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Sunday, 10 September 2017

Egypt-Mercosur FTA will hamper domestic production of auto spare parts, says FEI’s transport division

Is the Mercosur FTA bad news for the domestic auto industry? Egypt’s trade liberalization agreement with Mercosur countries — which lifts customs on car parts by up to 60% — coupled with the lack of a government strategy to develop the auto sector will “destroy” Egypt’s chance at developing an car manufacturing industry, Deputy President of the Federation of Egyptian Industry’s transport division Samir Allam tells Al Borsa. The agreement will put locally produced parts in direct competition with those imported from manufacturing giants such as Brazil, which will offer lower prices for better quality, and discourage auto manufacturers from investing in Egypt, Allam says.

The agreement also allegedly creates a loophole that would allow auto importers in Egypt customs-free imports of European or American cars from Mercosur countries, unnamed sources tell the newspaper. On the flipside, Egyptian Automobile Manufacturers Association CEO Hussein Soliman says Mercosur actually opens doors. He says Egypt’s FTA with the European Union didn’t push down the prices of European cars enough to make them significantly more attractive than their locally assembled counterparts.

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