In an attempt to control the quality of imported cars and car components, new regulations are now in force, Mona El-Fiqi reports For the first time, Egypt has set its own standardisation for imported cars and car components. The first phase of the standardisation procedure was put in force early last month. Although international specifications for car imports include 127 items, Egypt had not set specifications for cars until now. This has meant that cars and their components, regardless of their quality, had the right to enter the local market without restriction. The government's priority, according to Hani Barakat, chairman of Egyptian General Organisation for Standardisation and Quality (EOS), is to protect consumers. Official figures show that 40 per cent of car accidents are attributed to technical problems. Barakat said the absence of Egyptian specifications relating to car imports made it possible for factories around the world to send sub-standard cars and components to Egypt, representing a real danger to people's safety. He added that not only small factories but also famous brand names engaged in producing low quality cars to be sold at a low price in Egypt. In January, the Ministry of Trade and Industry announced that Egyptian standards will be applied to imported cars and components on three stages. The ministry gave a six- month grace period before the application of the first phase, which includes 10 items relating to safety, health and the environment, including regulations on brakes, lights and tires. The second phase includes 50 items while the third includes the remainder of 127 international specifications to be fully applied by 2013. Barakat stressed that before the new system was put in place, the EOS was keen to hold meetings with representatives of cars dealers, manufacturers, traders and importers to explain the 127 specification. "We have clear written approval for the standardisation from the Chamber of Engineering Industries as well as the Federation of Chambers of Commerce." Barakat insisted that the decision would not affect car prices. "There has been no impact on prices during the past few weeks, since the price of the 10 items represents between four to five per cent of a car's total price. Assuming that their price increased by 20 per cent it will only increase the car's total price by one per cent," Barakat explained. He also told Al-Ahram Weekly that it was important before setting restrictions on imports of certain car components to ensure the local industry's capacity to produce them according to the new standards. During the grace period, the EOS provided local factories with the help of foreign experts to change their production lines to comply with the new standards. "Analysing the situation in July, we found that 90 per cent of local producers are ready to produce the 10 items according to the standards," Barakat said. World Trade Organisation rules give Egypt the right to prevent the entrance of imports that do not meet the country's own standards. Barakat believes that with the full application of the new system, Egypt has an opportunity to become a car exporter rather than a car importer. Moreover, Egypt is currently on its way to join the UN Economic Commission for Europe (UNECE) agreement that will facilitate the entrance of Egyptian exports to foreign markets. The agreement permits trade exchange on cars and their components among members without inspection. This will give local products a competitive advantage in international markets. It is expected that Egypt will join UNECE by the beginning of 2011. One more positive impact of standardisation is that it helps to attract foreign investment to the sector and integrates Egypt into the international market. Barakat asserted that standardisation will be applied on all industrial products, but priority is being given to leather products, textiles and furniture. "We are currently working to define the safety, health and environmentally sound measures needed for each sector to set the appropriate standards according to international criteria," he said. The new system was welcomed by the majority of local car dealers. Abdel-Kader Talaat, sales and marketing manager at Ford, said that the decision had no negative impact on the business of his company, since "our imports of cars as well as components have certifications from the factory that they are original and manufactured according to specifications," Talaat said. According to Talaat, most dealers in the market will not be harmed by the application of the new standards. "Only those who import cars and components from unknown sources will be affected," he added. Talaat said the decision would have a positive impact on both Egyptian exports and consumers. The decision to apply the standardisation was part of a package of procedures to control car imports and encourage exports. On 14 August, Minister of Finance Youssef Boutros Ghali approved a decree that permits refunding fees paid on car and bus exports. The decision, which was applied retroactively on exports since January, is part of a financial reform policy to repay all taxes and customs duties imposed on exports. The decision aims at easing the financial burden on exporters and encouraging local industries to export. Ghali gave clear instructions to tax and customs authorities to facilitate refunds. Galal Abul-Fotouh, the minister's counsellor for customs affairs, said that the Ministry of Finance also amended Law 90/2004 to permit the direct refund of fees known as "resources development". The value of these fees is determined according to car engine capacity, ranging between two and 8.5 per cent.
