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Between 1987 and 1994, with International Monetary Fund (IMF) and World Bank support, Tunisia engaged in a series of important structural reforms.
Tunisia simplified its tax system and reduced tax rates, with a fixed maximum rate of 35 percent. Banking and financial sectors were partly liberalized and restructured. Some public companies were privatized and foreign trade and domestic prices de-controlled.
Unlike in most of the states of the region, the Tunisian economy is highly diversified, with the increasingly unreliable hydrocarbon sector now accounting for no more than 12 percent of local GDP.
Tunisia enjoys preferred status for its exports to EU countries, and has significantly lowered local tariff barriers to EU imports. This latter provision in particular has caused some concern among local Mahgreb businessmen (in Tunisia, for example, the predicted flood of competitively priced European goods threatens to bankrupt upwards of a third of the country’s manufacturing companies), but buoyed by realistic prospects of developing economic integration with the EU, the risk is seen as worthwhile.
Growth Prospects
Tunisia is placing much hope in its trade negotiations with the EU. It started implementing the Euro-Tunisian Association Agreement in 1998 that is scheduled to drop all customs duties between Tunisia and the EU by 2010. Tunisia still is not at EU level manufacturing and service levels, nor is the competitiveness of its market.
However, the removal of import controls is a risky and controversial move. Over half of Tunisia's industrial base could be threatened by higher quality imports
Stability
Like other Arab countries, Tunisia has relatively high levels of unemployment and a large public sector. Ben Ali recently announced a program to grant leaves of absence to civil service employees with a business plan to start their own business in the country's less-developed regions and to continue paying half their salary.
Tunisia is considered safe from an Islamic fundamentalist take-over. The thirty-one year rule of Tunisian President Habib Bourghiba (1956-87) left the country relatively free of bureaucratic corruption and steered it clear of the same command economy structure that decimated Algeria.
At the same time, the Bourghiba regime also created the underpinnings of a basically secularist society; on one occasion he went so far as to defiantly drink a glass of water during the Muslim fasting month of Ramadan on state-run television.
Today Tunisia is firmly in the hands of another committed secularist, the beneficent authoritarian Ziad Ben Ali, whose rigorously skeptical attitude towards democracy is probably best expressed in the 99 percent of the vote he captured during March 1994 presidential elections.
Moderately concerned about the potentially destabilizing effects of home-grown Islamic fundamentalism, he has taken few chances with local activists of the officially banned Islamic Ennadha (Renewal) Party, arresting, converting or exiling them with scant regard to legal niceties. At the same time, he has also expanded on a flourishing social service net (Tunisian medical care and education are arguably the best in the Arab world), and kept the bureaucracy clean.
Government Role in the Economy
The government of Tunisia has been methodically reducing its role in the economy. By 1994, forty-six of the 189 public enterprises were completely or partially privatized either through sale of shares or assets; most of these forty-six firms, however, were small-scale. Although the privatization program is supported by the National Labor Federation (UGTT), the government is moving carefully to avoid mass firings in unprofitable public companies.
The government is focusing on the stock market as the principal vehicle for the privatization program. Specific targets are companies operating in competitive sectors. TunisAir and other major state-owned companies will be partially or wholly privatized by selling shares through the stock market.
The most dramatic re-orientation has occurred in the financial and banking sectors. The Central Bank is gradually shifting to a supervisory and regulatory role. Interest rates were officially deregulated and commercial banks allowed to move into the long term credit market. The government made the Tunisian Dinar convertible for current account transactions, and currency trading was privatized.
In the financial markets, the former state controlled stock exchange, the Bourse, was privatized. The new structure is composed of brokerage houses. Similarly, a privately held central stock clearing house company was established. The state will continue to exercise its supervisory and regulatory role through the Financial Market Council.
In 1995, the government restructured its economic ministries. The former Ministry of National Economy was split into the Ministries of Industry and Commerce. The Ministry of Industry is responsible for improving the international competitiveness of Tunisian industry. It also retains control of the majority of state owned industries. The Ministry of Commerce manages consumer subsidy and price control policies. Finally, the Ministry of Economic Development, formerly the Ministry of Planning, is responsible for long-term budget and policy development.
