Egypt - Trade Polices and Barriers
Egypt just like many other developing countries has opened ways for global services and trade. The trade liberalization policies have facilitated this gradual process. The process begins with control of exchange to non tariff barriers to tariffs (Nash and Andriamananjara, 1997, -pp 234). Inter country trade between Egypt and Arab and Middle Eastern countries began during the 1970s with the adaptation of the liberalization policy. The liberalization trends since then have significantly changed.
Egypt trades balance has been characterized by a wide gap between imports and exports since 1981. By 1997 the country’s GDP was at 11%. This trade deficit was caused by the risks on finances and because of the growing rate of Egypt economy which has affected balance of payment. Financing of Egypt economy is from the oil industry and foreign aid. Foreign investors have ventured into the country via direct investment especially in the oil sector. The total exports revenues is mostly attributed to oil products and oil it self. Only a handful of categories were export products like clothing and textiles, vegetable products, metals and related products as well as chemicals.
The implementation of trade policies happed in the mid 70s which included the elimination of import state monopoly. Free trade zones were created as a result of Own Import System. This further aggravated the prevalence of various rates of exchange. By reducing the level to NTB and its coverage lead to further trade liberation. The use of uniform rate further led to trade liberalization by reduction of currency discrimination.
The tariffs have also changed that has enabled liberalization and effective use of protection. Furthermore, there was extensive elimination economy – wide bias on exports. This reduced at all activities in the economy apart from sectors like printing, livestock and cotton ginning.
A series of taxes and fees were eliminated by Egypt law No. 87 of 1987. These include imports such as marine duty, subsidiary tax, statistical duty and municipal tax. The County’s Customs authority duties are currency and 2- 3 % fee of the total imports depending on the application of the tariff. The fee of 2% is on those items with more than 30% tariff. An additional sale tax of 5 to 25% is includes in the value of imports (US Dept. of State, 1995-96).
The Egyptian government levies charges on the inspection of exports. This includes items like juices, vegetables and citrus fruits. Exports taxes according to the international monetary fund were eliminate in late 1992. The European Union which been Egypt’s trading partner has considered the country’s standard of import as a trade barrier. These products are at variance with internationally recorded standards set by the General organization for Import and Export control. This causes problems with imports goods such as cosmetics, sanitary ware, processed food and ceramic tiles into Egypt (Nathan Associates, 1998, pp 34).
Three measures have been used as quantitative restrictions on exports. These are prior approvals on exports, exports bans and export voters. Egypt in the mid 80s adhered to foreign pressures to reform its exchange rates. This resulted in the gradual simplification and devaluation of the exchange rate. This led to the appreciation of the Egyptian pound and the equilibrium of real exchange rate in 1993. Egypt is an open economy today and has a good number of rapidly growing economies.
The contributing factors to these developments and openness include relatively high tariff barriers, large public sector, trading - distorting domestic’s regulations and institutional setting of conducting business. The enhance production and exportation is due to the favorable business environment. Other acknowledged trade barriers include inefficiency of the banking system inefficient and constraints in the regulations of infrastructures and ports sector. The distorted regulations are however, not direct trade barriers and neither are they as results of the desire to impose them. They are however as a results of the disadvantageous policy of the country.
The Egyptian trade would improve by rationalizing imports prohibitions, narrowing and escalation of the imports, and to select quality control inspection that is compulsory and lowering tariffs peaks. Trade transparency has greatly improved but there is some degree of discretion within the system characterized by unpredictability for traders and legislative change. The pace of trade reform in Egypt’s trader is likely to improve employment opportunities and growth improvement.
The implementation of trade policy goals have considerably improved in two folds. These are the rationalization of tariff structure and the reduction of tariffs. Secondly is the reduction of number of products that have been subject to non- tariff barriers. This includes prohibitions imports and exports which are currently relied on trade policy instrument tariffs.
