Morocco, US likely to conclude Free Trade Agreement by end of 2003
Moroccan tourism withstands bombings' impact
Tax Reform to Boost Local Tourism Industry
ONMT's Draft Budget Proposes Decentralization and Money in Favor of Regions
Morocco to Spend $2 Billion on a Drinking Water Program
Morocco's King to help build a democratic state
Belgian prince dedicates environment projects in Morocco
Peace' orchestra makes Arab debut
Lea pour Sami Autistic Association opens branch in Morocco
Morocco's many contradictions
Morocco's wheat farmers face uncertain future.
Over 70 movies to be screened at Marrakesh film festival
Moroccan H1 budget deficit down 50 pct to $325 mln
Visao: underlines King Mohammed's will to improve women's condition
Over 122,000 candidates run for local polls in Morocco
Sunny Days for Moroccan Agriculture.

Morocco, US likely to conclude Free Trade Agreement by end of 2003

Morocco-USA, Politics, 8/26/2003

Morocco and the United States will probably conclude a Free Trade Agreement before the end of 2003, US former ambassador to Morocco, Margaret Tutwiler said. Tutwiler told the Moroccan TV channel "TVM" the signing of the agreement will be "a historic event," lauding the support of US officials to the project that is still being negotiated as well as the backing of the two countries' leaders, king Mohammed VI and president George W. Bush. http://www.arabicnews.com/ansub/Daily/Day/030826/2003082622.html

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Moroccan tourism withstands bombings' impact

By Souhail Karam

RABAT, Aug 13 (Reuters) - Tourism in Morocco has withstood the impact of suicide bombings in Casablanca in May, with a slight rise in receipts in the first half of 2003 compared with 2002, official and business sources said on Wednesday. But the industry, key to the North African country's development plans, is showing no signs yet of recovery from the global downturn triggered by the September 11, 2001 attacks on the United States. "The industry withstood the Casablanca bombings well," a Tourism Ministry spokeswoman said in reference to the May 16 attacks that killed 44 people, including 12 suicide bombers.

Receipts from January to June rose to 11.31 billion dirhams ($1.18 billion) from 11.15 billion dirhams a year earlier, but were down 15.5 percent from June 2001. The number of foreign visitors at the end of June was 1.74 million, up 4.6 percent from the first half of 2002 but the number of night-stays inched down 1.4 percent to 5.28 million, the ministry spokeswoman said. She gave no comparative figures for 2001.

Tourism is the main hard currency earner of the Moroccan economy and employs directly about 640,000 people. The fortunes of other key sectors such as handicrafts and transport are closely tied to it. Morocco, which welcomes usually 2.5 million foreign tourists each year, has offered price incentives to nationals in a bid to offset the global downturn. "We're compromising on prices to get customers in. Big spending and crucial markets, such as Germany, England, the United States, Italy and the Arab Gulf are down compared to 2002, which was not a good year anyway," one tourism operator said.

The number of German visitors fell 29 percent in the first half. From the United States and Britain, the drops were 13.5 percent and 8.1 percent respectively, government figures showed. Morocco plans to attract 10 million foreign visitors by 2010. The tourism ministry has said that it expects a one-digit growth figure in 2003. ((Editing by Gilles Trequesser; Reuters Messaging: souhail.karam.reuters.com@reuters.net ; +212-37 720065)) ($1=9.573 dirhams)

http://www.zawya.com/Story.cfm?id=1060777564nL13656281&Section=Countries&page=Morocco&l=122600030813

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Tax Reform to Boost Local Tourism Industry

In spite of a substantial slowdown in the tourism business this year, the Moroccans are going ahead full steam with their plan to boost the profile of their tourism industry in the 2010 horizon. The goal to boost the size of tourism in 2010 requires major investments in infrastructure and an overhaul of the taxation regime governing local entities.  The fiscal reform targeting local governments and entities are largely focusing on the travel industry. This reform program was recently the subject of a review and assessment by the Comite Strategique du Tourisme (CSC- Strategic Committee on Tourism).

