Issues covered by the WTO’s committees and agreements


Morocco: January 1996

Liberalization of the trade and investment régimes - including significant tariff cuts, reduction of quantitative restrictions and a major programme of privatization - had helped to underpin a period of strong growth and low inflation, with a positive impact on external debt.

22 January 1996


The Trade Policy Review Body of the World Trade Organization (WTO) conducted its second review of Morocco's trade policies on 17 and 18 January 1996. The text of the Chair's concluding remarks is attached as a summary of the salient points which emerged during the two-day discussion.

The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.

The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including: its domestic laws and regulations; the institutional framework; bilateral, regional and other preferential agreements; the wider economic needs and the external environment.

A record of the discussions and the Chair's summing-up, together with these two reports, will be published in due course as the complete trade policy review of Morocco and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994), Chile (1991), Colombia (1990), Costa Rica (1995), Côte d'Ivoire (1995), Egypt (1992), the European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mauritius (1995) Mexico (1993), Morocco (1989 & 1996), New Zealand (1990), Nigeria (1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), Slovak Republic (1995), South Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991), Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uganda (1995), Uruguay (1992) and Zimbabwe (1994).

Back to top

Over the past two days, the Trade Policy Review Body has conducted the second review of Morocco's trade policies and practices. These remarks, intended to summarize the salient points, are made on my own responsibility and do not substitute for the Body's collective evaluation and appreciation. The full discussion will be reflected in the minutes of the meeting.

The discussion developed under four main themes: (i) macroeconomic environment and general policy trends; (ii) Uruguay Round implementation process; (iii) regional agreements and the multilateral system; and (iv) individual policy issues.

Macroeconomic environment and general policy trends

Members commended Morocco on the breadth of the economic reform that it had implemented autonomously since the early 1980s. In this process, many previously protected manufacturing and services sectors had been exposed to competition. In turn, liberalization of the trade and investment régimes - including significant tariff cuts, reduction of quantitative restrictions and a major programme of privatization - had helped to underpin a period of strong growth and low inflation, with a positive impact on external debt.

Some members saw signs that the pace of reform had slowed recently and that the emphasis had shifted from external liberalization towards fiscal stabilization. In this context, questions were raised concerning the economic impact of severe droughts in recent years and their effect on the liberalization agenda. Members also expressed concern about delays in the legislative process, with a large number of draft laws awaiting adoption or promulgation. Morocco was asked to notify new laws as these were implemented.

Several comments focused on the Government's continuing involvement in the economy. Questions were asked regarding the rationale for existing duty exemption schemes, seeking to shield export industries from inefficiencies in domestic sectors. It was felt that a broader approach to liberalization might both reduce the need for such compensatory intervention, and promote economic diversification and backward integration of export sectors. Members also enquired about any specific policy initiatives to broaden Morocco's export base and diversify export destinations.

In reply, the representative of Morocco stressed his Government's continued strong commitment to an open, rule-based trading system and to domestic deregulation and privatization. Morocco had embarked on an irreversible process of economic reform with the final objective of full external and internal liberalization. This would lead to the deregulation of the transport sector and the privatization of a number of public enterprises, including two refineries and a development bank. Important changes were being prepared in the telecommunications area, and the electricity market had been opened to a major private project. No areas were closed to privatization and a second list was in preparation containing all remaining firms. Experience with privatization was positive, including in the creation of employment. There had been a strong response by the private sector to new privatization bonds recently issued. A precise timetable for further liberalization was to be announced.

Fundamental economic legislation was currently being changed. A new investment code had entered into force on 1 January 1996; and a new commercial code, company legislation, a competition law, and intellectual property legislation were currently in the parliamentary or governmental process. To accelerate administrative procedures, the setting up of commercial courts was scheduled for 1996.

Morocco had made considerable progress in diversifying the regional structure of its exports. This process was supported by export promotion initiatives and, more generally, by the implementation of the WTO Agreements. Morocco attached considerable importance to developing its commercial relations with North and South America, Asia, the Middle East and Africa.

