WORLD TRADE WT/TPR/M/8
8March 1996
ORGANIZATION(96-0843)
Trade Policy Review Body
17-18 January 1996
TRADE POLICY REVIEW
MOROCCO
MINUTES OFMEETING
Chairperson: H.E. Mrs. Anne Anderson
Page
I. INTRODUCTORY REMARKS BYTHE CHAIRPERSON 2
II. OPENING STATEMENT BYTHE REPRESENTATIVE
OFTHE KINGDOM OFMOROCCO 3
III. STATEMENT BYTHE FIRST DISCUSSANT 4
IV. STATEMENT BYTHE SECOND DISCUSSANT 5
V. STATEMENTS BYMEMBERS OFTHE TRADE POLICY REVIEW BODY 6
VI. REPLIES BYTHE REPRESENTATIVE OFTHE KINGDOM OFMOROCCO
AND ADDITIONAL COMMENTS 8
VII. CONCLUDING REMARKS BYTHE CHAIRPERSON 12WT/TPR/M/8 Trade Policy Review
Page 2
I. INTRODUCTORY REMARKS BYTHE CHAIRPERSON
1. TheTrade Policy Review oftheKingdom ofMorocco washeldon17and18January 1996.
Attheoutset, theChairperson welcomed thedelegation ofMorocco, headed bytheMinister ofTrade,
Industry andHandicrafts, HisExcellency Mr.Driss Jettou, andthediscussants (Mr.Stuart Harbinson
ofHong Kong andMr.OleLundby ofNorway).
2. TheChairperson recalled thepurpose oftheTrade Policy Reviews andthemainstages inthe
proceedings ofthemeeting. Copies ofwritten points submitted bythedelegations ofHong Kong,
theCzech Republic andCanada hadbeentransmitted tothedelegation ofMorocco; other delegations
alsosubmitted written questions shortly before themeeting. Incases where fullreplies could notbe
given, supplementary written replies would beprovided later.
3. Recalling thatintergovernmental organizations could attend meetings oftheGeneral Council
onthebasis ofadhocarrangements, theChairperson proposed thattheTrade Policy Review Body
invite EFTA, FAO, IMF, UNCTAD andtheWorld Bank, which hadrequested observer status, to
itsnextmeeting.Kingdom ofMorocco WT/TPR/M/8
Page 3
II. OPENINGSTATEMENTBYTHEREPRESENTATIVEOFTHEKINGDOMOFMOROCCO
4. Onbehalfofhisdelegation,therepresentativeofMoroccowelcomedtheholdingofhiscountry's
second Trade Policy Review under theWTO. Hestressed Morocco 'scommitment totheTrade Policy
Review Mechanism (TPRM), which hetermed avaluable toolinthecreation ofamultilateral trading
system based ontransparency. In1989 Morocco hadbeenoneofthefirstcountries tovolunteer to
submit itstrade policies forreview.
5. Following the1989review Morocco hadpursued theobjectives, adopted inthecontext ofthe
1983 Structural Adjustment Programme, ofreducing theexternal financial constraints, intensifying
economic liberalization, andstrengthening itsintegration intotheglobal economy. Through such
endeavours Morocco 'seconomy, despite unfavourable domestic andexternal circumstances, hadmade
asignificant recovery withareturn togrowth in1994, asharp improvement intheforeign debtindicators
andinflation brought under control. Privatization, anintegral partoftheadjustment process, wasalso
under way.
6. MoroccomaintainedpreferentialpartnershiprelationswiththeMediterranean,ArabandAfrican
countries. Thisapproach wascomplementary tothemultilateral policy towhich Morocco fully
subscribed. Therepresentative ofMorocco alsounderlined theimportance ofhiscountry 'srelationship
withtheEU,withwhich ithadrecently concluded anassociation agreement thatwasfullyconsistent
withtherelevant WTO provisions.
7. Likemostdevelopingcountries,anddespitetheopportunitiesformarketdiversificationprovided
bytheWTO Agreements, Morocco would havetobearsubstantial transitional costs linked tothe
liberalization oftheagricultural sector (astrategic sector forMorocco), theincreased costofimports
ofbasic foodstuffs andtheerosion ofpreferential margins. Hecalled ontheinternational community
andtheWTO tolendtheirsupport todeveloping countries soastoenable them toreapthebenefits
ofthemultilateral trading system.
8. Heoutlined theprogramme designed tobring Morocco 'slegislation intolinewiththenew
multilateral rulesanddisciplines contained intheWTO Agreements. Adraftamendment totheForeign
Trade Actwasbeing introduced; itsprovisions related totheimplementation oftariffequivalents and
safeguard measures. Intheareaofconstruction andpublic works, twonewtextsdealing withthe
qualification andclassification ofenterprises andtheapproval system forconsultancy bureaux hadbeen
adopted. Three draftlawsontelecommunications wereintheirfinalstages ofpreparation, andadraft
maritime codeandanewlawonintellectual property werebeing drawn up.TheLawonpriceregulation
andcontrols wastoundergo major changes, andadraftlawoncompetition wasbeing introduced.
