Tuesday,18 June, 2019
Current issue | Issue 1366, (26 October - 1 November 2017)
Tuesday,18 June, 2019
Issue 1366, (26 October - 1 November 2017)

Ahram Weekly

Reaching out to Mercosur

The entry of the Egypt-Mercosur trade agreement into force this week is a further opportunity to boost the country’s foreign trade, reports Mona El-Fiqi

The agreement would boost trade with Mercosur
The agreement would boost trade with Mercosur

The trade agreement signed between Egypt and the members of the South American Common Market (Mercosur) members of Argentina, Brazil, Uruguay and Paraguay in 2010 was not implemented because it was not approved by Argentina until July 2017.

However, the Egypt-Mercosur agreement came into effect after Argentina’s ratification had been formally sent to Mercosur, with the aim of strengthening relations between Egypt and the Mercosur countries, promoting trade, and negotiating a free-trade area in conformity with the rules of the World Trade Organisation (WTO).

The implementation of the deal means the immediate elimination of tariffs on a list of products for both sides, while a gradual reduction of customs duties will be applied to other products over the coming 10 years. After this period, products will enjoy tariff-free movement among the Mercosur countries and Egypt.

According to the deal, Mercosur exports of beef, wheat, poultry, cereals, raw materials and chemical products will enter Egypt free of duties. Egypt’s exports list includes textiles, agricultural products, fertilisers and cotton.      
Minister of Industry and Foreign Trade Tarek Kabil said that the deal’s entry into force would help raise the volume of trade and investment between Egypt and the Mercosur countries, which stood at $3 billion in 2016, according to figures from the Ministry of Industry and Foreign Trade. It is expected that the agreement will double that figure within 10 years.

The minister said that the agreement also aimed at attracting more Latin American capital inflows into the Egyptian market in the fields of agricultural production, technology, petrochemicals and food manufacturing.

It seeks to open new markets for Egyptian products in Latin America, especially in Brazil as this is one of the world’s most powerful economies, commented Mustafa Al-Nagari, chair of the Exports Committee at the Egyptian Businessmen’s Association.

Al-Nagari said he was optimistic that the agreement would have a positive impact on trade with these countries. “We should not worry about the elimination of tariffs. Sooner or later tariffs will vanish since the whole world is moving in this direction,” he said.

The deal will help secure strategic products for Egypt like wheat, sugar, beef, and poultry from the Mercosur countries. “It is better to expand the markets from which we import our needs in order to get products at higher quality and better prices than insist on tariffs,” Al-Nagari explained.

He said Egypt had kept some products out of the agreement in order to protect local industries, since these could be harmed by the entry of some products at zero tariffs.

According to the agreement, Egypt will be able to export textiles, agricultural products, fertilisers and car spare parts with no customs duties to these countries.

Al-Nagari added that Egypt had the right to make amendments to the agreement if circumstances changed in the future, adding products or deleting others.

Khaled Hamza, chair of the Imports Committee at the Egyptian Businessmen’s Association, said the elimination of tariffs on Mercosur products meant strong competition with local products as well as imports from other countries.
“To be able to compete, local industry has to increase production, sell at reasonable prices, and upgrade product quality. The government also has a responsibility to help solve the problems facing the industrial sector, including bureaucracy and financing,” Hamza said.

Abdel-Aal Ali, deputy chair of the Maritime Transportation Services Division at the Federation of Egyptian Chambers of Commerce, said that the government was exerting many efforts to sign trade deals to open new markets for Egyptian exports.
“It is the role of the exporters to seize these opportunities and increase their exports to these countries,” he said.

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