Reforms
Tunisia, under the influence of no-nonsense president Ziad Ben Ali, has implemented an International Monetary Fund-style economic stabilization program, highlighted by rigorous budget balancing, foreign trade liberalization and private sector incentives. Consequently, economic growth rates have surged. Not surprisingly, so, too, has the rate of direct foreign investment, which according to official statistics was up 22 percent during the first nine months of 1995 from the comparable period in 1994, to some US$ 300 million.
Most of this capital came from European Union investors who were encouraged by Tunisia's proximity to southern Mediterranean markets, relatively low cost labor force and enhanced fiscal transparency.
It has been in the vital area of local economic restructuring where Ben Ali's accomplishments have been most impressive. Within the past year or so, Tunisia has emerged as the unqualified financial success story of Arab North Africa, with high GDP growth rates (7 percent for 1996), relatively low inflation rates (6.1 percent in 1995), and a highly comand rigorously realistic exchange rate structure.
In addition, Tunisia took in foreign capital in 1994 by issuing a samurai bond (Japanese yen denominated government paper). In order to do so, it became the first Arab country to be assigned a country credit rating provided by the Japan Bond Research Institute.
If there are any gathering storm clouds on the Tunisian horizon, they are probably in the area of nascent privatization, where turf conscious Tunisian bureaucrats frequently erect obstacles for local businessmen. Barriers, however, are slowly falling (particularly in the area of agriculture), and all signs now point towards considerably higher levels of both local and foreign investment and sustainable overall economic growth.
Legal Overview
Tunisia is a Civil Law Republic, founded upon a constitution that embodies the principles of sovereignty of the people and separation of powers between the branches of government. The Republic is divided into twenty-three regions, each of which has its own local government and is competent to conduct and manage local affairs.
Judiciary
Judicial powers are vested in the Court of Justice (Cour de Cassation). The judicial branch of government has criminal, administrative and civil systems.
Civil Court System
The civil court system is divided into four levels; the District Courts, Courts of First Instance, Appeal Courts, and the Supreme Court.
District Courts
District Courts have jurisdiction to hear matters the value of which does not exceed TD 7,000 as well as matters relating to nationality and labor issues. A single judge hears cases in the District Courts. Appeal of a judgment from a District Court is made to the Courts of First Instance.
Courts of First Instance
A Court of First Instance is located in each of Tunisia's twenty-three regions in Tunisia. The Courts of First Instance are vested with the power to hear all civil and commercial matters without regard to the monetary value of the claim, including divorces and applications for immediate relief in urgent matters. The Courts of First Instance also hear appeals of decisions from the District Courts. Each Court of First Instance is composed of a panel of three judges.
Cases which began in by the Courts of First Instance, may be appealed to the Appeal Courts. Appeals of District Court judgments decided by Courts of First Instance may not be appealed to the Appeal Courts, but, rather, relief may be sought from the Supreme Court.
Appeals Courts
The Appeals Courts have jurisdiction to hear appeals of decisions rendered by the Courts of First Instance except where the decision was an appeal from a decision of a District Court. The Appeal Courts cover several regions, and, therefore, cases from several Courts of First Instance are heard by the same Appeals Court.
Supreme Court
The Tunisian Supreme Court examines decisions appealed from either the Appeals Court or from the Courts of First Instance sitting in its appellate capacity to determine whether the law was correctly applied by the lower court. The Supreme Court does not examine the substantive aspects of the case on appeal, and only points of law may be appealed to it. Submitting a matter to the review of the Supreme Court does not automatically stay execution of the original judgment. A stay of execution may be granted by the First President of the Supreme Court; the applicant making the motion for such a stay must deposit a bond with the court to secure the judgment.
