US-Morocco Free Trade Agreement falls short of economic expectations, report finds

The US- Morocco Free Trade Agreement (MAFTA) is a comprehensive deal designed to enhance bilateral commercial relations between the two nations. Signed in 2004 by President George W. Bush, the agreement made Morocco one of the few countries—and the only one in Africa—to benefit from such a pact.  A new report by the Washington Institute for Near East Policy evaluates the outcomes of MAFTA, two decades after its implementation. 

MAFTA was conceived in the aftermath of 9/11, driven by strategic and economic aspirations. The U.S. sought to promote a broader “Middle East Free Trade Area” and granted Morocco “major non-NATO ally” status. Morocco, in turn, aimed to strengthen its bilateral ties and security cooperation with the U.S.

The report shows that bilateral trade has more than quadrupled since 2006, increasing from about $1.3 billion to $5.5 billion in 2023. However, the report highlights a persistent, growing trade imbalance indicating that “MAFTA’s full economic potential is not being fully realized”. 

Morocco’s trade deficit with the U.S. increased from less than $1 billion in 2006 to approximately $1.8 billion in 2023. Furthermore, Morocco’s notable economic growth over the past two decades appears largely independent of MAFTA. The report finds that the kingdom’s GDP growth is more closely tied to its agricultural sector, internal policies, and infrastructure improvements.

The report also notes that Morocco has turned to niche markets, such as electric vehicle (EV) batteries, where MAFTA was expected to spur investment from both U.S. and third-party investors. Yet, Morocco has welcomed investments from China, with several Chinese companies announcing plans for EV battery production. 

China now leads in “greenfield” investments in Morocco, with U.S. capital contributing only 1%. The report argues that this growing Chinese involvement may explain Washington’s reluctance to push for more U.S. investments.

Conversely, the report underscores Morocco’s successful positioning as a leading destination for foreign direct investment (FDI) in Africa, bolstered by agreements like the African Continental Free Trade Agreement. For the U.S., investing in Morocco could be a strategic way to boost economic growth and trade with Africa.

The report concludes that MAFTA has mainly served political and strategic interests rather than achieving its economic goals. Nonetheless, it highlights the agreement’s role in maintaining a strong bilateral relationship amidst shifting U.S. politics, noting that the Biden administration has upheld Trump’s recognition of Moroccan sovereignty over the Sahara territory.

Moving forward, the report suggests that the U.S. should leverage trade to support Morocco’s economic growth by focusing on sectors such as light manufacturing. Additionally, expanding English-language training opportunities could further enhance mutual economic benefits.