9. Asweeping taxreform hadledtotheintroduction ofvalue-added tax(VAT), corporation tax
(IS)andthegeneral income tax(IGR), along withareduction intaxrates. Thesuccessive reforms
aimed atrationalizing andharmonizing thedomestic customs tariff hadreduced thenumber ofrates
andthetariff level, withtheexception oftariff equivalents introduced onagricultural products under
theterms oftherelevant WTO Agreement. Anewinvestment charter hadbeenintroduced topromote
thetransparency andharmonization ofconcessions andintegrate them intotheordinary law,aswell
astosimplify administrative procedures. Afreshimpetus hadbeengiven totheactivities oftheStock
Exchange aspartofthereform ofthefinancial sector.
10. Inconclusion, therepresentative ofMorocco stressed thathiscountry hadbeenthefirstto
signanddefinitivelyaccepttheWTOAgreements.Moroccowasfullycommittedtothegoalofachieving
asuccessful multilateral trading system under theWTO.WT/TPR/M/8 Trade Policy Review
Page 4
III. STATEMENT BYTHE FIRST DISCUSSANT
11. Thefirstdiscussant, Mr.Stuart Harbinson, acknowledged thattheKingdom ofMorocco had
expressedunwaveringsupportforthemultilateraltradingsystemandparticipatedactivelyintheUruguay
Round negotiations, aswellashosting theMinisterial Conference inMarrakesh inApril 1994which
gaverisetotheWTO.
12. Toitscredit, Morocco hadembarked onanautonomous liberalization process, inresponse
tothechallenges posed byfalling world phosphate prices anddrought. Impressive results hadbeen
achieved, although thisprogress hadbeeninterrupted toacertain degree asaresult ofthedroughts
in1992 and1993 andother factors. Nonetheless, theeconomy hadbounced backstrongly in1994.
13. While liberalization remains theguiding principle, theGovernment seemed tobefocusing on
consolidating astable macroeconomic framework. Itwould beinteresting tohearanexposition on
howtheGovernment assessed thepaceofliberalization, andthereasons andfactors accounting for
thechange ofemphasis. Asstated intheSecretariat 'sreport, anumber ofliberalization lawsand
initiatives aimed atbringing Morocco intolinewiththeWTO Agreements awaited adoption or
implementation owing tointernal resistance oradministrative delays. Given thattheresults of
liberalization hadtodatebenefited theMoroccan economy, itwould beinteresting toknow whythe
process hadnotbeencarried through andindeed stepped up.
14. Whilesubstantialeffortshadbeenmadetosimplifythelevelofbureaucracy,awebofprocedures
andmeasures toprotect domestic producers wasstillinplace. Moreover, measures aimed atprotecting
aneconomy inmany cases simply ended upbyundermining itscapabilities, since overregulation was
counterproductive andanti-competitive.
15. Recalling thesectors affected byprivatization, thediscussant suggested thatthepaceofprogress
todateseemed somewhat limited. Itwould beinteresting toknow which other enterprises, might in
thefuture beincluded intheprivatization programme, asmentioned intheGovernment report.
16. Thereforms hadcontributed tothesuccess intheservices sector, whose contribution toGDP
wasnowover50percent; thisprogress should haveencouraged Morocco tospeed uptheliberalization
process inthesector andtocontinue toparticipate actively infuture negotiations inthisareainthe
WTO. Itwasalsotobehoped thatMorocco would establish trade relations withregions, including
Hong Kong, which hadnottraditionally beenamong itsmain partners, andbenefit tothefullfrom
integration intothemultilateral trading system.Kingdom ofMorocco WT/TPR/M/8
Page 5
IV. STATEMENT BYTHE SECOND DISCUSSANT
17. Thesecond discussant, Mr.OleLundby, acknowledged theefforts made byMorocco. He
requested clarification fromtheMoroccan delegation onprospects forchanging thelayout ofthecustoms
tariff. Thisconsisted oftwocolumns, Column Gcontaining theofficial ratesandColumn Utheapplied
rates: anumber ofofficial rates were above Morocco 'sbound ceiling rates. Further details were
requested onthestatus ofwork intheareaoftariffication andimplementation oftariff equivalents
intheagricultural sector.
18. Thediscussant asked whether themotor vehicle industry wasaffected bytheliberalization and
deregulation planandwhether policy changes were planned inthisorinother sectors. Itwould be
interesting tohavefurther comment ontheagreement withFIAT toproduce an"economy" car,in
viewofthedistorting effect ofthisproject ontherestoftheeconomy.
19. Information wasrequested astoplans forfurther simplification ofthetariff structure andthe
further liberalization ofthetrade regime. Moreover, initsapplication thefiscal import levy(PFI)
looked more likeaprotection device thanasource oftaxrevenue: different ratesapplied todifferent
products, awider range ofimported goods werecovered, andadded tothecustoms dutycould effectively
raisetheimport dutyrateto50percent. Clarification wasrequested onthematter, aswellasonhow
Morocco viewed therelationship between thetradeliberalization process andtheresulting fiscal reforms
which might berequired.
20. Given thedistortions created byprotective measures andencouragement toexporters, further
liberalizationcouldimprovethecompetitivenessofMorocco'sexportsandcreatenewsourcesofgrowth.
