Import Tariffs

The tariff structure has steadily been improving in Egypt. In 1998 the GOE reduced the maximum tariff rate for most imports from a high of 50 percent to 40 percent and over 98 percent of Egypt’s tariffs are bound tariffs. On September 8, 2004 the Egyptian Government announced a new tariff structure.  The government removed GATT-inconsistent services fees and import surcharges, reduced the number of ad valorem tariff rates from 27 to 6, dismantled tariff inconsistencies, including sharp escalation and reverse progression on tariff rates, and rationalized national sub-headings above the six-digit level of the Harmonized System (HS).  The new tariff structure includes six tariff rates, pegged to the degree of processing, that range between 2 percent on raw materials, spare parts, and primary feeding products and 40 percent on durable consumer goods.  A number of exceptions still exist, including duties on imported alcoholic beverages, tobacco and cigarettes and passenger vehicles with cylinder capacity (cc) above 2000.  The changes in tariffs reduced the officially announced weighted average tariff rate from 14.6 percent to 9.1 percent.  The government also eliminated services fees and import surcharges ranging from 1 to 4 percent, which were considered GATT-inconsistent non-tariff barriers to trade.  The Egyptian Government replaced its 10-digit 13 thousand-line tariff structure with a six-digit structure with less than six thousand tariff lines.  This change should reduce disputes over product classification for customs purposes.  Additionally, the Egyptian Government eliminated import duties on 25 products that were in short supply on the domestic market. 
 
In addition to the customs tariff, all imports are subject to sales tax ranging from 5% to 25%.  Every importer is required to pay the tax and also to register for sales tax.  Although like a VAT in many ways, the sales tax is not a full VAT.  For example, no credit is paid for tax on inputs (e.g., on import of computers) unless the commodity subject to the charge is physically embodied in the output on which output sales tax is charged.  Therefore, if the computer hardware and software is sold onwards, a credit will be given for the tax paid on input.  If the computers are retained for use in the business, even if the importer is registered, no credit will be given.  The Sales Tax Department confirms that the tax will be 10% on both hardware and software. A list of recent tariff reductions for some major industries follows:

• Automotive industry and its feeding industries: The tariffs on the automotive manufacturing components have been reduced from the range of 5-12% to the range of 2-5%, in addition to around 10% sales tax.
• Passenger cars with engines under 1,600cc were reduced in September 2004 to a maximum of 40 percent, while engines over 1,600cc now have a tariff rate of 135 percent. 
• Paper manufacturing, printing and publishing: Tariffs on material for paper manufacturing have been reduced from the range of 5-32% to the range of 2-12%.
• Iron and steel industry: Some materials have been completely exempted from tariffs, while others have been reduced from 5% tariffs to only 2%.
• Food industry: Tariffs have been unified and reduced for the food and pharmaceutical industries to 5%.
• Material for textile industry: Tariffs have been reduced from 40% to the range of 12-22%.
• Medical equipment, including dentistry, equipment used for treating fractures, cardiovascular equipment, hearing aides, and needles used for sewing wounds: Tariffs have been reduced from 5% to 2%.
• In June 2006, the Egyptian parliament approved amendments to some articles of the Stamp Duty Law that simplified procedures and halved the stamp duty tax rate for certain products and services.
• In July 2006, Egypt reduced tariffs on whole chicken imports to zero, but arduous and unreasonable requirements continue to block U.S. imports.  The duties on poultry were to remain at zero until December 31, 2006, but could be extended.

Trade Barriers

SERVICES BARRIERS

Egypt participated actively in the Uruguay Round negotiations on services, but made commitments in only four sectors:  construction, tourism, financial services, and international maritime transport.  Egypt subsequently made commitments in the 1997 WTO agreement on financial services negotiations.  Egypt is gradually implementing its General Agreement on Trade in Services (GATS) commitments.  Egypt supported launching a new round of trade negotiations, including trade in services, at the WTO Ministerial meeting in Doha in November 2001.

Egypt has restrictions for most service sectors in which it has made GATS commitments.  These restrictions place limits on foreign equity in construction and transport services (foreign capital equity should not exceed 49 percent of the total capital of some activities).  Egypt restricts the employment of non-nationals to 10 percent of the personnel employed by a company.  Restrictions on the acquisition of land by foreigners for commercial purposes were amended in 2002 to allow the acquisition of land by non-Egyptians under certain criteria and procedures. 

In 1998, the Egyptian Government passed legislation allowing privatization of Egypt's four state-owned insurance companies.  The law removed the prohibition on majority foreign ownership of Egyptian private insurance firms, permitting up to 100 percent foreign ownership.  In addition, the law eliminated the prohibition on foreign nationals serving as corporate officers of insurance companies.  There are currently at least six foreign insurance companies operating in the market:  Alico, AIG, ACE and ACE AIIC (U.S.), Legal and General (U.K.), and Allianz (Germany).  There are eleven private sector insurance companies, three of which are joint ventures with U.S. firms.  Plans to prepare the four state-owned insurance companies for privatization have made slow progress.  In December 2004 the Minister of Investment, responsible for privatization of public and joint venture companies, announced government plans to privatize public insurance companies.  Senior insurance officials now predict the first privatization will take place by mid-2007.

