Rabat – The Moroccan Government Council approved on Thursday an amendment to Morocco’s free trade agreement with Turkey.
The amendment falls under Bill No 54.20, which Morocco and Turkey signed in Rabat on August 24, according to Morocco’s state media.
The bill and the amendment aim to impose customs duties, for a five-year period, on certain Turkish industrial products listed in the agreement “to reach 90% of the value of products from the most-favored-nation,” the source reported.
A most-favored-nation clause requires a country to provide any concessions, privileges, or immunities that it grants to one nation to all member states of the World Trade Organization. In short, the clause compels a state to respect the equal treatment of all countries.
The agreement stipulates that Morocco “will not apply any other duty having a similar effect to customs duties on imports from Turkey, except for the possibility of subjecting imports of Turkish origin, including products listed in Annex II of this Agreement, to measures in accordance with the provisions of Articles 18 and 19 of the Free Trade Agreement between Rabat and Istanbul.”
Morocco and Turkey signed a Free Trade Agreement in 2004. The agreement took effect in 2006.
The deal has caused controversy in Morocco. The North African country’s trade balance with Turkey has largely experienced a deficit since 2006. At the beginning of 2020, Morocco came close to dissolving the agreement.
In January, Minister of Industry Moulay Hafid Elalamy said Morocco loses $2 billion annually through its trade deal with Turkey. He added that the Turkish textile industry cost Morocco 44,000 jobs in 2017.
In February, Elalamy criticized the Turkish discount grocery chain BIM, saying the stores suffocate local shops and do not sell Moroccan products. The chain responded that only 15% of the stores’ merchandise comes from Turkey.
At the beginning of the year, Morocco and Turkey began reviewing their Free Trade Agreement but suspended negotiations due to the COVID-19 pandemic.
Morocco has already taken steps to counter its trade deficit with Turkey. The amended 2020 Finance Bill, which the Moroccan government and Parliament approved in July, included an import tax of 36% on Turkish textile and clothing products. The original import tax stood at 27%.