RESTRICTED
WORLD TRADE WT/TPR/S/8
16November 1995
ORGANIZATION(95-3439)
TRADE POLICY REVIEW
KINGDOM OFMOROCCO
Report bytheSecretariat
Thisreport, prepared forthesecond Trade Policy Review ofMorocco, hasbeendrawn upbytheWTO
Secretariat onitsownresponsibility. TheSecretariat has,asrequired bytheAgreement Establishing
theTrade Policy Review Mechanism (Annex 3oftheMarrakesh Agreement Establishing theWorld
Trade Organization), sought clarification from theGovernment ofMorocco onitstrade policies and
practices.
Document WT/TPR/G/8 contains thepolicy statement submitted bytheGovernment ofMorocco.
Note: Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting
oftheTrade Policy Review Body ofMorocco.Kingdom ofMorocco WT/TPR/S/8
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS xi
(1) Theeconomic environment xi
(2) Morocco inworld trade xi
(3) Institutional andlegislative framework xii
(4) Features ofeconomic policy xii
(i) International commitments xii
(ii) Trade policy instruments andtheireffects xiii
(iii) Sectoral aspects oftrade policy xiv
(iv) Trade policies andforeign trading partners xv
I. ECONOMIC ENVIRONMENT 1
(1) Major features oftheeconomy 1
(2) Evolution oftheeconomy 3
(i) Adecade ofadjustment programmes 3
(ii) Recent economic developments 4
(3) Trade performance 9
(i) Merchandise trade 10
(ii) Trade inservices 11
(4) Outlook 11
Annex I.1 Foreign exchange regime 13WT/TPR/S/8 Trade Policy Review
Page iv
Page
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 14
(1) General framework 14
(2) Procedure fortheformulation andimplementation oftrade policy 15
(3) Trade policy objectives 16
(4) Laws andregulations inthefieldoftrade 16
(5) Trade andcooperation agreements 18
III. INVESTMENT POLICY AND TRADE 21
(1) Investment policy 21
(2) Investment codes 22
(3) Foreign investment: trends andstructure 22
IV. TRADE POLICIES AND PRACTICES BYMEASURE 25
(1) Overview 25
(2) Measures directly affecting imports 25
(i) Registration anddocuments 26
(ii) Customs duties 27
(iii) Other levies andtaxes 31
(iv) Customs valuation 32
(v) Duty andtaxexemptions andrefunds 33
(vi) Import controls andprohibitions 34
(vii) Import licences andquantitative restrictions 34
(viii) Trade sanctions 36
(ix) Emergency action 36
(x) Rules oforigin 37
(xi) Domestic content 37
(xii) State trading 38
(xiii) Standards andtechnical specifications 38
(xiv) Government procurement 39
(xv) Measures applied intheexporting countries 40
(xvi) Other measures 40Kingdom ofMorocco WT/TPR/S/8
Page v
Page
(3) Measures directly affecting exports 41
(i) Registration anddocuments 41
(ii) Export taxes, charges andlevies 41
(iii) Export prohibitions, controls andlicences 41
(iv) Export quotas andrestraint arrangements 42
(v) State trading andexport cartels 42
(vi) Export subsidies 42
(vii) Duty andtaxconcessions 42
(viii) Export financing 44
(ix) Export credit guarantees andinsurance 44
(x) Export promotion andmarketing assistance 44
(xi) Freezones andindustrial zones 45
(xii) Other provisions 45
(4) Measures affecting production andtrade 45
(i) Subsidies andother concessions 45
(ii) Assistance foradjustment, theregions andresearch and
development 47
(iii) Competition policy 47
(iv) Protection ofintellectual property rights 49
V. TRADE POLICIES AND PRACTICES BYSECTOR 51
(1) Overview 51
(2) Agriculture, fishing andrelated activities 53
(i) Characteristics 53
(ii) Policy objectives andinstruments 53
(iii) Policy bytypeofagricultural product 56
