Appendix B Best Prospects for Agriculture and Industry Sector Exports Best Prospects for Agriculture Sector Exports A) Name of sector: Agricultural Exports B) Total market size (US $ millions): -- 1993 (estimated) 2,000 -- 1994 (estimated) 2,200 -- 1995 (estimated) 2,300 C) Total local cereal production (1,000 metric tons): -- 1992 (estimated) 3,200 -- 1993 (estimated) 1,900 -- 1994 (estimated) 2,000 D) Total exports (US $ millions): Algeria exports small quantities of dates and wine but 1993 figures are not yet available. E) Total imports (US $ millions): -- 1993 (estimated) 2,000 -- 1994 (estimated) 2,200 -- 1995 (estimated) 2,300 F) Imports from the U.S. (US $ millions): Commodity 1993 1994 (est.) 1995 (est.) Wheat 130 150 130 Feedgrains (corn and barley) 115 110 80 Veg Oils (soybean, sunoil) 85 85 70 Durum wheat 60 77 65 Protein meal (soybean) 55 60 50 Dairy products 110 100 60 Comments: Algeria remains an important market for U.S. agricultural exporters. The commodity export figures for 1994 reflect exports already registered under the GSM 102 and 103 programs. USDA has not yet determined whether supplementary credits will be made available to Algeria prior to the negotiation of the 1994-5 GSM program. The Algerian Government hopes that greater foreign exchange availability in 1995 will enable it to import more on a cash basis. The Embassy has estimated that the U.S. could allocate up to $500 million in GSM credits to Algeria for 1995 but this has not yet been determined. The major agricultural competitors of the U.S. in Algeria are France, Italy and Spain, as well as Canada (for wheat), Argentina (for vegoils), Brazil (for soybeans), and New Zealand (for dairy products). Best Prospects for Industry Sector Exports A) Rank of sector: 1 B) Name of sector: Oil and Gas Field Machinery C) ITA industry sector code: OGM D) Total market size (US $ millions): -- 1993 (estimated) 280 -- 1994 (estimated) 350 -- 1995 (estimated) 450 E) Total local production (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 F) Total exports (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 G) Total imports (US $ millions): -- 1993 (estimated) 280 -- 1994 (estimated) 350 -- 1995 (estimated) 450 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 80 -- 1994 (estimated) 100 -- 1995 (estimated) 150 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: Algeria's foreign exchange is earned almost entirely by its hydrocarbon sector, which depends heavily on U.S. technology. Current plans stress: increased exploration, increasing liquefaction capacity to enhance LNG exports, building additional pipelines, especially to transport natural gas and gas liquids, and negotiating contracts with foreign companies for enhanced oil recovery (EOR) in existing oil fields. These trends will continue and will provide an exceptionally high market growth rate. Expansion of this sector, which has no domestic production, will largely benefit U.S. exporters. The latter already dominate the market, but could still increase their market share in areas where their French, Italian and German competitors are most active. Most promising subsectors (estimated 1995 market size - US $ millions): -- Wellhead and down-hole: 315 (equipment and supplies) -- Drilling machinery: 135 A) Rank of sector: 2 B) Name of sector: Telecommunications Equipment C) ITA industry sector code: TEL D) Total market size (US $ millions): -- 1993 180 -- 1994 (estimated) 210 -- 1995 (estimated) 270 E) Total local production (US $ millions): -- 1993 80 -- 1994 (estimated) 80 -- 1995 (estimated) 100 F) Total exports (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 G) Total imports (US $ millions): -- 1993 100 -- 1994 (estimated) 130 -- 1995 (estimated) 170 H) Imports from the U.S. (US $ millions): -- 1993 17 -- 1994 (estimated) 22 -- 1995 (estimated) 30 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: The Algerian Ministry of Post and Telecommunications has a long-term plan to modernize and expand its network and to introduce new services. Implementation will depend almost entirely upon imports. U.S. manufacturers dominate the radio communications and satellite equipment market, while French, Japanese, and German suppliers dominate most other markets in which U.S. presence is very limited. Sales efforts should be directed to transmission, particularly fiber optics, switching and radio communications equipment, areas which offer opportunities for U.S. companies to increase market share. Most promising subsectors (estimated 1995 market size - US $ millions): -- Transmission equipment: 110 -- Switching equipment: 110 -- Radio communications equipment: 50 A) Rank of sector: 3 B) Name of sector: Water Resources Equipment C) ITA industry sector code: WRE D) Total market size (US $ millions): -- 1993 (estimated) 211 -- 1994 (estimated) 230 -- 1995 (estimated) 295 E) Total local production (US $ millions): -- 1993 16 -- 1994 (estimated) 16 -- 1995 (estimated) 