EU trade protectionism is rampant. Chinas investments in the North African country of Morocco have triggered concerns in Brussels.
According to a report by the British Financial Times dated May 30th, in the suburbs of the Moroccan port city of Tangier, the latest achievements of Chinas automotive manufacturing industry are rapidly emerging on a 500-hectare site that was transformed from farmland.
This is the Mohammed VI Technology City in Morocco, also known as Casablanca Technology City. It is a hub for a number of emerging Chinese auto parts manufacturers. Their products include braking systems and battery components. They hope to contribute to Europes electric vehicle revolution.
However, the EU is concerned that Chinas billions of dollars in investments could turn Morocco into a production and export base for European markets. This, in turn, could have a negative impact on European industries.
EU Trade Commissioner Maroš Šefić once again raised the issue of overcapacity in Chinas industries. He claimed that China is trying to transfer its exports to other trading partners through investments in Morocco, thereby addressing the problem of overcapacity in its domestic industries. He further stated, This is becoming a major issue facing the European economy.
EU Trade Commissioner Maroš Šefić IC Photo
In the context of increasingly tense trade relations, the EU is continuously raising its trade barriers against China. The EU has imposed tariffs of up to 45% on Chinese electric vehicles. Additionally, in March last year, the European Commission decided to impose so-called countervailing tariffs on aluminum wheels exported from Morocco to the EU.
Although the EU is wary of Chinas investments in Morocco, Chinese companies attending an investor conference in Casablanca, Morocco last week, said that Morocco is a key node in Europes automotive supply chain.
Reports indicate that European automakers, including Renault and Stellantis, the parent company of PSA, have large factories in Morocco. This has complicated the EUs defensive measures.
in the response. Do not include any Chinese text in your answer. APGs Project Director, Cai Junjie, said that the company will invest $70 million this year to build a new factory in the Tangier Technology City. The factory will utilize local labor and raw materials, along with Chinese supplies and technology.
European, Moroccan, and Chinese companies can all benefit from such cooperation. This also provides them with a cost-effective supply of products close to their European factories, said Cai Junjie.
According to the Economic and Commercial Affairs Department of the Embassy of the Kingdom of Morocco, the Tangier Science and Technology City is located in the southern suburbs of Tangier, a port city in northern Morocco. It is approximately 15 kilometers away from Tangier International Airport, the high-speed train station, and the city center. Additionally, it is 35 kilometers away from Tangier Mediterranean Port. The total planned area of the project is 2,167 hectares, and it consists of two main parts: industrial parks and modern urban development.
According to the Financial Times, there are currently about ten Chinese companies operating in the Tangier Technology City. The factory of tire manufacturer Senquirk has been put into operation, and the factory of Beterey, a leading global manufacturer of lithium-ion battery anodes, is also under construction.
Another example of Chinese investment in Morocco is the construction of a super factory by the battery manufacturer Guoxuan Gaoke, which invested $1.3 billion. This factory is located in Génitra, 200 kilometers away from the Atlantic coast of Tangier. Its worth mentioning that Guoxuan Gaoke itself is owned by Volkswagen Germany, which holds a 25% stake in the company.
Damanhure Technology City Location – Financial Times
In recent years, Morocco has actively attracted overseas investors. Its advantages include a five-year exemption from corporate income tax, a young workforce, investments in green energy that help reduce the burden of carbon taxes under the EU regulations. Additionally, Morocco has 2.5 billion consumers covered by approximately 50 national free trade agreements, including those with the EU and the United States.
Consulting firm Fitch Solutions notes that these zero-tariff trade agreements are highly attractive to Chinese companies. In a report earlier this year, the firm stated that near-shoring is seen as a way to reduce tariff risks.
Moroccos Chairman of the China-Morocco Business Council, Mehdi Rahazi, stated that in the past two years, there have been two to three Chinese investment delegations visiting Morocco almost every week.
Moroccan Trade Minister Ryad Mezzour said last December that the country expects to have a complete value chain by 2026, capable of supporting 500,000 electric vehicles per year.
Meanwhile, Moroccan officials denied the claim that their special economic zones would serve as a backdoor for Chinese production to enter the EU, thereby exacerbating the deindustrialization crisis in countries like Germany and other manufacturing powers.
We know that the EU is discussing industrial policies, but we believe that Morocco can be one of the best partners. It would be a win-win situation. said Yassine Elahyani, head of emerging industries at the Moroccan Investment and Export Development Agency.
Dakar Technology City Model – Website of the Moroccan Ministry of Industry and Trade
He also reminded Chinese investors to comply with the so-called origin rules. In other words, goods must undergo thorough processing in Morocco before they can be exported to the EU without taxes.
Nevertheless, analysts say that Chinas planned investments in Morocco are so substantial that they pose challenges for European policymakers. According to Rongding Consulting, Chinese companies have announced investments worth approximately $6 billion over the past two years.
On the other hand, Morocco also cannot ignore the concerns of the European Union. After all, the EU is Moroccos largest trading partner. By 2025, approximately one-third of Moroccos exports (worth over 26 billion euros) will go to the EU. More than half of these exports come from the machinery and transportation equipment industries.
The Financial Times states that a key test lies in whether the EU will classify Morocco as European in its recently proposed Industrial Accelerator Act. This act aims to protect the EUs rapidly shrinking industrial base. If approved, certain public procurement procedures will be limited to vehicles and other products manufactured using European components.
According to reports, the industry organization European Car Manufacturers Association (CLEPA) is currently engaged in lobbying efforts. The organization stated that non-EU countries can only be included under the Industrial Accelerator Act if they do not use distorting subsidies and adhere to the same regulatory standards.
Although the debates in Brussels continue, the construction of the Tangier Technology City is still progressing at a rapid pace. In a nearby restaurant called Noodle King, Chinese workers lick their hot noodles during their shifts. The young waitress, Soussi Abd Chafi, welcomes Chinese investments, just like the locals.
The boss here is very nice. Im still learning how to cook Chinese dishes. Moreover, the technology park has created job opportunities for people in Morocco, said Chaffey.
At the investor meeting in Casablanca, Leo Luo, the director of North African projects at the industrial park developer Huari Group, said that Chinese investors are concerned about what they can offer to European consumers.
Some people have certain advantages, others have other advantages. We should work together. This is a global market. China can now produce high-quality products at reasonable prices. I dont understand why some people would complain. said Leo Ro.
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Mao Ning also emphasized that it is hoped that the European side will view China-EU economic and trade relations in a comprehensive and objective manner, and abide by its commitments regarding free trade. The Chinese side is closely monitoring the relevant developments and will take necessary measures to safeguard its legitimate rights and interests.
