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Al-Ahram Weekly 27 July - 2 August 2000 Issue No. 492 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 27 July - 2 August 2000 Issue No. 492
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Narrowing the grace period
By Mona El FiqiAccording to the General Agreement on Tariffs and Trade (GATT) Egypt should have begun implementing the so-called Customs Evaluation Agreement (CEA) by July 2000. Yet last week Youssef Botrous Ghali, minister of Economy and External Trade, announced that the World Trade Organisation (WTO) has approved Egypt's request to delay application of the CEA until July 2001.
Egypt originally asked the WTO to postpone implementation of the agreement for three years to allow for the installation of an accurate evaluation system for customs duties. The WTO, instead, approved a one-year grace period.
According to the current law, customs duties on imports are evaluated according to an average price determined by the Customs Authority (CA). The CEA, however, stipulates that customs duties should be based on the price of the purchasing bill approved by a country's commercial representation offices abroad. And if customs employees disagree with the bill's price, the authority has the right to impose duties according to the market price of imports.
Before introducing the new agreement the cabinet had to amend the current law. Although draft bill no160/2000 was approved by the People's Assembly with amendments to 11 articles of the existing law, the government is still reviewing the bill's executive charter. The General Division of Importers has already submitted a memo to the minister of Finance expressing the importer's preferences.
Mustafa Zaki, chairman of the General Division of Importers at the Federation for Chambers of Commerce, stressed the importance of implementing Articles 22 and 23 of the new law, which determine customs duties on the basis of the price of the import bill.
To apply the new system accurately, however, requires training. Mohamed El-Husseini, head of the Central Department of Economic and Tariffs Researches at the Customs Authority, has speculated that one of the reasons behind the Egyptian request to postpone application of the agreement is that customs employees have not yet been trained to apply the new procedure.
According to the WTO agreement an international association financed by donors is to be commissioned to conduct training courses to familiarise customs employees and importers with standardised methods for accounting customs duties according to CEA guidelines.
Experts believe that the one-year grace period will be more than enough for the government to issue the executive charter of the new law and to offer training courses for employees. The lack of a comprehensive information network, however, will be an obstacle to the application. Hamdi Abdel-Azim, dean of the Researches and Studies Institution at Sadat Academy, believes that customs revenues will drop after Egypt applies the CEA because the new system will depend on the price of the invoice which can be fabricated by importers. Nor is there any information network for the CA to check the prices of imports in their countries of origin. Zaki has suggested that the CA receive information about import prices from the commercial departments, the international exchange markets and Egyptian embassies. The Importers' Division has already requested a link with the CA network for an annual fee of LE65,000.
Fearing that the new system will reduce customs revenues, the government has added Article 30 to the new law giving the CA the right to check the imported products even after they pass customs outlets and are sold in the market.
Although the concept of tracking imports in the market was ruled illegal by a verdict of the Supreme Constitutional Court on Law 75/1980, "importers do not object to this article since the main aim of this amendment is to fight smuggling, which is a national objective," said Zaki
Zaki added that following implementation of Article 30, the importer, the shipping company, the wholesaler, and even the traders should keep documents to prove that all due customs had been paid.
There is no doubt, however, that the evaluation agreement will benefit importers who are currently spending at least 10 per cent of import values on customs duties, which, according to Zaki, "is too much."
Zaki maintains that both producers and importers will profit from the new system. Eighty-three per cent of imports are raw materials, equipment and energy used for local production, while17 per cent are durable goods, food stuffs and cooperative commodities.
