72578 v1 World Trade Indicators 2009/10 Arab Republic of Egypt Trade Brief Trade Policy removing a development fee on all vehicle exports and exempting car parts from import duties.5 Efficient The Arab Republic of Egypt carried out many reforms protection has increased with higher tariffs on of its trade regime in 2004, cutting tariffs, reducing its competing products, and lower tariffs and export bans number of tariff bands from 25 to 6 and its number of on raw material inputs. The government introduced tariff lines from 13,000 to 6,000. The result was new import tariffs for several products such as cocoa, significant reductions in the weighted average tariff.1 cigarettes, chemicals, steel products, and machineries, Accordingly, based on its 5.6 percent MFN Tariff while at the same time eliminating import tariffs on Trade Restrictive Index (TTRI)2, Egypt is more open yarn, tin, and textiles. Moreover, in January 2009 it to trade than the average Middle East and North imposed a 25 percent ―precautionary fee‖ on imports Africa (MNA) (11.9 percent) or lower-middle-income of cotton yarn, fabric, and sugar from India, which (8.4 percent) country. Similar to the majority of other was later eliminated in April.6 The government also countries in the region, Egypt is more protective of its reduced import tariffs on specific capital goods not agricultural goods (with a TTRI of 7.0 percent) than its produced domestically to stimulate investment, and non-agricultural goods (5.4 percent). Based on the the prime minister issued instructions prohibiting TTRI, its trade regime ranks 64th out of 125 countries government authorities from importing any final (where 1st is least restrictive). The simple average of goods that have domestic subsidies.7 To support its the MFN applied tariff is 16.9 percent. When exports the government increased financing to export accounting for preferences, the country’s trade regime programs and reduced participation fees for appears somewhat more open, since its simple average specialized international fairs and exhibitions.8 of the applied tariff falls to 10.7 percent. The Additionally, activity in the construction sector was maximum MFN applied tariff, excluding alcohol and not significantly affected by the global crisis. tobacco, is 1502.5 percent, several times higher than Therefore, in March 2009, the government imposed a the regional average of 387.6 percent. In 2007, this top ban on cement exports until October 2009 due to tariff was levied on mixtures of odoriferous substances increasing domestic demand. The ban was extended and mixtures, i.e. solutions used to flavor food and for exports of grey clinker and grey Portland cement drinks. Based on the extent of its commitment to trade until October 2010.9 Egypt has initiated one safeguard liberalization in services, Egypt ranked 89th out of 148 investigation in the first quarter of 2008, being one of countries according to the GATS Commitment Index. eight countries in the world to have done so in 2008. As food prices soared in 2008, Egypt imposed a ban on rice exports in April,3 which was extended until External Environment October 2009.4 In response to the global economic crisis, Egypt implemented a fiscal stimulus package, Egypt’s exports do not have favorable access to which included export subsidies for manufacturing. international markets. Its Market Access TTRI10 The package also supported its car industry by (including preferences) is 3.3 percent, higher than the averages for the MNA region and lower-middle- income country group of 2.1 and 2.3 percent, respectively. The simple average of the overall rest of Unless otherwise indicated, all data are as of August 2009 the world tariff (including preferences) faced by the and are drawn from the World Trade Indicators 2009/10 country’s exports is 8.9 percent. When its trade flows Database. The database, Country Trade Briefs and are taken into consideration, the weighted rest of the Trade-at-a-Glance Tables, are available at world tariff (including preferences) is 1.8 percent (1.2 http://www.worldbank.org/wti. percent for non-agricultural products and a high 8.2 percent for agricultural products). As a member of the If using information from this brief, please provide the Common Market for Eastern and Southern Africa following source citation: World Bank. 2010. ―Arab (COMESA), Egypt enjoys access to its custom union Republic of Egypt Trade Brief.