COMESA Agreement Summary

Validity

Entry into Force

Current Position of In-Effect Customs Reductions According to the COMESA

The COMESA Agreement was initiated as a targeted preferential trade zone with the eventual aim of establishing a free trade area among member countries for it to develop into a customs union and later a common market. Egypt signed the Common Market for East and South Africa (COMESA) Agreement on 29-6-1998. Application of customs exemptions on imports from other member countries was in effect as of 17-2-1999 on the basis of equal treatment as regards goods with valid certificates of origin released from authorities concerned in every country. 9 members signed the Agreement on the Establishment of a Free Trade Area, namely Egypt, Kenya, Sudan, Mauritius, Zambia, Zimbabwe, Djibouti, Malawi, and Madagascar. Rwanda and Burundi acceded to the Agreement on 1-1-2004, granting full customs exemptions regarding exchanged imports, provided that products are accompanied by certificates of origin. 1- Egypt, Kenya, Sudan, Mauritius, Zambia, Zimbabwe, Djibouti, Malawi, Madagascar, Rwanda, and Burundi grant goods and products having COMESA certificates of origin full exemption from customs duties and any other duties and charges having equivalent effect. 2- Uganda, Eritrea, and the Comoros apply an 80% reduction on its imports from the COMESA member countries. 3- Ethiopia applies a 10% reduction of the customs duties imposed on its imports from COMESA members. 4- Seychelles and the Democratic Republic of Congo do not grant any

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67Egyptian Exports that Benefit from Duty Exemption

customs reductions. Swaziland does not apply any exemptions. The country is allowed a time period to study the impact of its accession to the Free Trade Area in light of its association with the Southern African Customs Union (SACU). Angola recently suspended its COMESA membership. Libya acceded to COMESA during the 10th Heads of States Summit in June 2005. All exports of products originating in Egypt are allowed duty-free in respect of all customs duties as well as other duties and charges having equivalent effect according to reduction ratios established by each country and on an equal treatment basis. No exceptions (excluding Sudan, Kenya, and Mauritius) are made. The Sudan had submitted on 23-5-2001 a negative list (including 58 commodities whose export from Egypt is not applicable unless full payment of duties is maintained). Upon Egypts request, the Sudan reviewed the above mentioned list on 20-7-2003 and reduced the number of commodities included on it. The following conclusions had been reached: The Sudan reduced customs duties by 30% on some commodities namely: sponge mattresses, candles, pipes, cars, mini- buses, water coolers, televisions, telephones, electrical switches, doors, iron windows and home furniture. The Sudan maintained some commodities that were excepted from applicable exemptions. These were sugar, flour, cigarettes, carbonated water, tomato paste, marmalades, juices, biscuits, sweets, Tahina, vegetable oils, soap, cotton yarns,

Egyptian Imports Excepted from DutyFree Treatment

Egyptian Exports to COMESA Members

cotton textiles, mixed textiles, medical cotton, ready-made garments, tricot, leather shoes, plastic shoes, shoes of textile material, sponge shoes, paints (except for vessels and vehicles) matches, tires (except for truck tires, farming equipment, bicycles, motorcycles, forklifts and detached machineries) liquid and dry batteries, plastic bags, perfumes, cosmetics, zinc sheets, reinforcing steel bars, passenger cars, iron strips; sheets and angles, refrigerators, water-air conditioners, electric wires and cables, cardboard packs and boxes, cement, wooden doors and windows, aluminum and office furniture. Kenya lately imposed trade barriers on its sugar imports for a four-year period (the determined quota allowed to be exported duty-free is estimated by 111,000 tons as refined sugar and 89,000 tons as raw sugar). This period will terminate on 31-12-2007. Kenya also extended for one year the enforcement of trade barriers to wheat flour beginning in May 2005. These measures take the form of tariff quotas (where a certain quantity enters the Kenyan market duty free, after which a duty of 60% is imposed) Mauritius exempts some goods from full duty elimination, including detergents, soap, paints, and sanitary towels, which face a 40% duty. Diapers imported from Egypt face a 20% duty. Customs exemptions on all imports of products originating in member countries with a value added amounting to 45%, shall be applicable. Egypt does not maintain any negative lists except with the Sudan. Excepted commodities are: chick-peas cotton textiles mixed textiles readymade clothes tricot products. Egypts major exports are: - Building materials such as iron

Egypts Major Imports from the COMESA Members

Agreement Benefits

and steel, and cement. - Chemical and pharmaceutical products primarily paper and medicines. - Food industries, sugar, oils and lubricants. - Rice, fruits and vegetables. - Some engineering products. Major imports of products originating in the COMESA member countries are: Coffee and tea Tobacco Sesame (oil palm) Livestock Copper Populations in the COMESA member countries are estimated at 380 millions which normally account for a wide and competitive market for Egyptian products especially that Egypt has substantially achieved industrial progress that went far beyond that of its COMESA counterparts. Benefit from exchanged exemptions, given the accession to the COMESA free trade area of 11 member countries where imports of products originating in other member countries are allowed duty-free besides Egypts application of the principle of equal treatment in connection with the rest of member countries. Member countries can import highlydistinctive products originating in Egypt primarily rice, foodstuffs, household utensils, dried onion, ceramics, sanitary ware, medicines, car tires, aluminum, iron and steel, yarn, textiles, and shoes. Increased Egyptian exports to COMESA member countries since 1999 where exports rate of growth has reached approximately 20% and increased to reach 25.5% in 2000. A considerable boom was achieved in 2001 where the growth rate was put at 4

47% and amounted to 121% over the first nine months of 2003 and where the value of Egypts exports was estimated at 95 million dollars compared to 43 million for the same period of the previous year, thus pointing to favorable indications of increased exports. Another boom was expected to take place in the coming years as a corollary of higher economic growth rates by some member countries, therefore resulting in higher living standards and consequently growing interest in imports of products originating in Egypt. Based on the production structure of member countries, it has been found out that they depend on exporting major raw materials such as copper, coffee, tea, rude leather, cattle meat, sesame, corn, tobacco. These are important commodities, which if allowed dutyfree, the well-being of the Egyptian consumer will be adversely affected. Benefit from financial assistance extended by the African Development Bank and other international funding institutions in the area of promoting exports to African countries. Article 158 of the COMESA Agreement stipulates for encouraging cooperation in investment. Article 164 cites the liberation of trade in services to provide the opportunity for Egypt to export technical expertise given its leading position in this respect especially in terms of contractors business. The Agreement provides for the establishment of an advanced shared information system within member countries. More gains can be accrued from the Agreement in the area of industrial and agricultural cooperation as well as transport and communication.