Egypt is a member state of various regional agreements like the Greater Arab Free- Trade Area (GAFTA) Common Market for Eastern and Southern Africa (COMESA) and has signed various bilateral trade agreements to improve liberalization of the regional trade. Such agreements include the European Union agreement and the Euro- Mediterranean agreement which has improved Egypt’s access to large market and deepen the preferential trade liberation.
As Egypt trade becomes more liberalized, it faces various challenges as it competes for global markets. There is already aggressive completion from eastern Europeans and central countries. NAFTA member’s countries in the US market face a competitive thereat to Egypt. The country has to fight these challenges by undertaking subcontracting activities with the main trading partners. The improvement of long term competitive advantage and responsive exchange rate is the current main challenge facing Egypt (Hoekman, 2000, pp 113).
World Trade Organization (WTO) members
World Trade Organization is a body that deals with trades laws rules and regulations at near –global or global level. It is an organization that looks at trade liberalization. WTO acts a forum for governments to negotiate agreements in trade. Trade disputed among these governments is settled by WTO. The government under trade agreements and members of WTO should adhere to the trade rules system. Trade problems among these countries can be solved by WTO thorough communication and negotiations.
Problems like the need to lower trade barriers can be lowered by WTO through negotiations that have seen trade liberalization. WTO further supports the existence of trade barriers depending on the circumnutates. For example for the purpose of diseases prevention and protection of consumers.
Negotiations and agreements are signed by the world trading countries. The agreements are the legal rules by these governments as they set their limits and trade policies. The goal of these rules is to assist service producers and good producers, the imports and the exporters as they carry out their business. These agreements are designed to meet environmental and social objectives. In solving disputes, WTO role is to involve conflicting interests and to solve the problem in a harmonious way.
The member countries for WTO are Angola, Albania, Argentina, Australia, Austria, Barbados, Bangladesh , Belgium, Benin, Bangladesh, Armenia, Belize, Cameroon, Canada, cape Verde, Burundi, Burkina, Brunei, Bulgaria, Brazil , Botswana, Bolivia, Central Africa Republic, China, Chad, Colombia, Chile, Costa Rica, Congo , Cote d’ lvoire, Croatia, Cuba, Cyprus, Czech republic, Denmark, Djibouti, Ecuador, Dominican Republic, Egypt, Estonia, Egypt , Fiji, Finland, European union, Finland, France, Yugoslav, Republic of Macedonia, Gabon, Estonia, The Gambia, Ghana, Greece, Georgia, Grenada, Haiti, Guinea Bissau, Guinea.
Guatemala, Horandus, Hong Kong China, Hungary, India, Iceland, Ireland, Indonesia, Israel, Jamaica, Italy, Jordan. Kenya, Kuwait, Lesotho, Lithuania, Liechtenstein, Kyrgyz Republic, Korea among others. The observer countries include Afghanistan, Bahamas. Andorra, Algeria, SERBAIA, Libya, Samoa , Russian Federation, Bhutan , ELARUS, Iran Iraq , Kazakhstan, Sudan, Seychelles’s, Sudan, Montenegro, Syria, Vanuatu, Yemen, Tajikistan, Uzbekistan among others.
The role of the observer status in WTO to enable organizations to hold discussions on issues that directly affects them. The guidelines for obverses members indicate that observer status shall not be included in meetings dealing with administration and finance or under the body for dispute settlement and committee on budget. The countries are not also included in Session Working Parties and Textiles Monitoring body.
Andriamanajara, S and Nash, J (1997) have trade policy reform lead to great openness in developing countries, WashingtonDC pp 123.
European Commissions, (1997) Annual Economic Report, growth development and convergence. Retrieved from http://europa.eu.int:80/en/ record/aer97/ chap2en.htm
On September 24th
Nathan associates (2000) new directions in Egypt trade policy and custom reform
Hoekman B (2000) Trade policy developments in the Middle east and north Africa, Volume 763, PP 113