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The EU-Algeria Association Agreement was signed in April 2002 and entered into force in September 2005.
The agreement sets out a framework for the EU-Algeria relationship in all areas, including trade. It reciprocally liberalises trade in goods, with elements of asymmetry in favour of Algeria.
It aimed to establish an EU-Algeria free trade area, including the complete dismantling of tariffs, by September 2020 – a target that has been met, save for a few remaining tariffs that Algeria is yet to eliminate.
- Algeria is the EU's 28th biggest trade partner, representing 0.7% of the EU’s total trade in goods in 2020.
- The EU is Algeria's biggest trade partner and accounts for the majority of Algeria’s international trade (46.7% in 2019).
- Total trade in goods between the EU and Algeria in 2020 amounted to €24.9 billion. The EU’s imports from Algeria amounted to €11.4 billion. Imports were dominated by fuel and mining products (€10.7 billion, 93.5%), followed by chemicals (€0.38 billion, 3.3%). The EU’s exports to Algeria amounted to €13.5 billion and were dominated by machinery and transport equipment (€3.9 billion, 28.9%), agriculture and raw materials (€3.2 billion, 23.7%), and chemicals (€2.7 billion, 20.0%).
- Two-way trade in services amounted to €4.6 billion in 2019. EU imports of services represented €1.5 billion, and exports were worth €3.1 billion.
The EU and Algeria
The Free Trade Area (FTA) of the EU-Algeria Association Agreement grants preferential treatment for Algerian exports to the EU. In January 2014, the EU implemented changes to its Generalised Scheme of Preferences (GSP), which removes import duties from products coming into the EU from vulnerable developing countries. As a result, countries that already had preferential market access to the EU, like Algeria due to its FTA, stopped benefiting from the GSP treatment in 2014.
The EU and Algeria adopted on 13 March 2017 new Partnership Priorities in the framework of the renewed European Neighbourhood Policy. Together with the joint assessment of the implementation of the Association Agreement, also adopted in March 2017, they constituted the political framework that guided the dialogue of the EU and its Member States with Algeria until 2020. These Partnership Priorities in the context of EU-Algeria relations focused on a variety of areas, including trade and access to the EU single market, energy, the environment and sustainable development.
Bilateral trade between the two partners is primarily based on Algerian exports of oil and gas products. Algeria is the EU’s third largest supplier of natural gas, after Russia and Norway.
Algeria started to negotiate its accession to the WTO when the Working Party was established on 17 June 1987. The EU continues to support Algeria’s efforts but the negotiation process remains stalled since 2014.
In June 2020, the EU and Algeria engaged in a dispute settlement procedure under the Association Agreement to resolve the dispute concerning some trade measures introduced by Algeria as of 2015.
Regional instability continues to be a major concern, both for the Algerian authorities and for investors. Security measures along the border with Libya have been stepped up. To boost the economy, the government is seeking to further develop its hydrocarbon resources. It has also explicitly embraced private sector development by opening research centres and launching major transport and housing projects. The country is experiencing an unprecedented economic crisis amid falling oil and gas exports, exacerbated by the Covid-19 crisis. It is now seeking to diversify its economy and to develop industrial activities beyond the oil and gas sector. It also seeks to modernise its FDI framework, its banking system and its public administration.
According to IMF and World Bank estimates, the Algerian government’s economic diversification plan, if linked to the creation of favourable conditions for the private sector and necessary adjustments to the education and training system, would boost economic growth substantially in the medium term, balancing the short-term costs of transition. Algeria would then be in a position to gain in competitiveness and to benefit from new markets, such as via the African Continental Free Trade Area (AfCFTA).
In 2021, under the new EU Trade Policy Review, the EU has proposed a new sustainable investment initiative to interested partners in Africa and the Southern Neighbourhood. Fostering strategic interdependencies and enhancing the EU’s relations and economic integration with the Southern Neighbourhood is a strategic necessity for long-term stability.
- The European Neighbourhood Policy provides political and financial assistance to Algeria. The EU committed €125 million to bilateral assistance for Algeria for the period 2018-2020, under the European Neighbourhood Instrument (ENI). The funding supported cooperation priorities agreed with Algeria, namely: (i) economic governance and support for economic diversification; (ii) territorial development and participatory democracy; (iii) energy/environment and climate actions.
- Under the EU’s Multiannual Financial Framework for the period 2021-2027, the EU will adopt a broad new financial cooperation instrument: the Neighbourhood, Development and International Cooperation Instrument (NDICI). The NDICI will be the basis of future EU-Algeria cooperation.
- More information on EU support is available from the Directorate-General for Neighbourhood and Enlargement Negotiations
Algeria in the Southern Neighbourhood
Algeria is one of the partners of the EU’s Southern Neighbourhood (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine*, Syria and Tunisia). The EU established its privileged partnership with the Eastern and Southern shores of the Mediterranean back in 1995 with the launch of the Euro-Mediterranean Partnership at the Barcelona Conference, aiming to establish an area of peace, stability and economic prosperity that upholds democratic values and human rights.
The 25th anniversary of the Barcelona Process in November 2020 was an opportunity to reflect on the strategic partnership with the region in light of the political, socioeconomic, financial and environmental challenges exacerbated by the Covid-19 pandemic, and to reassess the EU’s partnership with Algeria and the other Southern Neighbourhood partner countries. Following consultations with partners, this reflection resulted in the Joint Communication by the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy on ‘A renewed partnership with the Southern Neighbourhood - A new Agenda for the Mediterranean‘ and the annexed ’Economic and Investment Plan for the Southern Neighbours‘ in February 2021.
The impact of trade component of the EU’s Euro-Mediterranean Association Agreement with Algeria was assessed in the Ex-Post Evaluation of Trade Chapters of the Six Euro-Mediterranean Association Agreements with the EU’s Southern Neighbours (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia), which was published by the European Commission in 2021.
The pan-Euro-Mediterranean cumulation and the PEM Convention on rules of origin
The pan-Euro-Mediterranean cumulation system of origin was created in 2005. It brings together the EU, Algeria and other partners in Europe and the Mediterranean to support regional integration by creating a common system of rules of origin. Rules of origin are technical criteria which determine whether a specific product qualifies for duty-free or other preferential access under a given trade agreement.
Cumulation of origin means that a product coming from one partner country can be processed or added to a product of a second partner country and still be considered as an ‘originating product’ of that second partner country for the purposes of a particular trade agreement.
The pan-Euro-Mediterranean system allows for diagonal cumulation (i.e. cumulation between two or more countries) between the EU, EFTA countries, Turkey, the Western Balkans, the Faroe Islands, Ukraine, Moldova, Georgia and any other country that signed the Barcelona Declaration of 1995. The system was originally based on a network of Free Trade Agreements with identical origin protocols.
These individual origin protocols are being progressively replaced by a reference to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention), which was established in 2011 to provide a more unified framework for origin protocols. Algeria joined the Regional Convention in March 2017.
Committees and Dialogues
The EU and Algeria meet regularly to discuss issues and best practices and oversee the proper functioning of the Agreement.
Trading with Algeria
- Importing into the EU from Algeria
- EU trade defence measures on imports from Algeria
- Exporting from the EU to Algeria
- Trade relations are part of the EU's overall political and economic relations with Algeria
- Algeria is a member of the World Trade Organization
- More information about EU co-operation programmes for Algeria
* This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue.
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