The CSC is the primary organizing and monitoring structure that was appointed to insure proper implementation of the reform program leading to 2010. The year 2010 was chosen by the industry and the government as a key year during which the number of tourists is expected to dramatically increase. The CSC comprises of representatives of the ministries of the interior, finance, privatization, equipment and transport and tourism, as well as private operators represented within the Tourism Federation. Since its inception, the group made significant progress in the area of local taxation affecting the tourism industry. Thus, in the next fiscal year, travel and tourism businesses are expected to benefit from the elimination of a number of local taxes. Among the tax items to be scrapped is the early opening and late closing tax (taxe d'ouverture matinale et de fermeture tardive), which affects primarily hotels and their ability to control their hours of operation. Other taxes include those collected on shows and swimming pool access. Although these taxes generated very limited income to the government, their removal will bring added psychological incentive to investors and will free additional money in existing operations.

The other measures are likely to be significant. That includes the "simplification and harmonization of the tax system and the lowering of most other taxes that will not be removed entirely." These decisions are expected to be made soon so as to be applicable in 2004.  The standardization of taxes will include those affecting beverages and signs, with the goal to charge a lower flat tax according to the size of the establishment and hotel category. A new mode of calculating these taxes will be the subject of a working meeting in September involving local officials and the government's tax department. There are other pending issues, particularly the controversial urban tax and the municipal administration tax, which have yet to be solved. Changes in these taxes could indeed affect the balance of already weak finances of local governments. http://www.north-africa.com/one.htm

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ONMT's Draft Budget Proposes Decentralization and Money in Favor of Regions

The head of the Moroccan state tourism promotion bureau ONMT, Fathia Bennis, is proposing changes in the agency's promotion budget structure and allocation.  The proposal, which should be effective in 2004, introduces decentralization with specific budgets for regions and provinces for the promotion of their main  destinations. Working groups have been established to work on the details of the plan. http://www.north-africa.com/one.htm

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Morocco to Spend $2 Billion on a Drinking Water Program

The Moroccan water management agency ONEP (Office National de l'Eau Potable) was recently moved under the responsibility of the ministry of territorial management,  water and environment.  The agency has been given a budget of $2 billion or DH 20 billion to run its programs from 2003 to 2007. One third of this budget will be earmarked for the supply of drinking water to rural communities. http://www.north-africa.com/one.htm

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Morocco's King to help build a democratic state

RABAT, August 21 -- Morocco's King Mohammed VI renewed will to build "an efficient democratic state" to shield the country against all kinds of religious anathema and political exclusion. "The aim is basically to build an efficient democratic State with an inherent ability to protect itself from all kinds of religious anathema or political exclusion, and to develop a wealth-creating, job-generating market economy," said the king in a speech aired on the Moroccan TV and Radio stations on the occasion of the 50th anniversary of the Revolution of the King and the People. The anniversary marks the revolution sparked by a decision of the French occupiers to exile the Late King Mohammed V, Grand Father of King Mohammed VI, and the Royal Family. The move marked a decisive turning point on the struggle of the Moroccan people, under the leadership of the Late king, for Independence, a noble and cherished goal attained in 1956 after 44 years of French occupation. In his speech, King Mohammed VI also expressed determination "to shape a society based on mutual support and to stimulate the process of cultural revival, while taking into account the requirements of modern times and the need to respect Moroccan identity."

"Our duty is also to enhance the productive, free enterprise spirit and, at the same time, to confront, firmly and conscientiously, those who use discord, duplicity and ostracism to deprive the nation of its future and thwart its advancement," said the king. He stressed the importance for Morocco to continue its advance towards democracy to improve the country's image abroad. "Thanks to the progress achieved by our country in terms of democracy, we have managed to complete the process designed to improve the image of Morocco abroad," he said, adding "today we must seek, with the same determination, to improve the way Morocco perceives itself."

