

A store that belongs to BIM discount grocery chain operating Morocco. (Facebbok)
A store that belongs to BIM discount grocery chain operating Morocco. (Facebbok)

Yaouhi believes the new draft agreement aims to protect emerging industries and give them an opportunity to adapt to market conditions and gain strength before facing potential competitors, indicating that customs duties alone will not protect emerging industries, which would need continued support.

The impact of these new measures was clear on Turkish trade chains, as Turkish companies said that they faced new delays in recent weeks in exporting clothing merchandise to countries in North Africa.

Reuters reported that ready-to-wear exporters have complained about unusual requests for documents and delays up to five times the usual customs clearance time in Morocco and Algeria.

The complaints come as textile and clothing manufacturers in North Africa, the Middle East and Eastern Europe seek to take advantage of disrupted global supply chains due to the coronavirus pandemic. Giyasettin Eyyupkoca, president of the Laleli Turkish Industry and Business Association, said Morocco has long imposed the highest possible customs duties on Turkish imports in order to support domestic production.

But he said that in the past few months, exporters have faced “informal and undocumented” delays at the border. “In fact, it takes 10 to 12 days to clear our goods from customs instead of two days as usual,” he added.

Turkey exported $2.2 billion worth of goods to Morocco last year, leading to a trade deficit for Rabat and prompting some Moroccan lawmakers and industry officials to complain about unfair competition. Turkish sector groups did not provide the names of the companies that filed the complaints.