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Algeria-EU Association Agreement under revision: toward a balanced and mutually beneficial partnership

Algeria-EU Association Agreement under revision: toward a balanced and mutually beneficial partnership

Dzair Tube | 19th March 2024

By Dr. Hana Saada

The Algeria-European Union (EU) Association Agreement, signed in 2002 and implemented in 2005, has long been a subject of contention for Algeria. Its revision is now underway by both parties, marking a significant development in their bilateral relations. During a gathering organized by the EU delegation in Algeria and the Algerian Agency for Investment Promotion (Aapi) on “Business Climate in Algeria,” Simone Petroni, the Deputy Head of Mission of the EU delegation in Algeria, reiterated that both the EU and Algeria are committed to revising the association agreement to strengthen bilateral partnership and foster cooperation based on mutual benefit.

Current Agreement Imbalance

The decision to revise the Algeria-EU Association Agreement reflects a renewed engagement between the two parties, particularly with Algeria adopting a new approach centered on enhancing its economic strengths and investment opportunities. Despite the agreement being in force for over a decade, Algeria’s economy has not fully benefited, with EU investments in Algeria remaining relatively low. The total EU investments in Algeria from 2005 to 2022 amounted to only $13 billion, representing a mere 5% of the total trade value between the two parties, which exceeded $340 billion during the same period.

Call for Balanced Trade and Investment

Arezki Yahiaoui, representing the Ministry of Foreign Affairs and the Algerian community abroad, urged EU operators to increase their investments in Algeria. He emphasized that the current economic climate presents an opportune moment for both partners to revisit the agreement. Algeria, as a major and reliable energy supplier to its European counterparts, seeks to strengthen its non-hydrocarbon exports while rationalizing imports, particularly by prioritizing local production and potential exports.

Prioritizing a “Win-Win” Partnership

President Abdelmadjid Tebboune’s call for a comprehensive review of the agreement reflects Algeria’s commitment to achieving a mutually beneficial partnership. An assessment of the agreement’s impact on Algeria’s foreign trade from 2005 to 2015 revealed significant trade imbalances, with Algerian exports outside the hydrocarbon sector to the EU falling short of $14 billion, while imports from the EU amounted to $220 billion. Additionally, Algeria incurred substantial customs losses estimated at nearly $5 billion.

Opportunities for Dialogue and Reform

The EU’s readiness to listen to Algeria’s proposals and improve the agreement, as expressed by Josep Borrell, the EU High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission, signals a positive step toward strengthening the partnership. Algerian authorities have already identified key areas for revision, including measures to protect domestic industries and safeguard against market saturation by foreign goods.

Looking Ahead

The revision of the Algeria-EU Association Agreement presents a significant opportunity to rebalance trade relations with the European economic powerhouse. Algeria’s new economic policy aims to reduce imports, increase exports, and attract foreign investments, aligning with the goals set forth in the agreement’s initial signing in 2002. As the revision process unfolds, both parties will explore avenues for fostering a more equitable and prosperous partnership, reflecting Algeria’s growing role in the international arena.

 source: Dzair Tube