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22January 1996
TRADE POLICY REVIEW BODY
Review ofMorocco
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itssecond
review ofMorocco 'strade policies on17and18January 1996. ThetextoftheChair'sconcluding
remarks isattached asasummary ofthesalient points which emerged during thetwo-day discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChair'ssumming-up, together withthese tworeports, will
bepublished induecourse asthecomplete tradepolicy review ofMorocco andwillbeavailable from
theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: 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), Côted'Ivoire (1995),
Egypt (1992), theEuropean Communities (1991, 1993&1995), Finland (1992), Ghana (1992), Hong
Kong (1990 &1994), Hungary (1991), Iceland (1994), India(1993), Indonesia (1991 and1994), Israel
(1994), Japan (1990, 1992and1995), Kenya (1993), Korea, Rep.of(1992), Macau (1994), Malaysia
(1993),Mauritius(1995)Mexico(1993),Morocco(1989&1996),NewZealand(1990),Nigeria(1991),
Norway (1991), Pakistan (1995), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992),
Senegal (1994), Singapore (1992), Slovak Republic (1995), South Africa (1993), SriLanka (1995),
Sweden (1990 &1994), Switzerland (1991), Thailand (1991 &1995), Tunisia (1994), Turkey (1994),
theUnited States (1989, 1992 &1994), Uganda (1995), Uruguay (1992) andZimbabwe (1994).
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REVIEW OFTHE TRADE POLICIES AND PRACTICES OFMOROCCO
Concluding remarks bytheChair oftheTrade Policy Review Body
Over thepasttwodays, theTrade Policy Review Body hasconducted thesecond review of
Morocco 'strade policies andpractices. These remarks, intended tosummarize thesalient points,
aremade onmyownresponsibility anddonotsubstitute fortheBody'scollective evaluation and
appreciation. Thefulldiscussion willbereflected intheminutes ofthemeeting.
Thediscussion developed under fourmainthemes: (i)macroeconomic environment andgeneral
policytrends;(ii)UruguayRoundimplementationprocess;(iii)regionalagreementsandthemultilateral
system; and(iv)individual policy issues.
Macroeconomic environment andgeneral policy trends
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
régimes -including significant tariffcuts,reduction ofquantitative restrictions andamajor programme
ofprivatization -hadhelped tounderpin aperiod ofstrong growth andlowinflation, withapositive
impact onexternal debt.
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 andtheir effect onthe
liberalization agenda. Members alsoexpressed concern about delays inthelegislative process, with
alarge number ofdraftlawsawaiting adoption orpromulgation. Morocco wasasked tonotify new
lawsasthese were implemented.
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.
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.
Fundamental economic legislation wascurrently being changed. Anewinvestment codehad
entered intoforce on1January 1996; andanewcommercial code, company legislation, acompetition
law,andintellectual property legislation werecurrently intheparliamentary orgovernmental process.
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Toaccelerate administrative procedures, thesetting upofcommercial courts wasscheduled for1996.
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.
Uruguay Round implementation process
While expressing fullappreciation forMorocco 'srôlein,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 andphyto-sanitary controls.
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 thePrélèvement Fiscal àl'Importation (PFI). Members alsoraised questions about thefiscal
policy constraints thatmight arisefrom tariff cuts.
MembersrecognizedthatMoroccohadassumedacommendablelevelofcommitmentsinservices
sectors. They encouraged Morocco toparticipate actively intheongoing negotiations onmaritime
transport andbasic telecommunications. Some participants expressed concern about arrangements
affecting themovement ofpersonnel, including visarequirements.
Therepresentative ofMorocco responded thatanewExternal Trade Lawhadbeenadopted
bytheministries 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 External Trade Lawprovided foranti-dumping andcountervailing measures,
these hadnotbeenusedtodate. ThePrior Import Declaration (DPI) could serve tomonitor imports
threatening prejudice todomestic production.
Agricultural liberalization wasanirreversible partofthestructural adjustment programme.
Since 1994, importation offarmproducts hadbeenliberalized, withtheexception ofcertain basicfood
products onwhich consumption subsidies 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;
thede-monopolization ofsugar imports; andtheliberalization ofoilseed processing industries.
Agricultural tariff equivalents hadbeencalculated inaccordance withtherelevant WTO provisions;
these werecurrently 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, andsecond-hand vehicles.
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From 1January 1996, thestructure oftheMoroccan tariff hadbeenchanged, abandoning the
previous distinction between official andapplied rates. Thenewtariffschedule contained threecolumns;
theimport tariff, thePrélèvement Fiscal àl'Importation (PFI) andtheiraggregate. Thenewtariff
would benotified totheWTO. Thetransitional fiscal lawfor1996 entailed ageneral reform ofthe
system; itwasaimed atsimplifying, harmonizing andimproving thetransparency ofborder taxation.
Theresulting improvement inthefiscal andeconomic environment would helptoreduce contraband
trade. Rates onsome sensitive products hadbeenlowered; forexample, machinery andequipment
carried tariffs ofnomorethan2.5percent,while tools, spare partsandelectronic products weresubject
toa10percenttariff. ThePFIwasnotlevied onsuchproducts. Atthesame time, thenumber of
different tariff rateshadbeenbrought down fromthirteen tosix.Thefiscal effects ofthese tariff cuts
could bepartially offset byasmall increase andbroadening ofscope forVAT. Thepara-fiscal levy
of0.25percentwasintended tocompensate theprivate sector foritstechnical controls onexports,
consistently withArticle VIIIofGATT.
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.
Regional agreements andthemultilateral system
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.
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. Acommercial andtariff
agreement withtheUnion duMaghreb Arabe (UMA) hadnotyetentered intoforce, pending the
completion ofimplementing measures bymember States.
Itemphasized strongly thatMorocco didnotignore thedevelopment ofrelations withother
trading partners: thedirection ofreforms undertaken onanm.f.n. basis wasclear. Trade was
developing wellwithnon-European countries.
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.
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Individual policy issues
Members tooktheopportunity toseekclarification onawiderange ofpolicy programmes and
measures. These included Morocco 'snewInvestment Code; 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.
Inresponse, therepresentative ofMorocco explained themainelements ofthe1996Investment
Code. 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.
Imports ofmotor vehicles wereunrestricted, currently carrying a17.5percenttariff anda
PFIof15percentwhich wasconsiderably below thebound levels. Asinmany other developing
countries, Morocco 'sinitial industrialization efforts hadrelied strongly ontheautomobile industry,
andanational content requirement of60percentwasintroduced in1981. However, dueto
uncompetitive pricing, theMoroccan market hadbeeninundated byimports ofoldsecond-hand cars
which, inturn,hadanegative impact onroadsafety andtheenvironment. Toimprove thissituation,
theconcept ofan"economic car"wasdeveloped, andtheworld 'sleading producers wereinvited 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.
Tofightdeforestation andpreserve natural forests, a6percentimport taxonwood hadbeen
introduced in1986. Thetaxwasnotdiscriminatory, being paralleled byaninternal taxof40percent.
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; thishadnowbeenterminated.
Inaddition tothetariffchanges referred to,Morocco hadtaken several administrative measures
tofightcontraband trade. These included therestructuring andbetter funding ofthecompetent customs
services, andthesimplification ofcustoms procedures.
*****
During these twosessions, wehavehadanextremely useful, informative andstimulating
discussion.Averyclearthrustandsenseofdirection-towardsliberalization,modernizationandopening
up-hasemerged. 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.
END