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Al-Ahram Weekly 10 - 16 June 1999 Issue No. 433 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 10 - 16 June 1999 Issue No. 433
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Features Books Living Travel Sports Time Out Chronicles Cartoons Letters Controversy over import curbs
By Mona El-FiqiThe Egyptian government is planning to present a memo to the World Trade Organisation (WTO) to limit imports of some goods in order to protect local industry and foreign currency reserves.
Public Enterprise Minister Atef Ebeid said that Egypt's request to restrict imports of sugar, paper, wood and iron is in keeping with the right given to developing countries by the General Agreement on Tariffs and Trade (GATT) to limit imports when its reserves of foreign currency are negatively affected because too much of this money is used to purchase imports.
Ebeid said in a press statement that imports of sugar should not exceed 100,000 tons annually because, if unchecked, the increase in sugar imports would reduce the capacity of local sugar companies to compete, a situation which would eventually lead to their closure.
Although the government believes that taking such measures is the only way to protect local industry, not all businessmen agree.
Khaled Hamza, chairman of the Imports and Customs Committee at the Egyptian Businessmen's Association (EBA), said that although the government has the right to protect local industry, such measures "are only a temporary solution" and will not solve the basic problem.
The root of the problem is the high price of Egyptian products, compared to cheaper imported goods, according to Hamza. "Because of the heavy (cost) burden carried by Egyptian industry, our products cannot compete with foreign goods price-wise," added Hamza.
Local industry will never be protected unless the government faces the "real obstacles impeding local industry, such as the absence of high technology, a lack of well-trained workers and problems of low productivity."
Hamza anticipates that the WTO will not approve Egypt's request to limit imports "because it knows well that the problem is internal, originating in the high cost of local products. Even if the WTO were to accept our request, how long would that last?" he asked. He added that Egypt should actually open the door completely to imports in line with its commitments to the WTO.
Moreover, the high cost of Egyptian products has also resulted in reducing Egypt's exports, Hamza said.
Agreeing with Hamza, Ahmed El-Abed, general manager for exports at the Sugar and Integrated Industries Company, explained the sugar problem. The high price of Egyptian sugar cane "which is determined by the government" has led to the high price of locally produced sugar compared to imported sugar.
The government's sugar cane price is more than double that of foreign sugar cane "so how can we compete with sugar imports?" asked El-Abed.
The price of one kilo of domestic sugar is LE1.50 while that of a kilo of imported sugar is LE1.10. Although the quality of local sugar is better than that of imported sugar, according to El-Abed, consumers "only care for a competitive price."
El-Abed said that his company has conducted a study proposing that the government set a price for Egyptian sugar cane which would be closer to world sugar cane prices. The study also recommended establishing a fund to compensate farmers for any losses they might incur.
The Sugar and Integrated Industries Company has begun to export sugar to some Arab countries in order to decrease its losses caused by low-priced imports.
