- The liberalisation of textile imports to Egypt goes too slow, the US government holds. Therefore, it has filed a complaint against the Egyptian government for failing to lower its import duties on textile and apparel products. Many Egyptian jobs may be in danger.
The World Trade Organisation (WTO) today received a new request for consultations from the US government, regarding Egyptian "measures affecting imports of textile and apparel products." According to the Americans, Egypt is not lowering its import barriers as quickly as agreed upon.
In the Uruguay Round of the world trade negotiations, Egypt had agreed to remove a general prohibition on the importation of apparel and made-up textile products by 1 January 2002. This prohibition had been in place for a long time to protect one of Egypt's principal job providers; the textile industry.
During these trade negotiations, the textile industry from other countries had urged for an access to the lucrative Egyptian markets. Egyptian authorities however fought a bitter fight for the many jobs in its textile industry during these talks that aimed at a global free trade.
The government of Egypt could not stop a liberalisation of its textile market, but it achieved provisions to protect national jobs by introducing a slow and step-wise liberalisation. The local industry was to be given time to adjust to a new situation.
According to the deal agreed upon in Uruguay, Egypt's general import prohibition was to be replaced with gradually lowering import duties. Articles of apparel and clothing were to get an import duty of 46 percent of its value in 2003, 43 percent in 2004 and 40 percent thereafter. For other made up textile articles, including clothing, duties were set somewhat lower.
According to the US complaint, however, Egyptian authorities have operated with even higher import duties since the import prohibition was lifted.
On 31 December 2001, just before the import prohibition was set to expire, President Hosni Mubarak issued a decree, defining customs duties on several imported articles, including textile articles. According to the US complaint, these duties were of a specific value, defined in Egyptian pounds per piece of clothing, rather than a percentage of value.
- It appears that the specific duties applied by Egypt greatly exceed Egypt's bound rates of duty, the US government holds. "Specifically, it appears that the ad valorem equivalent of these duties range from a low of 141 percent to a high of 51,296 percent - all well above the bound rates."
The matter is to be discussed within short between the US and the Egyptian WTO delegations. If the two countries cannot reach an agreement, WTO mediators will have to get involved.
For Egyptian workers, the stakes are high. The national textile industry, which provides employment for one third of Egypt's industrial labour force, is not yet ready for international competition. After decades of protectionism, the industry is characterised by low productivity, poor management and old technological standards.
Out-dated technology has made the Egyptian textile industry too labour intensive and its national importance and protection has made individual labour costs higher than in countries such as India. Liberalisation could lead to the rapid loss of up to 50,000 jobs, Egyptian authorities fear.
Critics however hold that necessary modernisation would cost the same amount of jobs. Some representatives of the relatively small private sector within the industry are actually looking forward to more competition.
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