With respect toregional andbilateral agreements, itwould beinteresting tohearcomments fromthe
Moroccan delegation concerning theerosion ofpreferential margins which would result from
liberalization inthetextiles andclothing sector andintheagricultural sector, especially withreference
tothemarkets oftheEuropean Union. Reference wasmade tothepotential opportunities forMoroccan
exports inother geographic areas. Comments werealsorequested onthepassage intheSecretariat 's
report relating totheopportunity, offered bytheWTO Agreements toMorocco topursue andextend
itsreforms.WT/TPR/M/8 Trade Policy Review
Page 6
V. STATEMENTS BYMEMBERS OFTHE TRADE POLICY REVIEW BODY
21. Therepresentative ofHong Kong praised theefforts made byMorocco andrecalled thesituation
ofthecountry inrelation totheWTO Agreements. Anumber ofsectors, especially agriculture, textiles
andclothing, werestillheavily protected. Thegeographical distribution oftradeandthediversification
ofexport products were limited. Heasked forinformation onthespecific plans forprogressively
reducing thetariffequivalents onagricultural products inaccordance withtheWTO Agreements, and
onthecriteria forassessing thedesirability oftheprior import declaration (DPI), usedinstead ofthe
emergency measures envisaged bytheWTO. Herequested fuller information onMorocco 'stimetable
forupdating itslegislation, andonitsproposed strategy foreliminating internal resistance andcorrecting
administrative delays which wereholding backfurther liberalization. Hereferred totheindirect charges
thatlimited thecompetitiveness ofMoroccan products andliberalization inservices, inparticular road
transport andmaritime andportservices. Morocco wasencouraged tokeepupthepaceoftrade
liberalization, including tradeinservices, andmorespecifically basictelecommunications andmaritime
transport. Other questions hadbeensubmitted totheMoroccan delegation inwriting.
22. After encouraging Morocco topursue itsliberalization andreaffirming theimportance which
hiscountry attached totheTPRM, therepresentative ofCanada enquired astothebasic reasons for
thestrong growth inMoroccan trade, inparticular withNorth America, andrecent developments
regarding thecreation ofaMorocco-EU andMorocco-EFTA free-trade area. Heexpressed concern
attariff binding levels which wereoften higher thantheapplied rates, andatthedelay inMorocco 's
implementation oftheWTO provisions intheareaofagriculture. Herequested further information
inthisconnection, andonthecontent oftheplanned accompanying measures. Canada hadsubmitted
written questions.
23. Pointing outthathiscountry hadalsoprovided written questions, therepresentative ofthe
Czech Republic referred totheimplementation ofprivatization reforms. Heasked fordetails onfuture
measures aimed atpromoting investment inMorocco, andonthedatefortheentry intoforce ofthe
newcodeonthissubject.
24. Therepresentative oftheUnited States ofAmerica congratulated Morocco onthecommendable
progress achieved despite thedrought inthefinancial sector, withrespect totrade policy, including
intheareaofeconomic diversification. Heregretted thereversal ofthistrendandreferred totheincrease
intheproportion ofimports subject toimport licensing. Written questions hadbeentransmitted to
theMoroccan delegation.
25. Therepresentative ofCameroon encouraged Morocco tocontinue itsliberalization efforts.
Sheenquired astothetimetable foreliminating theprior import declaration required since June1995
forbananas, aproduct ofgreat importance tohercountry.
26. TherepresentativeofTunisiapaidtributetotheprogressmadebyMoroccointradeliberalization,
andadded thattheautonomous measures adopted byMorocco, anditsactive participation inthe
multilateral trading system andinregional andbilateral agreements wereevidence ofMorocco 'sfirm
commitment topursuing theliberalization process.
27. Therepresentative ofSenegal congratulated Morocco ontheefforts made intheareaof
liberalization. Headded thatMorocco hadalways exerted aforce ofattraction asapoint ofreference
forhiscountry, andurged thateverything bedonetohelpMorocco minimize thenegative effects of
thedrought.Kingdom ofMorocco WT/TPR/M/8
Page 7
28. Therepresentative oftheEuropean Union praised Morocco foritsresolve inliberalizing its
trade regime, andencouraged ittopursue vigorously theeconomic adjustment programme ithad
embarked on. After recalling thefavourable results ofthispolicy, herequested, likeprevious
discussants, clarification ontheupdating ofMoroccan legislation, onthefiscal reforms thatwereto
accompany reductions inimport duties, andontheprogress made inliberalizing theservices sector,
particularly energy andtransport. Healsoasked forinformation regarding arecent evaluation ofthe
effects ofthedrought, andonMorocco 'sproposed measures forcombatting thisproblem, aswellas
theimpact ofsuchmeasures onthereform process. Hepointed outthattheAssociation Agreement
withMorocco, initialled inNovember 1995, hadyettoberatified, andasked fordetails onfuture
agreements which Morocco would enter intowiththeMediterranean countries.
29. Therepresentative ofJapan paidtribute toMorocco 'sefforts inthefieldofeconomic andtrade
liberalization, andtoitsfirmcommitment tothemultilateral trading system. Referring tothefavourable
results achieved through theadjustment programmes, heurged Morocco topress onwiththispolicy
despite theimpact ofthedrought. Heencouraged Morocco toproceed withthepolicy ofgeographical
diversification oftrade, andexpressed thehopethattheagreement signed withtheEUwould comply
withtherelevant WTO provisions; hecalled ontheOrganization tobevigilant inthisrespect. He
referred totheproblems relating tothesingle-entry visa,validforthree months, required forforeign
businessmen whowere notnationals oftheEuropean Union. Written questions hadbeensubmitted
fortheattention oftheMoroccan delegation.
30. Therepresentative ofAustralia alsocommented onthehighlevelofprotection intheagricultural
sector and,liketheother discussants, sought clarification onthesubsidies andlevies stillinplace.