Following the various asset sales, mergers, acquisitions and divestiture of state shares, there are currently 39 banks in Egypt. As a result of its 1997 WTO financial services commitments, Egypt does not limit foreign equity participation in local banks.  Several foreign banks have majority shares in Egyptian banks, while other foreign banks are registered as branches of the parent bank (rather than subsidiaries).  In all cases, these foreign banks can conduct all banking activities in Egypt.  New foreign banking entrants face barriers, however.  Because the government believes there are too many banks in Egypt, it has not issued a new banking license in at least ten years and announced it plans to reduce the number of banks in Egypt to 21 banks in the next five years.  As a result, the only way a foreign bank can enter the market in Egypt is to purchase an existing bank.  In 2002, the Central Bank of Egypt (CBE) required that banks raise their capital adequacy ratios to meet Basel II standards.  The 2003 banking law substantially raised minimum capital requirements for all banks mandating that banks unable to meet this requirement either merge with other banks or exit the market.  The June 2005 deadline for banks to meet the capital increase was finally adhered to after several postponements. Six banks failed to achieve the new threshold and have or are still to undertake subsequent procedures such as merging with larger institutions.  Although the government has advocated the merger of some smaller banks since early 2001, it was not until late 2004 that two banks merged and three applied for CBE approval.  More progress was made in 2005 with the merger of two large state banks, Banque Misr and Banque du Caire, and the merger of the National Societe Generale Bank (NSGB) with Misr International Bank.  As of the end of 2005, 11 small banks had been merged into larger banks and the Central Bank had begun legal procedures to liquidate branches of three foreign banks that had not met the capital requirement.  The GOE has also been proceeding with plans to divest its shares in joint venture banks. To date, eight joint venture banks have been divested of public shares. 

In 1998, legislation was passed to allow privatization of the four state-owned banks that control over 50 percent of the banking sector's total assets.  Until recently, however, progress on privatization has been slow.  The government appointed new, western-trained senior management teams for the four banks.  In October 2006, after a one year delay, the first public bank – Bank of Alexandria – was privatized through a multiple round auction, that concluded with the sale of 80 percent of the Bank’s shares to the Italian bank, Sanpaolo IMI.   The downsizing and privatization of Egypt's banking sector should strengthen it and improve implementation of market-based financial operations. 

Egypt's WTO financial services commitment in the securities sector provides for unrestricted market access and national treatment for foreign companies.  International investors are permitted to operate in the Egyptian stock market largely without restriction.  Several foreign brokers, including U.S. and European firms, have established or purchased stakes in brokerage companies.  In May 2002, the Minister of Finance issued a decree to establish the Primary Dealers System which starting operating in July 2004.  The new system allows financial institutions that are registered with the Ministry of Finance, currently including 13 banks, to underwrite primary issues of government securities and to activate trading in the secondary market through sale, purchase and repurchase of government securities.  The government is using the primary dealers system to manage its public debt, secure non-CBE finance and create a market-based yield curve for public debt.

Telecommunications services have expanded rapidly in the past three years as the sector has been liberalized and opened to international competition.   The GOE began dismantling its state-owned Telecom Egypt monopoly in December 2005 by privatizing 20 percent of its assets.

Private-sector firms participate actively in Internet services and cellular services.  Foreign firms compete for contracts offered by Telecom Egypt to modernize its networks and switching equipment.  Telecom Egypt has sought foreign participation in the management and operation of the national telecommunications grid, however no agreements have yet been signed.  In February 2003, Egypt’s parliament approved a new telecommunications law (Law 10).  It stipulated, in compliance with Egypt's WTO commitments, that Telecom Egypt relinquish its monopoly status as Egypt’s domestic operator and sole international operator by January 2006 and provide for greater price flexibility for Telecom Egypt shares in a future public offering.  Steps are underway to implement the 2003 law, but the government has not yet issued licenses for new operators.   In June 2002, Egypt acceded to the WTO Basic Telecommunications Agreement (BTA), which requires the liberalization of telecommunication services and full autonomy of the national telecom regulatory authority by January 2006. Despite the deadline, in March 2006 the Minister of Communication and Information Technology announced that a study concerning the viability of a second license for a fixed-line operator would not be carried out before 2008.

In April 2003, Egypt joined the WTO Information Technology Agreement (ITA), which requires the eventual phasing out of tariffs on all information technology imports from WTO members.  Egypt has made significant progress in meeting its WTO telecommunications-related commitments.  More progress is required to achieve full autonomy in National Telecommunication Regulatory Authority (NTRA) operations.

In the cellular service market, which currently consists of two private GSM operators, the government awarded a third license through a public tender in July 2006.  The license stipulates that the winner employ neutral second- or third-generation technology (either GSM or CDMA).  The GOE has set the second quarter of 2007 as the target date for the third mobile company to be fully operational.   

Maritime and air transportation services are being liberalized.  A 1998 law ended the long-held government monopoly in maritime transport, and the private sector now conducts most maritime activities, including loading, supplying, and ship repair, and, increasingly, container handling.  The new Ain Sukhna port is the first privately owned and operated Egyptian port.  Another private port, East Port Said port, was inaugurated in October 2004.  Egypt Air’s monopoly on carrying passengers has been curtailed, and several privately owned airlines now operate regularly scheduled domestic flights and international charter services, although the national carrier remains by far the dominant player in the sector.  Private and foreign air carriers may not operate charter flights to and from Cairo without the approval of the national carrier, Egypt Air.  Egypt has agreed to begin preliminary discussions regarding an Open Skies agreement although these talks had not begun as of November 2006. 

Egypt passed laws in 1996 and 1997 permitting private firms to build and operate new airports.  Private concessions can operate businesses and provide services in airports, but private ownership of airports is still not permitted.  Six new build-operate-transfer airports were under construction at the start of 2001.  One of these, at Marsa Alam, opened at the end of 2001.  The Egyptian Government plans to increase the number of airports in the country from the current 18 to 25 over the next decade. 

