Tunisia trims controversial trade deficit with Turkey by taxing imports

Tunisia’s trade deficit with Turkey grew from approximately $208 million in 2010 to more than $707 million in 2017.
February 11, 2018
Tunisian female workers at an apparel factory in Sfax. 			(Reuters)
Protecting textiles. Tunisian female workers at an apparel factory in Sfax. (Reuters)

TUNIS - Tunisia slightly reduced its trade deficit in January after authorities imposed new custom duties on Turkish products for the first time in seven years.

The decrease was marginal given the scope of Tunisia’s economic woes. It was a sign that new policies, which include rebalancing the country’s economic partnerships and diplomatic priorities, were making headway.

The move was signed off on by Tunisian President Beji Caid Essebsi despite opposition from the Islamist Ennahda party, a partner in the country’s coalition government that has close ties with Turkey’s ruling Justice and Development Party.

Tunisia’s trade deficit with Turkey is its third largest, behind China and Italy. In 2017, the imbalance accounted for 12% of Tunisia’s trade gap. The mounting deficit became  controversial as secularist groups blamed Islamist influence since 2011 for being a factor in increased imports from Turkey.

Ennahda opposed the calls for curtailed Turkish imports and criticised the new measures as unfairly discriminatory against Turkey. Tunisian Islamists often tout Turkish President Recep Tayyip Erdogan’s economic policy as a model for Tunisia.

Tunisia’s trade deficit with Turkey grew from approximately $208 million in 2010 to more than $707 million in 2017, Tunisian government figures indicated.

Turkish imports — from sunflower seeds to dried figs to wedding dresses — are popular in Tunisia. They are often described by traders as higher quality than Chinese products and cheaper than the Tunisian equivalents. However, their effect on the Tunisian economy has been devastating to some industries, causing farming acreage to shrink and factories to shut down.

“Farmers in Beja, Mateur and Bizerte incurred huge losses because of the imports of Turkish sunflower seeds. Sunflower farmed areas shrank from 24,000 hectares in 2011 to 4,000 hectares in 2016 with the number of working days falling from 180,000 to 6,000,” said Naceur Amdouni, a farmer who heads the local branch of the country’s farmers’ union. “Why do they undermine a culture that benefits the soil and the farmers by importing such seeds?”

Another industry that has been hit hard by the trade imbalance is textile, which has seen 300 enterprises close and 40,000 workers lose jobs in the past seven years, trade union officials said.

Tunisia has about 1,800 textile factories employing more than 200,000 workers, the majority of whom are women. Around 1,000 enterprises specialise in exports.

In 2011, when Tunisia’s Trade Ministry was controlled by Ennahda, Turkey began importing products such as timber, construction material and sunflower seeds, which are outside the scope of a 2004 trade agreement between the two countries.

When that agreement was signed, Tunisia was eyeing Turkey’s $100 billion market to expand exports and balance trade. It imported fabric from Turkey, transforming it in Tunisian textile plants to products sold in Europe.

In 2001, however, the Tunisian market was flooded by Turkish products of all sorts.

“A deep deficit with Turkey came into the open after 2011,” said Tunisian economists Mariem Brahim and Fakhri Korbi in an analysis paper. “It should be noted that the overfilling deficit with Turkey is caused mainly for 2015 by the increase of imports of clothes and other products for local consumption.”

“On one hand, these imports do not contribute to the economic development and, on the other hand, their equivalents are available on the local market,” they added.

In December, Tunisia’s parliament voted to raise taxes on Turkish imports by up to 27%. Members of Ennahda walked out during the vote to protest the legislation, which went into effect January 1.

On February 6, the government noted the trade deficit was down 83% in January compared to the same period last year.

19