As can be seen in Annex Table 1, for each sector we have attempted to select appropriate tariff levels rather than averages over many, disparate tariff lines. That is, for a specific industry we have tended to choose a specific tariff, or an average over a few appropriate tariffs lines associated with more-processed products. For the tradable inputs used by the sector, we have tended to choose tariff lines associated with raw products or lower processed products. Note that Annex Table 1 also includes, for each industry, the share of total tradable input costs associated with specific inputs. The list of inputs is specific to each industry.

# **5. Estimating Non-tariff Barriers for Selected Activities**

By their nature, non-tariff barriers are not established by policy makers in terms of ad valorem equivalents. They involve, therefore, some detective work to estimate them. The case of purely quantitative restrictions (QRs) is a special case, because with some information of relevant supply and demand elasticities, the NTB can be extracted in terms of a price wedge. Unfortunately many NTBs, however, are not so explicit as QRs. One source of NTBs, for example, might simply be administrative delays that raise the local component of the costs of imported goods. Other NTBs can be import licenses to be negotiated with trade authorities, testing protocols for food and drugs,and sanitary and phyto-sanitary restrictions, which – while in themselves might not be formal trade restrictions – can be used as instruments for protection against import competition. Annex 3 presents some NTBs that are noteworthy to market participants in Egypt.

For this present report, Dr. Khaled Hanafy prepared estimates of price wedges between domestic prices of imported goods and their border prices, adjusting for applied tariffs, transport costs and, where appropriate, marketing margins. Annex 3 discusses the details of the NTB tariff-equivalent estimation for selected industries for which we have more detailed cost-share estimate from the Nathan study from 1999. It is important to point out that although the price wedge approach used here gives an estimate of the tariff equivalent of NTBs, it says nothing about the exact policies or policy instruments acting as NTBs, nor does it reflect their respective contributions.

The NTB estimates, as seen in Annex Table 3, cover a heterogeneous group of goods, but only where a CIF price is available. The reader will note that some products have explicit marketing margin estimates, some without. Even in the case of explicit marketing margin estimates, the NTB ad valorem estimates might be implicitly incorporating domestic marketing costs, including inventory costs, distribution and maintenance costs, advertising cost, and so on. If one takes all products in Annex Table 3, the average of all NTB ad valorem estimates is slightly less than 26 percent. Perhaps more representative for inputs used in manufacturing is to take the average NTB ad valorem estimates over the products that are of lower value added. That is, to take an average excluding jewelry, autos, soaps and cosmetics, table spreads, drinking glasses and cups, hand drills and refrigerators, all of which have high estimated price wedges due to NTBs. After excluding these high value-added goods, the average NTB ad valorem is slightly more than 9 percent.

What the tariff equivalent estimates of the NTBs emphasize is that there are sectors for which the ad valorem equivalents of barriers are apparently very high, and that there is a large dispersion among all NTB estimates. On the surface, this is puzzling, but certainly 10