Uruguay Round implementation process

While expressing full appreciation for Morocco's rôle in, and contribution to, the Uruguay Round and the significance of the commitments made, members sought clarification on the domestic implementation process. Particular reference was made to areas such as safeguards, anti-dumping, subsidies and countervailing measures. Delays in the implementation of agricultural tariffication were observed. Questions were also raised on the current scope of import licensing and prior declaration requirements and the use of sanitary and phyto-sanitary controls.

Noting that tariffication had increased the number of rates, members asked about any further initiatives to simplify the tariff structure, attenuate tariff escalation and align all official rates with GATT bindings. Several comments focused on the restrictive effects and administrative costs resulting from the cumulation of high tariffs, in particular in agriculture, with other import-related charges and levies, including the Prélèvement Fiscal à l'Importation (PFI). Members also raised questions about the fiscal policy constraints that might arise from tariff cuts.

Members recognized that Morocco had assumed a commendable level of commitments in services sectors. They encouraged Morocco to participate actively in the ongoing negotiations on maritime transport and basic telecommunications. Some participants expressed concern about arrangements affecting the movement of personnel, including visa requirements.

The representative of Morocco responded that a new External Trade Law had been adopted by the ministries involved and was to be submitted soon to the Government Council. New safeguard legislation was currently being developed in accordance with the relevant WTO Agreement. For the time being, the administration was authorized to introduce, on a temporary basis, a prior import declaration to monitor imports of products causing, or threatening to cause, injury to domestic producers. While Morocco's existing External Trade Law provided for anti-dumping and countervailing measures, these had not been used to date. The Prior Import Declaration (DPI) could serve to monitor imports threatening prejudice to domestic production.

Agricultural liberalization was an irreversible part of the structural adjustment programme. Since 1994, importation of farm products had been liberalized, with the exception of certain basic food products on which consumption subsidies were being granted. Import licensing requirements for sugar, vegetable oils, cereals and their derivatives were being phased out in the first half of 1996, terminating by 1 June. Accompanying measures included the establishment of tariff equivalents, which were generally below the GATT bound levels; reforms in the marketing system; creation of security stocks; the de-monopolization of sugar imports; and the liberalization of oilseed processing industries. Agricultural tariff equivalents had been calculated in accordance with the relevant WTO provisions; these were currently applied on meat and dairy products. Due to the 1995 drought and a change in the fiscal year, implementation of the reduction commitments for 1995 had been postponed to July 1996. From that date, import licensing requirements would be confined to products deemed sensitive for health and security reasons, including explosives, used tyres, and second-hand vehicles.

From 1 January 1996, the structure of the Moroccan tariff had been changed, abandoning the previous distinction between official and applied rates. The new tariff schedule contained three columns; the import tariff, the Prélèvement Fiscal à l'Importation (PFI) and their aggregate. The new tariff would be notified to the WTO. The transitional fiscal law for 1996 entailed a general reform of the system; it was aimed at simplifying, harmonizing and improving the transparency of border taxation. The resulting improvement in the fiscal and economic environment would help to reduce contraband trade. Rates on some sensitive products had been lowered; for example, machinery and equipment carried tariffs of no more than 2.5 per cent, while tools, spare parts and electronic products were subject to a 10 per cent tariff. The PFI was not levied on such products. At the same time, the number of different tariff rates had been brought down from thirteen to six. The fiscal effects of these tariff cuts could be partially offset by a small increase and broadening of scope for VAT. The para-fiscal levy of 0.25 per cent was intended to compensate the private sector for its technical controls on exports, consistently with Article VIII of GATT.

Morocco had assumed very substantial commitments, both in terms of sectoral coverage and level of liberalization, under the GATS. These included sectors such as telecommunications, transport, financial and professional services, construction, tourism and environmental services. In most cases, national treatment was granted. Morocco continued to participate actively in the ongoing negotiations on maritime transport, basic telecommunications and professional services. Visa requirements for business people were not generally restrictive; a solution would be sought to problems raised in this connection.

