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For the total of all manufacturing industries, we see that the share of imported
intermediate inputs amounted to just under 33%. – however there is considerable sectoral
variation. We see that there are three industries where the share of imported
intermediates is high. These include “other transport equipment” (78%), “others” (68%)
and “radio, television and communication equipment” (59%). There are then nine
industries (out of 24) where the imported intermediate share is between 30-50%. Here
we need to be very careful in interpreting the data, as these figures give us the share of
imported intermediates out of total intermediate input usage – which is not the same as
the share of imported intermediates in total value added. Nevertheless, where the share of
imported intermediates out of total intermediate input usage is higher, one would expect
the share of intermediates in value added to be higher.
It is then interesting to compare this information with the information we have on
utilisation rates to see if there is any evidence that utilisation rates tend to be lower, in
those industries where the share of imported intermediates is higher – and vica versa.
This information is contained in the last column of the table where we have calculated
the share of preferential exports in each sector but upon which MFN duties were in fact
levied. Not surprisingly, generally there is no strong positive correlation (the correlation
coefficient is 0.07). While there is no general pattern certain industries are worth
highlighting here. For example, “medical precision and optical equipment”, has a share
of intermediate imports of just over 34%. This is an industry where the share of
domestic intermediates in value-added is required to be between 60-70% for originating
purposes; and in this industry nearly 60% of exports pay MFN duties even though they
are eligible for preferential access. Indeed 98% of products which in principle were
eligible for preferential access paid MFN duties in this sector. Similarly for “machinery
and equipment” – this has a share of intermediate imports of just under 32%, and this is
an industry where the domestic value-added criterion here is typically between 60-75%,
and in this industry nearly 35% of exports pay MFN duties even though they are eligible
for preferential access. This means that just under 40% of products which in principle
were eligible for preferential access paid MFN duties in this sector. In this sector, the
value-added rule is typically applied and where the domestic share of valued added is
required to be between 60-70% for originating purposes. If we look at “motor vehicles”,
the vast majority of these exports were eligible for preferential access, yet MFN duties
were paid on over 16% of these exports. “Other transport equipment” is an interesting
sector, because it appears that only a small proportion of exports in this sector were
eligible for preferential access, hence the share of total exports which fell into this
category but then paid MFN duties is very low (0.68%); yet out of all the exports which
were eligible for preferential access, MFN duties were paid on 65% of those exports.
This discussion indicates that although when looking at the aggregate data it is hard to
discern the extent to which rules of origin may be impacting on access to EU markets for
Egyptian firms, the picture is perhaps slightly different when one digs a little deeper.
Above, we have identified a number of sectors which together may not amount to a
significant proportion of Egyptian trade with the EU, but where a surprisingly
significantly high proportion of exports which in principle are eligible for duty free
access in fact pay MFN duties. Of course we do not know why this is the case – but at a
minimum it does indicate that for a number of sectors, which apply the value added rule,
and where the share of imported intermediate inputs is high, there is a significant amount