In this connection, the king underlined the need "to instill in the people a sense of citizenship and make sure that they are proud of their nation's achievements, prepared to help remedy the flaws and shortcomings they may encounter, through concrete projects and reforms, instead of obstinately spreading skepticism and nihilism." "If the heroes of Resistance are not to be remembered by young people merely as names assigned to streets in town centres, then all Moroccans must remain faithful to the spirit of the August 20 Revolution and dedicated to the values of patriotism, " he said, adding "they must teach their children how to love their country, since our religion enshrines such love as an act of faith." "However, we will attain this objective only if we translate nationalism into a sense of citizenship and if we ensure that the quest for nationhood transcends the mere love for one's country, and develops into a genuine commitment to help build Morocco and make it a source of pride to all Moroccans," he said. - arabicnews

http://www.africast.com/article.php?newsID=47458

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Belgian prince dedicates environment projects in Morocco; educating public on environment - economic links

Environment, 8/25/2003

Prince Laurent of Belgium chaired Friday the inauguration ceremony of green kiosks in Meknes aimed to reinforcing the national environment protection policy. Prince Laurent, chairman of the Royal Institution of Sustained Management of Natural Resources and the Promotion of Pollution-free Energies, said he is "pleased to be associated to an environmental project in Morocco.

"The project shares our vision and will be of a great importance to future generations," he noted. The project, which is part of the Moroccan-Belgian partnership, is estimated at 1.000.000 DHs (US $100,000) extending on a twelve-month period. The green kiosks are equipped with didactic material to provide the best conditions for raising people's awareness. The purpose of the project is to contribute to the national policy in relation to raising the awareness of people concerning environment and environmental communication, the contribution to sustained development, the improvement people's living conditions and generating labor for the youth.

The green kiosks are due to be operable in harmony with the "green caravan," a mechanism developed part of cooperation between Morocco and Belgium. The "green caravan" is aimed to inform people on the nature and forms of environment deterioration and to popularize the principle of "environment's protection is everybody's responsibility." The implementation of the caravan will take 24 months and require a budget of 550,000 Euro, including 450,000 Euro allocated part of the Moroccan-Belgian cooperation. Prince Laurent underlined that the initiative of green kiosks and "la caravane verte" is an important means to restore favorable behaviors and ethics vis-a-vis the sustained management of environment. Moroccan secretary of state in charge of environment, M'hamed El Morabit, Belguim's ambassador in Rabat, Cristina Funes Noppen and other officials were present at the inauguration ceremony. http://www.arabicnews.com/ansub/Daily/Day/030825/2003082526.html

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'Peace' orchestra makes Arab debut

By Sebastian Usher BBC Rabat correspondent. Monday, 25 August, 2003, 01:27 GMT 02:27 UK

An orchestra made up of young Israeli and Arab musicians has played its first concert in an Arab country.  The West-Eastern-Divan Orchestra played a programme of Mozart and Beethoven pieces in the Moroccan capital, Rabat.  The concert was conducted by the orchestra's co-founder, the Israeli conductor and pianist Daniel Barenboim. Despite heavy security surrounding the event, the concert hall, in the city's Mohammed V Theatre, was full and the musicians received a standing ovation.  Wearing a loose white short and baggy white trousers, Daniel Barenboim introduced his young orchestra to a Moroccan audience that included King Mohammed's sisters and the prime minister. He said that Morocco's decision to hold the concert made it a pioneer in the Middle East. But he added that the full aim of the orchestra would only be achieved when it could play in all the countries represented by its musicians.

