Could Algeria-EU trade deal crumble days ahead of deadline?

Legislation | | MIC Customs Solutions |

With just a week to go, is the Algeria-EU trade deal dead in the water?

A long-planned free trade agreement between Algeria and the European Union could be at risk of collapsing entirely as the North African nation gets cold feet amid economic concerns, it has been reported.

The bilateral trade deal was set to be activated on September 1st 2020 after initially being agreed 15 years ago.

Although an activation agreement laid out plans to phase out tariffs over 12 years, this was eventually extended until this year for products including steel, textiles, electronics and vehicles.

However, as we discussed on these pages two weeks ago, Algerian president Abdelmadjid Tebboune has been calling for the deal to be completely reassessed with a view to "asserting our interests for balanced relations".

Now, as the cut-off date looms ever-larger, concern is growing over the potential impact on Algeria's economy of such an agreement with the EU.

Coronavirus has hobbled the Algerian economy to the extent that an International Monetary Fund prediction suggests it may contract by more than five per cent this year - and Algiers fears it might not cope without the outgoing tariffs.

Furthermore, due to a lack of diversification, Algeria remains reliant on the hydrocarbon industry. With global crude oil prices having tumbled due to a lack of demand in international markets, it has been heavily impacted by this decline in revenue.

Economists fear that unless action is taken, Algeria could be at risk of a slide into foreign debt.

Earlier this month, president of the national association of exporters Ali Bey Nasri claimed the EU is more interested in reaping rewards for itself than it is in trading fairly with the North African country and, as such, the FTA could be a "disaster" for the economy.

He insists the ongoing growth of the EU will pose a threat and that opening up Algeria to foreign markets will not make it less dependent on oil, nor more productive.

Mr Nasri said the playing field needs to be levelled with Europe so Algeria can implement the measures necessary to protect its fragile economy.

Now, Algerian prime minister Abdelaziz Djerad has promised to review all trade terms and to revise any economic and commercial agreements that are "harmful to the country", although he did not single any out by name.

The Associated Free Press asked the Ministry of Commerce about the looming deadline for FTA implementation and was told a task force has been set up to evaluate it, but no further details were provided.

However, fears are growing that an agreement that has been more than a decade-and-a-half in the making could now collapse just a week ahead of officially taking effect.

To add insult to injury, the EU has also removed Algeria from its COVID-19 safe country travel list amid concerns over a growth in case numbers.

Algeria imported some €240 billion in goods from the EU between 2005 and 2017 and is the EU's third-largest supplier of natural gas, according to the European Commission.