# _3.2 Exports and Non‐tariff Measures_

Studies that have examined the effect of NTMs in the MENA region are scarce at both the macro and the firm level. Ghali et al (2013) investigate the impact of NTMs on Egyptian imports, by differentiating between different categories of NTMs and find that NTMs have a significant negative effect on both the intensive and extensive margins. In the same vein, Péridy and Ghoneim (2013) calculate the average tariff equivalents (AVEs) of NTMs in selected MENA countries including Egypt, and estimate them at 39%, compared to 34% in Tunisia, 37% in Morocco and 47% in Lebanon. Their analysis of NTMs also shows that almost all NTM categories are trade reducing, especially SPS measures, quantitative restrictions, pre‐shipment inspection, and export‐ related measures with technical barriers to trade to a lesser extent.

At the firm level, the effect of technical barriers to trade (TBT), sanitary and phyto‐sanitary measures (SPS) and red tape costs (related to the trade facilitation agreement) was also examined. Enbaby et al. (2016), use firm‐level data to analyze the effects of product standards on the probability to export (firm‐product extensive margin), and on the exported value (firm‐product intensive margin). They find that SPS measures imposed on Egyptian exporters have a negative impact on the probability of exporting a new product to a new destination, while the intensive margin of exports is not significantly affected by such measures. Kamal and Zaki (2018) also examine the impact of TBT on firms’ exports in Egypt over the period 2005‐2011 and find the extensive margin and entry probability are negatively affected by technical barriers whereas exit probability is positively affected. Moreover, smaller firms are more adversely affected by TBT in their export participation and entry and exit decisions. Hendy and Zaki (2014) study the effect of red tape barriers on firms’ exports by merging the Doing Business data set with firm‐level exports data. They find that red tape barriers negatively affect Egyptian firms, with the effect being more robust for the extensive margin (the probability of exporting across different destinations) more than the intensive one (the value of exports).

# _3.3 Exports and Trade Agreements_

Two main methods have been used to examine the effect of trade agreements on trade flows: computable general equilibrium (CGE) models (ex‐ante) and gravity models (ex‐post). The CGE literature on the Africa region is relatively rich. Mureverwi (2016) use a multinational CGE model to assess the potential long‐term effects of the African Continental Free Trade Agreement on the African Union member states. The main findings show that African countries benefit from a higher labor demand, more capital accumulation and improved terms of trade, with Egypt being one of the major winners in absolute terms. In the same line, UNCTAD (2018) shows that GDP increases by 0.97 percent and total employment rises by 1.17 percent with a full liberalization in the African Continental Free Trade Agreement (AfCFTA). Mold and Mukwaya (2017) use the GTAP model and database and show a significant increase ‐ thanks to the AfCFTA ‐ in intra‐regional exports as a result of tariff elimination from 9.2% to 11.7%, especially in processed food, textile and apparel.

A gravity model is used by Abedini and Peridy (2008) to show that regional trade has increased by 20% over the period 1988‐2005, following the implementation of GAFTA. Yegizu et al (2103) also study the impact of GAFTA on the volume and pattern of bilateral agricultural trade during the period between 1995 and 2007 and find a heterogenous effect on different countries. Helmy et al (2018) examine the impact of the Egypt‐EU trade agreement on bilateral trade. They also introduce other trade policy variables such as the GAFTA, Agadir, and COMESA agreements and find that the three agreements are positive and significant with GAFTA showing the highest coefficient, followed by Agadir and the Egypt‐EU Association. However, Kheir El Din and Ghoneim (2005) highlight an important concern related to the multiplicity of regional trade agreements, known as the “Spaghetti bowl”. Such an overlapping does not entail a high cost because most of them are shallow creating less friction. Indeed, most of these agreements targeted tariff declines without addressing harmonization of rules and regulations, non‐tariff measures or bilateral investment treaties.

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