Egypt maintains several other barriers to the provision of certain services by U.S. and other foreign firms.  Foreign motion pictures are subject to a screen quota and distributors are allowed to import only five prints of any foreign film.  Foreign movies are subject to duties and import taxes of about 46 percent of the value of a film (32 percent for a copy of the movie, 12 percent on posters and 2 percent on the movie reel), as well as a 10 percent sales tax and a 20 percent box office tax (compared to a five percent box office tax for local films).

The Egyptian Government applies to private express mail operators a postal agency fee of 10 percent of annual revenue from shipments under 20 kilos, a fee that negatively affects their competitiveness.  Shipments weighing more than 20 kilos are treated as freight and are not subject to the 10 percent fee. 

According to the Egyptian labor law, foreigners cannot be employed as export and import customs clearance officers and tourist guides. 

INVESTMENT BARRIERS
Under the 1992 U.S.-Egypt Bilateral Investment Treaty (BIT), Egypt committed to maintaining the critical elements of an open investment regime, including national and Most-Favored-Nation (MFN) treatment of investment (with exceptions limited by the treaty), the right to make financial transfers freely and promptly, and international law standards for expropriation and compensation.  The BIT also establishes formal procedures to enforce the treaty, including international arbitration.

In 1999, Egypt and the U.S. signed a Trade and Investment Framework Agreement (TIFA) that established a TIFA Council designed to facilitate the discussion of bilateral trade and investment issues.  The Council met most recently in February 2005 and reviewed how recent reforms undertaken by the Egyptian government have affected Egypt's trade regime.  The Council also discussed issues related to agricultural trade, customs administration, intellectual property rights protection, and government procurement.

Egypt offers first-time investors expedited approval to establish operations, and special advantages and incentives are given to investors in 16 priority sectors (among them agriculture, housing, transportation, petroleum, and computer software).  Many incentives are geographically based to encourage investors to locate outside of the greater Cairo area.  For example, investors locating businesses in parts of Upper Egypt can receive 20-year tax holidays.  A dozen new industrial zones have been built in satellite cities in the desert areas outside of Cairo and Alexandria.    The Income Tax Law enacted in June 2005 eliminated some of the incentives in the Investment Incentive Law, namely all corporate tax exemptions and tax holidays that the latter law had authorized for newly established companies.  The 2005 tax law also repealed tax deductions extended to companies listed on the stock exchange.  The tax incentives were not eliminated retroactively, however so all existing companies will continue to receive their tax incentives until the end of the period stipulated when the company was established.

In 1995, Egypt notified the WTO about a measure inconsistent with its obligations under the Agreement on Trade-Related Investment Measures (TRIMS).  The notified measure granted customs duty reductions to investments that met certain conditions with respect to resource exploitation, technology transfer, and export performance.  By making this formal notification, Egypt qualified for a five-year transitional period for phasing out the relevant measure.  In February 2001, Egypt submitted a request to the WTO for an additional five-year transition period.  This request, which was received after the initial transition period had ended, was never formally granted by the WTO.  The United States is seeking to confirm whether Egypt is now fully in compliance with its TRIMS obligations.

Import Requirements and Documentation

For an imported shipment to be accepted at Customs in Egypt, the shipment must have the following documents:

1. Commercial Invoice - 2 copies plus the original document are required. Legalization by the Egyptian consulate in the country of origin is required in most cases.
2. Certificate of Origin - 2 copies plus the original document are required. The Certificate of Origin must be authenticated by the Egyptian consulate in the country of origin. Natural products are considered to originate in the country where the goods are extracted. The Certificate of Origin must bear a statement that the information given is true and correct to the best of the shipper's knowledge.
3. Packing list - packing list may be required by the consignee and is recommended in most cases.
4. Bill of lading - the number of bills of lading required depends upon the carrier. There are no regulations specifying the form or number of bills of lading required for shipment. A bill of lading must show the name of the shipper, the address and the number of bills of lading issued.
5. Pro forma invoice - this is an invoice required by the importer for submission along with the import license. It must show the country where the goods were manufactured.
6. Letter of Credi t- The Central Bank of Egypt in March 1999 advised all banks operating in Egypt that L/Cs must be covered 100% in cash by the importer. This replaced the previous procedure whereby banks and their clients reached their own agreements and covered, usually 10-20% of L/C’s value. In general, the exporter may not ship the goods before the Egyptian bank has notified the opening of a L/C. If the goods are shipped before the LC is opened, the importer runs the risk of being fined up to a maximum of the value of the goods. If the importer does not bear the cost, then the exporter will have lost the value of such a shipment, and in the case of products with a shelf-life, the delay at the customs can mean that even if the exporter (e.g. a U.S. company) wanted to take back the shipment, it’s no longer of any use.
7. Content analysis of the commodity – Required for those products which may be subject to standards testing.

MINISTERIAL DECREE 619 OF 1998 - CERTIFICATION OF ORIGIN

Ministerial decrees over the past years have had an impact on U.S. trade with Egypt. Ministerial Decree 619 of 1998 required imports to be accompanied by a certification of origin and stipulated that consumer goods (durable and non-durable) be shipped directly from the country of origin. Decree 619 subsequently was adjusted in late 1999 to allow the shipment of imported consumer goods from the main branches of the producing company and its distribution centers. Regulations also were implemented to facilitate the ability of firms to meet the requirement for a certificate of origin. This requirement can now be fulfilled with a company invoice noting the country of origin and bearing the endorsement of an Egyptian overseas commercial office. Since May 1999, the Central Bank of Egypt has required 100% coverage for credit lines opened for goods imported by traders for resale purposes.

