By Many Egyptian businesses are confused by the myriad requirements associated with exporting goods, reports Sherine Nasr The ultimate goal of trade agreements and the implementation of free trade areas is to help the business community explore new markets. However, understanding the terms of such agreements is not always an easy task, particularly for the layman. So many different requirements exist within various agreements that one can only wonder if business people are aware of their legal requirements. How can the Ministry of Foreign Trade get the message across ? "Only specialists can be aware of the details and procedures required to make a trade agreement useful and workable," said Sayed El-Bous, advisor to the minister for foreign trade, in a seminar hosted by the American Chamber of Commerce in Cairo last week. Egypt is interested in increasing its volume of exports, and to this end has signed a trade agreement with the EU and with African and other Arab countries. The latest interim agreement with the EU allows Egypt to export industrial goods without imposing customs duties. According to El-Bous, negotiations are still ongoing to secure a similar deal for agricultural products. And within 16 years EU products imported into Egypt will not be subject to customs duties. "The importation of raw materials will be liberalised within three years, intermediate goods within four years, followed by finished goods and finally motor cars within 16 years," said El- Bous, adding that the Ministry of Foreign Trade has published a book advising the business community on how to comply with the EU rules of origin. According to the agreement between Egypt and the EU which came into force on 1 May, Egypt can now enjoy exporting to the additional 10 European member states which joined the EU at the start of this month. To activate the agreement with the EU, Egypt signed the Agadir Free Trade Area with Jordan, Morocco and Tunisia a few months ago. "The idea is to apply the rules of cumulation of origin to the member states which are now working together to apply the same rules of origin," commented El-Bous, who explained that according to the rules of cumulation, exported goods comprising 45 per cent of local products are considered 100 per cent local. "The four Agadir countries will apply Pan EU rules of origin [to their exports] to avoid customs duties when exporting to the EU." Ironically, the Egyptian Customs Authority does not seem to approve of these agreements and, consequently does not abide by their terms. Rami Zaki of Procter and Gamble, claimed that his company received no tariff reductions on raw materials exported from the EU after the interim agreement with the EU came into effect last January. Similar complaints were expressed by Egyptian exporters to the Common Market for Eastern and Southern Africa (COMESA), which Egypt joined in 1997. Egyptian exporters are usually confused by the discrepancy between the tariff reduction rates ratified by the COMESA, the charges levied by the embassies of member states and those claimed by the actual local dealers in the respective countries. The rate of reduction for the same country can vary from 40 per cent to 10 per cent. There is no way we businessmen can get the right answer," commented Hassan Hegazi of Master Trade, a company which exports to EU markets. According to El-Bous, tariff reduction rates among member states is generally 80 per cent. A free trade area was announced in 2000 between nine COMESA member states including Egypt, Kenya, Sudan, Djibouti, Zambia and Zimbabwe, but according to El-Bous not all exporters are aware that different rates of reduction are enforced in each country. To confuse the matter further, countries such as the Democratic Republic of Congo ostensibly apply a 70 per cent reduction and implementing no reductions, while Ethiopia is applying only a 10 per cent reduction. According to El-Bous, it is important for Egyptian exporters to these countries to apply for the right form of the certificate of origin for the COMESA countries, where there is a large demand for ceramics, household appliances, pharmaceuticals and fertilisers, and to fully understand the right rule of cumulation. The tariff reductions applied across the Pan Arab Free Trade Area should have reached a 20 per cent level by the start of 2004, while all customs charges are expected to be abolished by 2005. In an attempt to help exporters navigate the maze of export requirements, the Ministry of Foreign Trade has published a number of books detailing the stipulations for various countries. This information is also available on the ministry's Web site: www.moft.org.eg.
