A NEW APPROACH FOR MOROCCAN EXPORTS

UNCLAS RABAT 000190

SENSITIVE
SIPDIS

STATE FOR NEA/MAG AND EEB/TPP/BTA (EGAN)
STATE PASS USTR (BURKHEAD) AND
CLDP(TEJTEL AND ELKSTOUF)

E.O. 12958: N/A
TAGS: ETRD ECON EIND EINV MO
SUBJECT: A NEW APPROACH FOR MOROCCAN EXPORTS

REF: A. RABAT 0171

B. RABAT 0119


1. (SBU) SUMMARY: A new national export strategy to be
unveiled this month seeks to address a key gap in the recent
improvement of the Moroccan economy - the continuing lack of
competitiveness of Morocco,s export sector. Non-phosphate
exports were essentially flat in 2008, and 2009 augurs worse.
The international downturn in trade has already impacted
traditional Moroccan specialties such as textiles and auto
parts. The new approach tackles the issue by integrating
export promotion with specific sectoral strategies, while
also giving a facelift to the country,s export promotion
apparatus. On the front lines in advancing the new strategy
is "Maroc Export," the renamed national center to promote
exports, whose director recently outlined for us his
ambitious attempt to match Moroccan producers with
international clients. END SUMMARY.

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NEW LOOK
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2. (SBU) A Booz Allen Hamilton study ordered in 2008 by the
Ministry of Foreign Trade confirmed what other analysts have
long argued: Morocco must enhance its capacity for
international product promotion and marketing in order for
Moroccan exports to be competitive in the international
market. Following the release of the study, Morocco moved to
revamp its hitherto "fragmented" approach to export
promotion, beefing up its export promotion agency, renaming
it "Maroc Export," and entrusting it to a dynamic, young, and
U.S.-educated Moroccan diplomat, Saad Benabdallah, a former
Economic Counselor in Paris.


3. (SBU) The rebranded agency is a key component of a new
overall export strategy. As outlined by Minister Maazouz at
a conference in Casablanca last week, the government aims to
increase non-phosphate Moroccan exports from 20 billion to 26
billion USD over ten years, through aggressive marketing and
promotion. The new plan, the Minister stressed, will be
integrated with other internal reform efforts already
undertaken to diversify export offerings and strengthen
Morocco,s hold on niche markets. One of these reform
efforts, the National Pact for the Emergence of Industry, was
launched on February 13 in Fez. The six year Pact
(2009-2015) will allocate 1.4 billion USD to boost the
competitiveness of Moroccan businesses through promotion (128
million USD for investments and exports),training (477
million USD for training centers and assistance),
infrastructure (193 million USD for industrial zones and
integrated industries),investments (341 million USD for
assistance and offshoring) and the support of small- and
medium-sized businesses (273 millions USD for financing).


4. (SBU) In a recent meeting, Benabdallah outlined the ways
in which "Maroc Export" will seek to achieve the Minister,s
vision. In addition to "rebranding" and modernizing the
agency,s headquarters, Benabdallah dismissed two-thirds of
his staff, and is moving to hire U.S.-educated,
English-speaking replacements. If we want to be taken
seriously, he noted, we have to look serious and able to meet
the demands of any potential buyer and compete with any other
country.

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NEW STRATEGY
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5. (SBU) The new Moroccan approach to exports is based on
three main principles, Benabdallah explained: promotion,
marketing, and institutional communication. Promotion for
Maroc Export means getting out and becoming known. Maroc
Export has the budget, he observed, to send serious companies
interested in reaching out to new markets to trade fairs.
Sourcing missions are another way to market the brand
overseas. Working with the USAID-sponsored New Business
Opportunity Program, for instance, Maroc Export organizes
these missions to highlight success stories. Lastly, through
institutional communication, Maroc Export will bring buyers,
industrials, journalists and anyone interested in doing
business to Morocco to get a new picture of today,s Morocco.
If we have the product, whether it is leather, textile, or
agricultural, Benabdallah asserted, we are willing to do what
it takes to get buyers to seriously consider Moroccan
products.

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NEW MARKET
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6. (SBU) The GOM officially considers the U.S., along with
Russia and Gulf Cooperation Council countries, as "mid-range"
potential markets for Moroccan Exports. Benabdallah told us
that he has a different vision. The U.S., he argues, must be
one of the "strategic" markets for Morocco, along with more
traditional export destinations like France, Spain, Germany,
Italy and the United Kingdom. Although Moroccan exporters
are most comfortable dealing with such traditional partners,
he argued there is great promise in the U.S. market and Maroc
Export will focus its efforts on reaching out to it. With a
new staff that understands U.S. business culture and a new
strategy to market Morocco, Benabdallah foresees 3-5 percent
annual growth in exports to the U.S. within the next five
years. We need to educate people, he observed, about the
advantages of the US-Morocco Free Trade Agreement (FTA) and
dissipate the fear of exporting to the U.S. If the global
economic crisis has taught Morocco anything, Benabdallah
asserted, it is that it needs to diversify and that it cannot
rely on the same old strategy.

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SAME OLD SKEPTICS
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7. (SBU) Benabdallah's notwithstanding confidence, some
observers question whether the new strategy will be enough to
significantly increase the volume of outgoing trade. A
number of such skeptics voiced their criticism at the
conference where Maazouz unveiled the new vision last week.
Abdellatif Belmadi, President of the Moroccan Exports
Association (Asmaex),agreed that that promoting exports is
essential, noting that he proposed a similar plan two years
ago. The situation is different now, he argued, and Morocco
needs to thoroughly reflect on how the economic crisis is
affecting each exporting sector. The GOM's optimistic
reports and "preventative" reforms have not sufficiently
analyzed the crisis, he added (Reftel B). For Belmadi, in
order to have a truly innovative approach, Moroccan exporters
must consider the effects the crisis has had on their
businesses and recalibrate what they can offer international
markets, since they currently do not have the capacity to be
competitive in certain markets, particularly the U.S.


8. (SBU) Other critics, while sharing the view Morocco needs
to access new markets, questioned whether the U.S. is the
appropriate target. The first step to diversifying Moroccan
exporting markets, argued Ambassador Hassan Abouyoub, former
Minister of Foreign Trade, is to seize the opportunities
available in African markets. Abouyoub suggested that
Moroccan exporters should profit from relationships developed
by the Moroccan banks and the national airline already
working in certain African countries. Richard Newfarmer,
Economist and Special Representative to the UN and the World
Trade Organization for the World Bank in Geneva, however,
suggested that Morocco's export strategy must tap into the
Asian market in order to achieve success. "If your export
promotion strategy is successful", Newfarmer told Maazouz,
"in the next 10 years your street signs will also be written
in Mandarin to accommodate your new market."

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NECESSARY CHANGE
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9.(SBU) COMMENT: A new, more integrated approach to promoting
exports is a necessity here, given the sector,s continuing
weakness and the lack of coherence of past promotion efforts.
The new effort comes in an uncertain international climate,
which is evolving rapidly. Maazouz,s vision is likely not
the last word on the subject. In particular, forthcoming
reports on Morocco,s experience with its numerous free trade
agreements, which will be released by Morocco,s General
Confederation of Enterprises (CGEM) in mid-March, will
undoubtedly shape the debate. Whatever the final shape of
the overall plan, however, Maroc Export,s new modern face
and access to resources already mark an important shift. END
COMMENT.


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Jackson