Egypt no longer requires import licenses for most products, although licenses are still required for some products, such as animal products.

U.S. Export Controls

Egypt is not subjected to special sanctions (such as those imposed on Libya and Iran). Nevertheless, there are three aspects of U.S. export control regulations that should be considered in doing business with Egypt.

First, the U.S. has stringent antiboycott regulations. American companies may not aid or abet the boycott against Israel that the Arab League has had on the books for years. For instance, American companies are not allowed to certify that their products do not come from Israel. If there appears to be any request that might be in support of boycotts, companies should contact the Bureau of Industrial Security in the U.S. Department of Commerce.

Second, there are numerous companies and individuals that have been blacklisted by the U.S. Government as a result of past violations of export regulations. The BIS has a Denied Persons List and the Office of Foreign Assets Control has a Specially Designated Nationals List. Both of these lists can be checked on line to ensure that the prospective business partner does not have anything against him.

Third, individual items may require specific export licenses. In principle all exports require a license, though in practice the vast majority of our exports fall under a so-called general license that allows export without getting permission from the BIS. For a number of items, a specific license is required. These include products whose high-tech nature implies that export may involve a national security risk.

Again, contacting BIS will enable an exporter to determine whether or not his specific items require a license. If a specific license is required, one of the considerations will be the reliability of the end-user. Government agencies and companies with a solid business reputation are more likely to be granted a license.

Temporary Entry

Temporary Imports

In general, Egyptian customs allows for commercial samples and temporary imports for display purposes at officially recognized exhibition or for sales promotion activities to enter the country duty free, with the exception of goods which are cited on the list of prohibited imports. Certain conditions do apply, however.

Goods must not exceed a value of LE 500 or be suitable for resale, which must be apparent from the forwarding documents. If the party concerned does not meet these conditions, a deposit may have to be paid along with a signed declaration on Customs Form 93 that the goods will be re-exported. A refund will be issued upon proof of exportation.

Medical samples must comply with the rules for the importation of pharmaceuticals, and samples of foodstuffs must comply with the relevant health regulations. In certain cases, goods imported on a temporary basis may be disposed of or sold in Egypt upon payment of the appropriate customs duty plus an extra tax of 10% per month after clearing customs.

On re-exportation of goods imported under temporary import regulations, companies should ensure that correct documentation and return of the letter of guarantee is obtained from the Egyptian Customs in order to avoid claims against the company at a later stage.

Printed advertising materials, such as catalogs, posters, or films, may also be imported duty free in small quantities.

Drawback System

Exporters may also take advantage of the drawback system. This procedure is different from the temporary admission system in that full customs duties are paid on the imported materials and the manufacturer does not fill out a special form with Customs. However, there is a one-year time requirement to re-export these imports as part of a final product in order to have the right to reclaim the full amount of the duties paid as well as other taxes such as the sales tax.

This procedure is cumbersome and refunding may take up to six months for processing. The agencies administering the program are tasked with the responsibilities of determining and then repaying the drawback amount. The Industrial Surveillance Authority carries out the first task, while the Customs Authority carries out the second. A delegate from Customs has to be present during the manufacturing process. To refund the amount paid, several administrative requirements must be satisfied:

• Details, such as quantities and materials used in manufacturing a unit of the exported products, must be provided to enable Customs to calculate the drawback rate;
• Proof of duties paid on the imported quantities must be furnished;
• In order to collect an allowance in the drawback rate for wastage and scrap, quantities of such must be verified.

In addition, the following documents must be provided: customs import release certificate, certificate of export of product, an export permit, a registered deed of sale from the original importer, and a customs clearance certificate.

To speed up the reimbursement process, the Egyptian Government introduced in October 1999 a new "tax rebate" system, by means of which exporters could be reimbursed according to pre-specified rates for each industry. The tax rebate system currently covers more than half of the major exported commodities.

Labeling and Marking Requirements

Finished goods that are imported for retail sale, must have the product's country of origin, the producer's name and product description in Arabic in a clearly visible place on the packaging. Special regulations exist for some items, including foodstuffs, pharmaceuticals and textiles.

Production and expiration dates must be clearly shown on the package. Information on the label cannot be easily erased, scratched or altered. Information must be written in Arabic as well, and weights and measures must be shown using the metric system. Dates are accepted in English, but the words "production" and "expiry" must be written in Arabic. The label must include:

• Name and address of manufacturer;
• Brand or trade mark (if applicable);
• Country of origin, type of product;
• Name and address of importer;
• Production and expiration dates;
• Product use instructions (optional);
• Ingredients;
• Storage instructions or storage temperature;
• Net weight;
• Gross weight and total number of packages per case or carton;
• If preservatives are being used- percentages of each preservative must be indicated;
• If meat or poultry, the statement that the meat "is slaughtered according to Islamic ritual" or "Halal," must be included; and
• For meat or poultry, all products must be in packaged and sealed bags. Labels must be inserted inside the package as well as on the outside. The label on the meat must include the following:
  - Country of origin
  - Producer’s name and logo
  - Name of slaughterhouse
  - Slaughter date
  - Name and address of importer
  - Name of entity, which issued the “Islamic slaughter” definition.

The Commercial Office in the Egyptian Embassy or Consulate in the country where the product originated must then approve all these labeling requirements.

