The rules call for the producers of some imported products to register all factories producing their goods with the Egyptian authorities, to certify the factories comply with certain standards, and to allow inspection by a “technical team”. Egypt’s government announced the change on 31 December, with the rules to come into force at the end of February.
Dairy, sweets and bakery targeted
Of the 23 product categories required to follow these rules, eight are food products including dairy and dairy products for retail; dried and preserved fruit for retail; oils and fats for retail; chocolate and food preparations containing cacao for retail; sugar confectioneries; pastries and foods prepared from cereals and bakery products and fruit juices for retail.
A US Department of Agriculture report said the change in rules as they stand will impact food exporters: “Products will be allowed entry into the Egyptian market only if they are produced in factories on the [Egyptian General Organisation for Import and Export Control] list of eligible manufacturers. The decree also gives the minister of trade the right to exempt factories from some or all the registration requirements.
“Egyptian authorities assert that the measure will ensure the quality of imported products, protect the health of Egyptian consumers, and protect the local industry from unfair competition,” added the report.
Rules to reduce forex demand
Beyond quality control, one of the major aims of the new rules appears to be reducing Egypt’s foreign imports, in order to safeguard the country’s fragile foreign currency reserves. Restrictions on foreign currency deposits and transactions has been causing problems for both international exporters and Egyptian buyers in recent years, although Bloomberg reports Egypt’s foreign currency reserves have stabilised since late 2015.
In an interview with Egypt’s central bank governor, Tarek Amer, Bloomberg quoted the banker as saying the new import regulations could save the country US$20bn (€17.9bm) this year. Hany Farahat, senior economist at CI Capital, was more conservative, telling Associated Press the measures could save around US$7bn (€6.3bn) a year.
The new rules have not been universally welcomed, however, with the USDA report suggesting they may be illegal under international trade agreements: “It should be noted that the proposed measure is generating questions regarding the rule’s legality under Egypt’s WTO obligations… Additionally, [US analysts in Egypt anticipate] opposition on the part of Egyptian importers, which could impact implementation.”