Al-Ahram Weekly Online   22 - 28 October 2009
Issue No. 969
Economy
 
Published in Cairo by AL-AHRAM established in 1875

Liberalisation with a twist

Debate continues over the merits of an agreement that purports to pave the way for further liberalisation of trade in agricultural goods between Egypt and the EU, Niveen Wahish reports

When the Egypt-EU Partnership Agreement was finally concluded and went into effect in June 2004, embarking on fresh negotiations seemed like something for the distant future only. This month, five years on, the European Union's Council of Ministers confirmed the signing of an agreement that amends the current provisions of the agreement between Egypt and the EU so far as agricultural, processed agricultural, and fish and fishery products are concerned, allowing for greater liberalisation of reciprocal trade. The council's approval follows that of the EU Commission. And it is to be followed by ratification by the Egyptian parliament during its upcoming session that begins in November. It will enter into force two months later. Negotiations, which took place over six rounds, started officially in February 2007 in Cairo and concluded in June 2008 in Brussels.

According to Christophe Besse, head of the Trade, Science and Enterprise Section of the delegation of the European Commission in Egypt, this agreement is "far-reaching". He said it is estimated that 90 per cent of the concerned bilateral trade will be fully liberalised; that is, not be subject to any tariffs or quantitative restrictions. Producers of potatoes, onions and oranges, which have long called for greater access into EU markets, have finally gotten what they have asked for. But while the entry of their goods is now guaranteed, some fear that the EU will revert to phytosanitary regulations to limit Egyptian exports. However, Besse responds that "Phytosanitary regulations are another issue. The EU has to protect its consumers. And Egypt has to raise the quality and safety of its products."

Not all products will enjoy the same privileges as potatoes, onions and oranges. Some exceptions to the agreement, which includes 23 tariff lines, are considered to have left some exporters dissatisfied. These exceptions include tomatoes, cucumbers, artichokes, courgettes, table grapes, garlic, strawberries, rice, sugar, processed products with high sugar content, and processed tuna and sardines.

Leading exporter and Chairman of the Agricultural Export Council Sherif El-Beltagy explained that these products were not allowed free entry into the EU because Egyptian production of these items could be considered a threat to domestic production. "We are able to offer cheaper prices," he said. Nonetheless, he counts on the fact that Egypt's produce is harvested at different times. He is also hopeful that negotiations for further liberalisation will not end here. In fact, according to Besse, after two years the two parties should discuss further liberalisation. Besse also added that the agreement stipulates that all 23 items with the exception of tuna and sardines will be afforded preferential bilateral treatment in the form of expanded quotas and customs exemptions on a seasonal basis.

EU goods will also have free entry into the Egyptian market with the exception of 25 tariff lines. Besse attributed both lists of exceptions to the existence of sensitivities regarding key products.

EU exports that will not enjoy the benefits of the agreement include tobacco, wines and spirits, and pig meat, for which current arrangements will remain in place. Confectioneries, chocolate, pasta and bakery products will see duties halved.

Gamal Bayoumi, who headed the Egyptian delegation during the negotiation of the Partnership Agreement, does not consider the free entry of European agricultural goods a threat to local agricultural producers. "European produce is far more expensive," he said. As for fear from European confectionaries and chocolate production, he said "there are many items that local producers do not provide," adding that local Egyptian produce in terms of quality and price is more suited to the larger part of the population than more expensive EU products. Even with a 50 per cent discount on their exports of confectionaries and chocolates, prices would still be expensive. "It is all calculated," he said.

Following agriculture, services are next in line for further liberalisation between Egypt and the EU. Since striking the 2004 agreement, EU- Egypt bilateral trade has been steadily increasing, from 11.8 billion euros in 2004 to an estimated 20.8 billion euros in 2008, compared to an average of 10 billion euros before the entry into force of the agreement. The enlarged EU represents 34 per cent of Egypt's total trade with the world.

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