Packaging requirements:
Article 74 of the Import and Export regulations stipulates that the package should be fit for preserving the product, and the product should occupy the space of the container in full. If a container is wooden, the container itself should be accompanied by an official certificate that states it is free from wood-harmful pests and insects.

Data which appears on equipment, tools and machinery should be identical to those appearing on the package. The country of origin should be indicated on each item and be non-erasable. They should be accompanied with an Arabic-language catalogue indicating the following:

• An illustrative design of the parts.
• Mode of assembly and operation.
• Maintenance procedures.
• Electrical circuits for electrical equipment.
• Safety measures.

Products prone to rust and corrosion should be painted with a special protective paint. Check that the labeling on the goods conforms to the current Egyptian labeling regulations for the product in question.

Be aware that packaging and import description discrepancies can lead to payment default.

Food imports face a number of burdensome labeling and packaging requirements. Poultry and meat products must be shipped directly from the country of origin to Egypt and sealed in packaging with details in Arabic both inside and outside the package. This requirement raises processing costs and discourages some exporters from competing in the Egyptian market. Appropriate packaging must be provided for food products. These should be clean and odorless, so as preserve the product and prevent damage occurring. Production and expiry dates must be clearly displayed on the product's packaging. The information should be printed in Arabic on the package using indelible type, but stuck on labels will normally be accepted as well.

Textile fabric was also subject to costly and complicated labeling requirements. Imported fabric had to have the name of the importer woven into the cloth and imported textiles were subject to quality control examination by a committee made up of members representing the domestic spinning and weaving industries. This group also has some influence with Egyptian Customs in setting the duties that are imposed. The labeling requirement for textile fabric was canceled while labeling requirements for imported garments mandate basic information on tags similar to foreign garments.n addition, fabrics are no longer subject to testing, and measures requiring that apparel labels be written in Arabic to include importer information were eliminated.  Egypt also committed to expedite the customs clearance process for apparel and textile imports.

Prohibited and Restricted Imports

Egypt lifted its ban on apparel imports on January 1, 2002, replacing it with excessive specific rate duties.  In January 2004, the Egyptian Government issued a decree replacing these specific-rate duties with ad valorem (percentage of value) tariffs consistent with Egypt's commitments to the WTO.

In 1998, Egypt issued a decree stipulating that passenger vehicles can only be imported during their year of manufacture, effectively banning the importation of second-hand cars.  In 2000, the decree was amended adding one year after the year of production to the period during which passenger vehicles can be imported.  In November of 2005 the Minister of Foreign Trade and Industry issued a decree lifting the regulation restricting the import of cars from the country of origin.

In February 2005, Egypt lifted its ban on beef with a fat content greater than 7 percent. In March, 2005, it lifted its BSE ("mad cow disease") ban on U.S. beef imports, but only de-boned U.S. beef is allowed entry.   U.S. live cattle imports remain banned.   The ban on imports of live cows, meat and its products, from most European countries remains active.   However, in September 2006, Egypt approved imports of live male slaughter beef from Moldova, Ukraine, Hungary and Romania.   In 2006, Egypt also approved imports of deboned beef from China and Canada.

Egypt continues to block imports of U.S. poultry and poultry products based on concerns that U.S. industry does not meet Egyptian Halal requirements.  Although a decree in July 2006 lifted the overall ban on poultry imports for six months, the Ministry of Agriculture (MOA) now requires that MOH officials be present to observe the slaughter process at U.S. plants to ensure Halal requirements are fulfilled.  The Egyptian army (as an exception to the rule) is currently holding a tender for importing poultry parts, and some U.S. exporters are considering participation in it.

The Egyptian Ministry of Health prohibits the import of natural products, vitamins, and food supplements in their finished form.  These items may be marketed in Egypt only through local manufacture under license, or by sending ingredients and premixes to a local pharmaceutical firm to be prepared and packed in accordance with Ministry of Health specifications.  Only local factories are allowed to produce food supplements, and to import raw materials used in the manufacturing process.
 
The Nutrition Institute and the Drug Planning and Policy Center of the Ministry of Health register and approve all nutritional supplements and dietary foods.  It takes from four months to one year for approval.  Importers must apply for a license for dietary products.  The validity period of the license varies from 1 to 5 years depending on the product.  After the expiration date of the license, the importer must submit a new request for license renewal.  License renewal costs about $500.  However, if a similar local dietary product is available in the market, registration for an imported product will not be approved.
   
The Ministry of Health (MOH) must approve the importation of used and refurbished medical equipment and supplies to Egypt in advance; without the approval, such imports are banned.  The ban does not differentiate between the most complex computer-based imaging equipment and the most basic of supplies.  At present, even new medical equipment must be tested in the country of origin and proven safe before it will be approved for importation into Egypt.  The importer must submit a form requesting the MOH’s approval to import medical equipment.  The importer will also provide a certificate issued by official health authorities in the country of origin, indicating that the medical equipment, subject to importation, is safely used there.

The importer must also present an original certificate from the manufacturer indicating the production year of the equipment, and that the equipment is new.  In addition, the importer must present a certificate of approval from the FDA or the European Bureau of Standards.  The importer must prove it has a service center to provide after sales support for the imported medical equipment, including spare parts and technical maintenance.  The MOH’s technical committee examines and reviews the technical specifications of the equipment before granting approval for import.  These regulations also apply to donated medical equipment.

