About EU's Trade Policy
The EU represents a market of 500 million consumers. It is the world's largest single market, and at the same time the most open market to developing countries in the world. Transparency of regulations and a secure legal investment framework are among the key benefits that the EU offers to its companies as well as to its economic partners.
EU's trade policy aims to open new markets for European exporters, workers and investors through trade agreements to reduce tariffs and other barriers. The EU also works to maintain the global trading system and to ensure it adapts to a fast-changing world. At the WTO, the EU represents and defends European interests, helping ensure that the multilateral commitments are met. In parallel, the EU works actively to help developing countries integrate further into the global economy and benefit from the advantages of free trade.
The scope of EU's trade policy covers not just trade in goods, but also trade in services and trade-related issues such as the commercial aspects of intellectual property or public procurement.
The EU external trade policy has been an exclusive EU competence since the Treaty of Rome, 1957. This means practically that the 27 EU Member States rely on the European Commission to propose and to conduct the EU common trade policy, including the negotiation of trade agreements with third countries. The entry into force of the Lisbon Treaty, in December 2009, paved the way for a European investment policy, as foreign direct investment has become in its turn a part of the EU's common commercial policy and by consequence a competence of the European Commission.
In November 2010, the European Commission set an assertive trade policy agenda for the following 5 years, focused on reducing trade barriers, opening global markets and ensuring that trade acts as an engine for economic growth and job creation.
EU-Egypt trade relations
Egypt is a major trading partner for the EU in the Southern Mediterranean region. It is part of the Euromed process for creating a free trade area of the Mediterranean. Egypt is also a member of the WTO, since 1995.
The EU is Egypt's first trading partner and Egypt's main source of foreign direct investment (FDI).
EU-Egypt trade relations are governed by an Association Agreement , by the means of which both parties are committed to free trade between them. Thus, since the entry into force of the Agreement in June 2004, Egyptian industrial products are granted duty free treatment upon importation into the EU. Similarly, Egyptian tariffs on EU exports of industrial products are gradually dismantled according to a number of schedules laid down in the Agreement. The process of dismantling will be completed in 2019.
As for the agricultural products, most of the exchanges have been fully liberalized in both directions since 1/6/2010, when the EU-Egypt Agreement on agricultural, processed agricultural, fish and fishery products , came into effect.
In November 2010, the EU and Egypt signed a protocol establishing a dispute settlement mechanism applicable to disputes under the trade provisions of the Association Agreement. Liberalization of trade in services and establishment remains a key objective for the future negotiations. At the regional level, a Pan-Euromed Convention on Rules of Origin was opened for signature in June 2011, which will allow, inter alia, cumulation of origin between South-Mediterranean and Balkan countries.
As part of the EU's strategic response to the Arab Spring, the European Commission set the ambitious objective of improving market access, as well as the progressive economic integration into the EU single market, of the concerned South-Mediterranean partners, including Egypt. For the accomplishment of this objective, on 14 December 2011, the Council of the European Union gave green light to the European Commission to start preparing negotiations for Deep and Comprehensive Free-Trade Agreements (DCFTAs) with Tunisia, Morocco, Jordan and Egypt.
The role of the Trade Section in the EU Delegation
The role of the Trade Section in the EU Delegation to Egypt is to facilitate EU-Egypt bilateral trade of agricultural and industrial products and of services.
More specifically, the Trade Section:
- ensures the smooth implementation of the applicable bilateral trade provisions in the EU-Egypt Association Agreement, as well as in the Agreement on trade in agricultural products;
- maintains good and effective contacts with the relevant national authorities (typically but not exclusively the Egyptian Ministry of Trade and Industry), the private sector representatives and professional organizations such as the Chambers of Commerce;
- observes, monitors and report regularly to the Commission's Headquarters on the developments of the Egyptian trade policy;
- states, explains and defends the EU trade policy vis-à-vis the various interested interlocutors in Egypt;
- in close cooperation with the EU commercial counselors in Egypt and the Commission's headquarters, assesses and helps solve trade disputes;
- facilitates communication and exchange of information between Egyptian authorities and the Commission's headquarters in matters of trade, technical standards, customs, sanitary and phyto-sanitary, and intellectual property rights.
Trade and investment
Trade in goods
- EU exports to Egypt in 2011: €13.9 billion (with 6.4% less than in 2010)
- EU imports from Egypt in 2011: €9.5 billion (with 30.25% more than in 2010)
EU imports from Egypt in 2011 were dominated by fuels and mining (58%); chemicals (10.9%); textiles and clothing (9.5%); agricultural products (7.4%). EU exports to Egypt in 2011 consisted mainly of machinery and transport equipment (35%), followed by fuels and mining products (17.8%); chemicals (16.6%); and agricultural products (13.6%).
Since the entry into force of the EU-Egypt Association Agreement in 2004, Egypt's exports to the EU increased by 123%, while EU's exports to Egypt increased by 82%. In 2011, the first year after the entry into force of the EU-Egypt Agreement on the liberalization of trade in agricultural goods, Egypt's exports of foodstuffs to the EU increased by almost 15% (considering that the average growth rate in Egypt's agricultural sector is of about 3%). EU's exports of agricultural products to Egypt decreased by 6% in 2011.
Trade in services
- EU exports of services to Egypt in 2010: €3.1 billion, with 6% more than in 2009
- EU imports of services from Egypt in 2010: €6.6 billion, with almost 15% more than in 2009
Egypt exports to the EU-27 mainly travel (about 56%) and transportation (28%) services. Egypt's services imports from the EU are dominated by other services than travel and transportation (66%), in particular by business-related (non-financial) services.
Foreign Direct Investment
Egypt experienced a foreign direct investment (FDI) surge in 2005 as a result of privatization and economic reforms. Although FDI declined in 2009, in the context of the financial crisis, EU's share in the total FDI received by Egypt increased up to 60%. In 2010, EU-originating FDI to Egypt reached €2.8 billion net outflows. Long-term reciprocal promotion and protection of investments is ensured through the Bilateral Investment Agreements (BITs) that Egypt has signed with most of the EU countries.
After the January 25 Revolution, FDI inflows to Egypt declined dramatically. In 2011, for the first time, a negative value of net FDI inflows was recorded (-482.7 mil.$, according to UNCTAD data). Such a decline reflects investors' perception of a deteriorating business climate, fueled by a weakened administrative capacity of securing FDI in the unstable environment of transition. Nevertheless, the EU continued to be a reliable source of FDI for Egypt: gross FDI inflows originating in the EU, as recorded by the Central Bank of Egypt, were of 9.5 $ billion in FY 2011/12, compared to 6.1 $ billion in the previous fiscal year. Thus, EU's share in Egypt's total gross FDI inflows incresed from 60% to 80%.
Since the entry into force of the EU-Egypt Association Agreement in 2004 the EU has provided Egypt with over € 80 million in trade-related assistance. This assistance has helped the Ministry of Industry and Foreign Trade, among other things, to carry out export promotion activities and to improve export-import procedures.
An additional € 20 million Trade and Domestic Market Enhancement Programme (TDMEP) will start in 2013, to help enhance Egypt's competitiveness in the global market through trade & domestic market reforms.
Regional trade agreements
Egypt is part to the AGADIR Agreement (together with Morocco, Tunisia and Jordan), of the Greater Arab Free Trade Area (GAFTA), as well as of the Common Market for Eastern and Southern Africa (COMESA). In addition, since 2007, Egypt has free trade agreements with Turkey and with EFTA countries (Iceland, Lichtenstein, Norway and Switzerland).