(iv) Fishery products andby-products 60
(3) Mining andquarrying 62
(i) Phosphate 62
(ii) Other extractive industries 63
(4) Manufacturing 63
(i) Textiles andclothing 65
(ii) Transport equipment 67
(iii) Other activities 68WT/TPR/S/8 Trade Policy Review
Page vi
Page
(5) Services 69
(i) Tourism 69
(ii) Electricity 71
(iii) Telecommunications 72
(iv) Transport 74
(v) Financial services 75
VI. TRADE DISPUTES AND CONSULTATIONS 77
(1) Disputes referred totheGATT andWTO 77
(2) Dispute settlement under theMorocco-EU Cooperation Agreement 77
(3) Dispute settlement within theArab Maghreb Union 77
(4) Other disputes 77
BIBLIOGRAPHY 79
APPENDIX -TABLES 81Kingdom ofMorocco WT/TPR/S/8
Page vii
CHARTS
Page
Chart I.1 Gross domestic product bybranch ofeconomic activity,
1986 and1993 2
Chart I.2 Realgross domestic product, 1970-94 4
Chart I.3 Trade ingoods andservices asapercentage ofGDP, 1970-93 8
Chart I.4 Balance ofpayments, 1987-93 9
Chart I.5 Breakdown oftrade, bymain product groups, 1987-94 10
Chart I.6 Regional breakdown oftrade, 1987-94 11
Chart III.1 Foreign investment bysector, 1994 24
Chart III.2 Foreign investment bycountry, 1994 24
Chart IV.1 Breakdown oftariffs byinterval andbysector, 1995 28
Chart IV.2 Customs duties applied toagricultural andindustrial products,
bydegree ofprocessing, 1995 29
Chart IV.3 Breakdown bycountry ofprivatization resources,
February 1993 -June1995 49
Chart V.1 Average customs tariffs bysector, 1995 52
Chart V.2 Wholesale price index, agricultural sector, 1987-94 55
Chart V.3 Wholesale price index, selected agricultural products, 1987-94 55
Chart V.4 Domestic sugar production andcoverage ofrequirements, 1983-93 58
Chart V.5 Exports ofmining andphosphate products, 1983-93 63
Chart V.6 Trends inthemajor branches oftheindustrial sector, 1990-93 64
Chart V.7 International comparison oflabour costs inthetextiles andclothing
industry, Summer 1993 66
Chart V.8 Tourism: Entries andearnings, 1983-94 70WT/TPR/S/8 Trade Policy Review
Page viii
TABLES
Page
I. THE ECONOMIC ENVIRONMENT
I.1 Social indicators 1
I.2 Economic performance, 1990-94 7
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
II.1 Trade legislation inMorocco 18
III. INVESTMENT POLICY AND TRADE
III.1 Industrial investment, 1994 23
IV. TRADE POLICIES AND PRACTICES BYMEASURE
IV.1 Average leveloftrade protection, 1988-94 25
IV.2 Import regime bycategory, 1989-94 35
IV.3 Consumer subsidies, 1989-95 46
V. TRADE POLICIES AND PRACTICES BYSECTOR
V.1 Subsidies toagricultural production andfishing, 1987-93 54
V.2 Voluntary restraints ontextiles, 1990-93 67
V.3 Energy production, 1987-93 72
V.4 Telephone rateperthree minutes, 1994 73Kingdom ofMorocco WT/TPR/S/8
Page ix
APPENDIX TABLES
Page
AI.1 Imports byproduct group, 1985-94 83
AI.2 Exports byproduct group, 1985-94 84
AI.3 Imports byregion andmain trading partner, 1985-94 85
AI.4 Exports byregion andmain trading partner, 1985-94 86
AIV.1 Internal consumption taxes onbeverages, alcohol andalcohol-based products,
1995 87
AIV.2 Goods subject toimport licensing, April 1994 88
AIV.3 State-owned companies affected byprivatization, June1995 92
AIV.4 Hotels affected byprivatization, 1995 94
AV.1 Customs duties applied tothevarious categories oftheISIC, firsthalf1995 95Kingdom ofMorocco WT/TPR/S/8
Page xi
SUMMARY OBSERVATIONS
(1) Theeconomic environment
1. Confronted withinternal andexternal
paymentimbalances,in1983Moroccoembarked
onaseriesofeconomicadjustmentprogrammes.
