Egypt-U.S. Business Relations

Making use of its strategic location, Egypt has preferential access to Africa, Europe, the Middle East and Asia through the African Continental Free Trade Area (AfCFTA), European Union-Egypt Partnership Agreement, and the Greater Arab Free Trade Area (GAFTA). Egypt is also party to the Agadir Agreement (a free trade agreement between Egypt, Jordan, Morocco, and Tunisia), EFTA (with Iceland, Liechtenstein, Norway, and Switzerland), Egypt-Mercosur Free Trade Agreement (with Argentina, Brazil, Paraguay, and Uruguay) and numerous bilateral trade agreements.
U.S. companies investing in Egypt can take advantage of a range of preferential trade agreements offering tariff reductions, enabling rules of origin, and access to massive markets that might otherwise be unavailable to them.

AfCFTA and other Egypt-Africa Agreements

• On May 30, 2019, the AfCFTA entered into force with 24 ratifications, with Egypt ratifying the agreement in April 2019. As of June 2021, 54 of the 55 African Union member states (Eritrea missing) had signed the AfCFTA and 35 countries had deposited their instruments of ratification.
• The operational phase of the treaty launched on July 7, 2019, with actual trading commencing on October 7, 2022, with the launch of the AfCFTA Guided Trade Initiative (GTI). Eight countries representing the five regions of Africa—Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia—started trading under the AfCFTA framework. The GTI is piloting the trade treaty’s operational, institutional, legal and trade policy environment.
• As of November 2022, 46 member states have submitted provisional tariff concession schedules, and the AfCFTA Secretariat has approved 36 of them. Rules of origin covering 88% of tariff lines have been agreed upon.
• AfCFTA creates the largest single continental market for goods and services since the formation of the WTO. In 2023, the combined population reached 1.4 billion people with an aggregate GDP of approximately USD 3.1 trillion.
• Africa currently accounts for 2% of global trade, with intra-Africa trade accounting for only 14% of the continent’s total trade in 2022. The United Nations Economic Commission for Africa forecast that trade between AfCFTA member states would grow by 34% by 2045.
• Egypt is also a member of the Common Market for Eastern and Southern Africa (COMESA), which has 21 member states. In 2022, COMESA had a GDP of USD 1.1 billion, encompassing a population of 640 million.
• Egypt has also signed and ratified the Tripartite Free Trade Area (TFTA) agreement, but as of March 2023 the pact was missing three of the 14 ratifications needed for it to take effect. The TFTA is meant to merge Africa’s three regional free-trade blocs—COMESA, the Southern African Development Community (SADC) and the East African Community—into a free trade zone spanning 29 countries.

BRICS

• On January 1, 2024, Egypt joined the economic bloc BRICS (Brazil, Russia, India, China, and South Africa), along with Ethiopia, Iran, Saudi Arabia and the United Arab Emirates.
• In 2023, Egypt's trade with BRICS members totaled USD 46.7 billion, more than one-third of Egypt's total foreign trade. Egypt is the world's largest importer of wheat, and Russia is one of Egypt’s primary wheat suppliers.
• The newly expanded BRICS is expected to account for 38% of global GDP, 46% of the world’s population and 43% of global oil production in 2024.

EU-Egypt Association Agreement

• Egypt and the European Union signed the Association Agreement in 2001, which came into force in June 2004 and establishes a free trade area as of 2019. An agreement on further liberalization of trade in agricultural products entered into force in June 2010.
• Since the agreement took effect, bilateral trade in goods has almost quadrupled, reaching USD 28 billion in 2023. Egypt exports to the EU stood at USD 18.2 billion in 2023 compared to USD 7.8 billion in 2012.
• All industrial goods exported from Egypt to the EU are exempt from tariffs.
• While the EU’s value-added criteria is as high as 75% for sensitive products such as textiles and apparel, U.S. companies can benefit in sectors such as agriculture and processed foods, where Egypt faces substantially lower tariffs on exports.
• Local component requirements (a minimum of 60% from Egypt or the EU) for the rules of origin under Mediterranean countries also allow for the use of inputs from third countries (diagonal accumulation of origin) for the remaining content.

GAFTA

• Egypt entered the GAFTA trading bloc, also referred to as the Pan Arab Free Trade Area (PAFTA), in 1998. As of 2005, all 17 GAFTA members are exempt from all customs duties and charges between the Arab League countries.
• The percentage of value-added required to confer origin is 40% of the ex-factory cost. Local labor is counted as added value, and Egyptian assembly of U.S. parts constitutes transformation to meet the origin requirements under GAFTA.
• Local component requirements under the GAFTA rules of origin also allow for the use of inputs from all other members (diagonal accumulation of origin).
• GAFTA countries combined had an estimated annual GDP of USD 4 trillion and a population of 444.9 million people in 2022.

Mercosur Free Trade Agreement

• The Egypt-Mercosur FTA, in force since September 1, 2017, was signed with the four founding members of the South American bloc and addresses the agriculture and land reclamation, food processing, textile, automotive, wooden industries and furniture, and mining sectors.
• The seventh phase of customs reductions on of goods imported to Egypt from Mercosur countries took effect on September 1, 2023.
  • A full customs exemption now applies to 600 commodities exchanged between Egypt and the Mercosur countries.
  • Tariffs on Schedule (C) products such as livers, anchovies, and aluminum ore have now been reduced by a total of 87.5% since the pact came into force.
  • Tariffs on Schedule (D) products (mats, woven fabrics, and blankets) have been reduced 70%.

  Updated March 2024