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UNCLAS SECTION 01 OF 02 RABAT 000619 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS USTR FOR DOUG BELL 
FAS FOR AILEEN MANNIX 
 
E.O. 12958: N/A 
TAGS: ECIN ECON EFIN ETRD MA
SUBJECT: MOROCCO IMPLEMENTS AGADIR AGREEMENT-- WITH A CATCH 
 
REF: A. RABAT 528 
 
     ¶B. RABAT 362 
 
¶1. (SBU) Summary:  Three years after its signature and nearly 
a year after it technically entered into force, Morocco on 
March 27 finally published the customs circular necessary to 
implement the Agadir Agreement.  That accord, signed by 
Morocco, Tunisia, Jordan, and Egypt in 2004, established a 
free trade area among the four countries as a step towards 
fulfillment of the 1995 Barcelona Declaration's vision of a 
Euro-Mediterranean free trade area by 2010.  The circular was 
long delayed, however, by Morocco's fear that it would be 
forced to extend duty free entry to a range of sensitive 
agricultural imports from the United States under our own 
bilateral FTA, if such products were admitted duty free from 
the Agadir signatories.  To resolve the impasse, Morocco 
ultimately decided to exclude these 128 sensitive 
agricultural products from the Agadir agreement, 
notwithstanding the fact the agreement itself calls for 
complete elimination of duties on all industrial, 
agricultural, and agro-industrial products.  Moroccan 
officials indicate that they formally notified counterpart 
governments of this decision in advance, and have not 
received any objections. The decision brings closure to an 
issue that has been the poster child of critics of Morocco's 
regional trade policy, at a time when there is increasing 
discussion here of the importance (and promise) of regional 
economic integration.  End Summary. 
 
¶2. (SBU) The Agadir agreement, a flagship project for 
regional free trade initiated by Morocco in 2001 and signed 
in February 2004, has languished since it formally entered 
into force in July 2006.  While technically in effect, the 
failure of Moroccan customs to issue implementing customs 
circulars meant that practically it had no effect on the 
ground.  In private conversations, government contacts 
concede that unlike Morocco's trade agreements with Turkey, 
the United States, and the European Union, which were 
negotiated in great detail and saw regular and intensive 
consultation with concerned Moroccan industries, the Agadir 
agreement and other similar regional or pan-Arab agreements 
were "political statements," which were entered into with 
much less preparation. 
 
¶3. (SBU) As a result, as officials at the National Export 
Council have explained to us, as it moved to implement the 
Agadir agreement Morocco quickly perceived an embarassing 
complication: any decision to grant preferential access to a 
list of sensitive agricultural products including beef, 
chicken, wheat, and other goods from Jordan, Tunisia or Egypt 
would require Morocco to grant an equivalent preference to 
the United States.  Morocco had negotiated an exception to 
this requirement in an exchange of letters dated June 15, 
2004 between USTR Robert Zoellick and Minister-Delegate 
Fassi-Fihri, but the letters indicated that "Morocco does not 
anticipate importing any agricultural good from an Arab 
League country if that country is not a net exporter of that 
good."   None of the other Agadir signatories, however, are 
net exporters of the goods in questions. 
 
¶4. (SBU) After a delay of nearly a year as various 
authorities considered how to resolve the problem, Morocco 
ultimately decided to formally exclude these goods from 
application of the Agadir Agreement.  The preambule to the 
March 27 circular implementing the Agadir Accord (5047/223) 
thus makes its application subject to relevant provisions in 
the circular that implemented the U.S.-Morocco FTA (No. 
4977/222).  Those latter provisions provide that the 128 
products listed in annex 10 of the Moroccan Customs 
implementing regulations "cannot be imported in a 
preferential category derived from bilateral, regional, or 
multilateral free trade agreements" with certain countries, 
unless those countries are net exporters of the products 
concerned.  The circular further specified in a separate list 
in the same annex the list of countries that are not net 
exporters; all three other Agadir signatories figure on this 
list. 
 
¶5. (SBU) While some in the Moroccan press who have been 
critical of the Agadir Agreement have had a field day with 
the decision, Morococan officials defend it, emphasizing that 
 
RABAT 00000619  002 OF 002 
 
 
there have been no objections from the other parties to the 
agreement.  In comments to a leading economic weekly, 
Minister of External Commerce Mechahouri stressed that all 
three countries were "consulted and made aware" of the issue. 
 He argued that Morocco was the only country to find itself 
in such a situation as only it has a free trade agreement 
with the United States (NB obviously overlooking the 
U.S.-Jordanian FTA), and in a play on words concluded that 
"to open ("s'ouvrir") does not mean to suffer ("suffrir") or 
to surrender ("s'offrir").  Questioned about the Agadir 
decision, officials at the Foreign Ministry have been quick 
to stress that the Customs decision puts Morocco in full 
compliance with its obligations toward the United States, and 
that this was the primary consideration guiding the Agadir 
circular. 
 
¶6. (SBU) The Customs decision comes at a time when regional 
economic integration is very much the topic of conversation 
in Moroccan government circles.  In addition to the newfound 
activism of the Arab Maghreb Union (UMA) on the topic 
(reftel) and the creation in Marrakech in February of a 
regional business confederation uniting business associations 
across the Maghreb, recent months have also seen conferences 
hosted by the UN Economic Council for Africa (UNECA) and the 
Moroccan High Planning Commission (HCP), all positing that 
increased intra-regional trade could unlock a virtuous cycle 
of exports leading to faster economic growth and reduced 
unemployment.  Experts note that with intra-regional trade in 
the Maghreb only constituting 3 percent of total trade flows, 
the region lags far behind its peers in Latin America and 
Asia.  They note too the potential advantages that could 
accrue from greater cooperation as the region moves towards 
free trade with Europe under the Euro-Mediterranean dialogue 
launched at Barcelona in 1995.  Maghreb countries, they 
argue, would do better to negotiate as a block with the EU, 
instead of dealing individually with it.  The theme of 
regional integration has also been pushed by the IMF, most 
recently in the Deputy Managing Director's visit to Morocco 
on April 4. 
 
¶7. (SBU) Comment: In the context of these long-range visions, 
issuance of regulations allowing effective implementation of 
the Agadir Agreement is a modest step.  It nonetheless 
removes an embarassing cloud that has hung over the agreement 
since its signature.  Though some predict complaints from 
other signatories about Moroccan back-tracking, others point 
to similar failures in other countries (Tunisia's failure to 
allow importation of the "Logan"-- an inexpensive 
Moroccan-produced vehicle-- is a particularly sore subject) 
and predict that they will let the issue slide, particularly 
given the fact that historically there has been almost no 
trade in the goods in question.  End Comment. 
****************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
****************************************** 
 
RILEY