agritrade

Deferment of Algerian FTA implementation commitments

22 October 2012

On 4 September 2012, press reports indicated that ‘Algeria has won a trade concession from the European Union, according to which the EU-Algeria free trade agreement should be fully phased in by 2020, and not by 2017,’ as originally foreseen in the agreement scheduled to enter into force on 1 September 2012.

The Algerian Trade Minister Mustapha Benbada argued that while Algeria was committed to the FTA, ‘the existing association agreement with the EU cost Algeria US$2.5m [€1.93m] in lost customs duties between 2005 and 2009, while investments from the EU have not been as strong as initially anticipated.’ The Algerian government argued that it needed more time ‘to reform its administration and its tax system, in order to make it less reliant on customs duties’ and thus ensure that the FTA is ‘mutually beneficial’.

Under the revised terms of the agreement, ‘tariffs will be gradually reduced for the next eight years, until they reach zero in 2020.’ 

Editorial comment

In the light of ongoing internal adjustment challenges faced in Algeria, some observers have indicated that the EC agreement to modify the implementation schedule of Algeria’s FTA potentially increases the scope for similar concessions in the context of the EU–Caribbean EPA.

Given the effects of the global financial and economic crisis on CARIFORUM economies, calls have been made in the Caribbean for the EC to ‘acknowledge the difficulties that the region is facing’ and ‘engage in a constructive dialogue that would waive the tariff reductions at this time’ (see Agritrade article ‘ Implementation of Caribbean tariff cuts in the spotlight’, 27 August 2012).

As in Algeria, concerns exist in the Caribbean over the revenue effects of the proposed tariff elimination commitments. Despite the relatively small levels of government revenue affected by the first stage EPA implementation commitments, particular concerns arise over the lack of harmonisation of internal processes of tax reforms with the proposed schedules for tariff elimination.

In the context of high global food prices and national efforts to relaunch food production across a range of products, there are also heightened concerns in the Caribbean region over a range of commitments on the elimination of ‘para-tariffs’ (a wide array of taxes, charges and levies that are not described as tariffs by the government imposing them). This is particularly the case in countries where new para-tariff measures are being introduced to support expanded domestic food production (see Agritrade article ‘ Revised tax package to curb food imports announced in Jamaica’, 3 September 2012).




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