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Trade policy reform in Egypt is a complex and dynamic phenomenon that continues to be subject to domestic politics and external interests and pressures that are not always trade oriented (El-Mikawy and Ghoneim 2003). In the 1990s and into the 2000s, Egypt’s trade policy became more open on unilateral, regional, and multilateral levels. A move toward diversification of Egypt’s main trading partners was observed in the 1990s, during which Preferential Trade Agreements (PTAs) were signed with African, Arab, and European countries. Domestic and foreign incentives and pressures to engage in such PTAs were driven by economic interests and political will. In parallel with trade liberalization in the 1990s, a process of trade reform occurred.

In terms of multilateral liberalization, Egypt has been a member of the General Agreement on Tariff and Trade (GATT) since 1970, and a member of the World Trade Organization (WTO) since its establishment in 1995, with developing-country status (WTO 2005).

Since the mid-1990s, Egypt has been engaged in negotiating and implementing a number of PTAs that have reinforced the trade policy shift toward further liberalization and export promotion. All the PTAs Egypt has been engaged in are Free Trade Agreements (FTAs). It has also engaged in a number of less-than-FTA type of agreements with a number of Arab countries.

Because Egypt has only been engaged in FTAs, its PTA policy has never faced a serious regulatory challenge arising from overlapping or contradictory regulations. However, there are potential challenges associated with being engaged with both Arab countries that aim at transferring the PAFTA to a customs union by 2015 and Common Market for Eastern and Southern Africa (COMESA) members, whose customs union was launched in June 2009 (UN and AUC 2013). It is not clear on what basis Egypt decided to pursue negotiations on both fronts, since a country cannot be a member of two customs unions simultaneously.

Trade reform and liberalization continued in the 2000s, with the governing regime's firm belief that an export promotion strategy should be Egypt's main engine of growth. Concurrently with trade liberalization, significant progress was made in the institutional setup designed to support exports and exporters. Rules, regulations, and organizations dealing with export procedures improved (Ghoneim 2002).

Egypt’s history of import substitution industrialization created vested interests that have resisted reducing tariff barriers. However, by implementing several reform and liberalization channels (including the structural reform program in the 1990s, the PTAs, and implementing the GATT/WTO commitments), and the rise of a relatively strong export-oriented lobby, trade policy started to gradually change over the 1990s and 2000s toward a more liberal environment. Nonetheless, the protection among different industries remains highly varied, with some industries receiving more protection than others (nominal and effective) due to the vested interests of certain lobbies and social concerns.

References

• El-Mikawy, Noha, and Ahmed F. Ghoneim. 2003. “Political Economy Aspects of Trade Reform in Egypt.” In Institutional and Policy Challenges Facing the Egyptian Economy, edited by Ahmed F. Ghoneim and Heba Nassar. Cairo: Center of Economic and Financial Research, Cairo University.
• Ghoneim, Ahmed F. 2002. “Institutional Reform to Promote Exports: Egypt and the EU.” In Institutional Reform and Economic Development in Egypt: Which Institutions and Why, edited by Heba Handoussa and Noha El-Mikawy. Bonn: Center for Development Research, Bonn University. Republished by the American University in Cairo.
• UN (United Nations) and AUC (African Union Commission). 2013. “Assessment of Progress on Regional Integration in Africa.” Meeting of the Committee of Experts of the Sixth Joint Annual Meetings of the ECA Conference of African Ministers of Finance, Planning and Economic Development and the African Union Conference of Ministers of Economy and Finance.
• WTO (World Trade Organization). 2005. “Egypt’s Trade Policy.” Review Document No. WT/TPR/G/150, World Trade Organization, Geneva.