Access to Markets
Egypt, situated in a strategic geopolitical location gives an ideal advantage of access to markets with various trade agreements incentives that operating in Egypt benefits from.
Egypt's multiple free trade agreements provides access to 1.5 billion consumers, of which 100 million consumers are in Egypt. Furthermore, connecting investors with established and emerging markets with 8% of world trade passing through the Suez Canal. Shipping time and cost are lower from Egypt, 7 days less to the USA than from China and 50% cheaper compared to the UAE.
- Pan Arab Free Trade Agreement/ Greater Arab Free Trade Agreement (GAFTA)
- Common Market for Eastern and Southern Africa (COMESA)
- Agadir Free Trade Agreement
- Egypt-EU Association Agreement
- Egypt-EFTA Free Trade Agreement
- Qualified Industrial Zones (QIZ)
- Egypt Turkey Free Trade Agreement
- Egypt-MERCOSUR Free Trade Agreement
Pan Arab Free Trade Agreement / Greater Arab Free Trade Agreement (GAFTA)
PAFTA was signed by 17 members of Arab League in 1981 and agreed upon its terms in 1997; aiming to facilitate and develop trade among Arab States. PAFTA members agreed to eliminate all non-tariff barriers (NTB's), including administrative, monetary, financial and technical barriers and reduce tariffs annually for ten years (10% annual reduction per year from 1998 to 2003 and by 20% in 2004 and 2005) till reaching a free trade zone in 2007. However, the Arab submit held in 2002 decided to reach zero tariff among Arab States in 2005 instead of 2007 and grant the least developed member states a preferential treatment.
Common Market for Eastern and Southern Africa (COMESA)
The COMESA Agreement was initiated as a targeted preferential trade zone with the eventual aim of establishing a free trade area among member countries for it to develop into a customs union and later a common market. Egypt became a member of the Common Market for East and Southern Africa (COMESA)in 1998, along with 20 other active member states. As a COMESA member, Egypt grants goods and products having COMESA certificates of origin full exemption from customs duties and any other duties and charges having the equivalent effect. Reference to the agreement rules of origin, customs exemptions on all imports of products originating in member country with a value-added amounting to 45%, shall be applicable. COMESA launched its customs union in June 2009; aiming to reduce and unify external tariffs linearly over a period of ten years starting from 2009 and ending in 2018. It is planned that a monetary union will be established by 2025.
Agadir Free Trade Agreement
Egypt had signed the Agadir Agreement in 2004, that came into force in 2006, to establish a free trade area between Jordan, Morocco, and Tunisia.
Advantages of the Agreement:
- Applying the cumulative Rules of Origin will support and enhance the economic and trade cooperation among the parties.
- Pursuit of establishing the Greater Arab Free Trade Area and the development thereof, and as a contribution to the efforts being exerted to establish a Common Arab Market.
- The Agadir Declaration has even more benefits of expanding the European Union markets after the accession of ten new member states.
- The Agadir Declaration will enhance trade exchange between Egypt and the signatory Arab countries since the volume of inter-Arab trade does not exceed 10% of their total trade volume currently.
- This Agreement deals with many important issues such as customs systems, rules of origin, government procurements, financial transactions, safeguard measures, new industries, subsidy and dumping, intellectual property, standards and specifications, and establishing a dispute settlement mechanism. Rules of origin constitute one of the most important articles stipulated in the Agadir Agreement since it will increase the prospective European Market Access for products of Party states, which consequently will encourage investments and increase inter-country regional cooperation.
All the industrial and agriculture products are exempted from the entire tariff and the non-tariff measures as soon as the agreement is into effect.
Egypt-EU Association Agreement
The EU-Egypt Association Agreement is in force since 2004. It creates a free-trade area between the EU and Egypt by removing tariffs on industrial products and making agricultural products easier to trade. Another agreement on agriculture, processes agriculture and fisheries products entered into force in 2010. The free trade agreement focuses on increasing trade between both regions by reducing custom duties fee on trade gradually decreasing annually until completely eliminated for certain products. Since 2004, EU-Egypt bilateral trade has more than doubled from €11.8 billion in 2004 to €27.9 billion in 2017. The EU's main imports of goods from Egypt in 2017 were fuel and mining products (€3.2 billion), chemicals (€1.3 billion) and textiles and clothing (€8.6 billion). The EU's main exports to Egypt are machinery and transport equipment (€6.9 billion), chemicals (€3.1 billion), fuels and mining products (€2.6 billion) and agricultural products (€1.3 billion).