Customs Regulations and Contact Information

Egypt announced implementation of the WTO customs valuation system in July 2001. The system has not been fully implemented yet due to its complexity, and importers sometimes face a confusing mix of the new invoice-based and old reference-price valuation systems depending on the type of imports.  The Ministry of Finance is trying to assist customs officials by translating and simplifying the WTO valuation system, which uses seven valuation methods.  The Ministry of Finance has committed to a comprehensive program to reform the customs system, and a priority is to implement the WTO Customs Valuation Agreement.  USAID has funds available for a six-year, $30 million customs reform project to support the Ministry of Finance's efforts.  The Ministry of Finance is working with other donors, including the European Union, on customs reform issues. A new Customs Law addressing valuation and other problems was expected to be discussed in parliament in late 2006, and new amendments are expected relevant to customs tariffs.

The GOE has disbanded the Model Customs and Tax Center (MCTC), which was established in 2003 as a “one stop shop” to settle income taxes, sales taxes, and customs duties for goods passing through any of Egypt’s ports.  In its place, the GOE established an Account Management System to streamline and facilitate the customs treatment of large importers.  (The GOE has also established a Large Taxpayer Center to provide similar services for large sales and income tax payers.) Two model customs centers which offer simplified procedures were opened in Alexandria and Suez in 2005, in addition to one in Damietta. Another center was inaugurated in Dekheila in August 2006, while Port Said's model center is expected to be open in early 2007.  

Customs procedures, designed to eliminate trading loopholes, are still cumbersome and rigid in areas such as duty rates. They are subjective when it comes to identifying whether a commodity fits in one tariff category or another.

Although on July 1, 2001, the Egyptian Customs Authority officially announced beginning of implementation of the invoice-or transaction value-based procedures in accordance with the WTO valuation agreement, the system is not yet being implemented, and customs agents have great discretion in valuating incoming shipments.

As under-invoicing is prevalent in Egypt as a means of tax-avoidance by local businesses, the Customs Authority has a tough policy regarding commercial invoices. Tariff valuation is based on either the worldwide price list received annually from foreign producers/distributors, or if that is not available, they take the highest price available in the local market. In cases where customs officials suspect under-invoicing, they usually add from 10% to 30% (called improvement percentage) to the invoice value. Importers have the right to take legal action against the Customs Authority in the event of a dispute regarding appropriate valuation, including arbitration that takes fifteen days or more. During that time, the disputed shipments are withheld and the importer has to pay fees as deposit until arbitration is over.

Customs officials suspect under-invoicing when legitimate sellers low-ball introductory prices of samples, then send larger quantities at higher prices; offer one price for a few items, and a quantity discount for subsequent shipments; or introduce a new product at a basic cost much cheaper than similar products previously imported from other sources.

The Egyptian Government has established a “white list” of importers who, under some conditions, are able to avoid full inspection of their shipments.

The ability to fulfill local content requirements is no longer required to obtain an approval to set up an assembly project. However, assembly industries must meet a minimum local content requirement of 45% in order to benefit from customs tariff reductions on imported industrial inputs.

A decree on computerized customs procedures has been issued for imported goods. The Customs Authority has begun applying a Computerized Customs Declaration Form (Bill of Entry) that intends to facilitate and simplify importers’ dealings with the Customs Authority and to avert problems or differences in customs evaluation.

Although the new adjustments were aimed at fixing impediments in the current Customs Law, businessmen state that there are a number of other problems still deforming the existing Customs Law which need to be fixed, including customs tariff discrepancies, application of exemptions, arbitration, valuation, wastage goods, preference agreements, export problems, slowness of guarantees and deposits procedures, cumbersome customs procedures, customs expediters and representatives problems, cancellation of immediate audits, and administrative problems.

Current importing regulations require that every component of a product be inspected, regardless of the compliance history of the product, country of origin, exporter, shipper or the importer. No import can be put up for direct sale on the Egyptian market without first proving that it conforms to Egyptian standards, if it is on the mandatory list. If there are no Egyptian standards that suit the imported product, then it must be defined using the standards of one of the international organizations that Egypt is affiliated with e.g. ISO, IEC, and Codex Alimentarius. On arrival of a shipment to the Egyptian ports, the process that takes place is as follows:

1) A committee from the Customs and Security bodies checks the shipment for security reasons and determines whether there are any illegal products.
2) The importer presents Customs with the documentation required to clear the shipment.
3) After reviewing these documents, Customs either clears the shipments for release to the importer directly or directs the consignment to other bodies for testing and inspection. Custom duties are then assigned and are paid in Egyptian pounds

Standards

· Overview
· Standards Organizations
· Conformity Assessment
· Product Certification
· Accreditation
· Publication of Technical Regulations
· Labeling and Marking

Overview

Standardization's official application in Egypt started in 1957, when presidential decree number 29/1957 established the Egyptian Organization for Standardization (EOS). In 1997, the organization's name was modified to Egyptian Organization for Standardization and Quality Control. This organization is entrusted to test products, materials, and industrial calibrations. The organization singularly sets, accredits, and issues the Egyptian Standard Specifications, as well as modifies or cancels standards. Specifications are set by means of approximately 90 technical committees, each consisting of 10 to 15 members that represent all concerned parties (governmental, research, censorship/surveillance/ control, productivity, consumer safety, etc.).

The EOS issued 4000 specifications in 2001, and 500 new standards are currently in process. The organization regularly issues specifications according to the International Standards Organization (ISO).  Egyptian specifications cover many fields such as the food industry, building materials, thermal equipment, engineering and electrical industries, mining, chemical industries, textile industries, environmental activities, etc.  They focus on product quality and specifications, packing, wrapping, and documentation.

Most of these specifications are optional except for those related to general health, public security, and consumer protection. A ministerial decision issued by the Ministry of Industry is needed to require compliance to these specifications. Obligatory standards constitute around 15% of the total number of Egyptian specifications. 

