72716 v1 World Trade Indicators 2009/10 Morocco Trade Brief Trade Policy As food prices soared in 2008, the government Morocco has been implementing trade reforms since reduced the import tariff on wheat in the beginning of 1996, most notably abolishing a majority of its the year from 130 to 2.5 percent, and later in August quantitative import restrictions. Moreover, all imports reduced the tariff on other key food imports.2 In June from the 16 other members of the Greater Arab Free 2009, as global prices fell, the government temporarily Trade Area (GAFTA) have been admitted completely increased the import tariff on durum wheat to 170 duty-free since January 2005. However, the percent.3 Additionally, in the context of the global restrictiveness of Morocco’s trade regime, especially in economic crisis, the Moroccan government established agriculture, remains higher than its region and income a fiscal stimulus package to support three of its key group. Its 18 percent MFN Tariff Trade Restrictive exporting sectors: textiles, automotive parts, and Index (TTRI)1 is higher than that of an average Middle leather and shoes.4 Also, in May 2009, it started East and North Africa (MNA) (11.9 percent) or implementing a new strategic plan for the lower�middle�income (8.4 percent) country. Morocco’s development of exports called ―Maroc Export Plus‖ agricultural TTRI is 33.1 percent and its non- (MEP). This 10-year strategy targets major exporting agricultural TTRI is 16.3. Based on the TTRI, it ranks activities such as the automobile and electronics 122nd out of 125 countries (where 1st is least industries, textile and leathers, off-shoring activities, restrictive). Morocco’s simple average of the MFN and agribusiness and fishing products. It aims to triple applied tariff has been decreasing since 2000. In 2008 exports (excluding phosphates and tourism).5 it was 21.3 percent, comparable to the regional average, and in 2009 it further decreased to 18.1 External Environment percent. If preferences are taken into account, the regime appears slightly more liberal since its simple Morocco’s exports, with a Market Access TTRI6 average of the applied tariff was 18.4 percent in 2008, (including preferences) of 1.8 percent, have better and 15.5 percent in 2009. Morocco also has a relatively access to international markets than the exports of an high 300 percent maximum MFN applied tariff, average MNA (2.1 percent) or lower-middle-income excluding alcohol and tobacco, and a high 53.6 percent (2.3 percent) country. The simple average of the share of tariff lines with duties higher than 15 percent overall rest of the world tariff (including preferences) (international peaks). The government’s trade policy faced by the country’s exports is 9.5 percent, but the space, as measured by the wedge between bound and weighted rest of the world tariff (including applied tariffs (the overhang), was 23.3 percent in preferences) is 2.8 percent. The tariff faced by its 2009. Based on the extent of its commitment to trade agricultural products is relatively high at 9.8 percent, liberalization in services, Morocco ranked 76th out of and by the non-agricultural exports is 1.7 percent. The 148 countries according to the GATS Commitment Moroccan dirham, which is pegged to a basket of Index. currencies consisting of the euro and U.S. dollar, has appreciated by 0.6 percent in real terms in 2008, making exporters less competitive abroad. Unless otherwise indicated, all data are as of August 2009 Morocco ratified two major free trade agreements in and are drawn from the World Trade Indicators 2009/10 February 2009, one that aims at establishing a free trade zone among the Arab-Mediterranean countries Database. The database, Country Trade Briefs and Trade-at- (ZLEA) and the other one a free trade zone between a-Glance Tables, are available at http://www.worldbank Turkey and Morocco.7 .org/wti. If using information from this brief, please provide the following source citation: World Bank. 2010. ―Morocco Behind the Border Constraints Trade Brief.