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Commission keeps hopes alive for trade talk relaunch with Morocco

There is not only CBAM, the United States or Mercosur in EU trade policy. There is also Morocco.

Trade relations with the EU’s southern neighbour were the focus of a dedicated session in the international trade committee this week. The MEPs’ exchange of views with Commission official comes amidst heavy lobbying of Southern European tomato growers riled by the southern competitor’s buoyant exports of the red fruit to the EU.

It also comes as a new ruling by the European Court of Justice is expected in the coming months or weeks on a settlement reached with Rabat related to trade with Western Sahara, a zone occupied by Morocco, an occupation deemed illegal by the UN and EU.

In 2018, the EU and Morocco renegotiated a 2013 trade protocol to a 1990s trade agreement that covers agriculture and fish products. The deal was invalidated  in 2016 by the Luxembourg court because it applied de facto to Western Sahara. As part of the renegotiation, the EU proposed to offer Western Saharans continued preferential market access and amended legal language to that end.

The Commission also introduced a trade flow monitoring mechanism to be able to identify which products come from Western Saharan territory and which from the officially recognised Moroccan territory. But the Polisario front sued the EU again at the Court of Justice over this settlement in 2019 – and the ruling is now pending.

Conditions for tomato import safeguard ‘not met’

DG Trade’s Leon Delvaux and DG Taxud’s Fernando Perreau de Pinninck rebuffed calls made last month by the organisation Copa Cogeca and some Spanish MEPs for the agreement with Morocco to be renegotiated to tighten up the tomato quotas following the UK’s departure from the EU. These interest groups also call for an import safeguard.

The 2013 protocol with Morocco opens in a very limited way the EU’s market to some Mediterranean products. As regards to tomatoes in particular, the quotas opened to Moroccan producers do not cover peak summer season in the EU, but are meant to ease trade for tomatoes in the spring or autumn.

“In 2020, the EU imported 435 000 tons from Morocco, representing about 6% of total EU production. That year imports were 5% higher when compared to 2019. For the first months of 2021, imports of fresh tomatoes from Morocco were in line with the previous season,” said Leon Delvaux. “In light of this data, the Commission considers that the conditions for safeguard measures do not appear to be met.”

Similar trade patterns were discernable for Western Sahara. The DG Taxud official noted that imports of tomatoes had increased by 12% from 2019 to 2020 and that the pattern of exports remained the same in the first months of 2021. “These tomato imports always respect the quantities of the TRQ agreed with Morocco under the Association Agreement,” stated Perreau de Pinninck.

The official also rebuffed claims that there was fraud in accounting for Western Saharan imports. The agreed tariff rate quotas “are fully respected”. Also: “There is no fraud that we are aware of. And that can be substantiated,” said the DG Taxud official.

The farm lobby calls come at a bad time for the European Commission. Brussels hope that stalled negotiations to renegotiate a 1990s trade agreement with Morocco can start soon, as pledged by the two sides in 2019.

Delvaux said that a the restart of trade talks would align the old trade agreement with the EU’s February 2021 Trade Policy Review, in particular its sustainability and environmental dimension.

The EU wants to include sustainable development provisions, energy and raw materials export disciplines, rules on services and investment and transparency and ‘good regulatory practices provisions’.

“We believe the modernisation would help support the economic recovery and meet our common objectives of resilient value chains decent jobs, fighting climate change and advancing with the digital agenda,” said Delvaux.

The EU enjoys a large goods trade surplus with Morocco (€ 4.9 bn in 2019), which is only partly compensated by a Moroccan has services surplus (€1.3bn in 2019).

This deficit also explains why the business community in Morocco is reticent at the idea of jumping straight into new trade talks with the EU. In a recent interview in the Moroccan press, Hassan Sentissi, president the business association ASMEX, said that Morocco had 54 bilateral trade agreements in place already. “Unfortunately, these accords haven’t had the expected result and have only deepened the bilateral trade deficit and increased imports.”

What is more the EU and Morocco continue to disagree over a recent Paneuromed rules-of-origin system overhaul, as Rabat is asking for more liberal rules to input sourcing.

One senses from the Commission’s statements that irking Morocco with potential restrictions on tomato imports is not exactly something it deems supportive of its diplomatic efforts. Especially given that a Damocles sword is hanging over the relationship in the form of a politically potentially explosive ECJ ruling.

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