Egypt Free Trade Agreement enters into force

Published 01-08-2007
The Free Trade Agreement between the Member States of the European Free Trade Association (EFTA) - Iceland, Liechtenstein, Norway and Switzerland – and the Arab Republic of Egypt entered into force today.

This is the eighth free trade agreement that the EFTA States have concluded with a Mediterranean partner country participating in the Barcelona process.

By concluding an agreement with Egypt, the EFTA States have established preferential trade relations with 15 States and Territories, in addition to the 27 Member States of the European Union.

The Agreement covers trade in industrial products, including fish and other marine products, and processed agricultural products. In addition, individual EFTA States and Egypt concluded bilateral agreements on basic agricultural products, which form part of the instruments creating the free trade area. The main objective of the Agreement is to achieve the liberalisation of trade in goods in conformity with the relevant WTO provisions. By 1 January 2020, customs duties on almost all industrial products will have been eliminated.

The Agreement also includes provisions relating to the elimination of other trade barriers as well as trade-related disciplines including rules on competition, state monopolies and subsidies. Moreover, the Agreement contains provisions on the protection of intellectual property, investment, services, current payments and capital movements, government procurement, economic co-operation and institutional and procedural matters. The Agreement establishes a Joint Committee which supervises the application of the Agreement and provides for binding arbitration.

Bilateral trade in goods between the EFTA States and Egypt amounted to 428.5 million USD in 2006, with EFTA exports amounting to 377.6 million USD, whereas import from Egypt to the EFTA States represented 50.9 million USD. In 2006, EFTA’s main export products to Egypt were machinery, pharmaceuticals and chemicals, while the main products imported from Egypt were aircrafts, textiles, and edible fruits and nuts.

The negotiations on the EFTA-Egypt Free Trade Agreement were concluded in October 2006 after ten rounds of negotiations.

Overview of Areas covered by the Agreement

TRADE IN GOODS

The rules of origin are based on the current Euro-Mediterranean model, maintaining the general structure and the substance of the European standard rules.

The Agreement provides for effective market access for industrial goods in terms of tariffs and rules of origin, practically creating EU parity for EFTA exports to Egypt. By 1 January 2020, almost all industrial goods originating in the EFTA States will enjoy duty free access into Egypt. Egyptian exports into the EFTA States are duty-free as from the entry into force of the Agreement.

The Agreement covers trade in all fish and other marine products. The EFTA States grant duty-free access on imports of all Egyptian fish products. As regards EFTA exports to Egypt, the Agreement provides for the lowering of tariffs within quotas from the entry into force of the Agreement. The quotas for certain products will be eliminated 6 years after the entry into force of the Agreement. The Parties envisage achieving full elimination of customs duties on all fish and other marine products within 14 years after the entry into force of the Agreement.

Trade in processed agricultural products is covered in Protocol A to the main Agreement. Trade in basic agricultural products is covered in three bilateral agreements negotiated separately between Iceland, Norway and Switzerland/Liechtenstein on the one hand and Egypt on the other hand. These agreements, which form part of the instruments establishing the free trade area, provide for tariff concessions.

INTELLECTUAL PROPERTY

The Agreement sets a high standard for the protection of intellectual property rights, covering areas such as patents, copyright, industrial designs, undisclosed information and geographical indications.

INVESTMENT AND SERVICES

The Parties agree to create stable, favourable and transparent conditions for companies of the other Parties that are making or seeking to make investments in their territories. They grant each other’s investments full protection and security as well as fair and equitable treatment in accordance with international law. The Parties recognize the importance of promoting cross-border investment and technology flows.

The Parties aim at achieving gradual liberalisation and the mutual opening of their markets for trade in services in accordance with the provisions of the General Agreement on Trade in Services (GATS).

PAYMENT AND CAPITAL MOVEMENT

The Agreement provides for unrestricted payments concerning "current transactions" and ensures that capital relating to direct investments can move freely, including repatriation and liquidation of benefits.

COMPETITION AND OTHER ECONOMIC MATTERS

Agreements between, and abuses of dominant positions by, economic operators of the Parties are incompatible with the Agreement if they affect trade between the EFTA States and Egypt.

The Parties agree on the objective of a progressive liberalisation of public procurement.

ECONOMIC CO-OPERATION AND TECHNICAL ASSISTANCE

The EFTA States commit themselves to engage in economic co-operation and to provide technical assistance to Egypt in order to facilitate the implementation of the Agreement. Such co-operation and assistance include the enhancement of trading and investment opportunities and support to Egypt's own efforts to achieve sustainable economic and social development. They will focus on sectors that face particular challenges as well as on sectors that will generate growth and employment. Additionally, there are bilateral Memoranda of Understanding on concrete technical cooperation projects between Iceland and Egypt, Norway and Egypt, and Switzerland and Egypt.

INSTITUTIONAL AND PROCEDURAL PROVISIONS

A Joint Committee composed of representatives of the EFTA States and Egypt supervises and administers the application of the Agreement. The Parties may hold consultations and, failing an agreement, apply provisional measures.

Moreover, Egypt or any EFTA State may refer a dispute relating to the interpretation of rights and obligations under the Agreement to binding arbitration if consultations do not lead to a settlement. The arbitral tribunal will settle the dispute in accordance with the provisions of the Agreement and the rules of interpretation of international law.