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Moroccans unsettled by free-trade deal with US

The Daily Star, Beirut

Moroccans unsettled by free-trade deal with US

Agreement leaves analysts skeptical about disparity between 2 markets

By Khatoun Haidar

18 March 2004

The debate over the bilateral free-trade agreement (FTA) signed March 2
between Morocco and the US took the Moroccan national scene by storm.
Never did the choice of a foreign commercial policy generate such a
controversial reaction in the Moroccan public opinion. Many view it as a
first step in the US Greater Middle East Initiative, a political
statement rather than just a commercial issue.

Already in 2002 when the FTA discussions were started in Washington
during a meeting between Moroccan King Mohammed VI and US President
George W. Bush, the principle of such an agreement was received with
suspicion in Morocco. The only other regional countries with bilateral
deals with Washington are Israel and Jordan.

Aside from political rhetoric, a rational and legitimate debate was
mirrored in the press.

“This accord will advance the national economy, generate thousands of
jobs, and insure the well being of the Moroccan people” said supporters.

“Given the disparity between the two economies, the accord will destroy
our productive sectors. US imports will condemn local production and
suppress thousands of jobs,” said FTA opponents.

A close look at the deal gives some credibility to the objections. The
FTA clause will mainly benefit US products subject in Morocco to 20
percent custom duties, compared to 4 percent restrictive tariffs on
Moroccan products entering the US. This was reflected by a March 2 press
release by the office of the US Trade Representative, saying: “This is
the best market access package negotiated yet with a developing country
in a US free-trade agreement.”

Agricultural products usually subject to special clauses aimed at
protecting the basic sectors of emerging markets, have to the dismay of
many Moroccans, been subject to the same immediate free access clause
Morocco will provide duty-free access immediately on products such as
pistachios, pecans, frozen potatoes, whey products, processed poultry
products, pizza cheese and breakfast cereals. Wheat, a highly political
issue in Morocco, is the only US product to stay subject to quotas.
Eight million people in Morocco depend on production of wheat - the main
crop produced by small farmers - for their livelihood.

Against this, the US was keen on protecting its agricultural sector. The
FTA states that there will be no immediate free access: “The US will
phase out all agricultural tariffs under the deal, most in 15 years. An
agricultural safeguard will be available in the event of significant
price decreases for certain products.”

Commenting on this, Mohammed bin Arouss, a Moroccan farmer said: “They
are selling us promises. Who know what will happen in 15 years?”

On the other hand, the Moroccan textile sector stands to gain from the
agreement, especially in view of the clause that makes textiles and
apparel duty-free if imports meet the FTA’s rule of origin.”

AMITH, the Moroccan textile and clothing manufacturers association,
expects that the sector’s exports, estimated at $30 million, could under
the new deal witness a six-fold growth in a short period of time. This
will have a positive outcome on economic growth in Morocco.

According to the Trade and Industry Chamber of Casablanca (CCIS), the
textile clothing sector represents 43 percent of the country’s
industrial exports, accounting for 14 percent of Morocco’s overall
industrial production with a yearly turnover of $2.8 billion, employing
196,213 people, or 39.5 percent of total industrial employment. Unique
to this sector is that female staff form 66 percent of the total number
of persons employed by the industry.

The deal’s most controversial aspect remains the two titles in the
clause on the enforcement of intellectual property rights relating to
generic medicine. They could complicate and delay the access of
pharmaceutical industries to generic molecules once they enter the
public domain.

Health Minister Mohammed Cheikh Biadillah stressed that “gains in the
field of generic medicine will be preserved” adding that, in the case of
an epidemic, the Doha deals stipulate that “health overrules all
accords.” However, the dealstill seems to be undermining the efforts of
pressure groups acting within the framework of the World Trade
Organization on behalf of poor countries to insure access to affordable
medication for all. US pharmaceutical giants will be able through this
deal to circumvent future gains.

Moroccan Premier Taieb Fassi Fihri gave assurances regarding some
aspects of the agreement, mainly on generic drugs, agriculture and
intellectual property, insisting that “Morocco’s rights and interests
are preserved.” Many analysts remain skeptical, stressing that the deal’s
political implications reach beyond its technical framework, and that
Morocco will not be able to cash directly on the price of its alignment
with the US.

In fact, the most significant returns will be indirect, coming from an
increase in US investment encouraged by the clause aimed at establishing
a secure and predictable legal framework for investors in Morocco.
Strategically located in North Africa, at the doorsteps of the European
market, Morocco could thus become an attractive location for US