Themonetary andbudgetary policy andtrade
liberalization measures adopted have yielded
significant results. Thegovernment deficit and
inflation havebeencontained andattheendof
1994 foreign exchange reserves represented
about fivemonths ofexports. Thedirham has
beenmade convertible forcurrent transactions
and forcapital transactions effected by
non-residents. Thedirham hasheld up
relatively wellagainst theprincipal foreign
currencies. Theexternal debtfellfrommore
than100percentofGDP inthemid-eighties
tolessthan70percentin1994, butdebtservice
isabsorbing almost onethirdofcurrent revenue
inthebalance ofpayments.
2. Thecountry 'spresent problems include
unemployment anddrought, which hasbeena
frequent occurrence inMorocco fornearly
20years. Because ofitsseverity, thedrought
of1995 isregarded asthedrought ofthe
century andtheresulting poorharvests could
chop 4to6percentoffrealGDP. These
adverse climatic conditions haveaggravated the
exodusfromruralareasandalsounemployment,
which hasnowreached about 16percentofthe
labourforceatnationallevel.Thesocialimpact
ofunemployment hasbeen softened bythe
existence ofanextensive informal sector which,
however, ishaving anegative effect on
government revenue andhelping toincrease the
burden ontax-paying enterprises.
3. Transport costs(including freight costs
forair,seaandroadtransport) arerelatively
highascompared withthose inother countries
inasimilar economic situation. Moreover, the
taxes levied donotreflect thelevel ofbasic
infrastructure (including electricity and
telecommunications) required byindustry as
government revenue ismostly usedforpaying
civilservice wages.4. Withaviewtopromoting investment,
especially foreign investment, thelawlimiting
foreignholdingsinMoroccancompanies,known
asthe"Moroccanization" law,wasabolished
inSeptember 1993, newbanking regulations
were adopted andaprivatization programme
waslaunched. Outofthe113State-owned
companiesandhotelsscheduledfor
privatization, 32hadalready beenprivatized
byJune 1995 andtoday public investment is
concentrated inthesocial andinfrastructure
sectors. Foreign financing forjointventures
with Moroccan partners isnow being
encouraged; suchinvestment could alsohelp
tofinance thereplacement ofobsolete plantand
equipment.
(2) Morocco inworld trade
5. Morocco'smerchandiseexportscomprise
three main groups ofproducts which account
forabout 80percent ofthecountry 's
merchandise export earnings: agricultural
produce andseafood, textiles andclothing, and
phosphate andphosphate derivatives. Morocco
possesses morethanhalftheworld 'sphosphate
reserves and, internationally, istheleading
phosphate exporter. Moreover, itisphosphates
thatenable Morocco tomaintain apresence in
alarge number offoreign markets.
6. ThestructureofMorocco'smerchandise
imports haschanged inrecent years toreflect
theneeds associated with theinvestment
encouragedbyeconomicadjustmentandgrowth.
Theshares offood andenergy imports are
declining whereas imports ofmachinery and
other capital goods, together withimports of
rawmaterials needed bythechemical industry,
areincreasing.
7. TheservicessectorinMoroccoismainly
based ontourism which isfavoured bythe
natural beauty ofthecountry anditscultural
heritage. Tourist activities bring inasmuch
foreign currency asagricultural andseafood
exports combined (about 30percent of
merchandise export earnings). European
tourists represent about 60percentofthetotal.WT/TPR/S/8 Trade Policy Review
Page xii
Although considerable, tourist earnings andthe
remittances from Moroccans working abroad
arenotsufficienttoabsorbthestructuraldeficits
ofthetrade balance.
8. TheEuropean Union continues tobe
Morocco 'smain trading partner. Itsupplies
about 54percent ofmerchandise imports,
receives 63percentofexports andevery year
isresponsible forabout 75percentofdirect
foreign investment. Within theUnion, France,
Spain, Italy andGermany have thelargest
shares inthetrade withMorocco. Outside the
EU,Morocco 'strade withJapan andtheUnited
States isontheincrease.
