Tax News | 04 September 2012
Algeria delays implementation of FTA with EU
by Ulrika Lomas, Tax-News.com, Brussels
Algeria has won a trade concession from the European Union, according to which the EU-Algeria free trade agreement should be fully phased-in by 2020, and not by 2017.
The Algerian government has successfully asked for more time to fully lift tariff restrictions with the EU on imports of industrial products, under the new Free Trade Agreement (FTA) which entered into force on September 1, 2012.
Trade minister Mustapha Benbada has reiterated that the FTA is necessary to help Algeria diversify its economy. However, Benbada said that the existing association agreement with the EU cost Algeria USD2.5m in lost customs duties between 2005 and 2009, while investments from the EU have not been as strong as initially anticipated. At the same time, Algerian imports from the EU have increased dramatically.
The Algerian government has argued that it is favourable to opening its economy and progressively lifting trade and investment restrictions, but that it needs some more time to make sure the FTA is mutually beneficial. The government says it needs the time to reform its administration and its tax system, in order to make it less reliant on customs duties.
Under the new terms of the EU-Algeria FTA, tariffs will be gradually reduced for the next eight years, until they reach zero in 2020.