WORLD TRADE  
ORGANIZATION  WT/REG232/2 
24 November 2008 
 (08-5753) 
Committee on Regional Trade Agreements Original:  English 
  
 
FREE TRADE AGREEMENT BETWEEN  
THE EFTA STATES AND EGYPT 
 
Questions and Replies
 
 
 
 The following communication, dated 21 and 24 November 2008, is being circulated at the request of the delegations of the EFTA States and Egypt.   This document reproduces the questions addressed to the Parties. 
 
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Questions from the Delegation of Chinese Taipei
 
 
1. The EFTA-Egypt FTA is the eighth FTA concluded between the EFTA States and a 
Mediterranean partner.  Except for the EU, Syri a and Algeria are the only Euro-Med partners 
left without signing an FTA with the EFTA.  Do es the EFTA have any plans to negotiate an 
FTA with them in the future?  If so, do the Parties have any plans to merge those FTAs all 
together into a bigger integration in the future? 
 Negotiations on a FTA are currently underway with Algeria.  There are no plans to merge 
these FTAs at the current time.    
General Exceptions 
 
2. According to paragraph 59 of the WTO Secretariat’s Factual Presentation and 
Articles 21 and 22 of this Agreement, it is und erstood that both articles regarding the general 
and security exceptions reflect, with some differe nces, the provisions of Articles XX and XXI of 
the GATT 1994.  Do the Parties want to completely  exclude the application of such provisions of 
the GATT 1994 which are different from those in this Agreement, such as paragraph (e): 
relating to the products of prison labour of Article XX of the GATT 1994? 
 Articles 21 and 22 are modelled after the other agreements concluded between the 
EFTA States and Mediterranean countries.  The few divergences that exist be tween these articles and 
Articles XX and XXI of the GATT are therefore not specific to the EFTA-Egypt Agreement. 
 
Questions from the Delegation of the European Communities  
 
A. BACKGROUND INFORMATION  
3. Paragraph 12 of the Factual Presentation indi cates that the three bilateral "agricultural 
agreements" have not been notified to WTO. WT/REG232/2 
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   Could the Parties confirm when they plan to notify them? 
 
 Further to communication with the WTO Secretar iat, we note a mistake in Paragraph 12 of 
the Factual Presentation since notification WT/REG232/ N/1 covers the three bilateral agreements on 
trade in agricultural products which form part of the instruments creating the free trade area between 
the EFTA States and Egypt.  Therefore, the first sen tence of Paragraph 12 of the Factual Presentation 
will be deleted in a revised version of the document to be issued after the meeting. 
 
C. EXPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  
4. Paragraph 39 indicates that Article 10 of the Agreement, which proscribes the Parties 
from applying to their mutual exports custom s duties or changes and quantitative restrictions 
or measures having equivalent effect, does not a pply to processed agricultural products covered 
under Protocol A. 
 Could the Parties explain the reasons for this exception? 
 
 Article 10 of the Agreement is also app licable to processed agricultural products. 
Article 1.1(b) of Protocol A allows EFTA Memb er States to apply measures upon exports.  This 
Article is included to maintain Parties right s and obligations under the WTO Agreement on 
Agriculture to apply export refunds within the price compensation scheme and has no relation to 
measures referred to under Article 10.  Questions from the Delegation of Japan
 
 
Safeguard mechanisms 
 
5. With reference to Paragraph 44 of the Fact ual Presentation (WT/REG232/1), has either 
Party supplied the Joint Committee with relevant information? If so, could the Parties provide the details of these cases?  
 No information concerning an intended applica tion of a safeguard measure has been supplied 
to the Joint Committee to date.  
Competition Policy 
 
6. With reference to Paragraph 56 of the Fact ual Presentation, could the Parties elaborate 
on the development of rules addressing anti-c ompetitive practices, which are to be adopted 
within five years of the entry into force of the Agreement?  
 To date, no developments in  this area have taken place. 
 
Questions from the Delegation of Thailand
 
 
Protocol A  
7. With reference to paragraph 16 of the Fact ual Presentation (WT/REG232/1), the EFTA 
States retain the right to levy a duty or apply export measures (such as refunds within the price 
compensation scheme) to take account of differenc es in the cost of the agricultural raw material 
incorporated in the products covered by the Protocol.  
 Could the EFTA States provide more details  about the price compensation scheme?  
What are terms and conditions for the refund?  WT/REG232/2 
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   Processed Agricultural Products have two co mponents: an industrial component and an 
agricultural component.  In principle, the EFTA States eliminate customs duties on the industrial 
component of the processed agricultural products (PAP s) under their FTAs.  Due to the high cost of 
agricultural raw materials in the EFTA States, however, domestic PAPs producers are at a disadvantage compared to competitors in other coun tries.  For this reason, the EFTA States apply 
price compensation schemes (import duties and export  refunds), aiming at equalising the difference 
between domestic and world prices for agricultural raw materials used in PAPs.    The EFTA States retain their right to apply export refunds in the case of export of domestically produced processed food products.  Th e refund is based on the difference between the 
domestic and world market price of the commodity u sed as an ingredient in the finished product.  
  Import duties on PAPs, similarly, amount to the difference between domestic and world 
market prices for the agricultural raw material concerned.  The part  of the duty reflecting this price 
difference is not subject to dismantling, whereas th e duty not related to compensation (the so-called 
industrial element of the duty) is, as mentioned above, eliminated. 
 