Shealsoasked forinformation onMorocco 'sliberalization programme inthefuture.
31. Therepresentative ofIndia commended Morocco onthesteps taken towards liberalization in
spiteofsuchdifficulties asdrought. Hewasconfident thatMorocco would ensure thattheregional
andbilateral agreements itentered intowere inconformity withtherelevant WTO provisions.
32. Therepresentative ofHungary likewise encouraged Morocco initsreforms; healsosought
further details ontheplans forreducing thePFIandliberalizing theagricultural sector under therelevant
WTO provisions, andontheneedforthelevies, given theexisting highleveloftariff protection.
33. Therepresentative ofSlovakia echoed theviews ofhispredecessors, andstressed thatthetrade
measures inforce atpresent inMorocco were rather restrictive.
34. Therepresentative ofIsrael called forstronger bilateral economic linksbetween hiscountry
andMorocco, andadded thattheexisting relationship hadnotachieved itsfullpotential. Heexpressed
appreciation fortheroleplayed byMorocco intheMiddle East.
35. Therepresentative ofGabon congratulated Morocco onitsactive participation ininternational
tradeandeconomic relations, andonthepolicies implemented tothateffect. Heconsidered thatthese
efforts deserved encouragement intheform offinancial helpandtechnical assistance from the
international community.
36. Therepresentative ofPakistan commended Morocco, andalsoobserved thatthelevelofcustoms
duties inMorocco following tariffication wasstillrelatively high.WT/TPR/M/8 Trade Policy Review
Page 8
VI. REPLIES BYTHE REPRESENTATIVE OFTHE KINGDOM OFMOROCCO AND
ADDITIONAL COMMENTS
(1) Macroeconomic environment andgeneral policy trends
37. Therepresentative ofMorocco again stressed theirreversible nature oftheliberalization process
andthedetermination ofhiscountry tocarry ittocompletion. Thederegulation ofkeysectors, including
thetransport sector, andtheprivatization ofanumber ofpublic enterprises were scheduled forthe
current year. Thelegal texts forliberalizing andprivatizing anumber ofactivities inthe
telecommunications sector were intheirfinalstages ofpreparation.
38. Thedrafttextsdesigned tobring Moroccan legislation intolinewiththeinternational agreements
hadbeenanalysed byinternational experts. TheInvestment Charter hadbeenadopted inlate1995
andentered intoforce on1January 1996. Voting orreview bytheChamber ofRepresentatives on
thetrade, companies andlabour codes, aswellasthedraftlawsoncompetition andonintellectual
property, wasscheduled forthespring 1996 parliamentary session. Theslowpaceintheadoption
oflegislation wasattributed toitsvolume andthechallenges itposed. Courts specializing intrade
disputes were tobeestablished in1996.
39. Hedescribed theprogress made indiversification, inparticular inindustry, andexplained that
thepolicy aimed atconsolidating traditional markets andseeking outnewones, taking advantage of
theopportunities offered bytheWTO Agreements. Morocco wasalready present inthemarkets of
most regions.
40. Thediscussantssuggestedthattheprogressmadeinupdatingthecountry'slegislationbenotified
periodically totheWTO Secretariat andurged Morocco topursue thegeographical diversification of
itstrade. They sought further information onthelinkage between macroeconomic stabilization,
liberalization andexport promotion policies. Therepresentative ofAustralia asked fordetails on
privatization, including theenterprises notinvolved, andontheinternal resistance mentioned inthe
Secretariat 'sreport. Therepresentative ofHong Kong wished toknow thepublic 'sreaction tothe
reforms.
41. Therepresentative ofMorocco confirmed theirreversible nature ofthereforms, andstated
thatallthelegaltextshadbeensubmitted tointernational experts toensure thattheycomplied with
theinternational commitments entered intobyMorocco. Allthese textsweretobeadopted in1996.
Notification ofsuchtextswasnotmandatory, butacompromise would besought inthisconnection.
Therepresentative renewed assurances toparticipants astothefuture diversification oftrade, including
tradewithHong Kong, thecontinuation andexpansion oftheprivatization programme toinclude new
enterprises, andthefavourable reaction oftheprivate sectors tothereforms. Aprecise timetable of
liberalization measures would beprovided.
(2) Uruguay Round implementation process
42. Therepresentative ofMorocco recalled thathiscountry hadalready notified itscommitments
withregard tothedates forimplementing theliberalization ofagricultural products, andwithregard
tosanitaryandphytosanitarymeasures,andpromisedthattheothernotificationswouldbemade.Having
beenadopted bythethree relevant ministers, thedraftamendment totheForeign Trade Actwasto
besubmitted totheGovernment Council.Kingdom ofMorocco WT/TPR/M/8
Page 9
43. TheTariff format dated backtothe1957 Law. IntheTariff, thegeneral dutyrates were
contained inColumn G,where rates were twoandahalftimes theapplied rates tobefound in
Column U.Theratescontained inColumn G,designed totaxproducts originating incountries not
granting MFN treatment toMorocco, hadnever beenapplied. Columns GandUwereabolished on
1January 1996, andreplaced bythree other columns containing thecustoms duty, thePFIandtheir
total.
44. After referring tothesituation which prevailed regarding theimport licensing ofagricultural
products, tothedates fortheirliberalization andtotheplanned accompanying measures, hereviewed
theimplementation ofthelatter. Successive years ofdrought andchanges totheannual fiscal calendar
hadprevented areduction ofimport duties in1995; thiswaspromised forJuly1996.