‖ World Trade Indicators 2009/10: Country Trade Global rankings point to a somewhat weak Briefs. Washington, DC: World Bank. Available at institutional environment in 2009, with Morocco being http://www.worldbank.org/wti. World Trade Indicators 2009/10 Morocco Trade Brief ranked 128th in the Ease of Doing Business index, dropped in 2008 to 7.8 percent of GDP, compared to which looks at the business environment in 183 9 percent of GDP the year before. countries. Additionally, Morocco’s Logistics Performance Index score, which reflects the extent of trade facilitation in the country, is below the regional Notes and income group averages, reflecting a less conducive 1. TTRI calculates the equivalent uniform tariff that climate for trade. Morocco scores 2.38 on a scale of 1 would keep domestic welfare constant. It is weighted by to 5, with 5 being the highest score, while the regional import shares and import demand elasticity. and income group averages are 2.42 and 2.47, 2. FAO, 2009. respectively. Morocco ranked 94th out of 150 countries 3. WTO, July 15, 2009, p. 39. and 5th in the MNA region. Its strongest logistics 4. World Bank, Spring 2009, p. 1. indicator is timelines of shipments in reaching their 5. World Bank, Fall 2009, p. 5. destination, while it needs most improvement in the 6. MA-TTRI calculates the equivalent uniform tariff of ability to track and trace shipments. trading partners that would keep their level of imports constant. It is weighted by import values and import Trade Outcomes demand elasticities of trading partners. 7. World Bank, Fall 2009, p. 6. Morocco’s trade growth, in real (constant 2000 U.S. 8. IMF, September 2008, p. 5. dollar) terms, dropped from an average rate of 10.5 9. African Economic Outlook, 2009. percent over the 2005–07 period to 5.4 percent in 10. IMF, August 2009. 2008 and is expected to turn negative in 2009, with 11. World Bank, Fall 2009, p. 4. trade falling by 0.3 percent. Trade growth slowed due 12. WTO, May 20, 2009, p. vii, and World Bank, Fall to the decline in the real growth rate of both imports 2009, p. 1. (from 10.9 to 5.6 percent) and exports (from 10.0 to 13. WTO, May 20, 2009, p. viii. 5.1 percent). Growth of these two is expected to further decline in 2009, with a steeper fall in exports. References In nominal U.S. dollar terms, trade growth was maintained from 29.6 percent in 2007 to an estimated African Economic Outlook. 2009. ―Morocco.‖ African 30.3 percent in 2008. Imports grew (from 32.8 percent Economic Outlook. July 27, 2009. . grew in the first three quarters of 2008, mainly due to Food and Agriculture Association of the United Nations high prices for phosphates and phosphate by- (FAO). 2009. ―Policy Measures Taken by Govern- products.9 However, they fell by 18.9 percent in the ments to Reduce the Impact of Soaring Prices (As of fourth quarter of 2008 as compared to the same 15 December 2008).‖ FAO. June 26, 2009. . 50.7 percent in the third quarter of 2008 year-on- International Monetary Fund (IMF). September 2008. year.10 The trend continued in the first half of 2009, IMF Country Report No. 304. IMF, Washington, DC. when nominal exports declined by 34.4 percent ———. August 2009. International Financial Statistics compared to the first half of 2008.11 The fall in exports (Country Tables). IMF, Washington, DC. was partially influenced by a decline in demand for World Bank. Spring 2009. ―Morocco Economic Update.‖ Moroccan goods and tourism services in the EU, July 27, 2009. World Bank, Washington, DC. which has been hit hard by the recession and accounts . for 71.9 percent of Morocco’s exports.12 ———. Fall 2009. ―Morocco Economic Update.‖ FDI as a share of Moroccan GDP decreased in 2008 September 4, 2009. World Bank, Washington, DC. to 2.7 percent, from 3.7 percent the year before. World Trade Organization (WTO). May 20, 2009. ―Trade However, it is still higher than its value of 0.2 percent Policy Review—Morocco.‖ WTO, Geneva. in 2002, before the FDI inflow drastically increased ———. July 15, 2009. ―Report to the TPRB from the following reforms (including privatization) aimed at Director-General on the Financial and Economic enhancing the business climate.13 Remittances are an Crisis and Trade-Related Developments.‖ WTO, important source of income in Morocco, but they Geneva.