TRADE POLICY REVIEW BODY: REVIEW OF EGYPT
TPRB'S EVALUATION
24-25 JUNE 1999

CONCLUDING REMARKS BY THE CHAIRPERSON Back to top

1. The second Trade Policy Review of Egypt was conducted on 24 and 25 June 1999. These remarks, prepared on my own responsibility, summarize the main points of the discussion; they are not a full report. Details of the discussions will be fully reflected in the minutes of the meeting.

2. The discussion developed under three main themes: (i) economic environment; (ii) trade policies and practices; and (iii) sectoral policies.

(i) Economic Environment

3. Members congratulated Egypt on its economic reform initiated in 1990/91, in which trade liberalization had been important; macroeconomic indicators and growth had improved significantly and GDP per capita had virtually doubled. Members felt that for Egypt to achieve its objective of annual growth of 7-8%, it would need to expand and diversify exports, attract more foreign investment and improve confidence through greater transparency and predictability in its economic environment. Members welcomed Egypt's commitment to the multilateral trading system and noted the importance of its increased participation in regional agreements remaining in accord with multilateral rules.

4. In response, the Egyptian delegate emphasized that reform would continue. Efforts to expand and diversify exports were under way, including through export promotion, but Egyptian exports faced market-access constraints, particularly anti-dumping measures and technical requirements. Investment would be encouraged, including by an increased national capacity, the further removal of restrictions and by improving accountability and predictability of the trade regime. Egypt's economic reform emphasized private sector participation and market based competition, supported by an adequate social safety net such that benefits were distributed among the population. Egypt remained committed to the multilateral trading system, with regional and other links fully in compliance with WTO obligations and seen as a step towards increasing exports.

(ii) Trade policies and practices

5. Members congratulated Egypt on its wide-ranging trade reform. They noted that most non-tariff barriers had been removed, tariff rates had been reduced and rationalized, although a degree of escalation remained. There was concern that some 12% of applied tariffs appeared to breach WTO bindings. Some Members asked about the requirement that goods be shipped directly from their country of origin and about recent changes raising margins on letters of credit. Questions were asked about customs procedures, the application of standards and about quality controls on imports.

6. Members commended Egypt for the removal of export controls. Egypt was encouraged to bring its intellectual property rights and trade defence legislation into conformity with WTO Agreements. Some Members asked when Egypt would accede to the Agreement on Government Procurement and suggested that the 15% preference for Egyptian bidders might lead to inefficiencies.

7. In response, the Egyptian delegate noted that special shipment requirements were a response to a surge in imports of counterfeit consumer goods; the requirement would be reconsidered as part of a programme to harmonize rules of origin. Customs ensured that applied tariffs did not breach WTO bindings. Egypt intended the timely implementation of its WTO obligations on TRIPs, Textiles and Clothing, and Customs Valuation. Trade defence legislation had been notified to the WTO, and was applied in accord with multilateral rules.

8. The Egyptian delegate detailed the application of technical requirements, stressing that most imports were subject to international standards, but he agreed that there was scope for a greater harmonization of domestic standards with international norms. Quality controls had been necessary to ensure compliance with standards. The increased appeals against customs decisions reflected the high level and diversification of imports. Banks were not subject to restrictions on financing imports, including by letters of credit.

(iii) Sectoral policies

9. In agriculture, Members noted that there now remained virtually no controls on trade. Some saw Egypt as having a comparative advantage in exports of horticultural products but wondered about market access for these products. The manufacturing sector was seen as a future area of growth especially in industries such as food processing and textiles and clothing. Some Members asked why textiles and clothing remained subject to quantitative restrictions and it was noted there appeared to be restrictions on cement and poultry. In the automobile sector, some Members questioned the recent ruling restricting imports of motor vehicles to their year of manufacture.

10. Services were seen as crucial infrastructural support and their further reform was thought vital for continued economic growth. Financial services and telecommunications were particularly important for attracting foreign direct investment, and a Member urged further liberalization of maritime transport. Members looked forward to Egypt's continued participation in future services negotiations in the WTO.

11. In response, the delegate from Egypt mentioned various steps being taken to raise productivity in the manufacturing sector. On textiles and clothing, restrictions would be phased out by 2002. All imported goods, including automobiles, had to be new. There were no import restrictions on cement and poultry slaughtered according to Islamic law could be freely imported. In services, he noted that the ongoing liberalization and privatization of key activities allowed Egypt to look forward, in future negotiations, to an opening of markets in areas where it enjoyed a competitive advantage. Liberalization and privatization in agriculture had been far-reaching, the policy focus having shifted from self-sufficiency to food security and export-competitive production. However, Egypt remained deeply concerned that the expectations of net food importing developing countries at the end of the Uruguay Round had not been met.

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Conclusions Back to top

12. In conclusion, it is my feeling that Members greatly appreciated Egypt's reform programme, particularly on the trade front, which had produced results in a relatively short period of time. Not only had economic growth been strong, but Egypt has successfully withstood the effects of external shocks. Egypt's emphasis on a strong social safety net, to support reform, is particularly welcome. Egypt was strongly encouraged to build on these achievements and to accelerate its trade reforms, including by improving the predictability and transparency of its economic environment, which could lead to improved trade and investment flows. It is also my feeling that Members welcomed Egypt's commitment to the multilateral trading system and that the system should support the Egyptian reform effort, particularly by keeping markets open.