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Invest in Tunisia with a Free Trade Agreement

Last week’s “Tunisia 2020” international investment conference highlighted a golden opportunity for the international community to lend crucial support to the moderate Arab state, now in its fifth year of democratic transition. The conference provided a forum for Tunisians to commit to economic reforms to increase investor confidence in the country’s high-potential economy, and highlighted the major infrastructure projects that Tunisian citizens have long-awaited.

Public frustration over the slow pace of reform has inspired popular demands for bold change.  The question for Tunisia’s unity government and parliament is: can they muster the political will and legislative agenda to move quickly enough? The 2014 general elections yielded few tangible results on the economic front. Parliament has been slow to reform the stifling regulatory environment that saps entrepreneurialism and makes access to credit a challenge.  

The passing of a new investment code in September was an important first step towards making it easier for foreign companies to invest in Tunisia’s potential as a high-skilled economy. This should be matched with Tunisian reforms that open up access to international markets for small and medium sized enterprises. Other important measures that should be prioritized include administrative reforms to the country’s stifling bureaucracy, judicial reform, and a national initiative to tackle corruption.  

Of course, this is all easier said than done. While the Tunisian people have expressed a clear desire for reform, numerous entrenched interests remain committed to maintaining the status quo. In this environment, creating incentives from Tunisia’s international partners to invest in the country are particularly important.

The United States has lent considerable economic support to Tunisia in recent years. It can now make an important contribution to boosting Tunisia’s economic growth by passing a Free Trade Agreement next Congress. As major global trade agreements like the Trans-Pacific Partnership have foundered, bilateral agreements with small countries like Tunisia become increasingly viable and practical, both politically and economically.

Access to US markets would greatly benefit Tunisia’s labor-intensive industries such as olive oil production and textiles, and would not significantly impact US jobs. Moreover, an FTA would create an opportunity for US companies to expand their reach within Africa (especially within Francophone Africa) given the relatively high skill level of the Tunisian workforce. 

Polling conducted by the International Republican Institute (IRI) has consistently shown employment to be Tunisians’ number one priority, and a May 2016 survey revealed that the Tunisian public is far ahead of decision makers in their appetite for meaningful economic reforms. 

Making it easier for Tunisian entrepreneurs to start businesses and reach new markets, increasing investment in the country’s impoverished interior and south, and attracting large foreign businesses that will hire Tunisians all rank as popular methods for improving the economy (and notably, are more popular than proposals for expanded government hiring). Significantly, for the first time out of 14 polls conducted by IRI since Tunisia’s 2011 revolution, a greater number of Tunisians say they would prefer to own a small business (38 percent) or work for a foreign company (13 percent) than work for the Tunisian government (35 percent).

The dramatic evolution Tunisia has undergone since the 2011 revolution warrant our attention and support. Unlike other countries impacted by the turbulence of the Arab Spring, Tunisia has not been overtaken by the Islamic State (IS) or unraveled into sectarian chaos. Tunisian leaders have consistently proven their commitment to solving political differences peacefully, respecting democratic process and serving as a force for moderation within the region.

The Tunisian government is working hard to combat the threat of extremism—not an easy prospect with Libya as its neighbor in the south. In a region where allies are few and far between, Tunisia’s quest for a new partnership with the United States should be reciprocated.  Acting now to cement the economic potential of that partnership makes sense for both commercial and political reasons.


Scott Mastic is the Regional Director for the Middle East and North African region at the International Republican Institute.

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