New challenges in the upcoming GATT round
Egypt, Economics, 4/2/2002

As the new round of negotiations on the multilateral world trade system approaches, experts say the Egyptian economy will face many challenges for which preparations should be made.

Under the new round, the agricultural subsidy applied by big countries is supposed to be eliminated, thus, increasing the prices of agricultural imports such as wheat, dairy products, sugar and meat by 10 percent.

Moreover, after cutting down industrial tariffs, the Egyptian labour will be threatened mainly in the fields of car manufacturing and poultry production.

If the upcoming negotiations reach an international agreement on the policies of competition, through which big and multinational companies will enjoy the rights enjoyed by national companies, this would lead to the stagnation of noncompetitive national products.

A question raised in this regards is: How can this be confronted and what is the role of the private sector and the NOGs in the light of such disregard by big countries of the demands of the developing countries? Prime Minister Atef Ebeid is currently probing a total vision of the upcoming challenges Egypt will face in the forthcoming round.

These challenges are represented in the weakness of the Egyptian production capacity and its inability to have access to world markets in the form of industrial or agricultural exports. Among the challenges are also the obstacles raised by big countries such as criteria of quality, issues of dumping and subsidy, health criteria and the system of quotas.

Moreover, reports also refer to equivocation in deregulating the sector of textiles, which would ultimately lead to distortions in the Egyptian balance of payments.

Negotiations on eliminating subsidy for agricultural commodities in the EU countries is expected to cause a big increase in prices of wheat, dairy products, sugar and meat. As a result, Egypt is expected to suffer an increase of 10 percent in its food bill which accounts for 24 per cent of annual imports.

Additionally, the new cut in industrial tariffs will increase the unemployment rate, as non-competitive Egyptian projects will be forced to lay off their workers and close down their door in the face of cheap imported commodities, mainly after China had joined the World Trade Organization and its acceptance of the economic reform programme, which will encourage the multinational companies to trade with China and expand the scope of Chinese products market.

Moreover, if negotiations in the upcoming stage reach a binding agreement on competition policies, through which big and multinational companies would enjoy the same rights enjoyed by the local ones, with limited capabilities, Egypt would find itself responsible for securing access of its commodities to the Egyptian consumer through government distribution channels and this in turn will cause the slackness of non-competitive Egyptian products.

Mohamed Farid Khamis, Chairman of the Egyptian Industries' Federation expresses the belief that avenues of confrontation are represented in establishing a national mechanism for negotiations under the auspices of the Ministry of Foreign Trade.

He said programs should be organized for training negotiators, adding that in this field Egypt could benefit from the experience of world organizations and research centres specialized in trade.

He also called for expanding Egypt's alliances with developing countries, the group of 77, the G-15, the COMESA, the Arab countries and the ASEAN with the aim of unifying efforts and achieving maximum success in the upcoming rounds.

The field of agriculture, he stressed the need for probing the expected effect of eliminating subsidy on prices of agricultural products in Egypt. He also called for mapping out an Egyptian strategy for confronting any increase in the food bill which is expected to range between $ 300-400 million annually. He also called for crop structure in the light of the expected increase in prices of agricultural imports.

Experts also called for adopting a programme for improving agricultural productivity and a national programme for registering Egypt's plant wealth resources. In the field of industry, experts call for the establishment of a national industry which is capable of competing at the domestic and international levels through examining the structure of tariffs which should be cut on production supplies and spare parts which are not developed locally, in order to avoid the potential effects of cutting down tariffs in the upcoming negotiations. They also call for adopting a national programme for modernizing Egyptian industry and the Egyptian production bases.

A close linkage between research centers and Egyptian industry should be realized in order to encourage technology transfer and set up developed national technology.

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