 Are there any other export measures
, apart from the refund within this scheme, 
applicable to products c overed by this Protocol?  
 
 No other export measures apart from refunds ar e applied within this scheme to products 
covered by this Protocol. 
 
Questions from the Delegation of Turkey  
 8. According to the Paragraph 11 of the Factua l Presentation, the preferential treatment 
for agricultural products is arranged in separ ate bilateral “agricultural arrangements” (AAs) 
that have been concluded between Egypt, and in dividual EFTA States.  Although the AAs form 
part of the instruments establishing a free-trade area between the EFTA States and Egypt and provide for a parallelism with the Agreement wi th respect to entry into force and duration, 
according to the Paragraph 12 of the Factual Pre sentation they have not been notified to the 
WTO.  We would appreciate clarification from the Parties for the separ ate arrangement for the 
agricultural products, while the processed agricultu ral products and fish and marine products 
are included in the FTA.  We also request an explanation regarding reasons of not notifying 
agricultural arrangements to the WTO. 
 Further to communication with the WTO Secret ariat, we note a mistake in Paragraph 12 of 
the Factual Presentation since notification WT/REG232/N/ 1 covers also the three bilateral agreements 
on trade in agricultural products, which are part of the instruments creating the free trade area between 
the EFTA States and Egypt.  Therefore, the first sen tence of Paragraph 12 of the Factual Presentation 
will be deleted in a revised version of the document to be issued after the meeting. 
  EFTA’s Free Trade Agreements cover trade in basic agricultural products in three separate 
bilateral arrangements as the EFTA States do not  have a common agricultural policy and have 
individual sensitivities regarding trade in basic agricultural products. 
 
9. We note that Paragraph 8(b) of Article XXIV of GATT 1994 states that “A free-trade 
area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce a re eliminated on substantially all the trade 
between the constituent territories in products  originating in such territories.”  However, 
according to Paragraph 22 of the Factual Presentation, 17.4%
 of Switzerland’s tariff lines 
(namely, 1,408  tariff lines of 8,080  total tariff lines) remain dut iable and these correspond to 
11.3%  of Switzerland’s total imports from Egyp t.  Likewise, according to Paragraph 24, WT/REG232/2 
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  727 tariff lines (12.8%) of Egypt’s tariff schedule remain dutiable and in terms of imports from 
the Parties these lines correspond to 0.6% of imports from Iceland, 3.4% of imports from 
Norway and 25.3% of imports from Switzerland. 
 Resultantly, it is not clear how this Agreemen t satisfies the conditions of Paragraph 8(b) 
of Article XXIV of GATT 1994 if such a significant portion of trade are not liberalized under 
the Agreement between Egypt and Switzerland.  We would appreciate clarification from the 
Parties for this point.  
 First, we would like to underline that there is no common definition agreed by Members for 
what constitutes "substantially all the trade”.  Furthe rmore, the "substantially all the trade" criterion 
does not specify whether it applies to tariff lines, the volume of trade or to both.  Second, in the case 
of Switzerland, no less than 88.7% of its imports  and 82.5% of its tariff lines are effectively 
liberalized in the trade with Egypt as shown in the F actual Presentation.  It is therefore our view that 
these numbers demonstrate that "substan tially all the trade" is covered. 
 Questions from the Delegation of the United States
 
 
Goods liberalization  
 
10. According to Tables III.2A, III2.B, III.2C and Annex 1 of the Factual Presentation, 
Table A.1:  
 Iceland  eliminates duties on 95.2% of all tariff lines and 98.9% of imports from Egypt 
under the Agreement.  Though 100% of industrial goods tariffs are duty-free, only 77.8% of agricultural tariffs are duty-free under the agreement.   Norway
 eliminates duties on 89.6% of all tariff  lines covering 97.8% of imports from 
Egypt under the Agreement.  Though 99.9% of industrial tariffs are duty-free, only 45.4% of 
agricultural tariff lines are duty-free under the Agreement. 
  Switzerland
 eliminates tariffs on only 82.6%  of all tariff lines covering 88.7%  of imports 
from Egypt under the Agreement.  Though 99.97%  of industrial goods are duty-free, only 
29.3%  of agricultural lines are duty-free under the Agreement. 
 
