Egypt: import restrictions on dairy and other goods challenged by EU at WTO
Last week the EU requested consultations for dispute settlement with Egypt at the World Trade Organization (WTO). The reason is the requirement by Egypt that certain categories of goods undergo import registration requirements. This applies to a range of goods including agri-food products such as milk, dairy, fruit juices and confectionary. Since 2016, EU exports of such goods to Egypt fell by 40%. This fits into a range of trade measures discouraging exports to encourage local manufacturing and value addition.
Since the introduction of the so-called Decree 43 in 2016, foreign companies planning to export certain goods have to register themselves and their supplying factories with the General Organization for Export and Import Control (GOEIC). 29 categories of goods are covered. For food and agriculture this includes: 1) milk and dairy in packages under 2kg, 2) preserved fruits in packages under 2kg, 3) oils and greases in packaging under 5kg, 4) sugar products, 5) chocolate products in packages under 2 kg, 6) bakery products and fruit juices in packages under 10 kg. These registration procedures take long and can be cumbersome and arbitrary.
The EU’s action is a first step in WTO dispute settlement proceedings. If the consultations requested do not lead to a solution that is satisfactory to the EU, it can request the WTO to set up a panel to rule on the matter. See EU press release.
“The EU is today acting to defend EU exporters who are facing unfair restrictions in accessing the Egyptian market. These import restrictions are illegal under WTO rules and we regret that Egypt has not acted to remove these, despite our repeated requests and efforts to resolve this issue. This is why we are now taking the next step by requesting consultations at the WTO.” – EU Commissioner for Trade, Valdis Dombrovskis
Decree 43 is, just one challenge facing exporters. As reported earlier, on Halal certification an Egyptian company has been made the sole certifying body to issue compulsory certification of exports. This will apply on a range of goods broader than meat, which will also include dairy (with the exception of crude milk). The trade community is still waiting for further clarity, and questions are raised about the WTO compliance of these proposed measures. The deadline for certification for ISEG Halal has been postponed until 28 February. Any new import permit will require ISEG Halal certification.
Cheese exporters will further face extra duties on Edam and Gouda in units of up to 10kg. This comes after an investigation that controversially concludes that Dutch exporters have engaged in dumping. While the Netherlands disagrees with these findings, the extra duties are now a fact, also for companies that have not yet exported these products. Such companies can apply for an exemption of anti-dumping duties by applying to the Ministry of Trade and Industry. See [link] for the final report.
Exporting to Egypt is not easy, but with the largest consumer population in the Middle East and North Africa, the opportunities are great. Rules, regulations and procedures can be unclear, arbitrary and open to interpretation and subject to frequent changes. As reported earlier, the Government of Egypt has an interest to facilitate trade through Nafeza a single digitized window with an Advanced Cargo Information (ACI) system. Though the implementation is showing some teething problems, it promises a more transparent and more predictable system.
Key to exporting is having good local partners or local representatives who know their way around, can access and assess regulations and decrees in Arabic and ensure that proper process is followed. It is clear that the Government of Egypt is interested to support local food processing, but that it cannot produce all the food it needs, particularly if it wants to export part of its agricultural production. This creates opportunities for Dutch food processors and exporters who want to access the Egyptian markets to move from trade to investment.
For questions or updates from Dutch agribusinesses exporting to or planning to invest in Egypt, contact: KAI-LNV@minbuza.nl