Morocco's trade relations with EU hit low following court ruling

Published in MEED, 9 March 2016

Rabat takes tough stance on Western Sahara in trade dispute with Europe

Relations between Morocco and its most important trading partner, the European Union (EU), have fallen to a worryingly low ebb in the wake of a court decision late last year which annulled a four-year-old agriculture trade deal.

Rabat has since halted cooperation with EU institutions, but despite a recent flurry of diplomatic activity there is little chance of the situation being resolved quickly or easily.

The EU Court of Justice ruled on 10 December that the agriculture deal had to be scrapped because it included products from the disputed territory of Western Sahara, which Morocco has unilaterally claimed for more than 40 years. The case was brought by the Polisario Front, the liberation movement for Western Sahara.

On 26 February, a spokesman for the European External Action Service, the EU’s diplomatic arm, said the EU had submitted an appeal against the court’s decision. That process is likely to take around 10 months.

The EU says it has had contact with Morocco on this issue “at all levels” since December. Nothing else is being discussed though.

In late February, the Moroccan government said it had suspended all contacts with EU institutions, except for those dealing with the court case. That is simply a formal acknowledgement of what has been happening ever since the court ruling.

In a statement on 11 December, the Moroccan Ministry of Foreign Affairs & Cooperation expressed its “astonishment” at the court’s decision and said it “legitimately questions the relevance of maintaining the contractual structure that both parties have managed to build up over many years, in the political, economic, human and security fields”.

Since then there has been little or no contact on other topics, including a proposed deep and comprehensive free trade agreement.

The EU’s high representative for foreign affairs, Federica Mogherini, visited Rabat on 4 March for talks with the Minister for Foreign Affairs Salaheddine Mezouar to discuss the court case. While there she reiterated the EU’s view that the agriculture agreement was in line with international law.

It will be tricky to convince the court of that though. Morocco’s claim on the territory is not recognised internationally and Western Sahara Resource Watch (WSRW), a lobby group, points out that there have been more than 100 UN resolutions calling for self-determination for Western Sahara.

The EU is a big donor to Morocco, with an aid programme worth €728m-890m ($800m-980m) a year between 2014 and 2017. Trade between the two is worth some €37bn a year and 63 per cent of Moroccan goods that are exported flow into the EU.

Those statistics suggest Morocco is in a weak position when it comes to arguing over Western Sahara, but it has some important cards to play, including its willingness to accept the return of its own citizens who entered the EU illegally – a sensitive issue for European governments given the huge numbers of migrants and refugees coming to the continent these days.

That helps to explain the position being adopted by the EU and some of its member states. While discussions with EU institutions are on hold, bilateral activity is carrying on apace and the French, German, Belgian and Spanish governments are among those to have stated their opposition to the court ruling. Those statements have often been closely followed by discussions over repatriating Moroccans.

Sweden, for example, announced on 15 January that following a policy review it would not recognise the Saharawi Arab Democratic Republic, the formal name for Western Sahara. Four days later its Minister for Home Affairs Anders Ygeman met the speaker of the Moroccan House of Representatives, Rachid Talbi Alami, in Stockholm for talks on a repatriation process for Moroccans. Alami described Sweden’s new policy as “a very good start”.

Some EU countries also have substantial commercial interests in Western Sahara. French oil company Total is undertaking surveys of the offshore Anzarane block while the UK-based San Leon Morocco is involved in two onshore blocks on the Tarfaya and Zag basins. Another UK-based firm, PetroMaroc Corporation, is a partner on the Zag site.

In terms of agriculture, French-Moroccan group Azura is one of several firms growing tomatoes in the Dakhla area of Western Sahara (King Mohammed VI also has an interest in farming in Dakhla via production company Les Domaines Agricoles, formally known as Les Domaines Royaux). Morocco also sells fishing licences to the EU for Western Sahara waters.

All this allows Rabat to take a far tougher line with the EU than it has adopted with other partners. Its free trade deal with the US, for example, does not cover Western Sahara. The same is true of its deal with the European Free Trade Association, a group of non-EU states including Switzerland, Norway, Iceland and Liechtenstein.

“If you look at the free trade arrangement that Morocco has with the US or with the EFTA countries there is an exclusion for Western Sahara and that doesn’t jeopardise the trade relations with these respective countries, but Morocco’s stance is a lot tougher when it comes to the EU,” says Sara Eyckmans, coordinator for WSRW. “Morocco is not necessarily in the weaker position.”

No matter how tough Rabat is, though, it will take some deft judicial and diplomatic footwork if the two sides are to resolve this issue, particularly if the appeal fails. For now it seems that a sparsely-populated area of just 586,000 people could undermine a far larger trading relationship.