45. The1996 Finance Acthadmade itpossible toreduce thenumber oftariff ratesfrom 13to
sixwhile maintaining theoverall fiscal burden atitsprevious level, andtorationalize thetariffstructure.
Inthecaseofproducts notmanufactured locally andsusceptible tocontraband trade thetariff ratehad
beenlowered to10percentandPFIexemption granted. Thetariff rateoncapital equipment and
machinery hadbeensetat2.5percent. VAT hadbeenraised by1percenttopartially offset thedrop
incustoms revenue caused bythereforms.
46. Hementioned theprovisions inforcewithrespect toanti-dumping andcountervailing measures,
andsaidthatadrafttextintheprocess ofbeing drawn upshould make goodtheabsence oflegislation
intheareaofsafeguard measures. Hereviewed Morocco 'scommitments intheareaofservices, and
promised asatisfactory solution totheproblem ofvisas raised bytherepresentative ofJapan.
47. Thediscussants asked forfurther information onthefuture ofthePFI,since alarge partof
government income wasbased onimports. They added thatmuch remained tobedone, given that
thelevel ofprotection wasstillvery high. They requested fuller details onanti-dumping and
countervailing measures andtheprior import declaration (DPI) system, aswellasonthetimetable
fortheentry intoforce oftariff equivalents intheagricultural sector. Therepresentative ofCanada
requested clarification ontheleveloftariff equivalents inrelation tobound rates, onthepermanent
orprovisional nature oftheadjustments provided forinthe1996Finance Lawallowing certain tariff
linestoberaised from0to2.5percent(minimum), andontherestrictions onthemovement ofpersons
applied toforeign investors.
48. Therepresentative ofMorocco confirmed thecircumstances inwhich thePFIwastobereduced
oreliminated, andstated thatonnoaccount would itincrease; customs duties hadbeenreduced and
thePFIeliminated onthemain products susceptible tocontraband trade. Theadjustments contained
inthe1996Finance Actwerepermanent; henceforth, theminimum ratewould be2.5percent,thereby
enabling theduties onother products tobelowered. Acopyofthenewcustoms tariff would besent
totheWTO; thedates fixed fortariffication would beobserved. Hepointed outthattheinternal
consumption taxwasneutral andnon-discriminatory. Adrafttextonemergency measures wascurrently
being prepared. Theprior import declaration (DPI), onlyusedinthecaseofthebanana, hadnow
beenabolished. Inreply tothequestion bytherepresentative ofJapan, heacknowledged therestrictive
nature ofentry andexitvisas required byinvestors, andpromised thatthese would beeliminated.
(3) Regional agreements andthemultilateral trading system
49. Therepresentative ofMorocco stated thattheAssociation Agreement signed withtheEUon
15November 1995was,withtheexception ofafewprovisions, thenatural extension oftheCooperation
Agreement entered intobythetwoparties. ThenewAgreement broke newground byestablishingWT/TPR/M/8 Trade Policy Review
Page 10
afree-trade zoneandintroducing reciprocal tradeconcessions. Onlyfollowing ratification oftheinternal
procedures would implementation takeplace, which should leadtoasignificantly enhanced levelof
tradefromtheyear2000onwards. Morocco promised tofulfilitsobligations inrespect ofnotification
uponratifying theAgreement. Furthermore, theTrade andTariff Convention negotiated inthecontext
oftheArab Maghreb Union (AMU) wasnotyetinforce, since theimplementing protocols hadnot
yetbeenfinalized between themember States.
50. Morocco planned totakefullbenefit ofthe10-year adaptation period granted inthecontext
ofthedismantling oftheMultifibre Arrangement under theWTO provisions. Morocco planned to
make fulluseofitsadvantages inorder toimprove competitiveness anddiversify exports. Atthesame
time, itexpected toincrease exports ofvegetable products.
51. Thediscussants asked forfurther clarification ontheAssociation Agreement with the
EuropeanUnion,ontheopportunitiesprovidedbytheWTOAgreementsforstrengtheningthemultilateral
trading system, andonthecurrent content ofthemost-favoured-nation principle inview ofthe
proliferation offree-trade agreements. Therepresentative ofCanada enquired astowhich sectors in
Morocco hadcontributed tothesharper growth intradewiththecountries ofNorth America thanwith
theEU. Therepresentative ofAustralia asked about theexpected results oftheregional trade
agreements. Therepresentative ofHong Kong requested further information onthesectors excluded
from theAssociation Agreement between Morocco andtheEU.
52. Therepresentative ofMorocco saidthattheprovisions oftheAssociation Agreement were
onthewhole currently inforce, butMorocco wastogradually open upitsmarkets toEuropean
manufactured products, withthefree-trade areascheduled for2010. Morocco 'sdiversification strategy
wasfirsttoexplore itsowngeographical area,andsubsequently toopenuptoother countries, including
Canada.
(4) Individual policy issues
53. Therepresentative ofMorocco provided information onthenewInvestment Charter. The
incentives hadbeenincorporated inordinary lawandharmonized forallsectors. Aminimum tariff
rateof2.5percenthadbeensetformachinery andamaximum rateof10percentforcapital goods,
equipment andtools, including theircomponents, spare parts andaccessories. These products were
exempt from VAT andthePFI. Special concessions hadbeenprovided forenterprises carrying out
major investment programmes.
