Morocco plans to increase taxes on import of Turkish textile and clothing to 36 per cent instead of 27 per cent. The tax is a part of the amended 2020 Finance Bill approved by the Moroccan government and Parliament earlier this month. With this decision, Morocco aims to promote local production, especially during the COVID-19 pandemic. The country also hopes to limit imports of textile products, which have strongly competed with domestic products.
The new tax will support the domestic Turkish textile industry. Some of the Turkish companies that the new tax rate will directly affect include clothing brands LC Waikiki, Koton, and DeFacto.
Morocco and Turkey signed a Free Trade Agreement in 2004. The agreement took effect two years later, in 2006. Since then, Morocco’s trade balance with Turkey has been largely in deficit as the country loses $2 billion annually in its trade deal with Turkey. The Turkish textile industry also caused Morocco a loss of around 44,000 jobs in 2017 alone.
At the start of 2020, Morocco and Turkey had decided to review their Free Trade Agreement. However, the countries suspended the negotiations due to the COVID-19 pandemic.