# A profile of border protection in Egypt: An Effective Rate of Protection approach adjusting for energy subsidies

Alberto Valdés and William Foster

|1. Introduction .................................................................................................................. 1|
|---|
|2. Effective Rates of Protection in Egypt: Cost-share Data Sources and Previous Studies<br>.......................................................................................................................................... 3|
|3. A Quick Review of the Algebra of Effective Protection .............................................. 4<br>a. Deriving the basic ERP formula ............................................................................... 5|
|b. Adding input subsidies – reduced energy costs – to the ERP calculation ................ 6|
|4. A Discussion of Energy Subsidies and Tariff Data Sources and Implications for the<br>Level of Disaggregation ................................................................................................... 9<br>|
|5. Estimating Non-tariff Barriers for Selected Activities ............................................... 10|
|6. Results: Levels and Dispersion of ERPs across Selected Industries, Tariffs Only<br>(without Energy Subsidies), Comparing 2009 with the Late 1990s ............................... 11|
|A note on the public sector ......................................................................................... 13|
|ERPs by selected industries for 2009, including estimated NTB equivalents............ 13|
|7. Results: ERPs Incorporating Energy Subsidies for 23 Sectors from 2006/2007 Input-<br>Output Information ......................................................................................................... 14|
|Impact of intervention on non-tradables ..................................................................... 16|
|Energy subsidies as compensation for input tariffs? .................................................. 16|
|Food and agriculture ................................................................................................... 17|
|Adding NTB equivalents to the ERP estimates by sector using the 2006/2007 I-O<br>matrix .......................................................................................................................... 18|
|8. Concluding Discussion: The Unexpectedly High ERP Dispersion and Strong Effect<br>of Energy Subsidies ........................................................................................................ 20|
|References ...................................................................................................................... 23|
|Tables ............................................................................................................................. 24|
|Annex 1: Additional Tables ............................................................................................ 34|
|Annex 2. Some details of the ERP algebra ..................................................................... 41|
|Annex 3. Measuring the ad valorem equivalent of NTBs for selected industries .......... 43|

The authors would like to thank Santiago Herrera and the Cairo-based staff of the World Bank for their assistance in obtaining data. Also thanks to Nabila Al Iskandarani for making available her study of 2000 and her willingness to respond to various inquiries, and to Professor Soheir Abouleinein for providing useful information. Special thanks to Dr. Khaled Hanafy for his work on non-tariff barriers, which is presented in Annex 3. Correspondence: <u>avaldese@uc.cl; wfoster@uc.cl</u>