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Egypt is one of Africa’s industrial heavyweights. Transforming the country’s economy to sustain job-rich and sustainable growth are pivotal steps in its march towards prosperity. Today’s search for new development models, accelerated by the unfolding of the COVID-19 pandemic, calls for shifting up a gear in raising Egypt’s industrial capabilities to compete in an industry 4.0 and agro 4.0 landscape. The Production Transformation Policy Review (PTPR) of Egypt uses a forward-looking framework to assess the country’s readiness to embrace change. This includes an analysis of the game-changing potential of the African Continental Free Trade Area (AfCFTA) and perspectives on agro-food and electronics (i.e. what in Egypt is referred to as part of the engineering sector), as well as identifying priorities for future reforms.
This review is the result of government-business dialogue, and benefited from peer learning from Italy and Malaysia. It also resulted from international and multi-stakeholder knowledge sharing through a dedicated Peer Learning Group (PLG) and the OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development.
At a time when global trade is under pressure and countries increasingly turn to regional integration to support their development, this Spotlight is a timely read for policy makers and business leaders in Africa and beyond. It shows how harnessing the African Continental Free Trade Area (AfCFTA) can support industrialisation in Egypt, and more widely in Africa, by tapping the full potential of regional supply chains, including renewable energies, pharmaceuticals, logistics and creative industries. This report builds on and enriches the Production Transformation Policy Review of Egypt: Embracing Change, Achieving Prosperity.
Published on November 13, 2023
The U.S. established diplomatic relations with Egypt in 1922, following its independence from protectorate status under the United Kingdom. The U.S. and Egypt share a strong partnership based on mutual interest in Middle East peace and stability, economic opportunity, and regional security. Promoting a stable, prosperous Egypt, where the government protects the basic rights of its citizens and fulfills the aspirations of the Egyptian people, will continue to be a core objective of U.S. policy.The United States and Egypt have a trade and investment framework agreement, which is a step toward creating freer trade and increasing investment flows. The United States also has a Generalized System of Preferences (GSP) program, which provides duty-free entry to the U.S. for certain products that meet specific qualifications.
Egypt is also party to several regional trade agreements, including:
- Agadir Agreement
- COMESA Agreement
- European Union-Egypt Association Agreement
- GAFTA
- Egypt-Turkey Free Trade Agreement
- Numerous free and preferential trade agreements with individual Arab countries
The United States exported $6.4 billion in goods to Egypt in 2022, up 8.8% from 2021. U.S. imports from Egypt totaled $2.8 billion in 2022, down 15.3% from 2021.
Tariffs on most U.S. agricultural product exports to Egypt are no higher than 5 percent; however, a number of processed and high value food products, including poultry meat, face tariff rates ranging from 20 percent to 30 percent and down 7 percent from 2012.
U.S. foreign direct investment (FDI) in Egypt (stock) was $12.7 billion in 2022, a 8.6 percent increase from 2021.
Egypt’s FDI in the United States (stock) was $49 million in 2022, up 6.5 percent from 2021.
U.S. exports to Egypt include:
- Wheat and corn
- Mineral fuel and oil
- Machinery
- Aircraft
- Iron and steel products
U.S. imports from Egypt include:
- Mineral fuels, oils, distillation products
- Salt, sulfur, earth, stone, plaster, lime, and cement
- Glass and glassware
- Vegetable, fruit, and nut food preparations
Egypt is the United States’ largest export market in Africa. In 2021, total bilateral trade in goods between the United States and Egypt stood at $9.1 billion, the highest level ever.
The U.S. Congress established the Qualifying Industrial Zone (QIZ) initiative in 1996 to support the peace process in the Middle East. The QIZ initiative allows Egypt and Jordan to export products to the United States duty-free as long as such products contain inputs from Israel.