A new presidential decree to cut import tariffs promises to stimulate trade, writes Mona El-Fiqi President Hosni Mubarak issued a decree on Monday to cut tariffs by 25 per cent, causing the average of tariffs on imports to drop from nine per cent to 6.9 per cent. The decree, which took effect on Tuesday, was applied on 1,114 items including intermediate products, capital goods, some food commodities and medicine. The Chairman of the Customs Authority Galal Abul-Fotouh described the decree as complying with the government's plan to reform the customs duties structure and encourage investments. It also fulfills Egypt's commitment to the World Trade Organisation (WTO) to review the customs duties system every five years. The last amendment was in 2002, stated Abul-Fotouh. The decree also demanded the application of minimum tariffs on some food imports such as meat, fish, wheat, flour, cheese, cooking oil and beans. Abul-Fotouh explained that the ultimate aim of the amendments is to fight price increases, particularly of some food commodities such as wheat and sugar which witnessed price hikes on the world market. Before the decree, the 1,114 items were subject to between two to 40 per cent customs duties. Now, 176 items enjoy zero tariffs, 140 require two per cent customs duties, 290 items are subject to five per cent, 369 items need 10 per cent duties and 139 items require 20 per cent customs. Meanwhile, tariffs on imported vehicles remain as high as 40 per cent, except for hybrid, environment- friendly vehicles which enjoy a 25 per cent cut on original custom duties, according to the new decree. The decree was welcomed by consumers as well as producers, since 90 per cent of listed items enjoy tariffs ranging between zero to 15 per cent. Consumers hoped that the decision will have a clear impact in cutting prices. Hoda Mahmoud, a housewife and mother of three, told Al-Ahram Weekly that, "the high prices made me no longer able to fulfill all of the children's needs, so I had to prioritise." Now, she might be able to afford all her household needs. In a news conference on Monday, Minister of Finance Youssef Boutros Ghali explained that the tariff cuts will mainly benefit consumers, as opposed to those implemented in 2004 in favour of producers. Ghali further assured that the government will follow up on the decision to guarantee that consumers reap the fruits of the amendments. The decree also encourages agricultural production with its total abolition of the two per cent custom duties imposed on fertiliser imports. Ghali added that it will also bolster the local industry, enabling it to compete in international markets. Naturally, the tariff cuts will have a direct negative impact on revenues from custom duties, an estimated loss of LE1.4 billion, according to the minister. But he believes that this will be compensated by the general improvement in economic activities, and rise in imports.