In the event that the Supreme Court voids a lower court judgment, the matter is resubmitted to another judge or panel of judges of the court which rendered the original judgment. For example, a voided judgment from the Appeals Court covering several regions would be resubmitted to an Appeals Court covering a different area. In the event that the court, on rehearing the matter, fails to comply with the ruling of the Supreme Court regarding the application of law, the matter is heard by the full panel of the Supreme Court whose decision on the case is binding.
Criminal Court System
The criminal court system is very similar in structure to the civil court system. Misdemeanor offenses are handled
by the District Courts, while all other criminal offenses, except felonies, are submitted to the Courts of First Instance for determination. Felony crimes are submitted to the criminal courts division of the Appeal Courts after an indictment has been issued by a judge based on the findings of the grand jury (Chambre dMises en Accusation).
Administrative Court System
The administrative court system is responsible for resolving disputes between individuals and the government and any governmental subdivision or agency.
Labor Law
Employment relations in Tunisia are governed by the Labor Code of 1956. Labor contracts may be for a definite or an indefinite period of time. A definite period contract may specify that it is valid for either a limited period of time or for a specific task. If the parties continue such a contract after the agreed expiration date, then it becomes a contract for an indefinite period.
A labor contract may be terminated by agreement of the contracting parties or as a result of resignation or dismissal of the employee. In the latter case, the employee is entitled to severance pay. The Labor Code sets standards regarding other employment conditions, such as the maximum number of work hours per week, the minimum wage level, overtime work rate and annual leave. Regional labor inspectors are responsible for the enforcement of such regulations. Worker health and safety standards are regulated and enforced by the Social Affairs Ministry.
Foreign Labor
The law providing incentives to foreign investors has granted wide employment facilities for expatriate personnel. For instance, foreign managers acting in their capacity as employers are not required to hold a work contract, and their company or enterprise may, with a simple declaration to the appropriate authorities, hire up to four expatriate technicians who may choose either a foreign social security system or the Tunisian system to which they must contribute a fixed amount set at 20 percent of their gross income.
Social security payments in respect of Tunisian employees are paid by the employer who contributes 20 percent of the employee's wage to the system and deducts 6.25 percent from the employee's wages for this purpose to be paid on the employee's behalf.
Trade Unions
The right of workers to form unions is secured in the Tunisian Constitution and in the Labor Code. The right of unions to strike is conditional upon the fulfillment of certain conditions, such as giving ten days advance notice and receiving the approval of the Central Labor Federation.
Tunisian law protects the right to organize and to bargain collectively. Working conditions (such as wages) are fixed through the negotiation of approximately forty-five collective bargaining agreements, which determined standards applicable to entire economic sectors.
The government must confirm the collective bargaining agreements, though it cannot modify them. After government confirmation, the agreements are published in the official journal, a mandatory condition for the legal validity of the agreements.
Environmental Law
Although Tunisia has enacted several laws pertaining to environmental protection, enforcement of environmental legislation has not been consistent until recently, due both to the lack of staff and resources. In addition, the legal instruments available in the past were not highly effective.
The creation of the National Environmental Protection Agency (ANPE) in 1988, however, led to the development of a National Action Plan for the Environment (NAPE), which attempts to draw together existing environmental legislation and programs and to provide a strategy for natural resource conservation, pollution control and land-use management. To that end, article 8 of Air Pollution and Noise Emissions Law No. 88-91 dictates that any industrial, agricultural or commercial establishment as well as any individual or corporate entity carrying out activity that may cause pollution to the environment, is obliged to eliminate or to reduce discharges and, eventually, to recycle rejected matter. TANPE may initiate legal proceedings against violators or reach a compromise with the polluting entity.
Legislation pertaining to environmental protection includes the Wildlife Protection Law No. 88-20; the Water Pollution Law No. 75-16; and the Marine Pollution Law No. 75-16.
In addition, Tunisia is a member of ISO. In June, 1997, the Technical Committee for the Elaboration of Standards adopted the ISO 14,000 Series relating to industrial atmospheric emission standards.