'Real friendship'

He and the orchestra's co-founder, the Palestinian intellectual Edward Said, have always said that the orchestra is not part of the political programme, but simply an example of productive co-existence. The 80 musicians, who range in age from 13-26, had their own views. One Israeli musician, who has been attending Daniel Barenboim's summer workshops since they began five years ago, said he was proud to be part of what he called an historic event. His Arab colleague Jibran said real friendships had been forged between the nationalities. But for some, it is a different story. Several Arab musicians said their motivation was all about working with Daniel Barenboim and not about meeting Israelis. One Lebanese musician said he was worried about being seen on television in the Arab world sitting next to an Israeli. Daniel Barenboim conceded that some of the Arab musicians had been afraid to strike up friendships with Israelis and some simply do not want to. But if he led his musicians in unity to the rousing climax at Beethoven's Third Symphony and to a standing ovation, the power of his vision of a harmonious Arab-Israeli co-existence was, for a moment at least, incontestable.

http://news.bbc.co.uk/1/hi/entertainment/arts/3177209.stm

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Lea pour Sami Autistic Association opens branch in Morocco

Morocco-France, Culture, 8/21/2003

"Lea pour Sami" association for autistic children and autistic disorders recently opened a branch in Al-Jadida, 200 km south of Rabat. The purpose of the Paris-based association is to fight ignorance on the autistic world and the effects of autistic disorder, and fight all types of physical and psychological violence against them. "Lea pour Sami" also aims to encourage school and social integration of autistic children, defend their rights and create places for French-Moroccan children affected by autistic disorder. According to the association, the number of autistic children in Morocco is as many as 40,000. "Lea pour Sami" is chaired by M'hammed Sajidi and sponsored by several figures in the circles of art, culture, literature and scientific research. http://www.arabicnews.com/ansub/Daily/Day/030821/2003082121.html

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Morocco's many contradictions

By Pascale Harter , BBC, Rabat Monday, 18 August, 2003,

The sweltering hot winds from the Sahara desert made sticky with sea-salt sweep through the wide, luxurious avenues of Rabat, once known as "the Pearl of Morocco". And it is still a very attractive city, albeit a modern one, with ATM machines, McDonalds and other western chain stores springing up almost daily. Rabat's inhabitants are as attractive and sophisticated as the city itself, and they know it. Anyone foolish enough to be outside in the midday sun will find themselves jostling for a space on the shady side of the street with Rabat's well-to-do classes, as they stroll self-assuredly to work.

Poor cousin

It is not unusual in Rabat to see a Moroccan man wearing an American baseball cap and shorts, while his wife accompanies him wearing a traditional gown or "djellaba", with the hood up. Morocco is rife with contradictions. In Rabat the smell of expensive aftershave is carried on the warm breeze, but when the wind blows in Sale, you may even catch a whiff of hashish. Sale, separated from Rabat only by a narrow river, is the poor cousin of the thriving capital, and much more indicative of the state of many towns in Morocco. It is from suburbs like Sale, with high unemployment and low development, that Casablanca's suicide bombers came from.

Fundamentalism

They were dissatisfied young men, with nothing to do, watching as Morocco's middle classes opt in to western consumerism. Places like this are a breeding ground for Muslim fundamentalism, which has taken root here over the last 30 years. The Moroccan authorities are actively cracking down on anyone seen as too radical a follower of Islam. And while an Islamic party did better in recent elections than ever before, the king did not appoint any of its members into his cabinet.

'Westernised'

The official line is that fundamentalism is an imported phenomenon, brought over by hotheads from Saudi Arabia. But many Moroccans I have spoken to say privately that they feel something is going wrong. "We have parroted the ways of the West, dressing like Westerners, worshipping money like Westerners, but without getting any of the development that goes with it," one woman told me. And many Moroccans identify with what they see as the suffering of their Palestinian brothers at the hands of Israel and America. Morocco may be part of Africa - and sometimes uncomfortably close to Europe- but it is also part of the Arab story. And now it would seem it is stuck between a rock and hard place.

http://news.bbc.co.uk/1/hi/world/africa/3160453.stm

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Morocco's wheat farmers face uncertain future.

