A profile of trade protection in Egypt: an effective rate of protection approach adjusting for energy subsidies and non-tariff barriers

William Foster and Alberto Valdés

Middle East Development Journal, 2014, vol. 6, issue 2, 285-307

Abstract: This study examines effective rates of protection (ERPs) in Egypt due to tariffs, non-tariff barriers (NTBs), and energy subsidies, and compares them with those of a decade ago. Two sources of cost-share information at different levels of aggregation are used: data on specific industries (four-digit ISIC code, 20 in the private and 17 in the public sector), and data on the inter-industry intermediate input costs from the latest available input–output matrix (2006/2007) with 23 aggregated sectors. Trade liberalization since late-1990s appears to have reduced protection, although some industries remain relatively highly protected due to tariff escalation, NTBs, and energy subsidies. Energy subsidies favor energy intensive sectors, of particular note the electricity sector. Energy subsidies also offset the dis-protection that results from intermediate input tariffs. The cement sector is notable, energy subsidies almost exactly offsetting the negative impacts of tariffs and indirect taxes. The fertilizer sector has zero nominal tariffs (benefiting agriculture) and so has a negative ERP due simply to tariffs on inputs; nevertheless, the sector has a high positive ERP due to energy subsidies. ERPs in the private sector have declined notably, and nominal rates of protection have declined generally. ERP dispersion across industries also fell over the decade, but there remains an unexpectedly high dispersion relative to that suggested by applied tariffs only due to the unequal impact of subsidies. Estimated tariff equivalents of NTBs are also highly dispersed.

Date: 2014
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DOI: 10.1080/17938120.2014.961325

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