Free Trade with Morocco: A Vital Step Towards Middle East Reform

New Market Access for U.S. Consumer and Industrial

· More than 95% of bilateral trade
in consumer and industrial products will become duty-free immediately upon entry into force of the Agreement, with all
remaining tariffs to be eliminated within nine years – the best market access package of any U.S. free trade
agreement with a developing country.

· Key U.S. export sectors gain immediate duty-free access to Morocco, such as information technologies, machinery, construction equipment and chemicals.

· Textiles and apparel trade will
be duty-free if imports meet the Agreement’s rule of origin, promoting new opportunities for
U.S. and Moroccan fiber, yarn, fabric and apparel manufacturing.
The Agreement requires qualifying apparel to contain either U.S.
or Moroccan yarn and fabric and contains a temporary 30 million square meter allowance for apparel containing 3rd country content (equals 0.2% of imports into the U.S.).

"Our agreement with Morocco is not just a single announcement, but a vital
step in creating a mosaic of U.S. free trade agreements across the Middle East
and North Africa."
Robert B. Zoellick, U.S. Trade Representative

New Opportunities for U.S. Farmers and Ranchers

· The Agreement, which covers all
agricultural products, opens Morocco’s market for many U.S. farm products.

· U.S. farmers and ranchers of
poultry and beef will benefit from new tariff-rate quotas that grow over time. U.S. wheat producers will benefit from new tariff-rate
quotas on durum and common wheat that could lead to five-fold increases in exports over recent levels.
These results will give U.S. farmers and ranchers new tools to compete with Canada and the EU, among
others, in Morocco’s market.

· Tariffs on products such as
sorghum, corn, soybeans, and corn and soybean products will be cut significantly or eliminated immediately, thereby allowing U.S.
exporters to respond to Morocco’s growing need for feed ingredients as its agricultural sector
continues to modernize.

· Morocco will provide duty-free
access immediately on products such as cranberries, pistachios, pecans, whey products, processed poultry products, and pizza
cheese. Tariffs on other products will be phased out in five years, including on walnuts, grapes, pears,
and cherries. Almond exports could double under a new tariff-rate quota.

· The United States will phase out
all agricultural tariffs under the Agreement, most in fifteen years. An agricultural safeguard will be available to respond to low-priced
imports of certain horticultural products.

Broad Commitments to Open Services Markets

· Morocco will accord substantial
market access across its entire services regime, subject to very few exceptions. The Agreement uses the so-called "negative list"
approach, meaning that all sectors are covered unless specifically excluded.

o Key services sectors covered by
the Agreement include audiovisual, express delivery, telecommunications, computer and related services, distribution,
and construction and engineering.

· The Agreement provides benefits
for businesses wishing to supply services cross-border (for instance, by electronic means) as well as businesses wishing to
establish a presence locally in the other country.

· Strong and detailed disciplines
on regulatory transparency supplement the Agreement’s cross-cutting transparency provisions.

New Opportunities for U.S. Banks, Insurance, Securities and
Related Services

· U.S. financial service suppliers
will have the right to establish subsidiaries and joint ventures in Morocco (in the case of insurance agency and brokerage, Moroccan
can limit foreign equity to 51 percent). In addition, banks and insurance companies will have the
right to establish branches, subject to a four-year phase-in for most insurance

· Morocco will allow U.S.-based
firms to supply insurance on a cross-border basis (through electronic means) for key markets including reinsurance, reinsurance
brokerage, and, subject to a two-year phase-in, marine, aviation and transport (MAT) insurance and
brokerage. Morocco also will allow U.S.-based firms to offer services cross-border to Moroccans in
areas such as financial information and data processing, and financial advisory

· Of further benefit to U.S.
insurance suppliers, Morocco will phase-out certain mandatory reinsurance cessions and expedite the introduction of insurance

An Open and Competitive Telecommunications

· Each government commits that
users of the telecom network will have reasonable and nondiscriminatory access to the network, thereby preventing local firms from having
preferential or "first right" of access to telecom networks.

· U.S. phone companies will have
the right to interconnect with former monopoly networks in Morocco at non-discriminatory, cost-based rates.

· U.S. firms seeking to build a
physical network in Morocco will have non-discriminatory access to key facilities, such as telephone switches and submarine cable landing

· U.S. firms will be able to lease
elements of Moroccan telecom networks on non-discriminatory terms and to re-sell telecom services of Moroccan suppliers to build a
customer base.

E-Commerce: Free Trade in the Digital Age

· Each government commits to
non-discriminatory treatment of digital products and agrees not to impose customs duties on digital products.

· For digital products delivered on
hard media (such as a DVD or CD), customs duties will be based on the value of the media (for instance, the disc), not on the value
of the movie, music or software contained on the disc.