54. After describing theconditions forimporting carsintoMorocco andthehistory ofthemotor
vehicles sector, hereferred totheintegration-compensation law. Theeconomy carproject hadbeen
launched forsocial andeconomic reasons: interalia,toensure price/purchasing power compatibility
andtoboost recovery ofthesector. FIAT hadsuccessfully bidforthisproject, under aneight-year
contract. Helisted theconcessions conferred, andpromised tonotify themtotheWTO inaccordance
withtheAgreement onTrade-Related Investment Measures.
55. Revenue from the6percentadvalorem taxlevied onimported wood andfrom the40per
centtaxonthedomestic trade inwood hadbeen usedforforest development andthereforesting
programme. TheDPI,required forbanana imports, wasapplied foraperiod ofsixmonths inaccordance
withtheprovisions ofLawNo.13/89, andsubsequently abolished. Hedescribed someoftheprovisions
ofthedraftlawoncompetition, under which price regulation should betheexception. Taxrelief on
products susceptible tocontraband trade-thetariffratewaslowered to10percentandexempted fromKingdom ofMorocco WT/TPR/M/8
Page 11
thePFI-andtheCustoms Administration 'sprogramme ofreforms wereallaimed atcombatting fraud
andcontraband trade.
56. Thediscussants expressed doubts about thenature ofthebenefits toexporters, inthelightof
thesubsidy provisions oftheWTO Agreements. Therepresentative ofHong Kong referred tothe
sectors excluded from thescope ofthelawoncompetition, andtotheauthorities responsible forits
implementation. Therepresentative oftheUnited States noted thatenvironmental policy concerns did
notjustify thetaxlevied ontheimport ofwood andwood products. Herequested information onthe
links between economic policy andfamily planning policy, andbetween regional agreements and
development inMorocco.
57. TherepresentativeofMoroccostatedthatassistancegiventoexporterswasaimedatencouraging
export activities byoffsetting thehighcostoffactors suchasenergy, andnoted thattheydidnot
constitutedirectsubsidies.Therepresentativedeclaredthatfamilyplanningpolicyhadachieveddramatic
results; following thecampaign against illiteracy, thebirthratehadplummeted. Finally, hestressed
theirreversiblenatureoftheliberalizationreformsundertakenbyhiscountry,andexpressedappreciation
forthepertinence ofthequestions raised andthehighquality ofthediscussions.WT/TPR/M/8 Trade Policy Review
Page 12
VII. CONCLUDING REMARKS BYTHE CHAIRPERSON
58. Over thepastfewdays, theTrade Policy Review Body hasconducted thesecond review of
Morocco 'strade policies andpractices. These remarks, intended tosummarize thesalient points, are
made onmyownresponsibility anddonotsubstitute fortheBody'scollective evaluation and
appreciation. Thefulldiscussion willbereflected intheminutes ofthemeeting.
59. Thediscussion developed under fourmainthemes: (i)macroeconomic environment andgeneral
policytrends;(ii)UruguayRoundimplementationprocess;(iii)regionalagreementsandthemultilateral
system; and(iv)individual policy issues.
(i) Macroeconomic environment andgeneral policy trends
60. Members commended Morocco onthebreadth oftheeconomic reform thatithadimplemented
autonomously since theearly 1980s. Inthisprocess, many previously protected manufacturing and
services sectors hadbeenexposed tocompetition. Inturn, liberalization ofthetrade andinvestment
regimes -including significant tariffcuts,reduction ofquantitative restrictions andamajor programme
ofprivatization -hadhelped tounderpin aperiod ofstrong growth andlowinflation, withapositive
impact oninternal debt.
61. Some members sawsigns thatthepaceofreform hadslowed recently andthattheemphasis
hadshifted from external liberalization towards fiscal stabilization. Inthiscontext, questions were
raised concerning theeconomic impact ofsevere droughts inrecent years andtheireffect onthe
liberalization agenda. Members alsoexpressed concern about delays inthelegislative process, with
alarge number ofdraftlawsawaiting adoption orpromulgation. Morocco wasasked tonotify new
lawsasthese were implemented.
62. Several comments focused ontheGovernment 'scontinuing involvement intheeconomy.
Questions wereasked regarding therationale forexisting dutyexemption schemes, seeking toshield
export industries from inefficiencies indomestic sectors. Itwasfeltthatabroader approach to
liberalization might bothreduce theneedforsuchcompensatory intervention, andpromote economic
diversification andbackward integration ofexport sectors. Members alsoenquired about anyspecific
policy initiatives tobroaden Morocco 'sexport baseanddiversify export destinations.
63. Inreply,therepresentativeofMoroccostressedhisGovernment'scontinuedstrongcommitment
toanopen, rule-based trading system andtodomestic deregulation andprivatization. Morocco had
embarked onanirreversible process ofeconomic reform withthefinalobjective offullexternal and
internal liberalization. Thiswould leadtothederegulation ofthetransport sector andtheprivatization
ofanumber ofpublic enterprises, including tworefineries andadevelopment bank. Important changes
were being prepared inthetelecommunications area, andtheelectricity market hadbeenopened to
amajor private project. Noareas were closed toprivatization andasecond listwasinpreparation
containing allremaining firms. Experience withprivatization waspositive, including inthecreation
ofemployment. There hadbeenastrong response bytheprivate sector tonewprivatization bonds
recently issued. Aprecise timetable forfurther liberalization wastobeannounced.
