Auto market escapes wave of price hike in January thanks to Egypt-UK Association Agreement

The Egyptian auto market has escaped a price hike on British cars that had been expected on the back of the latter’s exit from the European Union (EU), commonly known as Brexit.

The two countries signed the Egypt-UK Association Agreement, exempting products from customs.

Prior to Brexit, the UK had been part of the EU’s “zero customs” zone as part of the European Partnership Agreement, which had covered cars and spare parts coming from the country.

Alaa El-Sabaa, Chairperson of the Elsaba Automotive and member of the General Automobile Division at the Federation of Egyptian Chambers of Commerce (FEDCOC), said the recently signed Egypt-UK Association Agreement will ensure that the prices of cars coming from the UK will not be affected by Brexit.

El-Sabaa also said the new agreement includes an important framework to ensure the continuation of preferential trade treatment for products manufactured by the two countries. This is due to its including the same commercial advantages provided by the Egyptian-European Partnership Agreement.

The agreement came into force from 1 January, following the UK’s exit from the EU. It sets the framework for relations in various fields between the two countries, and reflects the interest in strengthening cooperation between the two, whilst upgrading them to maximise mutual interests.

Under this fruitful new agreement, customs exemptions will continue for British cars, along with exemptions and reductions on spare parts. The move is expected to stabilise British car prices.

El-Sabaa said that Egypt imports thousands of British cars annually, including Bentley, Jaguar Land Rover, and other brands. This is in addition to some models manufactured by other international companies such as Nissan Qashqai, and Juke.

For this purpose, the Egypt-UK Association Agreement provides complete trade liberalisation between the two countries in terms of a range of products. These include: industrial products; most agricultural commodities; food products; and fish and their products.

The agricultural commodities not included under the agreement will be subject to quantitative quotas set by the agreement, and considered sufficient to absorb a large proportion of the exports made by the two parties.

Under the new agreement, the two sides pledged to work together to achieve greater short-term trade liberalisation relating to agricultural commodities during the coming period.

This comes in addition to enhancing joint cooperation between Egypt and the UK’s customs authorities, with the aim of getting rid of practices that hinder trade movement. The agreement also aims to increase the flow of UK capital, expertise and technology to Egypt.

Montaser Zaytoun, Chairperson of the Zaytoun Auto Mall and member of FEDCOC’s General Automobile Division, said that the fate of UK vehicles and other customs exemptions has become fraught with danger following Brexit. This means that goods imported to Egypt via the UK, and vice versa, will not enjoy customs exemption, as the UK is no longer an EU member state.

Zaytoun said that the UK’s exit from the EU now means that there are customs duties of up to 40% on vehicles supported by a 1600 cc engine. Models with engines higher than 2000 cc are subject to custom duties of up to 100%, after they had previously enjoyed full customs exemption.