The U.S. goods trade surplus with Egypt was $3.7 billion in 2008, an increase of $690 million from $3.0
billion in 2007. .S. goods exports in 2008 were $6.0 billion, up 12.8 percent from the previous year.
Corresponding U.S. imports from Egypt were $2.4 billion, down 0.3 percent. Egypt is currently the 36th
largest export market for U.S. goods.
The stock of U.S.foreign direct investment (FDI) in Egypt was $7.5 billion in 2007 (latest data available),
up from $6.5 billion in 2006. U.S. FDI in Egypt is concentrated largely in the mining sector.
In recent years, the Egyptian government has gradually liberalized its trade regime and economic policies,
although the reform process has been somewhat halting. Under the leadership of PrimeMinister Ahmed
Nazif and a new ministerial economic team in place since 2004, the government has adopted a wide range
of significant reform measures. However, the government needs to continue to reduce corruption, reform
the cumbersome bureaucracy, and eliminate non-science based health and safety standards.
In 2004, the Egyptian government reduced the number of ad valorem tariffbands from 27 to 6,
dismantled tariff inconsistencies, and rationalized national sub-headings above the six-digit level of the
Harmonized System (HS). The government also eliminated services fees and import surcharges ranging
from 1 percent to 4 percent. The government reduced its 13,000 line tariff structure to less than 6,000
tariff lines. These and other changes have significantly reducedrequests for customs arbitration over the
past four years.
In February 2007, a presidential decree further reduced import tariffs on 1,114 items, including
foodstuffs, raw materials, and intermediary and final goods. The government also adopted the World
Customs Organization (WCO) HS-2007 for classifying commodities. The changes reduced the weighted
average of applied tariffs from 20.1 percent to16.7 percent. These goods include many foodstuffs, raw
materials, and intermediate goods, as well as some finished goods such as heaters. Vehicles, alcohol, and
tobacco are the only items on which tariffs are still 40 percent or greater. Passenger cars with engines
under 1,600 cc are taxed at 40 percent; cars with engines over 1,600 cc at 135 percent. In addition, cars
with engines over 2,000cc are subject to an escalating sales tax of up to 45 percent. Clothing also faces
relatively high tariffs, although the 2007 decree reduced the rate from 40 percent to 30 percent. Tariffs on
cloth were reduced from 22 percent to 10 percent, and yarn from 12 percent to 5 percent. In April 2008,
Presidential Decree 103 introduced further reductions to customs tariffs on several items includingprocessed foods, agricultural goods, paper products, cement and steel and related products, and some
durable household goods. Various items such as rice, soya bean oil, cement (portland, aluminous,
hydraulic, and white), toilet paper, and similar paper are now exempt from custom tariffs.
The 2007 decree also reduced tariffs on several agricultural commodities and food products. Among thereductions were those for fresh fruit, which dropped from 40 percent to 20 percent. Fruit represents less
than 1 percent of U.S. agricultural exports to Egypt. Most key U.S. agricultural product exports to Egypt
now enter at duties of 5 percent or lower; however, a number of processed food products such as potatoes
and frozen vegetables retain tariff rates in excess of 30 percent. The value oftotal U.S. agricultural
products to Egypt in 2007 was $1.8 billion. In the 2007 tariff reduction, Egypt lowered four tariff lines to
make them consistent with Egypt’s WTO bound tariff rates.
Significant barriers to trade for U.S. agricultural products remain, particularly for those of animal origin.
In addition, the government continues to make abrupt import regime changes without notification...