ECONOMY AND TRADE

Algeria-China
Algeria, China Deepen Cooperation With Oil And Gas Agreement

(AFP) - Algeria and China signed several cooperation pacts during a two-day visit by Chinese President Hu Jintao, including an agreement on oil and gas, much needed by China to fuel runaway growth. Hu left the north African country, on a trip focussing on raw materials in exchange for Chinese manufactured goods which also took in Egypt and Gabon.

A framework energy agreement, along with accords on research and educational exchanges, and economic and technological cooperation, was signed Tuesday. Officials said the agreement was aimed at developing bilateral trade in the oil and gas sector.

China also granted Algeria a "preferential loan" worth 48 million dollars (38 million euros) linked to a memorandum of understanding on economic cooperation.

Runaway growth in China has seen the country's demand for oil surge, with domestic production unable to keep pace, and Algeria is seeking to expand its markets for oil and gas exports to fuel its economy.
China has been a traditional ally of Algeria since 1958, when a provisional government was named there four years ahead of independence from France.

To meet soaring demand, oil imports to China have shot up 30 percent in recent years, about half from the Middle East and the rest from all over the globe, including Africa, where Algeria and Gabon are key oil exporters to China.

Algeria, meanwhile, is seeking new outlets for its key energy resources after stepping up production and asking the Organisation of Petroleum Exporting Countries (OPEC) to be allowed to increase it even further.

Algeria currently produces more than one million barrels of oil a day (bpd) and plans to step that up to 1.5 million bpd, despite its OPEC ceiling being 782,000 bpd.

The hydrocarbons sector brought in 24 billion dollars (19 billion euros) last year, or 96 percent of Algeria's export revenues.

Chinese companies have been steadily increasing their presence in Algeria's oil and gas sector: oil company Sinopec signed a 525-million dollar contract in 2002 to develop the Zarzaitine oil field in Algeria's Sahara desert.

And the China National Oil and Gas Exploration and Development Company is contracted to build an oil refinery near Adrar, also in the Algerian Sahara.

Furthermore, the China National Petroleum Corporation signed a contract worth 350 million dollars in July 2003 for oil importation from Algeria.

Algerian President Abdelaziz Bouteflika said at a dinner Tuesday in Hu's honour that conditions "today are favourable to encourage economic operators in both our countries to consolidate their relations by setting up partnerships."

The Algerian leader added that "the dynamism of the Chinese economy, its successful integration into the world economy and the key role that the country plays in the World Trade Organisation (WTO) open a vast field of expansion for our economic, commercial and technological relations."

Algeria is in the process of negotiating membership to the WTO, and has launched drastic reforms of its once state-managed economy to facilitate entry to the world body. The reforms have met with approval from the International Monetary Fund, although the Bretton Woods institution has urged Algiers to accelerate privatisation.
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Libya - FDI
Germany Resolves Libya Debt Wrangle, Paving Way For Investment

(AFP) - Germany announced that it had signed an agreement with Libya after years of negotiations under which Tripoli will repay millions of dollars of outstanding debt. Economy Minister Wolfgang Clement of Germany and Libyan Finance Minister Al Ageli Abdussalam Ibreni penned the accord last week although it was only made public Tuesday.

A spokesman for the German ministry said Libya would pay back at least 100 million euros (125 million dollars) in the next six months.

The move not only paves the way for greater German investment in Libya but marks another step in Tripoli's attempts to improve international relations.

The debts are outstanding payments owed to German firms that had invested in Libya during the 1980s using German government export credits.

Clement said that the accord was "a significant pre-condition" to resuming the export credit scheme to Libya, which is currently frozen, and provided "a fair chance for German business in the international market."

Ibreni said at his talks with Clement that he wanted more German investment in Libya, which he said was trying to strengthen the private sector, according to a German economics ministry account of the meeting.

Libya was widely shunned by the international community after the December 1988 bombing of a Pan Am passenger plane over Lockerbie, Scotland.

However, last year it offered compensation for each of the 270 dead, a move that led to the partial lifting of UN sanctions, and has signed a similar deal with Paris over the 1989 bombing of a French airliner.

Libyan leader Moamer Kadhafi has also announced a plan to dismantle Libyan weapons of mass destruction, under international control.

Meanwhile, a senior German foreign ministry official returned from Tripoli last Friday saying he was "very satisfied" with his talks with officials there over a 1986 Berlin nightclub bombing.

He said it was time to pay damages to relatives of the three people killed in the attack, for which Libya was held partly responsible.
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Trade/Economy
Tunisia Continues to Lower Customs Taxes for Products Imported from the EU

It has been eight years since Tunisia agreed to progressively dismantle its trade tariffs and open up its domestic market. This was part of an agreement with the European Union, whereby Tunisia will benefit from an anchoring of its economy to that of Europe, in exchange of upgrading its economic and trade practices.

As part of the agreement, Tunisian industrial products would enter EU markets without incurring custom taxes. Because Tunisia was given a period of time to adjust, EU manufactured products would continue to be taxed under a regime that requires a progressive reduction of such taxes over time.

As of now, custom taxes for raw material and industrial equipment coming from the EU have been reduced by 100% as part of a list of products, whereas another list of products saw a 72% tax reduction to a maximum tax of 12.04% today, compared with 43% in 1995. Among the products that are taxed at sub-12.04% are paint products, bathroom items, plastic accessories, wallpaper, plastic-based utensils, plastic-based office and school supplies, water heaters, and a variety of other products that are currently produced in Tunisia.

The tax of a third list of products comprising of cleaning items, ready-to-wear cloths, watches, eyewear, cosmetics, and other consumer products was lowered by 56% to 18.9% or less, compared to 43% in 1999.

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