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Al-Ahram Weekly 22 - 28 April 1999 Issue No. 426 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 22 - 28 April 1999 Issue No. 426
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Special Travel Sports People Time Out Chronicles Cartoons Letters Boosting trade with Africa
by Mona El-FiqiEgypt, as a new member of COMESA, is taking steps to promote increased trade with neighbouring African countries. The Egyptian Customs Authority recently issued a decree which requires a 90 per cent reduction in customs duties on imports from the 20 member countries of COMESA this year. This action was called for in the overall COMESA agreement which requires the remaining Egyptian duties on imports from COMESA members to be abolished by the year 2000.
Simultaneously COMESA decreed the same treatment for Egyptian exports, a move expected to expand Egypt's exports to the African trade group. Africa is a good market for a number of Egyptian products such as chemicals, ceramics, furniture and carpets, according to trade specialists.
In 1993 Egypt proposed its participation in the Preferential Trade Area (PTA) established in 1981 which became COMESA in 1993, but the proposal was refused. Then in 1997 Egypt again proposed joining COMESA. Minister of Foreign Affairs Amr Moussa noted the absence of Egypt in the sub-regional economic groupings in Africa which will constitute the African Economic Community by 2025.
Although COMESA regulations normally do not permit the participation of non-regional countries, Egypt was accepted as a member in June 1998 after extensive negotiations. The order by Egypt's customs authorities to sharply cut import duties for COMESA came last February.
Angola and Djibouti are the only two members of the African common market which have postponed tariff reductions for Egyptian goods because they need more time to develop their economies before fulfilling this commitment.
According to the Ministry of Trade and Supply, the value of Egyptian exports to COMESA was LE120 million in 1995, rising to LE132 million in 1997. COMESA exports to Egypt totalled LE558 million in1995 but dropped to LE516 million in 1997.
As evidence of the value of tariff cuts, when reductions were applied within the block of COMESA members, their intra-regional trade volume increased from $932 million in 1985 to $2.8 billion in 1997. Tariff reductions among COMESA countries should be applied when at least 40 per cent of the content of imported goods is locally produced. If a country meets this criteria, its products receive certificates of origin.
Ahmed Shiha, chairman of the Egyptian African Company for Export and Import, said that Egyptian companies will benefit from dropping tariff barriers between Egypt and the COMESA countries because the African people always prefer Egyptian products which are low-priced compared to expensive European commodities. "I have already established four branches of my company in four African countries for export and import operations, and they are really profitable," Shiha said.
The COMESA countries -- with a combined population of 300 million -- are a sizeable market for Egyptian products. But according to Shiha, transportation and export costs in the Africa market are generally high, so export-import operations should be done by a group of investors, rather than by individuals. According to Shiha, transportation to Africa is no longer a problem because nowadays exports reach their destination in three or four weeks.
The main aim of COMESA is to increase the volume of trade among its members by establishing a free trade area in the year 2000 and a unified system for tariffs in 2004. The third goal of the COMESA agreement is for the grouping to achieve a stable economic growth rate in member countries by developing their production and marketing systems. Still another aim is to support joint ventures in all sectors of the economy in order to improve the standard of living in the COMESA countries.
Several institutions affiliated to COMESA such as the Development Bank, Banking Union Clearing House and the Arbitration Centre have been established to help the trade group reach its goals.
