Back to the complete issue
Thursday, 13 September 2018

New tariffs take hold, gov’t says they don’t violate WTO agreements

**#1 New import tariffs have taken effect: Customs authorities at ports and airports across the country began yesterday to implement a decision signed off overnight Tuesday by President Abdel Fattah El Sisi to raise import tariffs everything from clothing to electronics and pet food, according to the Finance Ministry. The story is dominating headlines in the domestic press today.

More than 2k capital goods and raw materials will see duties rise out of a total of 5,791 items reviewed, Customs Authority chief El Sayed Negm noted, according to Reuters. The decision sets a 20% tariff on all imports by hotels and tourism businesses and raises duties on items including clothing, electronics, and pet food to 40%. Some categories of goods, including juices, saw duties jump to 60% from 20%. You’re also going to pay extra for having something repaired abroad: Send something out for maintenance or to have it fixed and you’ll be hit with a 10% levy.

Staple goods unaffected: The Finance Ministry was quick to note that staple goods are not impacted by the new duties — and that the decree reduced or eliminated tariffs other goods, including meds for chronic diseases and production inputs used by companies that assemble products domestically. The tariff changes also favour “greener” modes of transportation: Vehicles powered by natural gas will see duties fall 35%, while electric vehicles will be exempt from import duties.

The tariffs favour domestic manufacturers and will curb imports. “The amendments come as part of an effort to encourage local industry and urge citizens to forgo non-essential goods. They will help improve the state’s revenues,” said Radwa El Swaify, head of research at Pharos Securities Brokerage.

No WTO violation: The new tariffs are not in violation of any of Egypt’s trade agreements and were drafted with World Trade Organization policies and standards in mind, Finance Ministry customs affairs adviser Magdy Abdel Aziz tells Al Masry Al Youm. Moreover, the measures are in line with changes to the Harmonized System Code — a global standardized system of classifying traded goods to determine their customs duties — which underwent its regular five-year review by the World Customs Organization in 2017, according to Finance Minister Mohamed Maait.

Why now? The threat of outflows of hot money amid the EM Zombie Apocalypse has policymakers looking at ways to curb demand for FX, likely including leaving interest rates on hold (whereas earlier this year, the expectation was for further rate cuts). Add in a recent charge that the central bank is quietly guiding the exchange rate, and the rationale for the tariffs looks clear to us.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.