Standards Organizations

There are three main official Egyptian governmental organizations involved in developing and enforcing the standards used and applied in Egypt. They are:

Egyptian Organization for Standards and Quality Control (EOS):
The EOS is affiliated with the Ministry of Foreign Trade and Industry. The organization is responsible for issuing and developing Egyptian standards for raw materials, industrial products, measuring and testing instruments, technical inspections, quality control, calibration, and technical classifications and terminology. Since its establishment in 1957, the EOS has been considered a national reference in all matters relating to standardization and quality control. EOS is declared the official and competent national authority in Egypt granting licenses permitting the application of the quality mark to domestic industrial goods and products i.e. EOS is the organization that issues conformity and The Egyptian Quality Mark. The EOS does not have the right to decide which commodities are subjected to import and export control. From a legal perspective, the Minister of Trade and Supply is the sole authority for making such decisions.

General Organization of Import and Export Control (GOIEC):
GOIEC is affiliated to the Ministry of Supply and Home Trade. GOIEC currently has 22 offices and laboratories located at all the major sea and airports for import inspection as well as 11 others located throughout the country for export inspection. GOIEC has the responsibility for testing imported and exported products to ensure they meet the stipulations of EOS standards. Moreover, GOIEC may also indirectly generate standards through the use of an "ad hoc" technical committee. This committee provides recommendations for either creating or modifying a standard accordingly, and these recommendations are then passed on to the Ministry of Foreign Trade and Industry to be authorized and formalized. Similarly, GOIEC also tests products for consumer protection against economic fraud and deceptive practices- not solely for quality purposes. A 1999 Presidential Decree assigned GOIEC as the coordinator for all import inspections.

The National Institute for Standards (NIS):
NIS is affiliated with the Ministry of Higher Education and Scientific Research. NIS is Egypt's primary standards laboratory. NIS is mostly concerned with measurements, testing, calibration, accreditation and consultation, and it also provides laboratory accreditation services.

Conformity Assessment

For an imported shipment to be accepted at customs in Egypt, the shipment must have the following documents: Commercial Invoice, Certificate of Origin, Packing List, Bill of Lading, Pro Forma Invoice, and Letter of Credit.
 
The current import regulations require that every component of a product be inspected, regardless of the compliance history of the product, country of origin, exporter, shipper, or importer. All products that fall under the category of obligatory standards cannot be put up for direct sale on the Egyptian market without first conforming to Egyptian specifications. If there are no Egyptian standards that suit the imported product then it must be defined using the standards of one of the international organizations that Egypt is affiliated with e.g. ISO, IEC, and Codex Alimentarius. On arrival of a shipment to the Egyptian ports, the process that takes place is as follows:

1) A committee from both the customs and security bodies checks the shipment for security reasons and for any illegal imports.

2) The importer presents the customs officials with the documentation required to clear the shipment.

3) After reviewing these documents, customs either clears the shipments for release to the importer directly or directs the consignment to other bodies, usually the GOIEC for testing and inspection. Customs duties are then assigned, and are paid in Egyptian pounds. 

A problem that often takes place at customs is the process of what can be called “standard creation at port.” When a new product enters the country that has not previously been imported, customs officials will often insist that there must be a written description or standard to qualify a product for import. Hence, even if there is no such standard for the new product, the customs inspectors will try to fit the product into a previously existing standards category. The EOS often tries to apply the same standards to products that seem to be “historically” common in nature.

Inspection and testing of the imported goods will differ according to the nature of the consignment. Agricultural products for example, are sent to special agricultural authorities for detailed chemical inspection in the Ministry of Agriculture. Industrial and manufactured commodities may be directed for control at the Ministry of Industry. Some medical products, for example, will be directed to the Ministry of Health, EOS and other accredited laboratories. Since the establishment of GOIEC, it is mandatory that a sample be sent to the institute, most of the time for the sole purpose of classifying of the product according to HS codes. This process is a vital procedure in many cases where customs is unsure about product classification and tariffs due. Therefore, a number of different bodies legally have the rights to take samples of the imported shipment for further inspection and testing.

A large number of items are repeatedly imported into Egypt. Previous rules specified that every shipment must be tested to verify its conformity to standards requirements, irrespective of whether the preceding shipments were accepted or rejected, meaning inspection and testing must be repeated each time. The EOS has recently used past history of products, manufacturers, exporters and importers for clearing imported goods. When the product is first imported, it has to go through full inspection. If it is imported frequently within a year and each time all inspection procedures are cleared, then the product has a history file leading to reduced inspection afterwards. The exporter gains accreditation the more shipments are imported into Egypt.

Product Certification

The Egyptian Quality Mark scheme is based on the international standards listed in the ISO/IEC Guide 28/1982.

Presidential Decree No. 392/1979 stipulates that EOS is the national authority in the Arab Republic of Egypt to grant licenses permitting the application of the quality to industrial goods and products. Such licenses are only available for domestically produced goods, since acquiring such a quality mark involves not only the testing of the product, but also the inspection of the whole production line, similar to ISO accreditation. Hence, it is not viable for imported products, since inspection of the actual production company will have to take place.

In 1996, a Ministerial Decree No. 180 stated that all imports must abide by Egyptian product standards. In the case where there are no Egyptian standards that fit in with a specific imported product then the international standards listed below, in order of precedence, are acceptable:

- International Standards- ISO/IEC
- European Standards (EN)- if there are none, then British Standards (BS), German (DIN), French (NF) standards are applied
- American Standards (ANS)
- Japanese Standards (JIS)
- Codex Standards for food products.

