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Home >> Economy >> Economic Relations >> Economic Blocs & Groupings >> Free Trade Agreement between Egypt & Turkey

Free Trade Agreement between Egypt & Turkey

The Free Trade Agreement (FTA) between Egypt and Turkey was signed on 27 December 2005 in Cairo and entered into force on 1 March 2007.


FTA Objective:

1– The two parties will establish a free trade area between them over a transitional period of no more than twelve years of FTA's date of entry into force, according to the provisions of the FTA and in line with Article 24 of the GATT 1994 and other multilateral agreements for trade in goods annexed to the convention establishing the World Trade Organization.

FTA aims at:

a- Increasing and enhancing economic cooperation between the two parties in order to raise the standard of living of the peoples of both countries.

b- Removing obstacles and restrictions on trade in goods, including agricultural goods.

c – Developing economic relations between the two parties by increasing mutual trade.
d – Providing fair competition in trade between the two sides.

e - Creating favorable conditions for increasing and encouraging joint investments.

f- Developing trade and cooperation between the two parties in the markets of third countries.



FTA Advantages:

1-      Investment fields

- This agreement increases Turkish investors' confidence in the Egyptian economy. Therefore, Turkish businessmen direct most of their investments to joint ventures in Egypt to take advantage of the free trade agreements between Egypt and Arab countries and COMESA.

- Exempting Egyptian exports of industrial goods to Turkey from all customs duties and other fees and taxes upon the entry into force of the agreement.

- Increasing access opportunities for Egyptian exports of goods and industrial products to the Turkish market, such as cement, rolled iron and steel, liquids and slurries of polyethylene, leather, cotton yarn, drugs, crystal products, medical and surgery equipment, industrial detergents, porcelain products, ceramics and Chinese ceramics.

2- Agricultural commodities and processed agricultural products

-          Entry of the Egyptian exports of agricultural and processed commodities to Turkey once the agreement enters into force. They will be fully or partially exempted from customs duties that range by 32-45%, while the Egyptian side granted the Turkish exports exemption from customs duties in Egypt between 2% - 12% with the exception of two items with customs duties of 2%, 22%.

- Egypt's access to more agricultural and processed commodities than what has been given to other countries which signed the free trade agreement with Turkey, such as Morocco, Tunisia, Jordan, Syria and Israel. These commodities include rice, mango, guava, garlic and fresh, chilled and frozen vegetables.

- The Turkish market opened for certain Egyptian products of comparative advantage which were subject to high tariffs, such as potatoes.

-          The Egyptian side granted the Turkish side reductions of tariffs and quotas for some manufactured agricultural commodities.


3-      Accumulation of origin

The agreement allows once it enters into force to benefit from the accumulation of multilateral origin, which increases the ability of the Egyptian industry to access the markets of Turkey and the European Union countries that have free trade agreements with Turkey. This can be done through the establishment of joint complementary industries between Egypt and Turkey and Euro-Mediterranean countries, such as textile industry, which leads to maximizing the competitiveness of Egyptian exports through the import of primary goods and products and raw materials from the Euro-Mediterranean countries and using them in joint complementary industries, allowing the possibility of exporting them to Turkey and other Euro-Mediterranean countries.

4 – Services trade

The progressive liberalization of services trade and opening the markets of the two countries in accordance with the provisions of the WTO Agreement.

5- Protection of nascent national industries

Protection of national industry by providing guarantees for the protection of Egyptian nascent national industries and the industries that undergo restructuring or those suffering serious damage through increasing tariffs on imports of similar industries products.

Overview of FTA content:


1 - Cancelling all customs of equivalent effect and non-tariff restrictions on trade in goods between the two countries upon entry into force of the agreement. Neither of the two countries may impose new customs with equivalent effect or non-tariff restrictions.

2 - The article on health and plant health procedures stipulates that these procedures must conform to those of the GATT 1994 Convention and the WTO's.

3 –The article on facilitating financial transfers resulting from investments and trade between the two countries conform to the relevant provisions of each of the two countries.

4 –The article on the protection of the intellectual property rights must conform to the provisions of the WTO's and the agreements adhered to by the two parties.

5 - The agreement includes a special article on encouraging investments between the two parties.

6 –The article on the  disparity in the balance of payments that stipulates that if one of the parties  faces difficulties in the balance of payments, it shall take the necessary actions conform to the provisions of the WTO and the GATT 1994 and the relevant article in the IMF agreement.

7 – The article on the increasing reciprocal concessions for agriculture commodities with Turkey stipulates that the Joint Committee, during its annual meeting, will discuss further liberalization of trade in agricultural goods, processed agricultural product and fish in a way that guarantees the interests of both parties taking into account the outcome of the agricultural trade negotiations within the WTO.



Protocol (1): Treatment of industrial goods stipulates the following:

- Exemption of Egyptian exports to Turkey from all customs duties and other fees and taxes of equivalent effect upon the entry into force of the agreement.


- Liberating Egyptian imports of industrial goods of Turkish origin according to four lists identical to the import lists in the Egyptian-European partnership agreement and the same commodities included in the lists of the European Union. The reduction in customs duties on Egyptian imports of industrial goods originating Turkish should be started   when the agreement enters into force years behind the cuts currently in place with the European Union.

The four lists are summarized as follows:


The first list (raw materials):

-Tariff reduction begins in the first year of the entry into force of the agreement and reaches full exemption in the third year of the entry into force of the agreement.

- The most important commodities include: Aluminum ore, magnesium oxide, sodium chloride, sulfur, timber of conifers, parts and accessories of machines, aluminum oxide, copper alloys ore.


The second list (intermediate goods):

- Tariff reduction begins in the third year of the entry into force of the agreement and reaches full exemption in the ninth year of the entry into force of the agreement.

- The most important commodities include: carbon, chemical pharmaceuticals, paper, polyvinyl chloride, glass fibers and articles, fixtures and parts for cars of base metal, aluminum sheets, pipes and rubber tubes, pesticides for agricultural purposes, insulating receptacles.


The third list (finished goods):

- Tariff reduction begins in the fifth year of the entry into force of the agreement and reaches full exemption in the twelfth year of the entry into force of the agreement.

- The most important commodities include: Raw marble and travertine, knitted garments, knitted fabrics, garments, textiles, footwear, products of cast iron or steel, machinery and equipment, electrical equipment and parts.

  

The fourth list (cars):

- Tariff reduction begins with the start of the sixth year of the entry into force of the agreement and reaches full exemption in the fifteenth year of the entry into force of the agreement.

 

Free Trade Agreement between Egypt and Turkey

 

Date of publication:Thursday, 18 April 2013