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obtained goods, exporting to only one market, and the similarity between EU and for
example the AFTA ROOs. However, the most important reason that could be deduced
from the interviews and the analysis is the modest concern that firms devote to ROO.
Some firms argued that complying with QIZ ROO is more difficult and costs more.
According to the QIZ protocol (see Appendix 1), Egyptian exports will be granted
free access to the US market, only if they use 11.7 percent of Israeli inputs. The main
exports under the QIZ protocol include textiles and ready-made garments. Firms
claimed that the cost of complying with QIZ ROO, i.e. using Israeli inputs with a
value not less than 11.7 percent, is very high. Israeli inputs are more expensive than
domestic ones and than those imported from other countries. In many cases, firms
used Israeli fabrics, which are more expensive than East Asian fabrics, typically used
by Egyptian exporters, just to comply with QIZ ROO. However, firms benefit from
exporting under the QIZ protocol, because the US tariffs imposed on Egyptian exports
are very high. In addition, customs authorities are more careful about reviewing QIZ
certificates of origin compared to EUR1. Exporting firms to the US are responsible
for proving origin, before they can issue QIZ certificate of origin; while it is not the
case under EUR1. Moreover, inspections related to certificates of origin are carried
out in Egypt on a quarterly basis.
To conclude, interviewed firms did not report major problems related to complying
with EU ROO or issuing certificates of origin (EUR1.). This could be explained by
the fact that proving originating status is the responsibility of importers, who are
usually willing to pay imports tariff instead of asking exporters to comply with ROO.
Customs authorities in Egypt are not responsible for proving origin; they are only in
charge of signing EUR1. Firms typically also did not think that cumulation would
have positive effects on their exports, nor would moving to a more widespread use of
the value added criterion.
4 Conclusions:
Looking at the statistics with regard to the pattern of Egypt’s trade we see the
importance of the EU as a destination market for Egypt’s exports, though we note that
overall the share of Egypt’s exports to the EU are declining. The available evidence
indicates that much of what Egypt exports to the EU is in products where obtaining
originating status is relatively easy. However, an examination of utilisation rates,
suggests that in aggregate 48% of Egyptian exports are eligible for preferential access
to the EU market, but that just over 13% of those exports in fact pay MFN duties.
When we consider this by industry there is some evidence that there are certain
industries where the take up of preferences is lower, and that these are sectors with
higher shares of intermediate imports, and sectors where the value added criterion is
typically applied.
From the interviews undertaken, in general we find that currently EU rules of origin
are not perceived as a major problem or obstacle for Egyptian exporters, and that the
lack of Pan-European cumulation in most cases is not perceived to constrain firms’
choice of intermediate input supply. One exception to this is that of the textile
industry where there is some evidence that the possibilities of cumulation in particular
with Turkey, may impact of firms’ incentives and improved ability to export to the
EU. There are two principal explanations for the relative lack of significance of the