VZCZCXYZ0000
PP RUEHWEB

DE RUEHRB #0527/01 0831643
ZNR UUUUU ZZH
P 241643Z MAR 06
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 3180
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RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 3059
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UNCLAS RABAT 000527 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EB/TRA/OTP AND NEA/MAG 
 
E.O. 12958: N/A 
TAGS: ECON EWWT ETRD MO
SUBJECT: MOROCCO PORT REFORM: EYE ON THE FTA 
 
REF: RABAT 0276 
 
¶1.  Summary:  Morocco is making wide-ranging reforms to its 
port sector, a key piece of an economy which handles 98 
percent of the country's of foreign trade.  A law passed in 
December 2005 opens the sector to private operators, breaking 
the state's monopoly over commercial cargo services and 
creating an independent regulatory agency to oversee the 
sector.  The reforms should lower costs for importers and 
exporters, improving the conditions for trade.  The GOM's 
stated goal for the liberalization is to get Morocco ready 
for what Transport Minister Karim Ghellab called "maritime 
transport in the era of free trade."  End Summary. 
 
------------------------- 
Port Reform: FTA in Sight 
------------------------- 
 
¶2.  Commercially, Morocco is an island.  Its eastern border 
with Algeria has been closed for more than a decade, and the 
country is surrounded by the Sahara desert to the south and 
by the sea to the north and west.  As such, a full 98 percent 
of Morocco's foreign trade comes and goes via the country's 
12 international seaports, making the sector one of utmost 
importance to the economic well-being of the state. 
 
¶3.  Moroccan ports currently operate under a unique system of 
dual cargo handling, with state operator/regulator ODEP 
holding a monopoly on dockside cargo handling and a few 
private stevedoring companies operating an oligopoly over all 
on-board cargo loading and unloading activities.  This 
duality drives up costs for shippers, importers and 
exporters; as a result, handling costs for an average 
container are around $220 in Moroccan ports versus $130-$150 
for most Mediterranean ports. 
 
¶4.  A law passed in December 2005 will break ODEP's monopoly 
over land-based cargo handling and open the sector to 
competition from private firms, creating price and service 
competition.  It will allow the same firm to handle cargo on 
board ships and on the dock and weaken the oligopoly 
situation currently enjoyed by on-board stevedoring firms. 
 
 
¶5.  The new law splits ODEP into two separate entities; an 
independent regulator called the National Ports Agency (ANP), 
which will serve as the national ports authority, and the new 
Ports Exploitation Company (SODEP), a government-owned 
commercial operator that will compete with private firms for 
the business of on-loading and off-loading cargo.  SODEP will 
inherit ODEP's existing commercial activities, along with its 
infrastructure, employees and equipment. 
 
¶6.  The National Ports Agency, ODEP's regulatory progeny, 
will perform a standard regulatory role, coordinating the 
different actors within the ports, administering commercial 
port operations, launching tenders and approving new entrants 
into the field.  SODEP, the state operator's commercial 
offspring, is expected to start operating in the fall of 
¶2006.  It will initially remain a state company but may 
eventually be privatized. 
 
¶7.  The reform law, which was largely based on a study done 
by Drewry Shipping Consultants from the UK, will go into 
force gradually during 2006 as decrees of application are 
created.  Minister of Transport Karim Ghellab chose his 
right-hand man at the Ministry - the young and able 
technocrat and former policy director Mohammed Abdeljalil - 
to guide ODEP through the reform period. 
 
¶8.  The legislation was hotly contested by ports workers - 
joined by national labor union UMT - who fiercely resisted 
job losses by ODEP workers or any change to their status as 
state employees.  The government successfully resisted 
pressure to water down the reforms and assuaged workers' 
demands by negotiating terms that guarantee current ODEP 
workers no drop in salary or benefits. 
 
----------------- 
Open for Business 
----------------- 
 
¶9.  The GOM's aims are to achieve a better, cleaner 
regulation by isolating the regulator from the commercial 
operator, and to lower costs by opening stevedoring functions 
to competition.  National Ports Director Jamal Benjelloun 
said the reforms are essential to accommodate the country's 
rapid opening to foreign trade, citing the U.S.-Morocco FTA, 
Morocco's deepening engagements with the European Union, and 
with newer free trade partners like Turkey, Jordan, Egypt and 
Tunisia. 
 
¶10.  ODEP director Abdeljalil said another key motivation for 
restructuring the sector was to decentralize commercial 
control of port operations and prevent one company from 
immobilizing a port through strikes. 
 
¶11.  Comment:  These reforms are a smart move and are well 
overdue, since without an efficient, competitive port system 
the country will not be able to fulfill its ambitions to 
expand and diversify its foreign trade.  The government has 
bravely weathered criticism from port workers unions and 
withstood pressure to dilute out the reforms.  We expect to 
see a better-functioning sector in the years to come.  End 
Comment. 
 
****************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
****************************************** 
 
Riley