By Eileen Byrne

ROMMANI, Morocco, Aug 28 (Reuters) - In the sweltering August heat, two horses and a mule circle a man who urges them on with a knotted cord swirled above his head. The globalisation debate seems a million miles away from this hill-top farm some 60 km (37 miles) south of the Moroccan capital Rabat. The farmer is not aware of it, but talks held in Washington last month on a U.S.-Moroccan Free Trade Agreement could determine his future, that of his wife and three children, and of the two men he pays 50 dirhams a day ($five) to help at harvest-time. As one of Morocco's smaller wheat producers, the farmer, who gives his name only as Omar, could see his already meagre livelihood dry up as the trade barriers come down.

TALKING DOWN BARRIERS

U.S. officials have said a U.S.-Moroccan Free Trade Agreement may be signed by the year's end. Such an agreement could eventually give U.S. wheat producers privileged access to a Moroccan import market currently dominated by French, Ukrainian and Russian wheat. With a population of 31 million people, and bread a staple, Morocco consumes 5.2 million tonnes of wheat annually, mainly soft wheat. In years when drought hits local farmers, wheat imports can rise to as much as 3.6 million tonnes. But in good years, like this one when abundant rains sent total cereal production, including barley, soaring 87 percent above the last five years' average, imports fall back.

The 1.3 million Moroccan farmers growing cereals are protected by high tariffs at the ports. The tariff on wheat imports this year was raised to 103 percent. And a guaranteed price for much of their produce, currently about twice the world price, encourages them to keep planting cereals. Like the European Union, the United States is attempting bilaterally to talk down these trade barriers. It has on its side the development experts who believe free trade will iron out undesirable distortions caused by subsidies and protected markets.

THRESHING BY HAND

When enough wind comes over the hill, the barley stalks Omar's animals are treading will be threshed by hand to separate the grain. Using such ancient production methods, Omar is no competition to the large-scale farmers of North America or the Black Sea region. In a country that knew occasional famines well into the 20th century, Omar sees nothing wrong with high tariff protection. "Let us use our own wheat first, until Morocco is starving for wheat, and then start importing," he said. He himself has little margin for belt-tightening. The breakdown Omar gives of his outgoings and income -- from wheat, barley, lentils, and a little honey -- does not look good. He is rarely out of debt.

VEILED JARGON

In the veiled jargon of a U.S. Agency for International Development (USAID) report earlier this year, the liberalisation of cereal and other agricultural imports into Morocco looks set to bring "significant transition costs for the rural economy". For farmers like Omar, it could starkly show up their farming as uneconomic.With imports freed up, prices for farm products would fall. In the longer term, there would be less demand for agricultural labourers in Morocco and lower land prices, the USAID report predicted. Farmers with irrigation, capital and know-how would be able to explore openings in the European market by switching to certain fruits and vegetables, say Moroccan Agriculture Ministry officials. But they agree with the USAID report when it warned that, "Not all rural households will be able to adjust."

TIME TO PREPARE

Morocco's lead negotiator in the trade talks with the United States, Minister-Delegate for Foreign Affairs Tayeb Fassi Fihri, said in Washington on July 21 that transition periods of 12 to 15 years for lowering tariffs on agricultural commodities were being discussed. A timetable for phasing in lower wheat tariffs has also figured in discussions on trade liberalisation between Morocco and the European Union, scheduled for 2012. As long as wealthy countries continue to heavily subsidise their own farmers, Morocco's must at least be given time to adapt, argue some of the better-informed Moroccan farmers. Khalid Benslimane, a leading member of the Moroccan Agricultural Union, farms 150 hectares (370 acres) around Rommani, south of Rabat. He asks indignantly why farmers were not represented in Washington. "Liberalisation is not inevitable," he said. "If we have to go on strike, or block the ports (to prevent cheaper imports), we shall do it." The World Bank and USAID have urged the Moroccan authorities to plan ahead. In late July some of the Moroccan negotiators went from Washington to Mexico to look at the income-support schemes and other "social safety nets" used there to help maize farmers cope with fallout from the North America Free Trade Agreement.