9. Thefactors thathave favoured trade
withtheEUinclude both Morocco 'slower
labour costs andthepreferential treatment
granted tomany Moroccan products. However,
some categories ofagricultural products are
subject totariffquotas andthecountry hasalso
agreed torestrict itsexports oftrousers tothe
Union. Morocco andtheEuropean Union
intend toconclude anassociation agreement
which should eventually make itpossible to
establish afree-trade area.
(3) Institutional andlegislative framework
10. The Kingdom ofMorocco isa
constitutional monarchy; theexecutive power
isinthehands oftheKing, asHead ofState,
andhisGovernment. TheKing signs and
ratifies international treaties. Where trade is
concerned, billsaregenerally initiated bythe
competent Ministers andthensubmitted tothe
Chamber ofRepresentatives forapproval. The
Chamber iscomposed of333Members, two
thirds ofwhom areelected directly byuniversal
suffrage andonethirdbyanelectoral college.
11. Intheearly 1990s, theGovernment
began revising theMoroccan legislation, parts
ofwhich dated fromthelastcentury. Adraft
Company Actandthree newCodes, onefor
investment, onefortrade andoneforlabour,
havebeenprepared. Adraft Competition Act
isalsoinpreparation. Allthese texts, which
arebased ingeneral onthecorresponding
French legislation, areintended toadapt thelegislative framework tothevarious reforms
which havebeencarried out,especially inthe
areaoftrade. Withtheexception ofthedraft
Competition Act,these textsareintheprocess
ofadoption.
12. Theconstitutional reforms of1993were
concerned, among other things, withreducing
thetimerequired fortheadoption orratification
andimplementation oflaws inMorocco.
However, there arestillmany billswhich have
beensigned butnotratified orratified butnot
yetimplemented.
(4) Features ofeconomic policy
(i) International commitments
13. Morocco acceded totheGATT in1987.
Itparticipated actively intheUruguay Round
negotiations andhosted theMarrakesh Summit
inApril 1994. Ithasaccepted theWTO
Agreements andhastherefore committed itself
topursue theliberalization ofitsexternal trade
inamultilateral context.
14. Within theframework oftheWTO,
Morocco hascompleted thebinding ofallits
tariff lines. Thecountry hasalsobound its
fiscal import levyand,likeother members ofthe
WTO, ithasundertaken thetariffication ofthe
quantitative measures which affect agricultural
products. InJune1993, Morocco introduced
tariff equivalents ofbetween 100and365per
centforliveanimals, meat, dairy products and
some oftheir derivatives. Other tariff
equivalents aretobeintroduced in1996. For
some meat categories theceiling rates reach
380percent.
15. Subject tolimitations concerning the
physical presence offoreigners, Morocco has
entered intocommitments under theGeneral
Agreement onTrade inServices. Ithasbound
theconditions ofmarket access forcertain
categories ofservices,in particular professional
services, other business services, value-added
telecommunications services, environmental
services, andfinancial andtourism services.
Morocco isparticipating actively inthework
ofthemaritime transport services andbasic
telecommunications negotiating groups. AbillKingdom ofMorocco WT/TPR/S/8
Page xiii
iscurrently being prepared withaview to
adaptingthelegislationinforcetotheprovisions
oftheWTOAgreementonTrade-RelatedAspects
ofIntellectual Property Rights.
16. WithintheArabMaghrebUnion(AMU),
ofwhich Morocco isamember, Tunisia and
Algeria arethetwomostimportant destinations
forMoroccan products. Exports tothese
markets areexempt fromimport duties (inthe
caseofTunisia forcertain products) orpaya
countervailing taxof17percentrather thana
higher rate. Thevolume oftrade within the
Union isstilllimited buttheMember countries
areplanning toestablish afree-trade area.
Morocco isamember of,inter alia, the
Organization oftheIslamic Conference andhas
concluded bilateral trade andtariffagreements
withseveral Arab andSub-Saharan African
countries.
