OBG talks to Mustapha Benbada, Minister of Trade

Interview: Mustapha Benbada

What is the current situation regarding accession to the World Trade Organisation (WTO)?

MUSTAPHA BENBADA: At the 11th meeting of the Working Party on the Accession of Algeria in April 2013, WTO members reviewed the state of play in bilateral negotiations on goods and services, continued the examination of the Algerian trade regime based on the revised working party report, and examined legislative developments. Members pointed out that substantial work still remained to be done on issues such as monetary and fiscal policies, foreign exchange and payments, the investment regime, state ownership and privatisation, pricing policies, competition policy, and the framework for making and enforcing trading rights policies.

How can Algeria benefit from WTO accession?

BENBADA: The main conditions laid down by the WTO are related to the principle of liberalisation. The WTO agreements define open standards to which members must conform before accession. Given that trade alone is insufficient to maximise the opportunities offered by the multilateral trading system and to reduce the related costs that may arise, it must be matched with adequate regulation, effective institutions and sound economic policies. For Algeria, the negotiations on compliance will probably result in periods of transition. Of course, the accession to THE WTO presents challenges for companies given their exposure to international competition. But the need to increase productivity is the biggest argument in favour of accession, and this is a powerful factor in the growth that will strengthen the competitiveness of the national economy in the post-oil era. For example, effective participation in trade negotiations will enable us to resolve trade issues affecting our country. It is important to note that accession to the WTO is not an end in itself, nor an ideological ideal, but an important element of the economic reforms that our country has adopted and implemented with the intention of promoting economic and social development for the whole nation.

What are the planned initiatives to reduce the informal sector of the economy?

BENBADA: The proliferation of this phenomenon has taken alarming proportions and has negatively affected the economy. This situation challenged past and current governments to find adequate solutions to minimise the dysfunctions caused by informal markets and to create a legal framework enabling the integration of citizens who use these markets. For the implementation of these guidelines, a joint inter-ministerial working group has been established to provide a clear assessment of the situation and to supervise the reduction of informal business activity. They will propose actions aimed at developing the existing business infrastructure, creating new ones and bringing as many people as possible back into the formal sector.

What explains the re-evaluation of the association agreement with the EU?

BENBADA: Algeria and the EU have reached an agreement to review the schedule of tariff dismantling dictated in the association agreement signed in 2005. The agreement aimed at gradually establishing a free trade zone between Algeria and the EU by 2017. The new agreement took effect from September 1, 2012 and provides a deferral until 2020 for the lifting of tariff barriers on a wide range of industrial products imported to Algeria. This revision was requested because the association agreement did not bring the expected impact in terms of promotion of non-hydrocarbon exports. The tariff advantages were not effectively used to diversify the national economy and ensure mutual profit. Indeed, the acceleration of the tariff dismantling will lead to an important shortfall by 2017. For the Algerian government, it was imperative to solve a situation affecting budgetary revenues by readjusting tariffs, and thus preserving the balance of interests. It was necessary to give more time to certain industries which are considered fragile, in order to prepare them for the rise in competition and decline in Customs fees.