 According to Table III.2D, Egypt  provides duty-free access to 87.2% of its tariff lines, 
covering 99.4% of imports from Iceland and 96.6%  of imports from Norway, but only 74.7% of 
imports from Switzerland.   Annex 1, Table A.2, shows, though, that while 98.2% of industrial products are duty-free, only 13.7% of Egypt’s  agricultural tariffs are duty-free under the 
Agreement. 
  How do the Parties explain the highly di sproportionate liberalization between the 
industrial and agricultural sectors?   
 Trade liberalization in the Agreement is the r esult of negotiations between the Parties to the 
Agreement that aimed to strike a balance between specific interests and sensitivities of all the Parties 
involved.  
 For what reasons did Switzerland undertake liberalization on a lower percentage of 
tariff lines than Egypt?   
  WT/REG232/2 
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   The tariff liberalization contained in the Agr eement is the result of negotiations between the 
Parties to the Agreement that aimed to strike a ba lance between specific interests and sensitivities of 
the Parties involved.  
 Could the Parties please explain how their tariff elimination commitments achieve the 
“substantially all trade” standard set out in GATT Article XXIV? 
 
 In the context of this question, it must be  underlined that there is no common definition 
agreed by Members for what constitutes ‘substantially a ll trade’.  The criterion refers to ‘trade’ rather 
than imports or exports separately and does not en tail obligations relating to coverage of specific 
products or sectors.  As such, it is of the view of the Parties that the EFTA-Egypt FTA does fulfil the 
‘substantially all trade’ criterion set out in GATT Article XXIV.  
 Please provide the average duty rate by HS chapter and
 HS section for the lines that 
remain dutiable. 
 
 It is not possible to provide average duty rat es by HS chapter and HS section as requested due 
to the exclusion in calculations of specific and in-quota rates used in several tariff lines. 
 
11. Paragraph 15 of the Factual Presentation stat es: “The base rates used by the Parties for 
implementing their respective tariff liberalizatio n commitments are the WTO bound rates or 
the MFN applied rates, whichever is lowe r, on entry into force of the Agreement 
(1 August 2007).”  Please provide a list of which tariff lines have MFN applied rates above WTO bound rates. 
 There are no MFN applied rates above WTO bound rates otherwise they would not be in 
conformity with WTO-rules.  Article 7 of the Ag reement notes that the applicable rates for imports 
between the Parties, to which the successive reduc tions are to be applied, shall be the WTO bound 
rate or the applied rate enforced as of the entry into  force of the Agreement if this is lower than the 
bound rate.  
SPS  
12. As noted in paragraph 43 of the Factual Presentation, the Egypt-EFTA Agreement 
states that the principles of “non-discrimination” and “unduly obstructing trade” shall be applied in accordance with the WTO SPS Agreement.  However, the SPS Agreement 
incorporates additional principles, including transparency, regionalization, equivalence, etc. 
 How are those principles incorp orated into the Egypt-EFTA FTA? 
 The WTO Agreement on the Application of  Sanitary and Phytosanitary Measures is 
incorporated and made part of the Egypt-EFTA FTA (Article 14.2).  As such, additional principles of 
transparency, regionalization, equivalence etc. ar e an inherent part of the Egypt-EFTA FTA.  In 
addition, the Joint Committee established under th e FTA provides a forum for addressing sanitary and 
phytosanitary matters that may, directly or indir ectly, affect trade between the Parties in order to 
protect human, animal and plant health conditions  in the Parties’ territories and enhance the 
implementation by the Parties of the SPS Agreement. 
 
Government Procurement 
 
13. Paragraph 56 of the Factual Presentation states that:  “With respect to public 
procurement, the Parties have agreed to its progressive liberalization,” pursuant to Article 33 of the Agreement: WT/REG232/2 
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   Did the EFTA countries or Egypt open up an y public procurement to each other when 
the FTA entered into effect?  If so, please de scribe the public procurement each Party has 
covered to date under the Agreement. 
 
 Neither the EFTA States nor Egypt opened up any public procurement to each other upon 
entry into effect of the FTA. 
 
 When do the Parties intend to initiate consultations in the Joint Committee on the “progressive liberalization” of public procurement?  
 A first exchange of views took place in the c ontext of the first Joint Committee meeting held 
on 4 November 2008.  This will be  pursued at further meetings. 
 
 Do the Parties have a deadline or target date for opening up their public procurement under the Agreement? 
  There is no deadline or target date for ope ning up public procuremen t between the Parties 
under the Agreement.  
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