General Overview

EXECUTIVE SUMMARY OF THE COUNTRY COMMERCIAL GUIDE FOR MOROCCO

FISCAL YEAR 2004

“International copyright, U.S. Commercial Service and the U.S. Department of State, 2003. All rights reserved outside the United States.”

Two hundred years after being the first country to recognize the U.S. as an independent nation, Morocco’s free trade negotiations with the U.S. are well underway. When the U.S.-Moroccan Free Trade Agreement (FTA) is completed, it is expected to be the most comprehensive FTA that the U.S. has ever negotiated. Although congressional approval is required for ratification, it faces little political opposition. When ratified, Morocco will be the second Arab and first African nation to have an FTA with the U.S. In addition to opening Moroccan markets to greater American exports, the FTA will level the playing field with European competition and allow American corporations based in Morocco to export to Europe duty-free. Moroccan officials anticipate that the FTA will be the catalyst that accelerates and deepens the economic reform process.

Morocco is now steadily progressing internally toward greater modernization and globalization, with the creation of the country’s first commercial courts, new streamlined customs departments and 16 new Regional Investment Centers dedicated solely to facilitating new business ventures. A new comprehensive labor code, protecting both the employer and employee, was finally passed in July 2003. By further reducing trade barriers, fomenting transparency, and by institutionalizing international business law, accounting procedures and standards, the FTA will open Morocco up to increased U.S. business, direct investment and agricultural and service sector exports. With Morocco’s main asset being its 11 million-person workforce, American manufacturers are expected to follow the lead of Fruit of the Loom and the Gap and begin producing popular American textiles in Morocco, boosting its $33 billion GDP and $1,181 average per capita GDP. The greatest challenge lies in creating new jobs for Morocco’s large, growing young population and in providing effective educational and job training. Morocco’s King Mohamed VI, who is committed to consolidating reform policies in hopes of promoting economic development, nurturing political progress and combating terrorism, recently urged Morocco’s 31 million people to think critically about the reforms needed today in order to ensure a brighter future. Morocco was internationally praised for fair and transparent elections in fall 2002. Thirty five (35) Moroccan women are now present in Parliament.

The economic impact of the May 16, 2003 terrorist bombing of six locations in Casablanca on Morocco’s international investment and tourism sectors is not yet known. With Morocco’s ambitious project to attract 10 million tourists a year by 2010 in order to reduce unemployment, and 19% of the population living below the poverty line, Morocco cannot afford the economic price of terrorism and is devoted to continuing to strengthen security and create jobs.

Strategically located just 7 hours from JFK and 3 hours from Paris and on the Straits of Gibraltar, Morocco is seen more and more as a regional hub, both for transit and as a business base. Morocco’s moderate Mediterranean climate on 2,750 miles (3,500 km) of coastline, and its developed infrastructure, make it an increasingly more strategic and attractive location for business. The recent EU FTA has already spurred manufacturing development in Morocco, an activity that will be heightened when the U.S. and Morocco ratify their agreement. Most importantly, with a literacy rate of 43.7%, Morocco will rely on these key trade agreements to stimulate economic growth and to foster the job creation necessary to facilitate social and educational reform. Agriculturally, Morocco has been prospering due to moderately heavy rainfalls in 2002-2003. But, as a country the size of California, with only 20.12% arable land, there is still a large market for U.S. agricultural imports.

The U.S. Trade and Development Agency continues to make significant contributions to Morocco. Projects in 2002 included a fiber optics telecommunications development study, trade enhancement technical assistance, a landfill in Fez and a grant to develop improved methods of air traffic management. Although 2003 was a quiet year in which a tourism infrastructure definitional mission was sent to Casablanca and Rabat, and in which a convention center feasibility study in Casablanca was approved, 2004 is predicted to be more active.

The Commercial Service has identified the following sectors as best prospects for US firms:

1) Wastewater treatment,
2) Tourism infrastructure, equipment and services,
3) Housing and construction,
4) Engineering and Consulting,
5) Environmental equipment and services,
6) Seawater desalination,
7) Telecommunications equipment and services,
8) Airport/Aviation equipment and services,
9) Food processing and packaging and
10) Renewable energy.

At the top of the Foreign Agriculture Service’s best prospects list are:

1) Wheat, including durum,
2) Feed grains,
3) Oilseeds and products and
4) Dried fruits and nuts.