OBG talks to Martin Schulz, President, European Parliament

Interview: Martin Schulz

Where do you see the greatest scope to deepen cooperation between the EU and Algeria?

MARTIN SCHULZ: I think we need to proceed with a threefold strategy: economic diversification, political engagement and cultural exchange. As things stand 98% of all EU imports from Algeria come from fossil fuels and related materials. Whilst it is unsurprising that these items top our trading imports, their preponderance is indicative of the need to diversify our economic relationship and lower trade barriers. Energy is likely to remain the biggest sector in our economic cooperation, but even within that, diversification is needed. Algeria really has the potential to become the principal energy hub in the southern Mediterranean, and in this sense Algeria's new impetus on renewables and solar energy in particular, together with the potential of shale gas, are promising developments.

Politically we need greater, deeper and more continuous engagement. Our dialogue must become more structured, as mutual understanding helps fortify mutual trust, which spills over to all sectors of the economy. In this regard, we held the first ever summit of parliamentary speakers from member states of the Union for the Mediterranean (UfM) in Marseille in April 2013. This regional instrument must be strengthened to serve as a source of greater legitimacy and provide a sense of direction to our cooperation. And it works: immediately after our summit a conference organised by the European Parliament and the Medgrid industrial consortium reviewed the progress of initiatives under the Mediterranean Solar Plan (MSP), a priority for the UfM.

What can be done to further liberalise trade, and which industries are ripest for further liberalisation?

SCHULZ: The 2005 Association Agreement has played a big part in bringing the EU and Algeria closer together. Trade receded abruptly during the financial and economic crisis in 2009, but it has since picked up at a much higher pre-crisis level. The reasons for the success of the Association Agreement are clear: lower tariffs and detailed rules are a clear magnet for investors. I think there are two measures that can further improve trade: greater regional integration and Algeria’s membership into the World Trade Organisation.

The success of European integration can be seen in regional and intra-industry trade. That is why I am a fervent supporter of the Arab Maghreb Union. The EU has to go beyond its bilateral relation with Algeria and look at the bigger picture. What we have to be interested in is not just our share of overall trade with Algeria, but also in the volume and diversity of trade. Secondly, I think membership in the World Trade Organisation would greatly help boost trade with Algeria. I know that the pace of talks in this respect has increased, and this is indeed a welcome development.

What sort of concrete measures can be taken to diversify bilateral trade away from energy imports?

SCHULZ: I think the answer to this question rests more on the Algerian side than the European one. The EU trades in those goods and services where the added value is clearest. The Algerian government has clearly undertaken action to grow the economy in sectors other than energy, which would in turn help diversify our trade mix. In particular, I commend the government for supporting a favourable economic environment to help small and medium-sized enterprises. Spending on infrastructure, including motorways and ports, is also beneficial. Yet, again, it is not for me to choose a specific sector for trade diversification. That would be the job of the market. The opportunities would be enormous, from agriculture to services.

One measure that I keep repeating in my talks with officials, citizens and entrepreneurs in the region is a call for a less rigid and more transparent business climate. That would help boost foreign direct investment and creating a more competitive external trade sector. In the Ease of Doing Business ranking, Algeria fares poorly, at 148th place for 2012, and it has been sliding down in recent years. This trend needs to be reversed.