Overview to the EU and U.S GSP Programs in Case of Egypt Volkan EMRE Xiaoli ZHANG
Presentation Summary• Introduction• Overview of the EU GSP Program• EU GSP in Egypt• Overview of the U.S GSP Program• U.S GSP in Egypt• Conclusions
Country Profile• Population : 78.2 Millions (Most Populos Arab Country)• Strategic Location (Suez Canal) - 10% of the world trade - 25% of world petroleum• Current GDP: EUR 136.2 bn• GDP per capita: EUR 2090 (Low Middle Income )• GDP per sector (% of GDP) - Agriculture : 13.7 - Industry : 37.3 - Services : 49
Country Profile• EU and the U.S are two largest trade partners of Egypt ,absorbing morethan 40 percent of the total trade.• Both of EU and US have been using their own GSP Programmes that are inuse for more than 25 years.•GSP (Generilized System of Preferences ) : xxxxx
EU GSP ProgramImplementation and Length• first implemented in 1971 and has been renewed in every ten years• GSP+ implemented in January 2006Country Coverage and Conditionality• 176 Countries• Preferences can be withdrawnProduct Eligibility and Duty Treatment• 6,350 products (of 7,357 dutiable products) receive preferential treatmentQuotas and Graduation• Classified by the World Bank as a high-income country during three consecutive years• If imports of a product from a beneficiary country exceed 15%Rules of Origin and Cumulation• The EU GSP and GSP + programs permit partial cumulation on a regional basis for 4 economic regions: ASEAN, Central American Common Market , South Asia Association, Norway and Switzerland
EU GSP Program• India (17%), China (11%) and Brazil (6%) were the main exporters to the EU .• The EU has the most open regime to ACP countries: They paid full duty on only 3% of their exports to the EU. The remaining 97% entered at zero duty or at reduced rates of duty.• The EU is the most open market in the developed world for the worlds 50 poorest countries. The EU absorbed about 2/3 of all LDCs exports. In the case of agriculture, this figure is more than 70%• The EU is the main importer in the world of agricultural products from developing countries, absorbing more than the US, Japan and Canada put together• More than 70% of EU imports from low-income countries. The largest exporters to the EU among this group of countries are beneficiaries of the EU GSP, including the EBA
EU GSP ProgramTop Preferential Imports under the EU’s GSP 1st Textiles 31% 2nd Agriculture 19% 3rd Mineral Products 15%
EU Trade in EgyptThe EU is Egypts firstthe European Union and EgyptRelations between trading partner•In 2007, the EU mid-2004, for nearly• From 1977 to accounted EU/Egypt bilateral relations were governed by a34% of Egyptian Agreement. Under its provisions, Egypt enjoys free market Co-operation imports and 33% ofEgyptian exportsindustrial exports to the EU, while EU exports of industrial access for its products enjoy Most Favoured Nation (MFN) treatment.•Among EUare governed by an Association Agreement. started in 1995,• EMFTA Member States, UnitedKingdom, Italy, Germanythe Association Agreement aimed to build a FTA with signed in June 2001, and FranceareEU Member. The Agreement entered into force on 1 June 2004. Egypts largest trading partners•Egypt ranks as the EUs 35th largesttrading partner Egypt’s Exports to EU • 1st Mineral fuels 42% • 2nd Manufactured goods 33%
EU Trade in EgyptPositive impact of the Association Agreement on EU/Egypt tradeEU-Egypt bilateral trade has been steadily increasing: based on Eurostat data, €11.8 billion in 2004, €13.7 billion in 2005, €16.8 billion in 2006 and €17.2 billion in 2007 (73% increase in 4 years), compared to an average of €10 billion before the entry into force of the Association Agreement.Overall, since 2004(EMFTA entered into force), the exports of Egypt to the EU have increased annually by 20% on average, and EUs exports to Egypt have risen by 12% annually.
EU. GSP in EgyptIn 2000, about15% of EU imports from Egypt gain GSPtreatment, while the corresponding shares to Japan andthe United States are lower than 4 percent.Table shows that GSP is either not extended to Egypt’smost important export products or could not be extended,since these items already face zero MFN duties.
EU. GSP in Egypt •Referring to the data between Egypt and EU obtained from Eurostat, we built a pie chart. •The chart shows that the share of GSP Exports to EU accounts only 2% of the whole Exports in 2008. •Imports of the EU from Egypt is EUR 136 mil. İn 2008 ( Roughly USD 191 mil. )• Compared with the figure in 2000, the proportion declined dramatically (From 15% to 2%).• The Importance of GSP in the total exports has become less and less significant.
US GSP ProgramImplementation and Length• Introduction in 1974 / First Implementation in 1976• Continuity on periodical renewal• 9 times renawal from 1984 until 2009Country Coverage and Conditionality• 132 Countries• Level of Development, Labour, Intellectual Property Rights, Political Regime Type Support for TerrorismProduct Eligibility and Duty Treatment• Duty free access for 3400 types of products for developing countriesQuotas and Graduation• Losing eligibility for specific products if U.S imports of that product surpass the Competative Need Limit (CNL). In 2009 threshold is defined $140 mil. İncreasing by $5 mil each year / Becoming a ‘High Income Country’ = GraduationRules of Origin and Cumulation• Product is wholly produced within the GSP beneficiary country / At least %35 of final value when it enters to the U.S / Regional Cumulation: At least %35 includes imported imports from eligible members of the same economic association
U.S. GSP in EgyptImplementation and Length• Membership since March 1975Trade Volume• Ranking in the top 35 countries in exports to the U.S under GSP (32’nd place in 2008)• Petroleum Products and textiles are Egypt’s main exports• Exports under GSP account for a small percentage (between 2% and 3%) of overall trade with the U.S.Product Eligibility and Duty Treatment• Eligible Goods: Manufactured Items and Inputs, jewelry ,fresh and processed non-dairy agricultural products, chemicals, marble, minerals,silk blend apparel, carpets• Ineligible Goods: Most of the textiles and apparel
U.S. GSP in EgyptTypes of Duty Free Imports of the U.S (2007)• Egypt’s Exports to the U.S Under GSP
U.S. GSP in EgyptEgypt’s Exports to the U.S. Under GSP, 1989–2008 Why is Egypt only using GSP for %2 of its total exports to the U.S ? What is QIZ ? Does it have a negative effect to the trade under GSP ?
U.S. GSP in EgyptGeneral Comparison of the GSP Policies of the E.U and U.S• E.U offers developing countries hence to Egypt greater product scope• E.U is wider in country coverage.• Exports under EU GSP is greater in value than under U.S GSP in Egypt’s Case• Egypt could not improve its share of exports under both GSP Policies in its total exports to both destinations . ( Currently, the ratios are quite similar at around 2% )• Both E.U and U.S do have some competing policies with their GSP implementations ( EU = EMFTA / U.S = QIZ)Reasons Behind Egypt’s Small Share of the GSP in Exports to the U.S and to the E.U• Composition of the Exported Goods• Lack of Awareness of the GSP Opportunities• Lack of Improvement• Lack of Diversification• Poor Infrastructure• Failure to meet Quality Standards• High Concentration on exporting raw material instead of value added products