‖ World Trade Indicators that was launched in June 2009 and should be fully 2009/10: Country Trade Briefs. Washington, DC: World implemented by 2012.11 Bank. Available at http://www.worldbank.org/wti. World Trade Indicators 2009/10 Egypt Trade Brief Behind the Border Constraints Notes Egypt’s business environment improved in the last 1. WTO, August 5, 2008, p. viii. year, and its Ease of Doing Business rank for 2009 2. TTRI calculates the equivalent uniform tariff that went to 106th out of 183 countries from 116th in 2008. would keep domestic welfare constant. It is weighted by The changes it implemented, such as eliminating import shares and import demand elasticity. minimum capital requirements, also led to Egypt being 3. FAO, 2009. ranked as the ninth top reformer for 2008/09, after 4. WTO, July 15, 2009, p. 68. having been ranked the tenth top reformer the year 5. World Bank, Spring 2009, pp. 7–8. before. Additionally, Egypt’s Logistics Performance 6. WTO, July 15, 2009, p. 68. Index score, which reflects the extent of trade 7. World Bank, 2009, p. 36. facilitation, is below the regional and income group 8. Ministry of Finance, June 2009, p. 10. averages, reflecting a less conducive climate for trade. 9. Global Trade Alert, July 20, 2009. Egypt scores 2.37 on a scale of 1 to 5, with 5 being the 10. MA-TTRI calculates the equivalent uniform tariff of highest score, slightly below the regional and income trading partners that would keep their level of imports group averages of 2.42 and 2.47, respectively. It constant. It is weighted by import values and import ranked 97th out of 150 ranked countries and 6th in the demand elasticities of trading partners. MNA region. Its strongest performance was in the 11.COMESA, 2009. area of domestic logistics costs and timelines of 12. EIU, 2008, p. 31. shipments, while it needs most improvement in the 13. EIU, 2008, p. 8. area of quality of transport and IT infrastructure. The Egyptian pound has appreciated by 12.9 percent in real terms in 2008, making exporters less competitive References abroad. Central Bank of Egypt. July 2009. Monthly Statistical Bulletin. Central Bank of Egypt. August 14, 2009. Trade Outcomes . COMESA. 2009. ―COMESA Launches its Customs Due to slight accelerations in the growth rates of Union.‖ imports and exports, Egypt’s total trade growth Economist Intelligence Unit (EIU). 2008. Country Profile: remained strong in real (in constant 2000 U.S. dollars) Egypt. EIU. terms, increasing marginally in 2008 to 25.8 percent ———. June 2009. Country Report: Egypt. EIU. compared to the average rate of 23.3 percent over the Food and Agriculture Association of the United Nations 2005–07 period. However, this exceptional (FAO). 2009. ―Policy Measures Taken by performance is expected to reverse in 2009, when Governments to Reduce the Impact of Soaring trade of goods and services is forecast to fall by 4.6 Prices (As of 15 December 2008).‖ FAO. December percent. 15, 2008. . 2008 led to the rate of trade growth more than Global Trade Alert. July 20, 2009. ―Egypt: Export Ban doubling in nominal terms from 27.0 percent to an on Cement and Clinker.‖ Global Trade Alert.org. estimated 56.6 percent. An exporter of hydrocarbons . of total export revenues,12 Egypt has been adversely Ministry of Finance, Macro Fiscal Policy Unit. June 2009. affected by both decreasing demand due to the global Egypt’s Response to the Global Crises. Cairo, Egypt. recession and declining oil prices. Its non-merchandise . hit by the economic downturn.13 The trend continued World Bank. Spring 2009. Egypt Economic Update: Spring in the half quarter of 2009 when its exports declined 2009. July 29, 2009. . before. While the fall in imports was less steep in the ———. 2009. ―2009 MENA Economic Developments fourth quarter of 2008, in the first half of 2009 and Prospects: Navigating through the Global imports fell by 2.1 percent year-on-year. Recession.‖ Middle East and North Africa Region. World Bank, Washington, DC. Egypt Trade Brief World Trade Indicators 2009/10 World Trade Organization (WTO). July 15, 2009. ―Report to the TPRB from the Director-General on the Financial and Economic Crisis and Trade- Related Developments.‖ WTO, Geneva. . ———. August 5, 2008. Trade Policy Review—Egypt. WTO, Geneva.