Egypt and the AfCFTA – an opportunity for diversifying manufacturing exports and regional value chain participation
Egypt’s total global trade in goods was US$ was just over US$ 114 billion (9% of GDP) in 2021 of which 64% was imports (down from 69% in 2020). Both imports and exports have increased in 2021 following disruptions caused by the Covid 19 pandemic of 2020. Total trade grew by 31%, however, exports doubled during the 2020/2021 period from US$ 27 billion to US$ 41 billion (52% growth). Imports grew by 22% over the same period from US$ 60 billion to US$ 74 billion. Intra-Africa trade however remains low. Africa as a continent accounts for only 12% and 2% of Egypt’s global exports and imports respectively. The EU is Egypt’s largest trading partner accounting for 29% and 26% of Egypt’s exports and imports share respectively in 2021.
The country has been gradually opening up with the ratification of various free trade agreements, with the latest being the African continental free trade area (AfCFTA) which was ratified by Egypt in 2019. Egypt has a total of 8 free trade agreements (FTAs), enjoys non-reciprocal access under the General Systems of Preferences (GSP) from 9 countries and has 2 countries’ exports produced in its qualified industrial zones (QIZs). Boosting intra-Africa trade is one of the goals of the AfCFTA and Egypt has an opportunity to increase its manufacturing base through increase intra-Africa trade under the AfCFTA, given that it is the leader in manufactured goods in the continent.
As countries continue to deepen integration and liberalise trade, tariffs applied on imported goods have been on the decline and to date, it can be noted that the tariff although an important instrument for industrial policy is no longer the main barrier to trade. Non-tariff barrier (NTBs) which are cost raising are regarded as the major barrier impacting on not only intra-Africa trade but Africa’s global trade. The five-year average non-tariff trade costs (NTTC) to export intra-Africa products was about 292% ad valorem equivalent (AVE) between 2016 and 2020 (latest available data form the World Bank ESCAP database). NTTCs on agricultural goods are much higher than on manufacturing goods.
* The note presented here gives a snapshot overview of Egypt’s global economic and trading environment. The note is accompanied by an infographic highlighting key economic and trade indicators and forms part of a more detailed trade report published by tralac.
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