EGYPT: Regional Trade Agreements

Egypt is party to the following regional agreements: Agadir Agreement, COMESA Agreement, European Union-Egypt Association Agreement, GAFTA, Egypt-Turkey Free Trade Agreement, and numerous free and preferential trade agreements with individual Arab countries.

The Egypt-EU Partnership

  • Egypt and the EU signed a treaty called the Association Agreement in 2001 that came into force in 2004, also referred to as the Partnership Agreement, which establishes a free trade area over a 12-year transitional period by 2016.
  • All goods exported from Egypt to the EU were immediately exempt from tariffs
  • EU export tariffs will gradually be dismantled over the 12 year period
  • Agricultural goods and agricultural processed goods shall be treated according to certain quotas for specific goods with tariff privileges and certain market windows for exportation from Egypt
  • While the value-added criteria set in the EU can be as high as 60% and 75% for sensitive products such as textiles and apparel, US companies can benefit in certain sectors such as processed foods where Egypt faces lower to zero tariffs on agricultural exports.
  • Local component requirements (a minimum of 60% from Egypt or the EU) for the rules of origin under Mediterranean countries also allow for the use of inputs from third countries (diagonal accumulation of origin) for the remaining 40% content.

The GAFTA Agreement

  • Egypt entered the Greater Arab Free Trade Area (GAFTA) trading bloc in 1998. As of 2005, all 18 GAFTA countries exempted all customs duties and charges between the Arab countries.
  • GAFTA countries are currently engaged in negotiations to liberalize services and investments (with the exception of Sudan and Yemen).
  • The percentage of value-added required to confer origin is 40% of the ex-factory cost. Local labor is counted as added-value and Egyptian assembly of US parts constitutes transformation to meet the origin requirements under GAFTA.
  • Local component requirements under GAFTA rules of origin also allow for the use of inputs from all other members (diagonal accumulation of origin).
  • GAFTA countries combined have a GDP of over $780 billion annually with a population of around 320 million people.

The COMESA Agreement

  • The Common Market for Eastern and Southern Africa (COMESA) agreement was signed in 1994; currently there are 19 active member states. Egypt became a COMESA member in 1998.
  • All commodities are exempted between member countries with a minimum local value-added of 45%
  • Eleven countries have achieved a 100% reduction of tariffs on imports from other member countries.
  • US companies exporting from Egypt would have an edge entering the 19 COMESA countries, where general import duties reach up to 15%. These products would enter duty free through Egypt.
  • COMESA has a combined GDP of over $472 billion (2008) with a population of 430 million people.