((Reporting by Eileen Byrne, editing by Victoria Barrett; Reuters Messaging: eileen.byrne.reuters.com@reuters.net; +212-37 720065))

http://www.zawya.com/Story.cfm?id=1062046824nL0868965&Section=Countries&page=Morocco&channel=Features%2C%20Analysis%20and%20Opinion&objectid=13F83A62-8988-11D5-867E00D0B74A0D7C

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Over 70 movies to be screened at Marrakesh film festival

Morocco, Economics, 8/28/2003

Some 73 movies will be screened at the 3rd International Film Festival of Marrakesh (FIFM), to be held October 3-8. Twelve long and twenty short international movies were short-listed for the official competition. Six Indian films will also be screened part of the Indian Program, in presence of their makers and main actors. The Agency A3 communication, which organizes the event, said the event will this year be enriched by a section dedicated to new innovating works. Several international cinema figures will be participating at this year's FIFM, such as the Egyptian comedian Yousra, Oliver stone who is currently shooting in Morocco the super-production "Alexander the Great," Morocco's Amina Rachid and India's Amita Bachchan. During the opening ceremony, chaired by actress Nathalie Baye, France's Alain Delon will receive the Gold Star Trophy of Marrakesh for his works and some of his greatest films will be screened such as Le Guepard and Borsalino. The festival will also award other prizes including the Jury's Special Prize, Scenario, performance and short movie awards. The 3rd film festival of Marrakesh is dedicated to Daniel Toscan du Plantier whose works will be presented at a special section. http://www.arabicnews.com/ansub/Daily/Day/030828/2003082820.html

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Moroccan H1 budget deficit down 50 pct to $325 mln

RABAT, Aug 29 (Reuters) - Morocco's budget deficit dropped by almost 50 percent to 3.2 billion dirhams ($325.1 million) in the first half of this year compared to its level a year earlier, a government body said on Friday.The deficit was 6.3 billion dirhams in the first half of 2002, the Finance Ministry's economic forecast department DPEG said in a report. ((Reporting by Souhail Karam; Reuters Messaging: souhail.karam.reuters.com@reuters.net; +212-37 720065)) ($1=9.844 dirhams)

http://www.zawya.com/Story.cfm?id=1062157216nL29580252&section=Countries&page=Morocco&channel=All%20Morocco%20News&objectid=22403786-8F1A-11D4-67000D0B74A0D7C

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Visao: underlines King Mohammed's will to improve women's condition

Morocco, Politics, 8/29/2003

The Portuguese magazine "Visao" underlined in this week's issue the importance of King Mohammed VI's speech wherein he called for a "new Revolution" of the King and the People, voiced firm will to improve women's condition. The weekly's special envoy to Rabat, Patricia Fonceca, who met several Moroccan officials, mainly adviser to the king, Zoulikha Nasri, and Director of the Moroccan Tourism Office, Fathia Bennis, emphasized the importance of the speech wherein the sovereign stressed the necessity of doing justice to Moroccan women and emancipating her.

The commission in charge of revising the Mudawana (Moroccan family code) will submit the new version in September, and the text, which will be submitted to the King's approval, will start a "legal revolution" with an "enormous impact" on Moroccans' life in fields of divorce, legal age of marriage, children guardianship and inheritance, the magazine says. Zoulikha Nasri, the adviser to the king, the "highest position ever occupied by a woman in Morocco," as the magazine puts it, said "the sovereign has shown determination to resolve the issue since his enthronement in 1999, and significant steps has been made since." "But, Nasri goes on, it is useless for a woman to be minister, ambassador, judge or police officer if she does not have the same legal and civil rights as the man. Of course, there will always be dissatisfied people, but the majority of Moroccans support king Mohammed VI's determination to emancipate women." On her part, Fathia Bennis, chief of the tourism office and first woman to head the Moroccan stock market, lauded "the historic change," describing it as a "giant step on the irreversible path of democracy, which would not have been possible in Morocco without its "young king who understands the necessity of resolving this fundamental issue." http://www.arabicnews.com/ansub/Daily/Day/030829/2003082918.html