Regional agreements and the multilateral system

Morocco's multilateral trade policies coincided with efforts to intensify preferential ties with the European Union and North African countries; participants stressed the need to notify the resulting agreements under WTO provisions, particularly under Article XXIV of GATT. Details were sought on the recent Association Agreement with the EU, Morocco's dominant trading partner, and the implementation agenda. Attention was called to the gradual liberalization of EU markets in the wake of the Uruguay Round, implying fiercer competition from third countries for Moroccan preferential supplies to the EU of fruit, vegetables and clothing.

The representative of Morocco noted that the new Association Agreement initialled with the EU, a natural extension of the previous Cooperation Agreement, would lead to a free-trade area. It was in conformity with Article XXIV of the GATT and would be notified on ratification. Agriculture was included in the Agreement and progressive liberalization was foreseen. A commercial and tariff agreement with the Union du Maghreb Arabe (UMA) had not yet entered into force, pending the completion of implementing measures by member States.

It emphasized strongly that Morocco did not ignore the development of relations with other trading partners: the direction of reforms undertaken on an m.f.n. basis was clear. Trade was developing well with non-European countries.

He felt that Morocco was well placed to compete effectively on the EU's textile and clothing market, even after full liberalization under the Uruguay Round Agreement. The implementation period would be used for positive adjustments and further diversification of the sector. Geographic proximity and the flexibility of the industry would help support the necessary adjustments. He was also confident that Morocco's fruit and vegetable sector would further benefit from recent export diversification policies. The Association Agreement with the EU was expected to improve trade flows in this field significantly from the year 2000 onwards.

Individual policy issues

Members took the opportunity to seek clarification on a wide range of policy programmes and measures. These included Morocco's new Investment Code; the future orientation of competition policy, including price deregulation; local content requirements in the motor vehicle sector; a tax on imported wood products; prior import declaration requirements on bananas; and initiatives against fraudulent trade practices.

In response, the representative of Morocco explained the main elements of the 1996 Investment Code. Enterprises meeting specified criteria, for example in terms of employment, could apply for benefits such as reductions in infrastructure-related charges and professional training. Morocco's new competition law provided for general price liberalization; price controls could be introduced only in exceptional circumstances for a limited period. The law, to be implemented in the course of 1996, would be phased in over three years. A National Competition Council would be set up as an independent judicial body.

Imports of motor vehicles were unrestricted, currently carrying a 17.5 per cent tariff and a PFI of 15 per cent which was considerably below the bound levels. As in many other developing countries, Morocco's initial industrialization efforts had relied strongly on the automobile industry, and a national content requirement of 60 per cent was introduced in 1981. However, due to uncompetitive pricing, the Moroccan market had been inundated by imports of old second-hand cars which, in turn, had a negative impact on road safety and the environment. To improve this situation, the concept of an "economic car" was developed, and the world's leading producers were invited to tender in mid-1994. Incentives were offered to ensure a local content of 50 per cent and a reasonable sales price. In June 1995, the Government signed an eight-year contract with the winning competitor, Fiat. In parallel, import tariffs were reduced to their current level which, in turn, would promote competition. The project met the relevant provisions for developing countries and would as soon as possible be notified under the WTO Agreement on Trade-Related Investment Measures.

To fight deforestation and preserve natural forests, a 6 per cent import tax on wood had been introduced in 1986. The tax was not discriminatory, being paralleled by an internal tax of 40 per cent.

After the banana market was liberalized in July 1994, a glut of imports, largely exceeding minimum access requirements, caused severe market disturbances in May, June and September 1995. In response, the Government had taken emergency surveillance measures and introduced a prior import declaration requirement for six months; this had now been terminated.

In addition to the tariff changes referred to, Morocco had taken several administrative measures to fight contraband trade. These included the restructuring and better funding of the competent customs services, and the simplification of customs procedures.

During these two sessions, we have had an extremely useful, informative and stimulating discussion. A very clear thrust and sense of direction - towards liberalization, modernization and opening up - has emerged. WTO members congratulated Morocco on the direction of reforms and the steps taken. We have greatly appreciated the fact that, reflective of Morocco's serious attitude to WTO, the Minister has come here personally with such a strong delegation. Finally, I would like to express my appreciation for members' participation in the meeting, and thank the discussants for their impressive contributions as well as the Secretariat for its preparatory work. Back to top