· The e-commerce commitments will
help establish Morocco as a leader in Middle East and North Africa for the further development of electronic

Morocco is an emerging market at the crossroads of Europe, Africa, and the Middle East. It imports $11 billion in products each year. Currently, U.S. products entering Morocco face an average tariff of more than 20 percent, while Moroccan products are only subject to an average 4 percent duty in the United States.

Transparent Rule-Making and Procedural Protections for Traders and

· Each government must publish its
laws and regulations governing trade and investment, and, beginning within one
year, publish proposed regulations in advance and provide an opportunity for public comment on them.

· Each government commits to apply
fair procedures in administrative proceedings covering trade and investment matters directly affecting companies from the other

· Both governments must ensure that
traders and investors from the other country can obtain prompt and fair review of final administrative decisions affecting their

Commitments to Combat Bribery

· Each government will prohibit
bribery, including bribery of foreign officials, and establish appropriate criminal penalties to
punish violators.

· The Agreement also recognizes the
importance of protecting whistle-blowers.

Important New Protections for U.S. Investors

· The Agreement establishes a
secure, predictable legal framework for U.S. investors operating in Morocco.

· All forms of investment will be
protected under the Agreement, such as enterprises, debt, concessions, contracts and intellectual property.

· U.S. investors will enjoy in
almost all circumstances the right to establish, acquire and operate investments in Morocco on an equal footing with Moroccan
investors, and with investors of other countries.

· Pursuant to the Trade Promotion
Authority Act of 2002 (TPA), the Agreement draws from U.S. legal principles and practices to provide U.S. investors in Morocco a
basic set of substantive protections that Moroccan investors in the United States currently enjoy under
the U.S. legal system.

· Among the rights afforded to U.S.
investors (consistent with those found in U.S. law) are due process protections and the right to receive a fair market value for
property in the event of an expropriation.

· The Agreement removes certain
restrictions and prohibits the imposition of other restrictions on U.S. investors, such as requirements to buy Moroccan rather than U.S.
inputs for goods manufactured in Morocco.

· These investor rights are backed
by an effective, impartial procedure for dispute settlement that is fully transparent. Submissions to dispute panels and panel
hearings will be open to the public, and interested parties will have the opportunity to submit their

Trademarks: State-of-the-Art Protection in the Digital

· The Agreement requires each
government to maintain a system to resolve disputes involving trademarks used in Internet domain names, which is important to
prevent "cyber-squatting" with respect to high-value domain names.

· The Agreement applies the
principle of "first-in-time, first-in-right" to trademarks and geographical indications, so that the first person who acquires a right to a
trademark or geographical indication is the person who has the right to use it.

· Each government will be required
to establish transparent procedures for the registration of trademarks, including geographical indications, and to develop an
on-line system for the registration and maintenance of trademarks, as well as a searchable

Copyrights: Protection for Copyrighted Works in A Digital

· The Agreement ensures that
authors, composers and other copyright owners have the exclusive right the make their works available online. The Agreement also ensures
that copyright owners have rights to temporary copies of their works on computers, which is
important in protecting music, videos, software and text from widespread unauthorized sharing via the

· Each government commits to
protect copyrighted works, including phonograms, for extended terms (e.g., life of the author plus seventy years), consistent with
U.S. standards and international trends.

· The Agreement includes strong
anti-circumvention provisions, requiring each government to prohibit tampering with technologies (like embedded codes on discs) that
are designed to prevent piracy and unauthorized distribution over the Internet.

· Each government commits to using
only legitimate computer software, thus setting a positive example for private users.

· The Agreement requires protection
for encrypted program-carrying satellite signals (including the signal itself and the programming), thus preventing piracy of
satellite television programming.

· Internet Service Providers (ISPs)
will have limited liability, reflecting the balance struck in the U.S. Digital Millennium Copyright Act between legitimate ISP activity
and the infringement of copyrights.

Patents & Trade Secrets: Protection

· Patent terms can be adjusted to
compensate for unreasonable delays in granting the original patent, consistent with U.S. practice.

· Grounds for revoking a patent are
limited to the same grounds required to originally refuse a patent, thus protecting against arbitrary revocation.

· The Agreement provides protection
for newly developed plant varieties and animals.

· Test data and trade secrets
submitted to a government for the purpose of product approval will be protected against unfair commercial use for a period of 5 years
for pharmaceuticals and 10 years for agricultural chemicals.

· The Agreement ensures that
government marketing-approval agencies will not grant approval to patent-infringing pharmaceuticals.

Morocco, the first country in the world to recognize the newly sovereign United States in 1777, is a strong ally of the U.S. in the war against terror. The Treaty of Peace and Friendship between the U.S. and Morocco, negotiated in 1787, is the longest unbroken treaty relationship in U.S. history.

