Export and Import Policies:
Egypt's trade reform efforts have been uneven in recent years, though there has been significant progress since the Nazif government came to power in July. Shortly after taking office, the new government moved quickly to cut tariffs sharply and simplify the customs regime to stimulate trade and economic development. The government removed GATT-inconsistent services fees and import surcharges, reduced the number of ad valor em tariff rates from 27 to 6, dismantled tariff inconsistencies, including sharp escalation and reverse progression on tariff rates, and rationalized national sub-headings above the six-digit level of the Harmonized System (HS). As a result of this significant reform, Egypt's average weighted tariff rate fell from 14.6 percent to 8.9%. The government also eased or lifted a number of restrictions on U.S. products over the last year. Tariffs on fabric imports were significantly reduced and tariffs on clothing were finally made consistent with Egypt's WTO commitments. A BSE-related ban on U.S. beef imports was lifted in early 2005, and a requirement that beef imported for direct consumption contain no more than seven percent fat content, was made voluntary.
Despite the government's sweeping customs/tariff reform and easing of import restrictions, significant problems remain. The WTO customs valuation system has not been fully implemented four years after it was introduced in Egypt. As a result, importers face a confusing mix of new invoice-based and old reference-price valuations. Acknowledging these problems, the Ministry of Finance has reiterated its commitment to fully implement the Customs Valuation Agreement and is working in concert with USAID, which is funding a comprehensive five-year, $20-million customs-reform project.
A number of non-tariff barriers or bans continue in force to protect local producers. Mandatory quality-control standards make importing certain products into the Egyptian market difficult. Although the Government says that the quality-control standards are applied equally to imports and domestically produced goods, in practice, imports are scrutinized more rigorously by multiple government agencies. At best, enforcement is opaque. Moreover, many U.S. agricultural products also face burdensome import licensing requirements. Although a ban on whole poultry was lifted in July 1997, the government continues to ban the importation of poultry parts, claiming that they are not processed in accordance to halal (religious) requirements.
Health food products such as low-calorie foods, diet pills, and vitamins also face informal barriers to trade. These products must obtain a special registration from the Food Institute of the Ministry of Health, which can take months to process. Products with domestic substitutes have experienced substantial delays, some as many as six months to one year.
Shelf-life standards also act as an indirect trade barrier. Egypt sets the shelf life of processed foods using regulations that are rigid and do not recognize quality, safety, and technological differences between producers. By government decree, imports (mainly food products) must have 50 percent or more of their shelf life remaining. Egypt also applies shelf life standards to certain non-food products such as syringes and catheters. The Ministry of Foreign Trade and Industry is in the process of reviewing regulations governing shelf-life issues to render them more WTO-consistent.
The import inspection process remains confusing, despite the designation of the General Organization for Export and Import Control (GOEIC) as the coordinator for all import inspections. Over 130 categories of imports are subject to mandatory quality-control inspections, including foodstuffs, appliances, electrical products, and auto parts. Imported refrigerated containers of foodstuffs typically take 25 days to clear customs. While two-month delays were common in the past, overall customs-clearance times are improving, and import inspections now typically take three to four weeks.
In June 2002, Parliament approved a new Export Promotion Law, Law 155 of 2002, which reinforces the coordinating authority of the GOEIC over import inspection, although the Ministry of Health and the Ministry of Agriculture maintain their own inspection units and procedures. The law also is designed to improve the duty drawback and temporary admission systems for exporters by establishing a central unit under the joint supervision of the Ministries of Finance and Foreign Trade and Industry to monitor and streamline the systems. The duty drawback system requires full custom duties to be paid on semi-finished imports. There is a one-year time limit for re-exporting these imports as part of a final product in order to have the right to claim the full amount of the duties and taxes paid. In November 2002, the Ministries of Foreign Trade and Finance jointly inaugurated the new temporary-admissions unit at the Port of Alexandria, a first step in a plan to upgrade operation of the temporary-admissions system at all ports of entry in the country. The law also established an "export promotion fund," to promote Egyptian exports and increase their share in foreign markets, but the specific activities of the fund have not yet been determined. To date the fund has not been used to subsidize exports. As of April 2005, the law’s executive regulations have not yet been issued.
Ministerial Decrees 577 and 580 of 1999 require cars to be imported in the year of production.
Ministerial Decree 619 of 1998 required imports to be accompanied by a certification of origin and stipulated that consumer goods (durable and non-durable) be shipped directly from the country of origin.
Decree 619 subsequently was adjusted in late 1999 to allow the shipment of imported consumer goods from the main branches of the producing company and its distribution centers. Regulations also were implemented to facilitate the ability of firms to meet the requirement for a certificate of origin. This requirement can now be fulfilled with a company invoice noting the country of origin and bearing the endorsement of an Egyptian overseas commercial office. In 2000 the decree was amended adding one year after the year of production to the period during which passenger vehicles can be imported. Since May 1999, the Central Bank of Egypt has required 100 percent coverage for credit lines opened for goods imported by traders for resale purposes.
Export Subsidies:
Egypt only rarely provides agricultural export subsidies and does not impose export performance requirements. A small export subsidy for rice (about $19 million total) ran from September 2000 to September 2001, but the program was terminated and has not been renewed. Exports of scrap iron are subject to levy of 225 Egyptian pounds per ton or an export tax on exports of scrap iron to ensure a sufficient supply for the domestic steel industry. Exporting industries, including Investment Law 8 projects, are required to pay the full customs rate on imported inputs and receive a partial tariff rebate when they export finished products. Although exporters had previously reported lengthy delays in the customs-rebate process, recent rebate transactions have been processed faster and more efficiently than in the past. The paperwork process associated with import-export transactions also has been simplified and updated.
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