Tunisia import restrictions to hinder trade with EU

A letter allegedly sent by Leon Delvaux, the acting director of the European Union, to the Tunisian Minister for Trade and Industry was leaked by the Tunisian news site Tunisie Numerique. It expressed deep concerns over complicated new import regulations that the European Commission for Trade says could restrict imports from the EU.

Al-Monitor contacted the European Commission for Trade, whose spokesperson replied, “We do not comment on leaks. We can only confirm that we have some concerns in relation to certain measures adopted by Tunisia that could potentially restrict EU imports. We are in contact with the Tunisian authorities with the aim of removing such restrictions.”

Tunisia’s economic crisis is deepening and its trade balance is going deeper into the red from $427.88million in August 2021 to $665.38 in April 2022. Although growth of 2.8% was reported in the second quarter of 2022 after a prolonged stagnation, according to Data Science company Insights TN, the real figure is -3.5% since 2019.

The EU supplies 48.3% of Tunisia’s imports, valued at €8.8 billion in 2020. According to EU data, the majority of these imports are machinery and materials to be used in industry, such as sewing machines, yarn and fabrics for the textile industry to be made into products for export. Consumables such as domestic appliances, for example, make up a smaller portion of products imported from EU companies.

By contrast, the EU is Tunisia's largest customer base, exporting 57.9% of its industrial and agrifood production, principally mechanical and electronic products with an overall value of 10 billion Tunisian dinars ($3.25 billion) worldwide between January and May this year. Tunisia's other main exports are garments and textiles and agrifood products, principally olive oil in bulk.

The EU stated that it supports Tunisian small and medium-sized enterprises as they start exporting goods to the EU through the EU trade development program INSADDER.

Houssem Saad, a member of the economic rights association ALERT Tunisia, told Al-Monitor, “The Tunisian market is very small for the EU, so this EU letter was primarily a political statement. They want to see more competition, more transparency and economic rights in Tunisia.”

Saad explained that the government is operating in an increasingly arbitrary way and “not respecting administrative procedures.”

He said that what is concerning is that these new rules for the importation and exportation of goods are not new laws, but decisions made by ministers and announced on Facebook. Even under the current presidential system, new laws are issued as presidential decrees and published in the official gazette, which serves as the Tunisian republic’s legal statute record.

In Saad's opinion, this arbitrary governance makes things very difficult for Tunisia’s trading partners like the EU, as regulatory changes may not be easily communicated to trading partners.

Saad explained the problem importers are now facing using the example of importing domestic electronics. Ordinarily, Tunisian importers would source them from EU-based or Turkish distributors. However, under the new regulations, the government insists that Tunisian importers have to buy products such as refrigerators or televisions directly from the manufacturers, which means sourcing directly from brands in the Far East, such as Samsung and LG. Buying directly from brands would require bulk orders to make shipping from Korea cost effective. It requires the importer to have letters of credit from a bank of sufficient value to cover the cost of bulk shipping from so far away.

Saad further explained that only allowing direct imports from manufacturers will skew market in favor of the larger commercial companies that either have bank confidence or even own the banks themselves. Financial inclusion has been a serious problem for decades. According to the World Bank, only 30% of the population (about 2.5 million people) have bank accounts. Many of the larger corporations also own banks, so for small and medium enterprises, gaining access to credit is very difficult. Saad said only those with easy access to banks and who have sufficient liquidity can raise substantial letters of credit in order to order directly from East Asian manufacturers.

Tunisia is facing one of its worst-ever economic crises and ALERT believes these measures could deepen it by reinforcing economic inequality in the market rather than encouraging competitiveness and market growth. Saad said that limiting imports “is a bad decision because if you want to export you also need to import.”

Al-Monitor has repeatedly contacted the Tunisian Ministry for Trade and Industry but has yet to receive a reply.