EU begins dispute settlement proceedings against Algeria to defend European companies

The EU considers that, by imposing these trade restrictive measures since 2021, Algeria is not respecting its trade liberalisation commitments under the EU-Algeria Association Agreement.

The EU’s aim is to engage constructively with Algeria with a view to removing the restrictions on several market sectors, spanning from agricultural products to motor vehicles. These include an import licensing system with the effects of an import ban, subsidies contingent on the use of local inputs for car manufacturers, and a cap on foreign ownership for companies importing goods in Algeria.

In light of unsuccessful efforts to resolve the matter amicably, the EU has taken this step to preserve the rights of EU exporters and EU companies operating in Algeria who are adversely affected. The Algerian measures also harm Algerian consumers, due to an unduly restricted choice of products.

Next steps

The EU aims to find a mutually satisfactory solution during the dispute settlement consultations. If no solution is reached, the EU will be entitled under the EU-Algeria Association Agreement to request the establishment of an arbitration panel.

Background 

The EU and Algeria signed an Association Agreement in 2002, which entered into force in 2005. It sets out a framework for EU-Algeria cooperation in all areas, including trade. It liberalizes trade in goods on both sides. The EU is Algeria’s biggest trade partner and accounts for the majority of Algeria’s international trade (around 50.6% in 2023).

In recent years, the value of total EU exports to Algeria steadily decreased, dropping from €22.3 billion in 2015 to €14.9 billion in 2023. The EU has repeatedly raised its concerns over trade restrictions on several market sectors with the Algerian authorities but to no avail. The referral of the dispute to the EU-Algeria Association Council for consultations is the first step in formal dispute settlement proceedings under the EU-Algeria Association Agreement.

All EU trade agreements include a dispute settlement mechanism, designed to help the EU and its trading partners to resolve disputes that may arise with respect to the application of the agreement.