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Sunday, 23 September 2018

Tariffs on EU cars will still fall to zero next year, says Nassar

**#3 EXCLUSIVE- Tariffs on EU cars will still fall to zero next year, says Nassar: Trade and Industry Minister Amr Nassar told Enterprise overnight that the government has no plan to put on hold a tariff cut on cars imported from the European Union. Automobiles imported from the EU will enjoy zero-duty access to Egypt as of 1 January under our trade liberalization agreement with the European Union.

Nassar was reacting to media reports yesterday that the government would delay the customs cut. In a statement to Enterprise, the minister said he had no idea where the rumor had originated. An official from the Customs Authority also told us yesterday that there have been no preparatory meeting between the authority and the ministry to coordinate on such a move. As far as the Customs Authority is concerned, our source said, duties on EU car imports will fall to zero on New Year’s day.

Reports of a delay started early on Saturday as newspapers picked up a story broken by Youm7, which cited an anonymous government source. The source told the newspaper that government was set to announce a two-year delay of the cut after reaching an agreement with EU trade officials. In a call-in to Sada El Balad’s Salat Tahrir TV show, Alaa El Saba, who runs an automotive distributor and is a member of the Federation of Egyptian Chambers of Commerce’s auto division, said the tariff cuts have already been postponed twice. El Saba called on the government to clarify the situation.

Winners and losers: Pure importers of EU-assembled models would be winners if duties fall to zero as they gain a price advantage over domestically assembled vehicles. Local manufacturers have been pushing for what is localled called the “automotive directive”: A package of incentives that would give local assemblers a measure of protection if they were to go up the value chain into manufacturing.

Where is the automotive directive? All of this comes as the Madbouly Cabinet has yet to clarify its plan for the directive, which is currently being reviewed by a committee of three ministries. A senior government source told us in July that the expectation was for the committee to substantially alter the plan. The shift would nix a general nationwide policy of investment and tax incentives to automotive assemblers to move up the value chain to manufacturing, to a system of special economic zones for car manufacturing with incentives. Nassar had said last month that the ministry is planning to have the automotive directive drafted and ready before the House of Representatives reconvenes for the fall legislative session in October.

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