Algeria Set to Join WTO, Sign US Free Trade Agreement
By Tim Kennedy
WASHINGTON, 5 December 2004 - “Our economy is based too much on hydrocarbons. We must diversify our economy. If not, Algeria will become lost in the global marketplace,” Abdelhamid Temmar, chief economic counsel to President Abdelaziz Bouteflila, said last week during meetings with finance and trade leaders in Washington. “We have to reform our banking system. We have to open our land markets for foreign investment. And we have to promote the private sector, which - quite frankly - is disappointingly too small.”
Presidential financial advisors are seldom so candid, but Algeria - and its successful handling of its nearly bankrupted economy - is a unique case. Virtually abandoned by investors in the late 1980s due to decades of violent political unrest, the country had an unemployment rate of 32 percent, negative economic growth and a debt load that was about to exceed its annual gross domestic product.
Elected in 1999 on the promise of implementing political, economic and social reforms, President Bouteflila kick-started the Algerian economy with $18 billion worth of infrastructure improvements that yielded four years of steady economic growth (it now stands at a robust 6 percent), a 40 percent increase in individual purchasing power and a net increase of over 1.2 million jobs that has pushed unemployment down to a more acceptable 23 percent.
“In 2002, the situation in Algeria was quite bad. Instability was all around,” said Temmar at a dinner hosted by the Washington-based US-Algeria Business Council. “But when we look at the situation now, things have changed dramatically: We are enjoying political stability; democracy is flourishing; we’ve resolved many of our debt problems; and we’ve managed to put most of our economic woes behind us.”
Temmar said Algeria’s remarkable economic recovery is largely the product of an economic policy that believes “the role of government is to spend only what it should spend while allowing the economy - with all its traditional market forces - to do what it should do.”
To accomplish this, said Temmar, Algeria has based its economic doctrine on two propositions: First, the country must have a free market; second, Algeria must become integrated in the global economy. “We live in a globalized world,” Temmar added. “In order for us to succeed we must seek out and find markets where we can compete.”
Temmar’s early December visit to Washington was the culmination of months of negotiations that will likely see Algeria join the World Trade Organization (WTO) in 2005.
Membership in the WTO will enable Algeria to take the important step of signing a Free Trade Agreement (FTA) with the United States. Temmar and leaders from key sectors of the Algerian economy used their Washington visit to pay calls on the World Bank, the International Monetary Fund and the White House Office of the US Trade Representative.
“The Trade and Investment Framework Agreement Council discussions between the US and Algeria were extremely productive,” Cathy Novelli, assistant US trade representative for Europe and the Mediterranean told Arab News. “We advanced our bilateral economic agenda in such areas as investment, and we also held informative talks on Algeria’s WTO accession. We have a rich list of opportunities to follow up on over the next year.”
Temmar said Algeria has already enacted many reforms, including, the reorganization of its tariff system, reform its tax laws and enacting legal protections for investors. “Ultimately, we have done our best to create a good business environment that is enticing to business,” he added. “But our work is not finished, and we hope the international business community will help up finish what we have started.”