Structure of Imports and Exports in Egypt

Foreign Trade in Egypt Dr/rana

Trade policy in Egypt 1960-1970
•Egypt suffered from severe deficits in its Balance of Payments throughout this period, and also
failed to increase its level of exports.
•The First Five Year Plan sought to increase the level of exports.
• In May 1962, Egypt was obliged to devalue its currency by about 19 percent.
•Thus, during 1963 and 1964 the Egyptian Balance of Payments continued deteriorating and the
deficit in the current account reached a LE 120 million.
•These factors in combination led to severe foreign exchange crisis in 1966.
•Thus, at the end of the 1960s and in the early 1970s, Egypt's Balance of Payments problems
remained unsolved.
•In a sense, a continuing payments deficit per se implies an overvalued exchange rate.
•The poor performance of the lagging exports of Egypt
during 1960/72, however, pointed to supply rigidities as
the major obstacle.
•Hence, the conditions of the supply and demand
elasticities of Egypt's exports and imports in 1972 did
not dictate further devaluation of Egypt's currency.
•In addition, Egypt's large foreign debt burden would
have been increased further if Egypt had devalued its
currency.
•An additional problem resulting from overvaluation of
Egypt's currency was the development of a black market
for hard currency.
Trade policy in Egypt 1970-1980
•By 1970 the share of Egypt's exports to the Soviet Union and Eastern Europe had risen to about 60
percent of the total, climbing from about 20 percent in 1955.
•The share of imports from the Soviet Union and Eastern Europe during the same period increased
from 7 percent to about 33 percent.
•In general, trade with Eastern Europe showed a balance of payments surplus in favor of Egypt, but
this surplus may have resulted partly from politically motivated subsidies.
•Ending the concentration of trade with Eastern Europe was an integral element of Sadat's westward
reorientation of the country.
•Another aid agreement with the Soviets in 1970 provided for the expansion of an iron and steel
complex at Helwan and for the establishment of a number of power-based industries, including an
aluminum complex that uses power generated by the High Dam.
•By the beginning of the 21st century, largest manufacturing enterprises were still owned or operated
by the state, although the government had begun to sell substantial holdings to the private sector.
•Iron, steel, and automobiles were of growing importance to the Egyptian economy.
 Trade policy in Egypt 1980-1990
•Despite unprecedented economic growth from 1975 to 1985, Egypt's trade balance has been consistently negative.
•The Egyptian economy experienced a boom, primarily due to large foreign exchange inflows: increased petroleum prices
and export proceeds, higher Suez Canal revenues, accelerating worker remittances, and increased tourism earnings,
which ended in 1986 as a result of unfavorable external developments, primarily a decline in petroleum prices as well as
other related sources of foreign exchange, a global recession, and a sharp decline in aid flow.
•In addition to a number of NTBs like export bans, export quotas, prior approvals, and quality control, exports in Egypt
were also subject to taxes, some of which were explicit and others of an implicit nature.
•Some exports are specifically subject to an export tax, such as raw hides and skins.
•However, the list of goods subject to export quotas included 17 items, most of which were foodstuffs, as well as cotton
waste and various yarn waste.
•Petroleum, raw cotton, and rice exports, Summed pipeline revenues, and Suez Canal fees were all handled by the Central
Bank pool.
•Nearly two-fifths of imports are made up of raw materials, mineral and chemical products, and capital goods.
•Petroleum and petroleum products rank first among its top exports, followed by raw cotton, cotton yarn, and textiles.
Trade policy in Egypt 1990-2000
•In the 1990s and into the 2000s, Egypt's trade policy became more open on unilateral, regional, and
multilateral levels.
•In parallel with trade liberalization in the 1990s, a process of trade reform occurred.
•In terms of multilateral liberalization, Egypt has been a member of the General Agreement on Tariff
and Trade (GATT) since 1970, and a member of the World Trade Organization (WTO) since its
establishment in 1995, with developing-country status (WTO 2005).
•Since the mid-1990s, Egypt has been engaged in negotiating and implementing a number of PTAs that
have reinforced the trade policy shift toward further liberalization and export promotion.
•All the PTAs Egypt has been engaged in are Free Trade Agreements (FTAs).
•However, there are potential challenges associated with being engaged with both Arab countries that
aim at transferring the PAFTA to a customs union by 2015 and Common Market for Eastern and
Southern Africa (COMESA) members, whose customs union was launched in June 2009 (UN and AUC
2013).
•Trade reform and liberalization continued in the 2000s,
with the governing regime's firm belief that an export
promotion strategy should be Egypt's main engine of
growth.
•However, by implementing several reform and
liberalization channels (including the structural reform
program in the 1990s, the PTAs, and implementing the
GATT/WTO commitments), and the rise of a relatively
strong export-oriented lobby, trade policy started to
gradually change over the 1990s and 2000s toward a
more liberal environment.
•Until the early 1990s, exports in Egypt were subject to
taxes, some explicit (e.g. raw hides and skins) and
others implicit (e.g. cotton growers), in addition to a
number of NTBs such as export bans, export quotas,
prior approvals and quality control.
Trade policy in Egypt 2000-2016
•In 2001, Egypt signed an Association Agreement with the European Union (EU), Egypt's top trade
partner, which entered into force in 2004.
•In 2002, Egypt's unweighted average tariff was reduced to 20.6% (excluding tariffs on alcoholic
beverages) comparing to 47.4% in 1981.
•In 2003, further tariff reductions were introduced, leading to reducing the import-weighted
average tariff to 12%.
•In 2004, the Ministry of Finance declared commitment to a comprehensive reform of Egypt's
customs administration and reorganize the "Customs Authority "to meet international
standards.
• In 2009, the Ministry of Trade and Industry announced an export promotion strategy for the
period 2010-13.
• In 2010, Egypt and the EU completed an agricultural annex
to their Free Trade Area (FTA), liberalizing trade in over 90%
of agricultural goods.
• Customs tariffs were reduced on intermediate goods if the
final product has a certain percentage of input from local
manufacturers, beginning at 30% local content.
• In the last ten years, the Egyptian government has
significantly reduced import tariffs that reached to below
15% for a vast majority of goods entering Egypt.
• In January 2016, the Egyptian authorities decided to take
some measures to decrease importing and protect the
market from the flood of cheap low-quality goods.
• The Central Bank of Egypt (CBE) raised cash deposits at
banks on letters of credit required from importers to 100%
up from 50% to boost domestic products against foreign
competition.
Trade policy in Egypt 2020-present
•In 2020, Egypt was the number 30 economy in the world in terms of GDP (current US$), the number
57 in total exports, the number 41 in total imports, the number 126 economy in terms of GDP per
capita (current US$) and the number 68 most complex economy according to the Economic
Complexity Index (ECI).
• Egypt imports mainly mineral and chemical products (25 percent of total imports), agricultural
products, livestock and foodstuff (24 percent, mainly wheat, maize and meat), machinery and
electrical equipment (15 percent) and base metals (13 percent). Other imports include raw hides,
wood, paper-making products, textiles and footwear (9.5 percent), artificial resins and rubber (6
percent) and vehicles and aircraft (5.5 percent).
•Main import partners are Germany, Italy, China, Turkey, Saudi Arabia, Kuwait and Lebanon, United
States and India. In Egypt, exports account for about a quarter of GDP.
•The major exports are oil and other mineral products (32 percent of total exports), chemical products
(12 percent), agricultural products, livestock and others fats (11 percent) and textiles (10.5 percent,
mainly cotton).
•Major export partners are Italy, Spain, France, Saudi Arabia, India and Turkey.
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