Tunisia has entered into several international conventions and agreements dealing with environmental problems and aspects, including:
Business Forms & Structures
The commercial law of Tunisia recognizes two types of companies; share companies and companies of persons (partnerships). Foreigners are permitted to hold shares in Tunisian companies without restriction. In companies organized for the purpose of certain commercial and service activities, however, permission of the Higher Investment Board is required in order for foreign investment to exceed 49 percent. Transfers of shares representing in excess of 10 percent of the voting rights in such a company requires a separate approval.
Share Companies
Share Companies may be established as either a joint stock company or a limited liability company.
Joint Stock Companies
Joint stock companies may be established with a minimum of seven shareholders. The minimum nominal value per share in a joint stock company is TD 5. The board of directors of a joint stock company is comprised of between three to twelve directors. The directors appoint the chairman and general manager of the company.
While foreigners may serve as directors of joint stock companies without any limitation, officers of the company are subject to Tunisian labor law which gives preference to Tunisian nationals. Foreign ownership in businesses which engage in certain fields is restricted by decree to no more than 49 percent of the share capital unless special permission is obtained from the Higher Investment Board.
In existing companies, transfers of shares representing more than 10 percent of the voting rights require approval.
Joint stock companies are used primarily to conduct investment operations and activities. From the perspective of the availability of financing, banks prefer the financing arrangements available to joint stock companies.
Limited Liability Companies
Limited liability companies may be established with a minimum of two shareholders. The shareholders appoint a manager who is endowed with all the powers of the company with regard to and toward third parties, even if the shareholders of the company have taken measures to limit the powers granted to the manager. For this reason, limited liability companies are used primarily for small projects and family businesses. All shares must be nominative and bearer shares are allowed only with the permission of the Ministry of Finance.
Foreign Companies
A foreign company may establish and register a branch in Tunisia by obtaining a Merchant Card from the Ministry of Trade. The process for obtaining a Merchant Card and registering in Tunisia is significantly easier for foreign companies which have engaged in a contractual relationship with a Tunisian company.
A copy of the contract with the Tunisian company, the incorporation documents of the foreign company and all records and board decisions of the foreign company relating to the creation of the foreign branch must be submitted along with the application for registration to the Ministry of Trade.
In 1996, legislation authorizing the creation of International Trade Companies (ITC) was adopted. An ITC is a non-resident company in which the share capital is held by Tunisian or non-Tunisian residents where at least 66 percent of such share capital is paid through convertible foreign currency, An ITC may engage wholly in export, and 80 percent of its turnover must originate from exportation.
Partnerships
Under Tunisian law, partnerships, or a company of persons, may be formed. The unlimited liability of the persons forming such a partnership or company of persons for its obligations is a deterrent to using this corporate form.
Commercial Agency
Foreign companies wishing to effect business in Tunisia without establishing a corporate entity in Tunisia must appoint a Tunisian citizen to act as their agent. Agency and representation activities are reserved to Tunisian citizens under the applicable law. An agent wishing to act for a foreign company must conclude a contract with the foreign principal and then apply to the Ministry of Trade for authorization. While the terms of an agency contract are freely negotiable, the contract may not provide for exclusivity.
Banking & Currency
Foreign Currency Control
Foreign exchange controls in Tunisia are regulated by the Foreign Trade and Foreign Exchange Code of 1976. The government has undertaken a review of the Code and is in the process of instituting liberalization changes. The Tunisian Dinar is not fully convertible to foreign currencies, however, in recent years, Tunisia has relaxed foreign exchange control provisions regarding current account transactions. A currency account transaction law was enacted in 1993 which incorporates liberalizing provisions in this regard. Today the Tunisian Dinar is commercially convertible for all bona fide trade and investment operations. Foreign investors in Tunisian companies are entitled to repatriation capital and may receive dividends in foreign currency.
In the area of importation of goods, all import documents which involve payments must be handled through authorized banks. Foreign currency may be purchased from the Central Bank of Tunisia (CBT) or from banks which have been designated by the CBT for the payment of imports, subject to licensing restrictions and provided that the license has been obtained prior to importation. Payments for exports received in foreign currency ordinarily must be repatriated within ten days of payment.