IPR Enforcement: Tough Penalties for Piracy and

· The Agreement requires each
government to criminalize end-user piracy, providing strong deterrence against piracy and counterfeiting.

· Each government commits to having
and maintaining authority to seize, forfeit and destroy counterfeit and pirated goods and
the equipment used to produce them. IPR laws will be enforced against goods-in-transit, to deter violators from using U.S.
or Moroccan ports or free-trade zones to traffic in pirated products.
Ex officio action may be taken in border and criminal IPR cases,
thus providing more effective enforcement.

· The Agreement mandates both
statutory and actual damages under Moroccan law for IPR violations, which will deter
piracy. Under these provisions, monetary damages can be awarded even
if actual economic harm (retail value, profits made by violators) cannot be determined.

Strong Government Procurement Disciplines Set Precedent for Region

· The Agreement includes
disciplines on the purchases of most Moroccan central government agencies, as well as the vast majority of Moroccan regional and
municipal governments.

· The Agreement requires that
covered Moroccan government purchasers not discriminate against U.S. firms, or in favor of Moroccan firms, when making covered
government purchases in excess of agreed monetary thresholds.

· U.S. and Moroccan suppliers will
have increased certainty due to strong and transparent disciplines on procurement procedures, such as requiring advance public notice
of purchases, as well as timely and effective bid review procedures.

· Each government must maintain
criminal and other penalties for bribery in government procurement.

Ground-Breaking Customs Procedures

· The Agreement requires
transparency and efficiency in customs administration, including publication of laws and regulations on the Internet and procedural certainty
and fairness.

· Both governments agree to share
information to combat illegal trans-shipment of goods. In addition, the Agreement requires customs procedures designed to facilitate
the rapid clearance through customs of express delivery shipments.

· Strong but simple rules of origin
will ensure that only U.S. and Moroccan goods benefit from the Agreement. Rules are designed to be easy to administer and are
consistent with other U.S. free trade agreements in the region.

Commitments and Cooperation to Protect the

· The Agreement fully meets the
environmental objectives set out by the Congress in TPA. Environmental obligations are part of the core text of the

· Each government will required to
effectively enforce its own domestic environmental laws, and this obligation is enforceable through the Agreement’s dispute
settlement procedures.

· Each government commits to
establish high levels of environmental protection, and to not weaken or reduce environmental laws to attract trade or

· The Agreement also promotes a
comprehensive approach to environmental protection. Procedural guarantees that ensure fair, equitable and transparent proceedings
for the administration and enforcement of environmental laws are married with provisions that
promote voluntary, market-based mechanisms to protect the environment.

· As a complement to the Agreement,
the governments will sign a Joint Statement on Environmental Cooperation that will establish a Working Group on Environmental
Cooperation, develop a plan of action and set priorities for future environment-related

o EPA and USAID have developed a
new environmental project in Morocco, which focuses on building Morocco’s capacity to develop its environmental laws,
institutions and enforcement mechanisms in line with Morocco’s commitments under
the Agreement.

Cooperative Activities to Promote Worker

· The Agreement fully meets the
labor objectives set out by the Congress in TPA. Labor obligations are part of the core text of the Agreement.

· Each government reaffirms its
obligations as members of the International Labor Organization (ILO), and commits to strive to ensure that its domestic laws provide for
labor standards consistent with internationally recognized labor principles. The Agreement makes
clear that it is inappropriate to weaken or reduce domestic labor protections to encourage trade or

· Each government will be required
to effectively enforce its own domestic labor laws, and this obligation is enforceable through the Agreement’s dispute
settlement procedures.

· Procedural guarantees in the
Agreement require each government to provide access for workers and employers to fair, equitable and transparent labor tribunals or

· The Agreement includes a
cooperative mechanism to promote respect for the principles embodied in the ILO Declaration on Fundamental Principles and Rights at Work,
and compliance with ILO Convention 182 on the Worst Forms of Child Labor. Cooperative
activities may include:

o Discussions of legislation,
practice and implementation related to the core elements of the ILO Declaration on Fundamental Principles and Rights at

o Discussion of legislation,
practice and implementation related to compliance with ILO Convention 182 on the Worst Forms of Child Labor.

o Improving systems for the
administration and enforcement of labor laws.

Tools to Enforce the Trade Agreement

· All core obligations of the
Agreement, including labor and environmental provisions, are subject to the dispute settlement provisions of the Agreement.

· Dispute panel procedures set high
standards of openness and transparency:

o Open public

o Public release of legal
submissions by governments;

o Opportunities for interested
third parties to submit views.

· Emphasis is on promoting
compliance through consultation, joint action plans and trade-enhancing remedies.

· The Agreement includes strong
enforcement mechanisms, including the ability to suspend trade concessions or establish monetary assessments.