In the absence of an Egyptian or international standard, authorities often will refer to the Analysis Certificate accompanying the product.

Certification:
All certificates issued concerning the shipment’s details, must be countersigned by the Chamber of Commerce and notarized by the Egyptian Embassy or Consulate in the country of origin.

Accrediation

Presidential Decree 312/1996 established the Egyptian Accreditation Council (EGAC), a governmental organization. EGAC has contracted with UKAS of the United Kingdom to provide technical assistance during the early stage of its function

EGAC/UKAS joint accreditation will be practiced for a transition period. The accreditation activity is to be carried out according to the relevant international requirements (ISO/IES guides 58,61,62,65 and 66 as well as ISO/IEC TR 17010 and 17020). Accreditation activity covers: product certification, system certifiers, inspection bodies, and testing and calibration laboratories and personnel certifiers

Publication of Technical Regulations

The Egyptian Accreditation Council (EGAC) is currently publishing a directory for all the companies that have been accredited for ISO 9000 or ISO 14000 certificates.

The EOS library is the only library in Egypt specializing in the field of Standard Specifications and its related publications.

The library has more than 160,000 standard specifications in the form of complete groups, among these are 4000 Egyptian standards, and standards groups of more than 30 countries and regional and international organizations such as ISO, IEC, CODEX, and AIDMO as well as foreign standardization organizations. The library has also a large collection of catalogues, specification guides, bulletins, and magazines in the field of Standardization and its related activities alongside some references, books, and specialized dictionaries.

Labeling and Marking

Most imports require certain labeling and packaging requirements, especially food products.

Labeling requirements:
Production and expiration dates must be clearly shown on the package. Information on the label cannot be easily erased, scratched or altered. Information must be written in Arabic also. Dates are accepted in English, but the words "production" and "expiry" must be written in Arabic. The label must include: -

• Name and address of manufacturer;
• Brand or trade mark (if applicable);
• Country of origin, type of product;
• Name and address of importer;
• Production and expiration dates;
• Product use instructions (optional);
• Ingredients;
• Storage instructions or storage temperature;
• Net weight;
• Gross weight and total number of packages per case or carton;
• If preservatives are being used- percentages of each preservative must be indicated;
• If meat or poultry, the statement that the meat "is slaughtered according to Islamic ritual" or "Halal," must be included; and
• For meat or poultry, all products must be in packaged and sealed bags. Labels must be inserted inside the package as well as on the outside. The label on the meat must include the following:
  - Country of origin
  - Producer’s name and logo
  - Name of slaughterhouse
  - Slaughter date
  - Name and address of importer
  - Name of entity, which issued the “Islamic slaughter” definition.

The Commercial Office in the Egyptian Embassy or Consulate in the country where the product originated must then approve all these labeling requirements.

Packaging requirements:
Article 74 of the Import and Export regulations stipulates that the package should be fit for preserving the product, and the product should occupy the space of the container in full. If a container is wooden, the container itself should be accompanied by an official certificate that states it is free from wood-harmful pests and insects.

Multiple product samples:
Sampling and inspection duties are mainly carried out by the GOIEC, however, some products may be subject to inspection by other concerned institutions. GOIEC has been authorized to assume inspection and certification functions without referral to any higher authority, but for the food industry, for example, there are 3-4 bodies involved that have the right to take samples from any imported shipment. They are:

• The Radiation Department of the Ministry of Energy and Electricity
• The Ministry of Health
• The Ministry of Agriculture (Veterinary Office)
• The Ministry of Supply (Import and Export Control)

Each agency draws its own sample and tests it independently.

Shelf- life standards and product specifications:
In 1994, the government issued a decree that all food products should have at least 50% of the established shelf life remaining at the time of importation into Egypt. Moreover, Egypt applies shelf life standards to certain non-food imports such as syringes and catheters. Exporters to Egypt must be aware that import and custom procedures take a period of no less than 2 weeks; hence, expiration dates must be at least twice that length of time.

Trade Agreements

Egypt is involved globally in several intra and inter- regional trade agreements, both multilateral and unilateral, including preferential trade agreements with the E.U., the U.S., Arab, African and European countries, some of which are:

• Agreements with Arab countries
• The General Agreement on Tariffs and Trade (GATT)
• The General Agreement on Trade in Services (GATS)
• Europe Mediterranean Partnership Agreement
• The Common Market for Eastern and Southern Africa (COMESA)
• Trade and Investment Framework Agreement (TIFA)
• Pan Arab Free Trade Area (PAFTA)

Moreover, Egypt has signed several bilateral agreements with Arab Countries; Jordan (December 1999), Lebanon (March 1999), Libya (January 1991), Morocco (April 1999), Syria (December 1991), Tunisia (March 1999). Additionally, in 1995, Egypt and China entered into a trade accord. Egypt also signed an economic treaty with Russia.

Web Resources

Commercial Service in Egypt: http://www.buyusa.gov/egypt/en/
American Chamber of Commerce in Egypt: http://www.amcham.org.eg/
U.S. Embassy: http://usembassy.egnet.net
USAID in Egypt: http://www.usaid-eg.org/
U.S. Department of Commerce, Bureau of Industry and Security: http://www.bis.doc.gov/index.htm
Ministry of Foreign Trade and Industry: http://www.mfti.gov.eg/e_index.htm
Model Customs Tax Center: http://www.mctc.gov.eg/
Standards Information: http://www.mitd.gov.eg/English/affliates/EOS/Eos.htm