20 F) Total exports (US $ millions): -- 1993 5 -- 1994 (estimated) 5 -- 1995 (estimated) 6 G) Total imports (US $ millions): -- 1993 (estimated) 200 -- 1994 (estimated) 220 -- 1995 (estimated) 280 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 50 -- 1994 (estimated) 60 -- 1995 (estimated) 80 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: Improving water resource supply and increasing agricultural production are major priorities. The government's irrigation program offers substantial opportunities for direct sales and licensing arrangements. Several companies are seeking to develop local manufacturing of irrigation and waste water treatment equipment. All have indicated their interest in working with U.S. companies. American suppliers, whose technology enjoys a high reputation here, sell mostly drilling equipment, a market which they dominate. They could, however, displace their French, Japanese and German competitors in most other areas. Most promising subsectors (Estimated 1995 Market Size - US $ millions): -- Drilling equipment: 118 -- Irrigation equipment: 94 -- Waste water treatment equipment: 47 A) Rank of sector: 4 B) Name of sector: Computers and Peripherals C) ITA industry sector code: CPT D) Total market size (US $ millions): -- 1993 (estimated) 52 -- 1994 (estimated) 57 -- 1995 (estimated) 67 E) Total local production (US $ millions): -- 1993 2 -- 1994 (estimated) 2 -- 1995 (estimated) 2 F) Total exports (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 G) Total imports (US $ millions): -- 1993 (estimated) 50 -- 1994 (estimated) 55 -- 1995 (estimated) 65 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 17 -- 1994 (estimated) 20 -- 1995 (estimated) 30 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: The Algerian market for computers and peripherals is very large. Demand is estimated at some $200 million, four times the amount of actual imports in 1994, and only lack of financing is hampering import growth. Although U.S. manufacturers dominate this market, they can still increase their market share through greater availability of financing. Their main competitors, French and German suppliers, benefit from the greater availability of government export credits to finance their sales than that for American suppliers. This is their only competitive advantage over their U.S. counterparts. Most promising subsectors (Estimated 1995 Market Size - US $ millions): -- Microcomputers: 50 -- Monitors/printers: 20 -- Minicomputers: 14 A) Rank of sector: 5 B) Name of sector: Drugs and Pharmaceuticals C) ITA industry sector code: DRG D) Total market size (US $ millions): -- 1993 315 -- 1994 (estimated) 360 -- 1995 (estimated) 420 E) Total local production (US $ millions): -- 1993 60 -- 1994 (estimated) 60 -- 1995 (estimated) 60 F) Total exports (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 G) Total imports (US $ millions): -- 1993 250 -- 1994 (estimated) 300 -- 1995 (estimated) 360 H) Imports from the U.S. (US $ millions): -- 1993 .5 -- 1994 (estimated) .6 -- 1995 (estimated) .7 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: Pharmaceuticals are one of Algeria's largest import categories and will continue to be. European suppliers, particularly France, have a virtual monopoly on this market. However, importers are seeking to diversify suppliers, and this is supported by governmental determination to do so, creating for the first time, a significant opportunity for American companies. Manufacturers are now allowed to sell their products through distributors. U.S. pharmaceuticals are sold in Algeria through European subsidiaries, and are treated as European products, but American suppliers have ample opportunities to penetrate this lucrative market for both direct sales and licensing arrangements for local manufacturing. Algeria imports the whole range of pharmaceuticals. A) Rank of sector: 6 B) Name of sector: Food Processing and Packaging Equipment C) ITA industry sector code: FPP D) Total market size (US $ millions): -- 1993 (estimated) 160 -- 1994 (estimated) 180 -- 1995 (estimated) 220 E) Total local production (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 F) Total exports (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 G) Total imports (US $ millions): -- 1993 (estimated) 160 -- 1994 (estimated) 180 -- 1995 (estimated) 220 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 10 -- 1994 (estimated) 15 -- 1995 (estimated) 20 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: Although the Algerian food processing industry is underdeveloped, demand for equipment and machinery is unfulfilled for two main reasons: insufficient agricultural production and lack of foreign exchange for equipment imports. However, the GOA's efforts to develop the agricultural sector and increase food production, and the expected improvement of Algeria's financial situation, should make this market attractive to U.S. suppliers. Although the market is