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Over 122,000 candidates run for local polls in Morocco

Morocco, Politics, 8/29/2003

Some 122,658 candidates mostly representing political parties, will vie for 23,689 seats in local urban and rural councils throughout Morocco, part of the polls, to be held on September 12. The Istiqlal Party (PI) topped all parties and fielded 12,904 candidates. It is followed by the Socialist Union of Popular Forces (USFP) with 11,925 candidates. The Party of Justice and Development (PJD, Islamist) which won 42 seats in last year's legislative elections, ran 4,268 candidates. The National Rally of Independence (RNI) totalled a number of 9,105 candidates. The Berber-oriented parties of the Popular Movement (MP) and the National Popular Movement (MNP) presented 7,880 and 6,161 candidates respectively. Independent candidates, known in Morocco as SAP, numbered 3,033 candidates.

Some 52,379 candidates, grouped in 1,767 lists, will run for election in the 104 urban and rural local councils where a voting system by list will be enforced. The vote by list will be adopted in constituencies whose population is more than 25,000 strong. On the other hand, uninominal voting system will be enforced in the 19,451 constituencies hosting less than 25,000 inhabitants. The number of candidates fielded in these constituencies stand at 48,801, ie. two candidates per seat.

The 122,658 candidates, whose numbers is still temporary until the delivery of final receipts by the competent authorities, started campaigning for election on August 27 at midnight. The campaign will down curtain on election eve, ie. on September 11 at midnight. http://www.arabicnews.com/ansub/Daily/Day/030829/2003082921.html

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Sunny Days for Moroccan Agriculture.

Morocco, August-5 Volume 14. 28.08.2003

As countries across the globe prepare to send their delegates to Cancùn next month to discuss progress post-Doha, Morocco is facing similar problems as other developing countries - a workforce heavily involved in agriculture and the threat of free trade with the subsidy-rich north. Although last winter's rains brought smiles to the Moroccan countryside, the sector continues to face an important problematic - trade.

Value added (VA) in the agricultural sector increased by 5.6% in 2002, helping to contribute to total GDP growth of 3.2%. These figures were more modest than those achieved in 2001 (when agricultural VA rose by 27.6%), but nonetheless showed the continued importance of agriculture to the economy. With GDP forecast to grow by around 5.5% in 2003 (according to government projections), it will be agriculture, and particularly the bounty cereal crop, which will be a primary contributor.

Today, agriculture contributes around 15-18% towards GDP. The principal crops are cereals, fresh fruit and vegetables (FFVs), olives, almonds, citrus fruits, wine, and fish and livestock products. Two products in particular provide bellwethers for the sector's performance as a whole - tomatoes and cereals.

Tomato exports, the country's main FFV export, have been facing big difficulties. At the end of May 2003, they had declined by 62.4% in value and 65.3% in volume (according to Finance Ministry figures). The reasons for this worrying decline, according to the national FFV exporters' association, were: climate (large variations affecting the regularity of production), low prices abroad and quota limitations during the crucial winter period (the only period that Moroccan FFVs have access to the main EU market).

Morocco has managed to establish itself as an important source for European tomato consumption, but it continues to face strong barriers. The problem lies in the seasonal structure of the market in the EU. Tomato production is dominated by greenhouse production in northern Europe in the summer months (primarily from the Netherlands, Belgium, and Germany), leaving access limited to the winter months for both Spain and Morocco. The former, with important export production in the southern provinces such as Almeria and Murcia, is keen to limit competition from Morocco. Thus access continues to be constrained, and the picture may be further clouded by increases in agricultural imports from Eastern Europe on the one hand, and stronger indirect protection in the form of quality control and provenance requirements.