64. Fundamental economic legislation wascurrently being changed. Anewinvestment charter
hadentered intoforce on1January 1996; andanewcommercial code, company legislation, a
competitionlaw,andintellectualpropertylegislationwerecurrentlyintheparliamentaryofgovernmental
process. Toaccelerate administrative procedures, thesetting upofcommercial courts wasscheduled
for1996.Kingdom ofMorocco WT/TPR/M/8
Page 13
65. Morocco hadmade considerable progress indiversifying theregional structure ofitsexports.
Thisprocess wassupported byexport promotion initiatives and,moregenerally, bytheimplementation
oftheWTO Agreements. Morocco attached considerable importance todeveloping itscommercial
relations withNorth andSouth America, Asia, theMiddle EastandAfrica.
(ii) Uruguay Round implementation process
66. While expressing fullappreciation forMorocco 'srolein,andcontribution to,theUruguay
Round andthesignificance ofthecommitments made, members sought clarification onthedomestic
implementation process. Particular reference wasmade toareas suchassafeguards, anti-dumping,
subsidies andcountervailing measures. Delays intheimplementation ofagricultural tariffication were
observed. Questions werealsoraised onthecurrent scope ofimport licensing andprior declaration
requirements andtheuseofsanitary andphytosanitary controls.
67. Noting thattariffication hadincreased thenumber ofrates, members asked about anyfurther
initiatives tosimplify thetariffstructure, attenuate tariffescalation andalignallofficial rateswithGATT
bindings. Several comments focused ontherestrictive effects andadministrative costsresulting from
thecumulation ofhightariffs, inparticular inagriculture, withother import-related charges andlevies,
including thefiscal import levy(PFI). Members alsoraised questions about thefiscal policy constraints
thatmight arisefrom tariff cuts.
68. MembersrecognizedthatMoroccohadassumedacommendablelevelofcommitmentsinservices
sectors. They encouraged Morocco toparticipate actively intheongoing negotiations onmaritime
transport andbasic telecommunications. Some participants expressed concern about arrangements
affecting themovement ofpersonnel, including visarequirements.
69. Therepresentative ofMorocco responded thatanewForeign Trade Acthadbeenadopted by
theministries involved andwastobesubmitted soontotheGovernment Council. Newsafeguard
legislation wascurrently being developed inaccordance withtherelevant WTO Agreement. Forthe
timebeing, theadministration wasauthorized tointroduce, onatemporary basis, aprior import
declarationtomonitorimportsofproductscausing,orthreateningtocause,injurytodomesticproducers.
While Morocco 'sexisting Foreign Trade Actprovided foranti-dumping andcountervailing measures,
these hadnotbeenusedtodate. Theprior import declaration (DPI) could serve tomonitor imports
threatening prejudice todomestic production.
70. Agricultural liberalization wasanirreversible partofthestructural adjustment programme.
Since 1994, importation offarmproducts hasbeenliberalized, withtheexception ofcertain basicfood
products onwhich consumption subsides werebeing granted. Import licensing requirements forsugar,
vegetable oils,cereals andtheirderivatives werebeing phased outinthefirsthalfof1996, terminating
by1June. Accompanying measures included theestablishment oftariff equivalents, which were
generally below theGATT bound levels; reforms inthemarketing system; creation ofsecurity stocks;
thedemonopolization ofsugar imports; andtheliberalization ofoilseed processing industries.
Agricultural tariff equivalents hadbeencalculated inaccordance withtherelevant WTO provisions;
these were currently applied onmeatanddairy products. Duetothe1995 drought andachange in
thefiscal year,implementation ofthereduction commitments for1995hadbeenpostponed toJuly1996.
From thatdate, import licensing requirements would beconfined toproducts deemed sensitive for
health andsecurity reasons, including explosives, usedtyres, andsecondhand vehicles.
71. From 1January 1996, thestructure oftheMoroccan tariff hadbeenchanged, abandoning the
previous distinction between official andapplied rates. Thenewtariffschedule contained threecolumns;WT/TPR/M/8 Trade Policy Review
Page 14
theimport tariff, thefiscal import levy(PFI) andtheiraggregate. Thenewtariff would benotified
totheWTO. Thetransitional fiscal lawfor1996entailed ageneral reform ofthesystem; itwasaimed
atsimplifying, harmonizing andimproving thetransparency ofborder taxation trade. Rates onsome
sensitive products hadbeenlowered; forexample, machinery andequipment carried tariffs ofnomore
than2.5percent,while tools, spare partsandelectronic products weresubject toa10percenttariff.
ThePFIwasnotlevied onsuchproducts. Atthesame time, thenumber ofdifferent tariff rateshad
beenbrought down from 13tosix.Thefiscal effects ofthese tariff cutscould bepartially offset by
asmall increase andbroadening ofscope forVAT. Theparafiscal levyof0.25percentwasintended
tocompensate theprivate sector foritstechnical controls onexports, consistently withArticle VIII
ofGATT.
72. Morocco hadassumed verysubstantial commitments, bothinterms ofsectoral coverage and
levelofliberalization, under theGATS. These included sectors suchastelecommunications, transport,
financial andprofessional services, construction, tourism andenvironmental services. Inmostcases,
national treatment wasgranted. Morocco continued toparticipate actively intheongoing negotiations
onmaritime transport, basic telecommunications andprofessional services. Visarequirements for
business people werenotgenerally restrictive; asolution would besought toproblems raised inthis
connection.