dominated by Italy and Germany who account for some 80% of imports, U.S. companies will have ample opportunities to increase their share of the import market. The GOA's commitment to the long term development of this industry emphasizes the private sector's role, which is already very active in this industry. Most promising subsectors (Estimated 1995 Market Size - US $ millions): -- Fruit/vegetable canning equipment: 88 -- Grain mill machinery: 66 -- Controls: 66 A) Rank of sector: 7 B) Name of sector: Mining Industry Equipment C) ITA industry sector code: MIN D) Total market size (US $ millions): -- 1993 (estimated) 85 -- 1994 (estimated) 95 -- 1995 (estimated) 115 E) Total local production (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 F) Total exports (US $ millions): -- 1993 0 -- 1994 (estimated) 0 -- 1995 (estimated) 0 G) Total imports (US $ millions): -- 1993 (estimated) 85 -- 1994 (estimated) 95 -- 1995 (estimated) 115 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 7 -- 1994 (estimated) 8 -- 1995 (estimated) 9 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: The government is now promoting this industry, which has been neglected despite rich mineral deposits. Large future purchases of equipment and machinery, as well as foreign expertise to exploit and, in some instances, process the country's minerals are envisioned. Algeria in 1991 promulgated new legislation which, for the first time, allows direct foreign participation in this sector, which since independence, had been influenced, helped, and equipped by Eastern European communist nations. With the geopolitical changes that have occurred, opportunities are now open for others, especially for American firms. Their current competitors are mainly German and French suppliers. Most promising subsectors (Estimated 1995 Market Size - US $ millions): -- Sorting, screening equipment: 28 -- Crushing, mixing machinery: 28 -- Drilling equipment: 28 A) Rank of sector: 8 B) Name of sector: Building Products C) ITA industry sector code: BLD D) Total market size (US $ millions): -- 1993 (estimated) 230 -- 1994 (estimated) 250 -- 1995 (estimated) 300 E) Total local production (US $ millions): -- 1993 (estimated) 30 -- 1994 (estimated) 30 -- 1995 (estimated) 40 F) Total exports (US $ millions): -- 1993 (estimated) 5 -- 1994 (estimated) 5 -- 1995 (estimated) 6 G) Total imports (US $ millions): -- 1993 (estimated) 200 -- 1994 (estimated) 220 -- 1995 (estimated) 260 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 5 -- 1994 (estimated) 6 -- 1995 (estimated) 7 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: This market offers good sales opportunities for U.S. exporters who are active in only a few of its many segments. The GOA is promoting the construction sector, particularly road building, partly to create jobs, because unemployment is a major problem, and housing to redress dire shortages. This will call for large imports, particularly for lumber, wood products, specialty steel products and portland cement, all of which are currently purchased from various European countries. Also, companies interested in joint-venture and licensing arrangements will find markets for building systems and local production of equipment to manufacture building products. Most promising subsectors (Estimated 1995 Market Size - US $ millions): -- Lumber: 120 -- Specialty steel products: 120 -- Wood products: 60 A) Rank of sector: 9 B) Name of sector: Agricultural Machinery and Equipment C) ITA industry sector code: AGM D) Total market size (US $ millions): -- 1993 (estimated) 90 -- 1994 (estimated) 106 -- 1995 (estimated) 130 E) Total local production (US $ millions): -- 1993 (estimated) 5 -- 1994 (estimated) 6 -- 1995 (estimated) 8 F) Total exports (US $ millions): -- 1993 (estimated) 2 -- 1994 (estimated) 2 -- 1995 (estimated) 2 G) Total imports (US $ millions): -- 1993 (estimated) 85 -- 1994 (estimated) 100 -- 1995 (estimated) 120 H) Imports from the U.S. (US $ millions): -- 1993 (estimated) 1 -- 1994 (estimated) 1 -- 1995 (estimated) 2 I) Exchange rates used (US$1=AD) -- 1993 23.5 -- 1994 36 -- 1995 Comments: Agricultural development is a government priority. Government policy to increase arable land and promote farm mechanization will spur demand for imported equipment and machinery. Privatization of agriculture and a less restrictive distribution system are being implemented. Half of all food consumed by Algerians is imported, and the government is determined to implement these changes, which should produce significant opportunities. Nearly 60% of Algeria's imports originate from its largest traditional trading partners, Italy, France and Germany. American suppliers, whose technology enjoys a high reputation here, must establish a presence in Algeria in order to benefit. Most promising subsectors (Estimated 1995 Market Size - US $ millions): -- Soil preparation/cultivation equipment: 52 -- Spare parts and tires: 52 -- Tractors: 26