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1 Introduction
The aim of this part of the report is to consider the possible significance of rules of
origin in the context of Egypt. The examination is based partly upon a careful
examination of the most recent trade, production and input-output statistics, and partly
upon a series of interviews undertaken with key firms and sector representatives in
Egypt. The first part of this report considers therefore the pattern of Egypt’s trade, and
the structure of production in Egypt in order to assess the extent to which, prima facie,
one would expect rules of origin to be significant for Egyptian industry. The second
part then details the conclusions which emerge from the interviews undertaken.
Before going into detail regarding trade and production it is useful to recall the
principal trade agreements which Egypt is party to, and/or is hoping to sign and
implement in the near future. These include the Egypt-EU Association agreement
(date?); the Agadir Agreement, with Jordan, Tunisia and Morocco (date?); the Egypt-
Turkey customs union; and the QIZ protocol with Israel and the USA. It is worth also
noting that a key motivation for the Agadir Agreement, the Egypt-Turkey free trade
agreement, and the QIZ protocol with Israel and the USA was to allow for more
diagonal cumulation between the participating countries, and in so doing to improve
their competitiveness in the EU and US markets.
2 Patterns of Egyptian manufacturing production and
trade
We turn first to a consideration of the pattern of production in Egypt which is
summarized in Table 1 below. The Table is based on production data from the
Industrial Statistics Database, which is a new database recently established by
CAPMAS. The information is based on survey of almost 10 thousand industrial firms
in Egypt. The table presents the information by ISIC rev.3, 2-digit industries, where
the industries are ordered by their share in production. From the table it can be rapidly
seen that the structure of manufacturing production in Egypt is highly concentrated,
with the first five industries (Food and Beverages, Chemicals, Textiles, Basic Metals,
and Other Non-Metallic mineral products) accounting for over 62% of total
manufacturing production. A useful measure of the degree of industrial concentration
is the Herfindahl index, which ranges from 0 to 1. An index of 1 is where there is only
industry. The Herfindahl index for Egypt is 0.11, which suggests that the number of
equivalent sized ISIC 2-digit industries in Egypt is 8.5. This again indicates the
relatively high degree of concentration of Egyptian industry.