Meanwhile, cereals form the basis of Moroccan agriculture. Much of the current agricultural optimism can be traced to the bounty cereal crop this year - 80m quintals, an increase of 59% on the previous year's harvest. The importance of cereals lies in the fact that over half of agricultural land is devoted to this crop. Bread is also the basic food staple in Morocco, so the performance of the sector also has important consequences on national food security, and the trade balance (when shortfalls necessitate imports).

The fragility of Moroccan agriculture can thus be largely pinned to cereals. Two important factors need to be considered - firstly, the world cereals market is heavily distorted by massive subsidies in the USA and the EU. This makes the Moroccan market continuously vulnerable to agricultural dumping from these countries. The second element, which magnifies this threat, is that most cereals are produced as subsistence crops, or as subsistence with the surplus being marketed, and consequently little effort is made to making the product competitive (an unrealistic effort anyway, given the artificial competitiveness of the product abroad).

So, agriculture is in many senses the key to Moroccan development. Almost half of the Moroccan labour force (around 6m people) works in agriculture. The discrepancy between 50% producing only 18% of the GDP is obvious, yet agriculture remains economically and socially the backbone of the economy. As a recent article in the Moroccan daily "La Vie Economique" stated, "If agriculture goes, everything goes".

This is no exaggeration if one takes into consideration the 23% unemployment rate in the Kingdom, which is proving a problem difficult to address. As regards the urban-rural divide, it is worth noting that rural unemployment is at a record low this year, around 4%, when urban unemployment remains above 21%. The rural exodus should thus be mitigated this year, although this conclusion must be tempered by the relatively more acute poverty levels to be found in the countryside.

In addition, of the adults living in rural areas, nearly 67% are illiterate, making economic diversification a difficult task. The illiteracy rate among farmers is even higher, at 75.6%.

Yet, it is within the sphere of trade that Moroccan agriculture faces its biggest challenge to date. Free trade agreements with the EU and the USA offer the prospect of enhanced access to these important markets, yet at the same time there is the heightened risk of agricultural dumping in Morocco. That, for example, is why the negotiations for the agricultural section are proving to be the most tenacious out of the 11 chapters of the US FTA comprises.

For the US and the EU, Morocco would be just another small market to trade with, but for the Kingdom, such agreements mean proof of the credibility and stability of the economy. This would make it a trustworthy destination for much sought after foreign investment. On the other hand, free trade deals also imply - particularly in the case of the EU - the opening of a lucrative market. Illustrative of this point is the fact that an overwhelming 86% of all vegetables exported are destined for the EU.

A large number of jobs depend on the outcome of the free trade agreement. Most farmers work on small family-run farms, often purely for subsistence (or where only the surplus is marketed), and this bears directly on Morocco's agricultural competitiveness on the international market. The result could be a deadly concoction for the population should cheap agricultural products be allowed to enter the Moroccan market. Local farmers could be driven out of business due to the large ensuing fall in prices. As far as the US FTA negotiations are concerned, the Moroccan authorities are looking with interest at Chile, where access to the US agricultural market was obtained while the local wheat sector has been afforded continued protection.

Another aspect that needs to be considered in the negotiations is the regulation and standardisation that is common practice in the more advanced economies and which ensures certain product quality standards are met before goods can enter the market. These standards also have the side effect of making it more difficult for smaller producers to trade with the country in question, as market access may not be granted because of the inability of the producer to fulfil certain quality requirements. In addition, often the products meet the standards, but are unable to gain access due to a lack of supervision or certification.

In this regard, although the US has the reputation of being one of the most protected economies in the world, European food quality standards (HACCP, etc) are generally regarded as more stringent. Thus an ability to export to the EU should translate into US quality compatibility relatively smoothly.

It is clear that the success of Morocco's integration into the world economy, through free trade agreements with the EU and the US, will ultimately depend on agricultural performance. As Morocco celebrated its 50th year of independence last week, it is interesting to note the continued importance of the primary sector to the economy. The ability of that sector to adapt and change will be the key to Morocco's development in the next half century.

http://www.oxfordbusinessgroup.com/weekly01.asp?id=664

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