Egypt-EFTA Free Trade Agreement
The European Free Trade Association (EFTA) member states – including Iceland, Liechtenstein, Norway and Switzerland – signed and entered into force a free trade agreement with Egypt in 2007 in order to support and increase bilateral trade between Egypt and EFTA states and to promote the economic integration into the Euro Med Zone through the liberalization of trade in industrial and processed agricultural products. Accordingly, Egyptian exports of industrial products are liberalized and Egyptian customs tariffs on industrial imports from the EFTA States will be gradually reduced until January 2020 when custom duties on all industrial products will be completely eliminated.
Trade Advantages of the Agreement:
- Canceling all customs duties and taxes on Egyptian industrial exports to EFTA.
- Swiss companies have been given an opportunity to set up export industries in Egypt to export their products to EFTA.
- Providing advantages and customs exemptions for Egyptian exports to EFTA of agricultural commodities, especially those of importance to Egypt such as potatoes, oranges, tomatoes and flowers.
- Egypt's application of the Euro-Mediterranean rules of origin, which have been applied to the agreement on the Egyptian-European partnership.
- Abolition of all tariffs on fish and other marine products within 14 years from the date of the agreement.
- Egypt has financial and technical assistance from the EFTA countries to develop the agricultural sector and fishery sector, as well as to contribute to several of project that aim to transfer their expertise in the fields of textiles and garments and pharmaceutical products.
- The EFTA prepares a feasibility study in fishery on how to make the most of Lake Nasser.
- Both parties adopted gradual liberalization and open markets for trade in services under the basic items for this kind of trade.
- EFTA is obliged to promote its economic cooperation with Egypt; it will also provide technical assistance to facilitate the application of the agreement. This cooperation includes working to improve trade and investment opportunities and support the continuity of achievements in the field of economic and social development.
- Economic cooperation focuses on sectors that face challenges and growth and employment opportunities in Egypt, in addition to signing the Bilateral MoUs on cooperation projects between Egypt and Iceland, Norway, and Switzerland.
- Establishing a joint committee to oversee the implementation of the agreement, and arbitration.
Qualified Industrial Zones (QIZ)
Designated geographic areas, within Egypt, that enjoy a duty-free status with the United States. Companies located within such zones are granted duty free access to the US markets, provided that they satisfy the agreed upon pre-defined rules of origin. The benefits of Egypt's QIZ are various, ease of access to US markets being the most important, with open, unlimited quota as well as exemption of tariff and non-tariff barriers. Other benefits include, low factor costs as well as a huge supply of labor force. Enhanced by the added benefits of trade agreements with other markets, Egypt is ideally-suited to provide countless economic benefits to industries located within these zones. The positive economic impact of the QIZ to date has been such that foreign investors and Egyptian companies alike are continually seeking to locate and qualify their businesses within these zones in order to increase their competitiveness and profitability. The industrial zones under QIZ are in Alexandria, the Suez Canal, Greater Cairo, and Central Delta regions, Minya and Beni Suef are recent additions.
Egypt Turkey Free Trade Agreement
Egypt signed a bilateral free trade agreement (FTA) with Turkey in 2005 and entered into force in 2007 to create a free trade area between the two countries over a period of no more than 12 years from the date of ratification.
Trade Advantages of the Agreement:
- Restrictions on trading in goods including agricultural products are to be removed
- creating favorable conditions for more investment
- providing fair competition in trade between the two countries
- facilitate access to EU markets and free trade agreements between Egypt and Africa like the COMESA facilitate access to Turkish Investors
Hence, Egyptian industrial exports to Turkey are immediately exempted from customs duties other fees and taxes of equivalent effect upon the entry into force of the agreement. However, deduction rates are applied to certain list of products that vary during operation years until reaching full exemption. The FTA not only provides Egyptian industrial exports with total and immediate free access to the large Turkish market, but also facilitates access to the EU market. Egyptian exporters face stiff challenges in accessing that market even with the Egypt–EU Partnership Agreement. The Egypt–Turkey FTA is expected to help exporters meet the EU's strict regulations and standards by integrating Turkish and Egyptian industries and by enabling Egyptian exporters to benefit from Turkey's experience in the EU. Just as important, the FTA is expected to increase confidence in the Egyptian economy and further position it as a hub to other African, European, and Arab countries.
Egypt-MERCOSUR Free Trade Agreement
In 2010 Egypt signed a preferential Free Trade Agreement with the Common Market of the South (Mercosur) , which allows preferential privileges for the Egyptian exports to enter the Latin American markets, and to reduce the cost of Egyptian imports from Latin American countries such as sugar, meat and soy oil.
The FTA aims at cutting tariffs by more than 90% between Egypt and the Mercosur countries and cancelling customs duties on agricultural goods, along with finding solutions to the issues of the rules of origin and the preferential guarantees and promoting cooperation in the fields of investment, services and others.