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Russia includes Morocco in a North African free trade zone project

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Russia includes Morocco in a North African free trade zone project

Atalayar | 8th August 2023

By Élise Pacot

A few days after the Russia-Africa Summit, Russia has announced that it is working on a free trade agreement with several North African countries, including Morocco.

During a meeting with his Cabinet of Ministers, Russian President Vladimir Putin announced his intention to sign free trade agreements with several North African countries, namely Algeria, Morocco, Tunisia and Egypt. According to the TASS press agency, the President of the Russian Federation has set himself the goal of transforming the existing political trust between Moscow and the North African countries into economic cooperation.

“We are preparing agreements on a free trade zone with Egypt, Morocco, Tunisia and Algeria. It’s the whole of North Africa. There are many more points of development on the continent, and there are some very interesting countries”, said the Russian head of state at the meeting.

According to Vladimir Putin, the North African free-trade zone will be integrated into the Eurasian Economic Union (EEU), which already offers a common economic space on the model of the European Union with Belarus, Armenia, Kazakhstan and Kyrgyzstan.

This initiative follows on from the discussions held at the second Russia-Africa Summit on 27 and 28 July, the results of which were reported by the Minister for Economic Development, Maxim Reshetnikov. During the meeting on August 2, Reshetnikov stated that African countries consider Moscow to be a reliable partner in the fight for economic independence.

“African countries are moving from the fight for political sovereignty and independence to the fight for economic sovereignty. And in these processes, they see us as a reliable partner, ready to give Russian companies the opportunity to develop and win. And we are ready to share our experience and technologies”, he declared.

Morocco’s involvement in this project therefore confirms the good relations between Rabat and Moscow. At the Russia-Africa Summit, the Kingdom, through its head of government Aziz Akhannouch, reiterated its determination to strengthen bilateral relations and trade with the Russian state, Morocco World News reported.

“Today, we note that in his speech, Russian President Vladimir Putin praised all the efforts made by His Majesty the King and expressed his pride in the solid relations with Morocco and highlighted their future prospects”, noted Mr Akhannouch.

Morocco, Russia’s third-largest trading partner in the region

On the sidelines of the summit on 27 and 28 July, Russian Federation spokeswoman Maria Zakharova told the Moroccan press agency (MAP) that the two countries enjoy “very good” cooperation relations in a number of areas, including the economy, finance, tourism and business. She also added that Moscow and Rabat have “a solid legal basis for this cooperation”.

Indeed, in 2002, Morocco and Russia signed an agreement for the development of a strategic partnership, which was strengthened by the signing in 2016 of the Declaration for the deepening of the strategic partnership. These agreements have strengthened cooperation in the fields of agriculture, energy, fisheries, science and technology, culture and higher education.

Today, the Kingdom is Russia’s third largest economic partner in the region, although the volume of trade fluctuates from year to year. In 2021, trade rose by 42 % compared to 2020, reaching 1.6 billion dollars.

According to an article in the Moroccan media 360, Moscow’s main exports are chemicals, petrochemicals, metals, high-tech products, foodstuffs, hydrocarbons and derivatives (ammonia), while Rabat’s main exports are agri-food products (citrus fruit, tomatoes, etc.) and fresh produce (fish). In addition, since the war in Ukraine, diesel imported from Russia has risen from 66,000 tonnes in 2021 to 735,000 tonnes in 2022.

According to the Ministry of Foreign Affairs spokeswoman, trade has increased by 25 % since 2021, a trend that will continue into the first months of 2023.

Russia-Africa trade relations continue to grow

The increase in the volume of trade with Russia is not a phenomenon specific to the Kingdom of Morocco. According to the TASS agency, Maxim Reshetnikov noted that economic cooperation with African countries has been growing since 2019. “Last year, it amounted to 18 billion dollars. In the first half of the year, it increased by 35 %. On the one hand, growth over the last 20 years is tenfold. On the other hand, for example, with the EEU countries, where the population lives seven times less than in Africa, trade turnover is 4.6 times higher”, he said.

An analysis by the 360 media reports that Russian-African trade is heavily concentrated in four countries: Egypt, Algeria, Morocco and South Africa, hence Russia’s interest in creating a free trade zone in North Africa. Yet trade between Moscow and Africa remains low overall. In 2021, it stood at $18 billion, including $4.7 billion in foodstuffs. Compared with the 282 billion dollars recorded in 2022 between China and African countries, Russian-African trade is negligible.

Nevertheless, of the four countries in the project, three are among the top three in terms of Russian-African trade. Russia’s main trading partner in Africa is Egypt, where the volume of trade between the two countries reached 4.7 billion dollars in 2021. Algeria comes second, with trade worth 3 billion dollars in 2021.

Towards a better balance in economic relations?

Through these new agreements, Russia is seeking to increase and balance trade cooperation, since 80 % of exports in the trade structure are Russian. “It is also necessary to increase imports. There is also a regional imbalance: over 65 % of trade turnover last year went to six North African countries. It is important to intensify contacts with other countries”, said Reshetnikov. As a result, economic partnership agreements will be drawn up with other African countries in addition to those covered by the free trade area.

In Morocco, the balance of trade between the two countries was 778.4 million dollars in favour of Russia in 2021. According to 360, this imbalance can be explained by the low supply of goods from the countries of the region to Russia, the concentration of trade from the region on the European market, and the overall low value of products exported (particularly agricultural products) by the countries of the region compared with those imported. In reality, the departure of Western operators from Russia could represent an opportunity for Morocco to promote the export of goods from sectors such as the automobile, textile and agri-food industries.

To solve this problem, the head of the Ministry of Economic Development plans to increase support for insurance for deliveries via EXIAR (Russian Export Credit and Investment Insurance Agency), as well as dealing with the problems of connecting African banks to the Russian Financial Messaging System, switching to rouble payments, and developing the mechanism for free trade agreements. Negotiations are reportedly currently underway with Egypt, while the issue with Algeria, Morocco and Tunisia is being addressed.

 source: Atalayar