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Al-Ahram Weekly 28 Jan. - 3 Feb. 1999 Issue No. 414 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 28 Jan. - 3 Feb. 1999 Issue No. 414
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Focus Economy Opinion Culture Features Living Travel Sports People Time Out Chronicles Cartoons Letters Parliament cries foul over dumping
By Gamal Essam El-Din
Parliamentary deputies, government officials and businessmen will hold a number of meetings next week to discuss measures to discourage dumping and subsidised sales onto the local market.The meetings were proposed this week after MPs complained that local industries had been suffering from heavily subsidised imports and unfair dumping and pricing practices. The MPs were furious about the government's failure to take action and called for the imposition of countervailing import duties to block future dumping practices and subsidised sales. They also called on the banking sector to ensure that loans would not be used to fund the importing of subsidised commodities.
The protests came on Sunday during a parliamentary interpellation (a question that must be answered by the government) made by Ali Fath El-Bab, MP for the Islamist-oriented Labour Party, addressed to Minister of Trade and Supply Ahmed Guweili. The criticisms were an indication of how seriously MPs are taking the possibility of an international trade war.
Deputies also took the government to task for failing to reform the financial structure of certain loss-making public sector companies such as the Helwan Iron and Steel Company (HISC) and various sugar mills in Upper Egypt.
El-Bab charged the Ministry of Trade's Anti-Dumping Office (ADO) with inefficiency, excessive bureaucracy and a failure to take action to deal with the problem. "We all know, for example, that Egypt has been flooded with huge quantities of cheap, subsidised hot and cold-rolled steel products," said El-Bab. "Ten to fifteen thousand tons arrive each month, mainly from Romania, the Ukraine and Russia. Worse, the price per imported ton dropped from $220 nine months ago to a mere $130 currently, compared with $330 per ton for the local product. Despite these flagrant practices and documented complaints filed by HISC, the ADO has reacted by imposing dumping fees of a mere 20 per cent on imported steel products and 50 per cent on stainless steel sales."
El-Bab claimed that the sugar, copper, glass, car, fertiliser, textile and electronics industries were suffering from dumping practices carried out by Indonesia, the Ukraine, Kazakhstan and Russia. "Imported copper, for example, is sold at $1,000 per ton, compared with $2,790 per ton for local copper," said El-Bab. He called on President Mubarak to personally intervene to save local industries. "In the United States, President Clinton warned Japan about dumping," said El-Bab. "The US Trade Department took immediate action by imposing dumping fees of 199 per cent on steel imports. We want to take the same position in Egypt, but unfortunately the Ministry of Trade insists on strictly abiding by the rules of the World Trade Organisation (WTO) even though these give developing countries the right to take measures to protect their domestic products from foreign dumping." He also accused the Ministry of Trade of dragging its feet on dumping cases filed against Egypt by the European Union.
Joining forces with El-Bab, several deputies accused the Ministry of Trade of allowing the domestic market to be used as a dustbin for cheap, low-quality products.
Businessman Ahmed Shiha, MP for the downtown Cairo district of Al-Darb Al-Ahmar, claimed that free-zone areas had effectively become licensed smuggling regions. Shiha, who himself works as an agent for Japanese electronics companies, complained that 26 licensed free-zone areas, five of them in Cairo's district of Nasr City, should bear the blame for swamping the country with cheap TV and video sets. "The costs of this kind of dumping, from which the Arab Industrialisation Organisation suffers a great deal, are estimated at LE800 million a year," said Shiha. He urged the Ministry of Trade to close down such areas because of their damaging effects on the local economy.
Mostafa Mongi, the National Democratic Party (NDP) MP for Helwan, accused the Ministry of Trade's General Authority for Export and Import Control (GAEIC) of corruption and irregularities. "We all know that officials in this organisation take bribes from a mafia of importers to allow the dumping of huge quantities of sub-standard goods," he said.
Mohamed Qiwita, NDP MP for Damietta, claimed that grant agreements with the United States Agency for International Development (USAID) for the funding of US commodity imports were responsible for the increase in dumping on the local market.
Qadri El-Azzazi, NDP MP for Sohag, argued that as well as causing economic harm, dumping has heavy social costs, especially in those areas of Upper Egypt that produce sugar and paper. "It leads to the killing off of vital local industries and forces workers into unemployment," Azzazi said.
However, some dissenting MPs argued that most of the current practices were in fact the outcome of fair international competition. Yehia Abou Steit, NDP MP for Alexandria, argued that companies complaining about dumping were mainly loss-making firms seeking protection from foreign competition. "These companies would be better streamlining themselves than complaining about alleged dumping practices," he said.
Prominent businessman Mohamed Abul-Enein opined that dumping practices in developing countries were due to the financial meltdown in Southeast Asia which has led to serious distortions in international trade. He also said that the high production costs of Egyptian industries had a detrimental effect on competitiveness.
Abul-Enein later clashed with Sameh Ashour, the Nasserite Party's deputy, who argued that private businessmen, despite being granted tax holidays and customs exemptions by the government, were still unable to boost exports. "Dumping in Egypt is primarily due to open-door policies and excessive liberalisation. These policies may be able to provide consumers with cheap products today, but tomorrow they will have to pay a heavy price for letting their local industries fade away," said Ashour.
Abul-Enein responded by reiterating that production costs in Egypt were the highest in the world. "Private investors, for example, still pay international prices for electricity, gas and even land," he said.
Minister Guweili argued that many of the trading practices highlighted were in fact due to legitimate competition and a sharp fall in international commodity prices. "The problem is that some want to see the market protected in their interest," Guweili said. "Some here are slow in upgrading their industries to meet the new challenges of competition." He also said that the ADO had played an important role in dealing with dumping and subsidised sales. "We all remember how this office successfully stood up to the dumping charges filed against Egypt in the EU," said Guweili.
He said that his ministry had approved dumping fees of 35 per cent and 50 per cent on stainless steel products from Spain and Greece respectively. "As for steel imports, we imposed a mere 20 per cent because this is in addition to existing import duties of 20 per cent," Guweili explained. "We have also imposed dumping fees of 30 per cent on imported matches and 30 per cent on French tyres. This ensures protection for local industries, especially for the iron and steel mills. Egypt, however, will soon be in dire need of four million tonnes of steel because of the mega-development projects which are under way in Toshka, Sinai and the Gulf of Suez."
Guweili did however admit that commodity import agreements, including those with the United States, were partly responsible for flooding the local market with imported goods. "Imports increased last year by $1.3 billion while exports fell by $217 million," said Guweili. He argued that the fall in exports was due more to a plunge in international commodity prices than to poor performance by the local commodity-producing sector. He cited a recent report in the Economist magazine which listed Egypt among the world's top 20 emerging markets in 1997.
Guweili's reassurances did not satisfy Zakaria Azmi, President Mubarak's chief of staff, however, who applied for and obtained the Assembly's consent for the series of committee hearings which will be held next week.
