EU-Algeria relations

1. Background

EC-Algeria cooperation goes back to July 1969 when an agreement was signed for a period of five years, linking Algeria to the EEC (which then included six members). These cooperation agreement was essentially commercial. Indeed, France was almost the only source of aid or other forms of cooperation, for it maintained considerable economic and political interests in the Maghreb. The same kind of agreements were signed with Morocco and Tunisia as well.

In the agricultural chapter, the EEC imposed substantive restrictions so as to prevent competitive goods from entering its market. Preferential tariffs were granted for certain agricultural products such as citrus fruits, exonerated from 80% (Spain wasn’t a member yet); or olive oil exonerated from 30% (as Italy couldn’t meet the Six’s market demand).

The terms of the agreement were only reciprocally applicable to the goods imported from the EEC which did not compete with the local production.

Under the Global Mediterranean Policy, new bilateral agreements were concluded in 1976 with all three Maghreb countries, Tunisia, Algeria and Morocco, -taking effect in 1978-. This time, the GMP went beyond the strict framework of commercial co-operation and provided for economic and financial aid (in the form of bilateral financial protocols, see table). The EEC intended this aid for the development, modernisation and diversification of their industrial and agricultural industries, while at the same time imposing new restrictions that proved to be catastrophic for North Africa’s exports:

  • The zero rate applied to industrial products imported from the eight Mediterranean countries with which the EEC was to co-operate under the GMP was no longer applicable to textiles and refined petroleum products, which represented a large part of Algerian exports.
  • In order to protect the Common Agricultural Policy, the EEC established a « tariff calendar » limiting the access at a preferential rate of agricultural products to the European market to seasons in which the European production cannot meet the demand.

In 1981 and 1986, the cooperation agreements and financial protocols were renewed for a period of five years, with a net increase in the Commission grants and loans share of the protocols (the Commission’s loans are more advantageous than the European Investment Bank’s).

In 1991, the GMP was replaced by the Renovated Mediterranean Policy. The fourth generation of financial protocols were negotiated for the 1992-96 period. The main two innovations of the RMP consisted in prioritising economical and structural reforms in the Beneficiary countries and the accent on the regional cooperation and on environment.

The implementation of financial cooperation between the EU and Algeria has been considerably delayed due to the political and security situation in the country. These were aggravated due to the technical closure of the Delegation of the Commission in Alger between July 1994 and November 1998.

In the period 1978-1996 Algeria received €949 Million under four financial protocols, from which €309 Million were from the Commission and €640 Million from the European Investment Banks. From the three Maghreb countries, Algeria has the lowest absorption capacity. By September 2000, only 66% of the committed funds had been allocated.

2. Euro-Mediterranean Partnership

The MEDA Programme

The MEDA Programme is the main instrument to manage the aid under the Euro-Mediterranean Partnership, agreed in Barcelona in November 1995. The MEDA Programme was created to encourage and support the reform of economical and social structures of Mediterranean partners, in view of the establishment, by 2010 of a free trade area around the Mediterranean. The MEDA resources are attributed bilaterally, within the framework of the National Indicative Programmes while the regional Indicative Programme covers multilateral activities.

A total amount of €164 Million was committed to Algeria through the MEDA Programme (1996-1999). The main programmes were the support for structural adjustment (from a total of €125 Million, €30 Million were from MEDA funds); the support to Small and Medium Enterprises (€57 Million); the support for industrial re-organisation and privatisation (€38 Million); the support to the modernisation of the financial sector (€23 Million); and a €5 Million for a project supporting NGOs. Besides MEDA funds, the European Investment Fund has loans for a total of €620 Million. Grants under MEDA II amount to € 150 Million for the period 2002-2004.

Association Agreement

The negotiations for the establishment of an Association Agreement between the European Union and Algeria were concluded in December 2001. The agreement was officially signed on the occasion of the Vth Euro-Mediterranean Conference of Foreign Ministers, held in Valencia on the 22nd and 23th of April 2002 -the Agreement will only get into force once Algerian Parliament, European Parliament and the 15 Member States Parliaments have ratified it-.

Although every Euro-Mediterranean Association Agreement signed by the EU and its Mediterranean partners is agreed on bilateral basis, there are certain common aspects to all of them: political dialogue, respect for human rights and democracy, establishment of WTO-compatible free trade over a transitional period of up to 12 years, provisions relating to intellectual property, services, public procurement, competition rules, state aids and monopolies, economic cooperation in a wide range of sectors, cooperation relating to social affairs and migration (including re-admission of illegal immigrants and cultural cooperation.

The Agreements create two common institutions, the Association Council, at Ministerial level, and the Association Committee, at senior official level, which meet on a at regular basis(1).

The respect of human rights and democratic principles are an important element of political cooperation between the partners. The Agreements foresee the possibility to be suspended in the event of major human rights violations.

The introduction of the fight against terrorism, organised crime and corruption is a new feature. The chapter of Justice and Home Affairs includes a detailed description about people movement, procedures of visas delivery and migrants’ rights. Unlike its neighbours, Algeria has been ready to open its developing services’ market to the EU.

This association agreement took effect in September 1st, 2005. It planed mutual concessions concerning some products. The stake is to establish a free trade area between European Union and Algeria in 2017.

Besides, this agreement includes cultural and social aspects. Moreover, Algeria is a partner country of Europe, concerning immigration.

3. Trade Relations

Trade relations between Algeria and the European Union member countries are considerable. 77% of Algerian exports go the European member countries. On the other hand, 55% of its total imports are original from the EU, accounting for €6.098 Million.

Algeria had a trade surplus with the EU of €10.300 Million in 2000. This is mainly due to the energy that the EU import from Algeria, which in the year 2000 accounted for €16.480 Million, nearly doubling the amount of the previous year.