WASHINGTON – The Office of the U.S. Trade Representative today filed a formal request for consultations in the WTO with Egypt in connection with the import duties that Egypt places on certain apparel and textile products.
During the Uruguay Round of multilateral trade negotiations that were concluded in 1994, Egypt agreed to bind its duties on certain articles of apparel and clothing in 2003 at a rate of 46 percent, based on the value of the imports. It agreed to bind its duties on certain other textile and apparel articles at a rate of 41 percent. The actual duties that Egypt imposes on these imports appear to greatly exceed these bound rates, which would be inconsistent with Egypt’s WTO commitment. In addition, because the imposed rates are based on the number of articles being imported, rather than the value of the imports, the imposed rates cause considerable uncertainty in the market.
The Government of Egypt appears thus to have effectively denied U.S. exporters access to the Egyptian market through these duties. The United States exported just $256,000 in clothing to Egypt in 2002.
In the Uruguay Round of multilateral trade negotiations, Egypt agreed to remove a general prohibition on the importation of apparel and made-up textile products by January 1, 2002. It also agreed to bind its duties under HS Chapter 61 (articles of apparel and clothing, knitted or crocheted) and HS Chapter 62 (articles of apparel and clothing, not knitted or crocheted) at an ad valorem rate of 46 percent in 2003, 43 percent in 2004 and 40 percent thereafter. It agreed to bind its duties under HS Chapter 63 (Other made up textile articles; sets; worn clothing) at an ad valorem rate of 41 percent in 2003, 38 percent in 2004, and 35 percent thereafter.
On December 31, 2001, just before the import prohibition was set to expire, Egypt issued a decree (No. 469) amending the customs duties applicable to a number of imported articles including articles that enter under HS Chapters 61, 62 and 63. The amended duties were specific (i.e., in Egyptian pounds per piece of clothing), rather than ad valorem. When converted to ad valorem equivalents, these specific duties appear to greatly exceed the bound rates that Egypt agreed to apply in the Uruguay Round. More than 280 tariff categories are covered by the decree, with ad valorem equivalent duties ranging from a low of 141 percent to a high of 51,29 percent. (These ad valorem equivalents are based on average prices of U.S. exports to the world in 2002.)
Today’s consultation request is the first step under WTO dispute settlement rules. If the consultations fail to resolve the dispute within 60 days, the United States will be entitled to request that a panel be established to consider the U.S. complaint and determine whether Egypt is acting in accordance with its WTO obligations. The WTO dispute settlement process takes abo 18 months, if there is an appeal.