(ii) Trade policy instruments andtheir
effects
17. Morocco'scurrenttradepolicycombines
progressive import liberalization with the
promotion ofindustrial exports andheavy
protection forcertain agricultural staples. On
theimportside,domesticproductionisprotected
byanumber ofmeasures suchasthelicences
required forafewproducts (10.2 percentof
totalmerchandise imports in1994 asagainst
8.4percentin1993), import duties, thefiscal
import levyandaparafiscal tax.Subsidies have
been granted inorder toencourage the
consumption ofcertain locally-produced
agricultural products.
18. By1993, Morocco hadconsiderably
simplified itsimport tariff byreducing the
number andthemaximum levelofdutyrates;
themaximum rateshadgenerally beenreduced
to35percent,except forcertain products which
weresubject todutyat40or45percent. Since
then,themaximum rateshavebeenraised, more
particularly asaresult oftheintroduction of
certain tariffequivalents. Attheendofthefirst
halfof1995 thesimple average dutyratewas
23.5 percent. This average conceals a
progressivity ofduties intheindustrial sector,especially asregards products which havebeen
orcould bemanufactured inMorocco.
19. The agricultural sector, whose
importance resides notonlyintheproportion
ofthepopulation thatitemploys butalsointhe
foodsecurity policy nowinplace, isthesector
thatreceives themostprotection: cereals, in
particular softwheat, andoilseed, sugar, milk
andmeat aretheproducts more especially
concerned. TheForeign Trade Actprovides for
variable levies onimports ofcertain staple
foods. Farmers areexempt fromtaxation.
20. Ontheexport side, Moroccan goods,
especially those with ahigh level oflocal
processing, arebeing promoted bymeans of
tariff andtaxconcessions. These concessions
include relief andexemption fromorreduction
ofduties andlevies, especially onimported
inputs, andconcessions withrespect tothetax
onexporters 'profits. Goods forexport are
exemptfromvalue-addedtax.Thereisprovision
forrefunds onexports ofcertain agricultural
products insurplus onlocalmarkets, butsofar
there appears tohavebeennoinstances ofthis
measure being applied. Industrial zones, in
which Stateaidisavailable forthepurchase of
land, andafreezonearecurrently operational.
Except forhydrocarbons andcertain services,
duties and taxes onexports have been
progressively abolished; thetaxes levied on
agricultural andmining exports wereabolished
bythe1995 Finance Act.
21. Theinstrumentsdesignedtoprotectlocal
industry could make exporting enterprises less
efficient. Theprinciple istogivefavourable
treatment onlytogoods, inparticular inputs,
which arenotorcannot belocally produced.
Atthesame time, rawmaterials ofMoroccan
origin arerelatively expensive. Infact,
shelteredfromforeigncompetitionandbenefiting
fromsubsidies, thelocal producers havelittle
incentive toreduce their costs. Moreover,
although theimporting countries havenotsofar
taken anycountervailing measures against
Moroccan exports, theconcessions granted
could increase theriskoftheirdoing so.These
regimes alsohaveaprejudicial effect onexportsWT/TPR/S/8 Trade Policy Review
Page xiv
ofcertain services, including tourism, which
mainly uselocally-produced inputs.
22. Morocco hasnolegislation concerning
theemergencymeasuresdescribedinArticleXIX
oftheGATT. However, theforeign trade
regulations currently inforce provide for
anti-dumping and countervailing measures
which, itseems, havenever yetbeenapplied.
Asaprecaution, pending theentry intoforce
ofanewlawintended, among other things, to
adapt these measures totheWTO Agreements,
apreliminaryimportdeclarationwasintroduced
inApril 1994. Bananas aretheonlyimport for
which thisdeclaration isrequired.
(iii) Sectoral aspects oftrade policy
23. Agriculture provides work forabout
40percentoftheMoroccan labour force.
However, thecontribution ofthesector toGDP
hasfallen fromnearly 20percentinthemid-80s
tolessthan15percentonaverage since 1990.