Capital transfers are subject to the approval of the CBT. Non-residents are allowed to repatriate invested capital and net proceeds of such investment in foreign currency.
Banking
The CBT monitors the commercial, development and investment banks operating in Tunisia. The commercial banks provide short and mid-term credit. Development banks grant only long-term credit for the financing of large scale projects in tourism, agriculture and industry. Investment banks, which were recently created, are responsible for promoting investment projects and managing capital risks.
New legislation enacted in 1994 is aimed at broadening the range of banking services and products available, easing restrictions regarding loan approvals, and increasing competition in the banking industry. These new laws also created a new type of banking category which specializes in providing financial management banking services for business enterprises.
Intellectual Property
Tunisia is a signatory of the Paris Convention for the Protection of Industrial Property and the Paris Convention Regarding Trademarks, as revised in the Hague, London and Stockholm. Tunisia is a member of the World Intellectual Property Organization and is a signatory of the UNCTAD agreement on the protection of patent and trademarks. Tunisia has withdrawn from the Madrid Agreement regarding trademarks.
Patents
Patent applications are examined by the Patent Office only with regard to form and, while novelty of an invention is examined, merit is not. A patent application, together with the grant of a patent are published in the Official Gazette. Opposition to a patent application must be filed within two months of the date when the application was filed. Applications for the issue of letters patent should be made before the invention has been published, used or otherwise received sufficient publicity to allow it to be put into practice.
The protection period of a patented invention is twenty years from the date on which the patent application was filed. Working of a patent is an official requirement, and must be done for two consecutive years, starting within three years of the date on which the patent application was filed or two years from the date on which the patent was granted. Nominal working of a patent, by way of direct offer or solicitation, is sufficient to meet the standards.
Rights in a patent may be transferred or assigned to third parties, including, by the laws of succession, to heirs.
Designs and Industrial Models
Designs and industrial models may be pthrough registration. There is no novelty examination conducted regarding the application for registration of a design or industrial model. Any interested party who has filed an application with regard to the same or similar design or model may file a request for cancellation of the infringing design or model before a competent tribunal.
A design or industrial model registration is granted for five, ten or fifteen years, beginning on the date the application for registration was filed. The registration of a design or industrial model, as well as its cancellation or assignment, are published in the Official Gazette and entered into the designs register. There are no provisions regarding the compulsory working or licensing of a design or industrial model.
Copyright
The Tunisian Copyright Law of 1994 determined the Copyright as the right of the owner of the work to have the exclusive right to copy the work in a material form, whatever its type is, and to present his work to the public. The protected work may be it literary, scientific or artistic, whatever its value or the purpose for which it is prepared.
According to Article 18 of the Law, the copyright shall be valid during the author's lifetime and shall continue for fifty calendar years after the author's death. The copyright with respect to photographic works is valid, according to Article 19, for twenty-five calendar years as from the date of work completion. The copyrightis assignable by sale, wholly or partially, according to Article 22.
The Law establishes the Tunisian Institution for the Protection of Copyright. The Institution has several functions, including the protection of copyright.
Any party which does not respect copyright as defined by the law, shall be obligated to pay damages to the owner of this right. The law also establishes monetary sanctions for violations or infringements. A person who violates the law may be obliged to pay fines ranging from TD 500 to 5,000.
Trademarks
As a result of Tunisia's withdrawal from the Madrid Agreement with regard to trademarks, in 1988, trademark applications thereafter should be filed in Tunisia by anyone interested to protect a trademark right in order to secure his interests and to be availed of the protections under the laws of Tunisia.
Registration is a necessary element to gain protection and is ordinarily issued directly upon filing an application for registration. A trademark registration is valid for fifteen years from the date on which the application for registration was filed. It may be renewed indefinitely for similar periods of time. Tunisia does not require use of a trademark as a condition for maintaining registration.
Tunisia follows the International Classification of goods and services. | 