(iii) Regional agreements andthemultilateral system
73. Morocco 'smultilateral trade policies coincided withefforts tointensify preferential tieswith
theEuropean Union andNorth African countries; participants stressed theneedtonotify theresulting
agreements under WTO provisions, particularly under Article XXIV ofGATT. Details weresought
ontherecent Association Agreement withtheEU,Morocco 'sdominant trading partner, andthe
implementation agenda. Attention wascalled tothegradual liberalization ofEUmarkets inthewake
oftheUruguay Round, implying fiercer competition from thirdcountries forMoroccan preferential
supplies totheEUoffruit, vegetables andclothing.
74. Therepresentative ofMorocco noted thatthenewAssociation Agreement initialled withthe
EU,anatural extension oftheprevious Cooperation Agreement, would leadtoafree-trade area. It
wasinconformity withArticle XXIV oftheGATT andwould benotified onratification. Agriculture
wasincluded intheAgreement andprogressive liberalization wasforeseen. Atradeandtariffconvention
withtheArab Maghreb Union (AMU) hadnotyetentered intoforce, pending thecompletion of
implementing measures bymember States.
75. Itemphasized strongly thatMorocco didnotignore thedevelopment ofrelations withother
trading partners; thedirection ofreforms undertaken onanMFN basiswasclear. Trade wasdeveloping
wellwithnon-European countries.
76. HefeltthatMorocco waswellplaced tocompete effectively ontheEU'stextile andclothing
market, evenafterfullliberalization under theUruguay Round Agreement. Theimplementation period
would beusedforpositive adjustments andfurther diversification ofthesector. Geographic proximity
andtheflexibility oftheindustry would helpsupport thenecessary adjustments. Hewasalsoconfident
thatMorocco'sfruitandvegetablesectorwouldfurtherbenefitfromrecentexportdiversificationpolicies.
TheAssociation Agreement withtheEUwasexpected toimprove tradeflows inthisfieldsignificantly
from theyear2000 onwards.Kingdom ofMorocco WT/TPR/M/8
Page 15
(iv) Individual policy issues
77. Members tooktheopportunity toseekclarification onawiderange ofpolicy programmes and
measures. These included Morocco 'snewInvestment Charter; thefuture orientation ofcompetition
policy, including price deregulation; localcontent requirements inthemotor vehicle sector; atax
onimported wood products; priorimport declaration requirements onbananas; andinitiatives against
fraudulent trade practices.
78. Inresponse, therepresentative ofMorocco explained themainelements ofthe1996Investment
Charter. Enterprises meeting specified criteria, forexample interms ofemployment, could apply for
benefits suchasreductions ininfrastructure-related charges andprofessional training. Morocco 'snew
competition lawprovided forgeneral price liberalization; price controls could beintroduced onlyin
exceptional circumstances foralimited period. Thelaw,tobeimplemented inthecourse of1996,
would bephased inoverthreeyears. ANational Competition Council would besetupasanindependent
judicial body.
79. Imports ofmotor vehicles were unrestricted, currently carrying a17.5percenttariff anda
PFIof15percentwhich wasconsiderably below thebound levels. Asinmany other developing
countries, Morocco 'sinitial industrialization efforts hadrelied strongly ontheautomobile industry,
andanational context requirement of60percentwasintroduced in1981. However, dueto
uncompetitive pricing, theMoroccan market hadbeeninundated byimports ofoldsecondhand cars
which, inturn,hadanegative impact onroadsafety andtheenvironment. Toimprove thissituation,
theconcept ofan"economy car"wasdeveloped, andtheworld 'sleading producers were invited to
tender inmid-1994. Incentives wereoffered toensure alocalcontent of50percentandareasonable
salesprice. InJune1995, theGovernment signed aneight-year contract withthewinning competitor,
Fiat. Inparallel, import tariffs were reduced totheircurrent level which, inturn, would promote
competition. Theproject mettherelevant provisions fordeveloping countries andwould assoonas
possible benotified under theWTO Agreement onTrade-Related Investment Measures.
80. Tofightdeforestation andpreserve natural forests, a6percentimport taxonwood hadbeen
introduced in1986. Thetaxwasnotdiscriminatory, being paralleled byaninternal taxof40percent.
81. After thebanana market wasliberalized inJuly1994, aglutofimports, largely exceeding
minimum access requirements, caused severe market disturbances inMay, JuneandSeptember 1995.
Inresponse, theGovernment hadtaken emergency surveillance measures andintroduced apriorimport
declaration requirement forsixmonths; thishasnowbeenterminated.
82. Inaddition tothetariffchanges referred to,Morocco hadtaken several administrative measures
tofightcontraband trade. These included therestructuring andbetter funding ofthecompetent customs
services, andthesimplification ofcustoms procedures.
*****
83. During these twosessions, wehavehadanextremely useful, informative andstimulating
discussion. Averyclearthrust andsense ofdirection -toward liberalization, modernization andopening
up-hademerged. WTO members congratulated Morocco onthedirection ofreforms andthesteps
taken. Wehavegreatly appreciated thefactthat,reflective ofMorocco 'sserious attitude toWTO,
theMinister hascome herepersonally withsuchastrong delegation. Finally, Iwould liketoexpress
myappreciation formembers 'participation inthemeeting, andthank thediscussants fortheirimpressive
contributions aswellastheSecretariat foritspreparatory work.