During thelast10years drought hasbecome
anincreasingly regular feature oftheclimate
and,accordingly, isnowafactor which must
betaken intoconsideration inmaking forecasts.
Thus, theGovernment hasreoriented its
agricultural policy away fromthebroader goal
ofself-sufficiencytowardsthenarrowerobjective
ofguaranteed foodsecurity. Theprogressive
liberalization ofthissector could befacilitated
bythecommitments entered intobyMorocco in
thecontext oftheWTO Agreements andthe
developmentofmoreefficientmodernproduction
unitsusing irrigation systems. Atpresent, such
units arefarming about 11percentofthe
cultivated areaandaccount foraquarter of
agricultural production and80percentofthe
country 'sagricultural exports.
24. Intheindustrial sector, theaimis
diversification, especially ofexports. Thus, the
range ofgoods produced bythissector hasbeen
extended, even though there hasbeen little
change initsshare ofbothGDP andexports.
Diversification hasconsisted inraising thelevel
ofprocessing ofcertain products, inparticular
inthemining industry (phosphate), thechemical
industry (chemicals and parachemicals),
manufacturing (especially textiles andclothing),andthefoodindustry. Thedevelopment ofthe
textiles andclothing branch, more particularly
otward processing, canbemainly attributed to
labour costs andtheproximity oftheEU.
Moreover, thecomprehensive programme of
dismantlement ofquantitative restrictions
announced bytheEUinthecontext oftheWTO
Agreement onTextiles andClothing isgiving
Morocco timetoadjust: forthemostpart, the
country 'sexports areamong those which the
Union intends tointegrate under theAgreement
bytheendofthe10-year period.
25. Themotor vehicle sector hasbeen
experiencing difficulties forseveral years.
Accordingly, theGovernment hasundertaken
torevitalize thelocalcontent system introduced
in1982, according towhich motor vehicle
assembly firms must incorporate, intheir
production, 60to70percentofparts of
Moroccan origin oroffset byexports. A
contract recently signed with aEuropean
manufacturer callsforalocalcontent of50per
centafterthefirstthreeyears; thecontract also
provides forcertain taxconcessions.
26. Theservices sector contributes more
than50percenttotheformation ofMoroccan
GDP. Theincrease initsshare isattributable
tothedecline inthatofagricultural activities
during recent years. Atthesame time, the
sector hasespecially benefitted from the
dynamism generated bythe country 's
achievements intheareaofliberalization. In
fact, this isthesector inwhich the
disengagement oftheState hasbeen most
pronounced interms ofthenumber of
enterprises privatized.
27. The liberalization ofthebanking
subsector hasfacilitated theentire opening-up
process currently under wayinMorocco. The
liberalization oftheother branches ofthe
services sector, suchastelecommunications and
insurance, islessadvanced but,given the
commitments entered intobyMorocco inthe
context oftheWTO Agreement onTrade in
Services, there areplans forcertain activities
tobeopened up.Kingdom ofMorocco WT/TPR/S/8
Page xv
(iv) Trade policies andforeign trading
partners
28. Asinthecaseofother countries, the
liberalizationprogrammecarriedoutunilaterally
byMorocco overaperiod ofmorethan10years
wasmade necessary byeconomic difficulties.
Asindicated inthefirstreview ofMorocco 's
trade policy in1989, thethrust ofthepolicy
pursued hasbeen topromote exports of
manufactures. Thefavourable results obtained
insuchareas aseconomic growth, inflation,
government finance andexternal trade ingoods
andservicesshouldhaveencouragedthecountry
tocontinue withthereforms. However, internal
resistance andadministrative andlegislative
delays seem tohave blunted theinitial
enthusiasm.
29. Morocco 'sactive participation inthe
Uruguay Round negotiations and the
commitments ithasentered into inthis
connection reaffirm itsattachment tothe
multilateral trading system. The WTO
Agreementsofferitanopportunitytopursueand
extend itsliberalization policy andtoeliminate
thedistortions inherent inthepreferential
regimes currently inplace. Thus, theconditions
arenowfavourable forMorocco totakeupthe
challenge ofthedrought andrevitalize its
adjustment process.