ALGIERS (Reuters) – OPEC member Algeria should speed up its World Trade Organisation (WTO) accession bid by tackling outstanding questions on energy and services, the European Union’s (EU) trade chief said in remarks published on Tuesday.
The country’s WTO negotiations “are still stumbling on the sectors of energy and services — two issues which can’t be pushed aside or treated lightly,” government daily El Moudjahid quoted Trade Commissioner Peter Mandelson as saying on a visit to Algiers.
Diplomats say the north African country’s decade-old effort to join the WTO has stumbled over its reluctance to abandon double pricing of energy on the domestic and international markets, as well as over difficulties the country has had in modernising and liberalising services in its Soviet-style command economy.
Algeria argues that its oil and gas export prices are set by the international market, while its subsidised low hydrocarbon prices at home are part of the competitive advantage the country offers to international investors.
Diplomats say one obstacle in services is slow progress in improving transparency in banking, a sector dominated by big loss-making state banks with a history of bad debts and graft.
Mandelson told Algerian reporters: “The next step, Algeria’s accession to the WTO, is vital and will govern the Algerian economy’s whole process of development. It’s really the key.”
He said he sensed Algeria was quickening its attempt to join the WTO “and it should keep up this momentum”.
Algeria in 2006 asked the EU for help in speeding up its WTO talks, which began in 1998. Membership would help Algeria draw foreign investment into its lacklustre non-energy sector.
Until the early 1990s, Algeria had a socialist economy. A ban on private sector foreign trade was lifted in 1991 but years of political strife delayed the onset of liberalisation.
An EU association accord that took effect in September 2005 aims to gradually phase out tariffs to create a free trade zone between Algeria and the bloc within a decade or so.
Mandelson was quoted as saying he wanted the accord “reviewed and renewed” to enable Algeria to speed up the development of private enterprise and job creation.
Many Algerian companies have said they are worried that an eventual complete abolition of customs duties could transform Algeria into a captive market for European exports.
The EU wants to help stimulate southern Mediterranean economies after decades of lacklustre private sector growth led to widespread youth unemployment and illegal migration.
The EU is the main trade partner and source of investment for the Maghreb countries, but a goal fixed in Barcelona in 1995 for a full Mediterranean free trade area remains far off.