Now is the time to take stock for the Algeria – European Union Association Agreement. Signed in 2002 and entered into force in 2005, this agreement provided for a free trade area in 2017, before being postponed to September 2020.
But the sharp drop in oil prices has forced Algeria to take measures to safeguard its economy to preserve its foreign exchange reserves, by increasing restrictions on imports.
If on the Algerian side, the complaints are linked in particular to the weakness of European investments, visa restrictions and generally an agreement favorable to the EU, on the European side, the complaints are linked to the measures taken by the Algeria to reduce imports.
The European Union (EU) has drawn a negative assessment of the relationship between it and Algeria within the framework of the Algeria – EU association agreement, denouncing the restrictive measures introduced by the Algerian government “in contravention” with said agreement.
“The EU is affected by the restrictive trade measures introduced by the Algerian government in contravention of the Association Agreement,” says the European Union in its report on the state of EU-Algeria relations within the framework of the renewed European neighborhood policy covering the period between April 2018 and August 2020.
“Since 2015, Algeria has introduced a series of protectionist measures, citing the deterioration of the balance of payments due to the fall in the price of oil,” says the EU. “These measures include: until the end of 2019, a system of non-automatic import licenses for certain products (vehicles, cement, concrete reinforcing bars); from January 2018, the suspension of the importation of 45 product families (851 tariff positions) and the increase in customs duties (up to 60%) for 32 families of finished products (129 tariff positions); finally, since January 2019 a “provisional additional safeguard duty” (DAPS), tax equivalent to customs duties, between 30% and 200% of the value of the imported goods, affecting 1095 tariff positions ”, details the report.
EU talks about very negative impact on its businesses
Claiming that these measures are “unprecedented in the region on European operators”, the European Union indicates that their combined impact has been “very negative” on the latter. “During the period 2015-2019, the export by the EU27 of products affected by these restrictive measures fell by more than 50%, from 2.722 billion euros in 2015 to 1.348 billion euros in 2019”, fact know the report.
The criticisms of the European Union do not stop there. The report notes that “other measures taken in 2019 on the terms of payment for imports are also hurting trade. ”
The European Union cites in this context as a first example “the circular published by the Association of Banks and Financial Institutions (ABEF) [which] only authorizes import operations for contracts using, as far as possible, the FOB incoterms clause. The ABEF also imposes a ’priority’ ’use of the national flag as well as a minimum payment period of 9 months to commercial banks,” the report said.
“These measures have provoked strong reactions from European exporters as well as from their Algerian customers”, denounces the EU in its report, adding that “these modalities were relaxed” at the end of December 2019. “At the same time, ABEF imposed on importers to place with a bank 120% of the value of the import at least 30 days before its delivery to obtain a letter of credit ”, it is reported.
“The negative effect of these measures is amplified by the lack of predictability and prior communication by the Algerian authorities,” the EU further deplores.
The report was also the opportunity for the European Union to take stock of its cooperation with Algeria and to look to the future of the bilateral relationship. “The pace of this cooperation was more intense in the first part of the period covered by this report; then it suffered the cadence of political developments and, ultimately, the impact of the COVID-19 pandemic, “says the EU.
The EU is keen on respecting trade clauses
“The EU will remain ready to support the reforms announced by Algeria, in particular in terms of governance, diversification of the economy and improvement of the business and investment climate”, supports the report, tacitly warning Algeria on the need to respect the trade clauses of the association agreement.
“It will be necessary to ensure that trade takes place in a framework which respects the rules agreed upon jointly,” warns the EU. “Finally, regional stability and cooperation in the field of Immigration and mobility will continue to feature prominently on the partnership agenda, ”the report concludes.
According to the Algerian Ministry of Commerce, Algerian imports from the EU have increased from $ 9 billion to $ 21.099 billion in 15 years (2003-2018), an increase of nearly 150%. At the same time, Algerian exports, consisting mainly of oil and gas, increased from $ 14.470 billion in 2003 to $ 23.652 billion in 2018, an increase of 63.45%.
Algeria imported 320 billion dollars worth of goods between 2005 and 2019 from the European Union while its non-hydrocarbon exports to the same area and during the same period are paltry in the order of 15 billion dollars, according to the president of the National Association of Algerian Exporters, Ali Bey Nasri.
