Brussels, 16/07/2009 (Agence Europe) - If one is to believe the Algerian press, all is not well between Algiers and Brussels, and the local press has said that renegotiation of the association agreement signed in 2002 is on the cards. Brussels, however, is playing down this disquiet, which would seem to be more indicative of a bitter struggle between those who want an open economy and those who want to keep the private sector out of the market. At issue are measures adopted by the Algerian government on conditions that foreign firms have to meet to be able to exercise a commercial activity and which are causing an open crisis. This episode may be added to several previously which demonstrate that, even if Algeria has stuck with the European approach with regard to the other countries of the Mediterranean rim, it has never been fully at ease with the trade chapter of the agreement, which does not seem to sit well with this oil-producing country, where trade remains imbalanced: largely fuel exports against the need to bring in massive imports to satisfy local needs. The country's traders are exerting constant pressure on the government and state that, four years after the agreement came into effect, the aim of a “win-win” “shared area of prosperity” is more like a mirage. The problem does not come from relations with the EU; it is domestic and shows the difficulty the Algerian economy is experiencing in making full use of the agreement, a European source said, summarising a situation where, the source says, various quotas are unused (for example, in agri-food production and in tomato processing). Algeria is finding it difficult to inject any dynamism into its firms, despite the best efforts and support of the European Commission and the European Investment Bank (EIB), it is said in Brussels, citing various international economic bodies which point to the need for greater liberalisation of the Algerian economy.
The measures, in force since May, which brought about the crisis, are considered to be contrary to the trade arrangements under the association agreement. The European Commission is calling for the arrangements that both parties undertook to observe, to be met. A letter from European Trade Commissioner Catherine Ashton to Algerian Trade Minister El Hachemi Djaâboub highlights that these “measures would seem to be at odds with the association agreement … which contains a stability clause (and which) commits Algeria to offering the same treatment to EU service providers as national companies receive”. According to what has been published in the Algerian press, in her letter, Ashton “urges (Algeria) to reconsider the measures announced and to examine whether it would be possible to suspend them”. No response has been forthcoming, but, according to the media, the minister has said unofficially that “Algeria has the sovereign right to take its own decisions and no one can assume the right to tell it what it must do”. Djaâboub argues that “Algeria, which is a $51 billion market, has to take measures to regulate investment that will safeguard its interests”. “The decisions taken, including requiring there to be at least a 30% Algerian shareholding in foreign commercial companies, will be strictly met and applied, because these are matters of national sovereignty, no matter what these firms think,” he added. Some on the Algerian side speak of the “economic nature” of these decisions, when the country is seeing both a fall in its oil revenues and a drop in its non-fuel sales abroad, especially in the EU, its main trading partner. Information given shows that non-fuel exports remain low, not exceeding $800 million while purchases abroad have “exceeded forecasts”, going over $40 billion, “a blessing for Europe, Algeria's main supplier”. The EU is Algeria's top trading partner, accounting for 53.23% of its imports and 51% of its exports. In Algiers, the EU is even criticised over Algeria's accession to the WTO and the Commission is accused of not providing the hoped-for backing, highlighting the issue of the dual pricing of gas which distorts competition in favour of
Algerian production.
The Algerian media also publish the comments on an unnamed European source who regrets the “retroactive nature” of the decision. “The Algerian government could have used the safeguard clause contained in the association agreement,” said an official speaking on condition of anonymity. “Especially since the clause is well-known, with the economic crisis and the risks to the balance of payments,” the same source added. (F.B./transl.rt)