Doing Business in Egypt: 2010 Guideline for Netherlands Companies

Date

August, 2010

Place

Cairo- Egypt

Author(s):

Embassy of the Kingdom of the Netherlands | Economic Affairs and Development Co-operation Department T- (202) 7368752 F- (202) 27358736 E- [email protected] http://www.hollandembassy.org.eg

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Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Contents

• Introduction • Market Overview • Setting up a Business • Law of Business - Investment Laws - Free Zones - Special Economic Zones - Investment Zones • Indirect Investment - Commercial Agents - Distribution - Franchising - Technology Transfer and Licensing Agreements • Import and Trade Regulations a. Import Tariffs b. Import Requirements and Documentation c. Movement Certificate (EUR.1) d. Packaging, Marking and Labelling e. Importing Used Machinery and equipment into Egypt • Main Trade -

Laws and Regulations Tender Law Non-Banking Financial Services Intellectual Property Rights Labour Law and Employment Customs Commercial Register Law Law No. 114 of 2008 Economic Courts Dispute Settlement Arbitration

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Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Introduction

The Doing Business in Egypt: 2010 Guideline is designed to provide Dutch companies and/or businessmen/women with an overview of the Egyptian market, including general information on the legal and regulatory environment for conducting business in Egypt. The Economic Affairs Department of the Embassy of the Kingdom of the Netherlands strongly recommend that Dutch companies and/or businessmen/women seriously interested in investing in Egypt or signing contracts with partners/agents/distributors should seek advice from an appropriate qualified professional, and that such advice specifically relates to their particular circumstances. The Economic Affairs Department can provide information on lawyers, accountants and freight forwarding companies in the market. A local partner is imperative to successful penetration of the Egyptian market and to help navigate the complexities of doing business in Egypt. The importance of having a local partner lies also in the fact that foreign companies cannot bid directly on government tenders; they must act through local agents. Also, as the market becomes more sophisticated in Egypt, there is a growing demand for after-sales service requiring the services of a local agent. In that regard, we always recommend Dutch businesses to have a strong and reliable local partner with a good network, knowledge of the business environment and the rules and regulations. The Economic Affairs team of the Embassy can provide a range of services to Dutch companies and/or businessmen/women wishing to grow their business in the Egyptian market. The services include market information, identifying business partners and providing the support and advice most relevant to your company’s specific needs in the market. Should you need assistance in your search for appropriate partner, you may send us your request via e-mail: [email protected]. While we make every effort to ensure that the information in this document is accurate, the Economic Affairs Department of the Embassy of the Kingdom of the Netherlands in Egypt accepts no responsibility for any errors, omissions or misleading statements.

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Market Overview

The Netherlands is Egypt’s 5th largest EU trading partner and the 10th largest International trading partner. Dutch exports to Egypt concentrate in sectors such as machinery and transport equipment, chemical products, food products and life animals, metal ore, office equipment and automation. The main import products from Egypt are mineral fuels and agricultural products. The Netherlands is also the fifth largest investor in Egypt. Main Dutch investors in Egypt include Heineken, Shell, Unilever, Akzo Nobel, Philips, Farm Frites and GiroNil. With a population of over 80 million, Egypt is by far the Arab World’s most populous nation with a growing economy that has become much more diversified than in the past. It is a major oil and gas producer, with natural gas production increasing rapidly. Investment needs in infrastructure remain substantial. In May 2010, the government endorsed an institutional framework for public-private-partnerships (PPPs). PPP projects in the pipeline include building and maintaining hospitals, potable and wastewater stations, and freeways. Other significant sectors of interest to Netherlands companies include chemicals, pharmaceuticals, agriculture, water, tourism, renewable energy, logistics, ICT and consumer goods. A slowdown in economic activity in Egypt was expected in 2009/2010 due to the global financial situation. According to the IMF estimates, economic growth fell to 4.5-5.5% in 2008 and 2009 from a 7% average in the past three years, with inflation declining to 812% over the same period. The FDI flows and net exports of goods and services would most likely decline as markets shrink and export prices fall, leading to a large budget deficit. However, a large domestic consumer market and potential for development in terms of the growth of the middle class, home ownership and banking, long-term growth prospects are undoubtedly positive. The economic reform programme implemented since July 2004 by the Nazif government, centred around four main areas: reforming the tax system (corporate/personal taxes have been cut to a flat rate of 20% and for petroleum companies to 40.55%), transforming the customs administration and reducing the average weighted tariff from 9.5% in 2004 to 5.5.% in 2009, improving the business climate (the WB/IFC Doing Business 2010 report ranked Egypt among the top ten global reformers for the fourth time in five years) and reforming the monetary and banking sector. Although these reforms have developed considerable momentum, red tape remains a business impediment in Egypt, including a multiplicity of regulations and regulatory agencies, delays in clearing goods through customs, arbitrary decision-making, high market entry transaction costs, and a generally unresponsive commercial court system. In spite of these impediments that pose significant downside risk to doing business in Egypt; the country still has the potential to be among the emerging markets poised to offer good returns for foreign investment. The reality of the risk diminishes with the application of due diligence and thorough market research.

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Doing Business in Egypt: 2010 Guideline for Netherlands Companies |

Setting up a Business

There are many potential business structures and commercial vehicles under Egyptian Law. Investment in Egypt is governed and regulated by Companies Law No. 159 for 1981 (“Companies Law”), Investment Law No. 8 for 1997 (“Investment Law”), and Capital Market Law No. 95 for 1992 (“Capital Market Law”). Direct investment in Egypt (except for Free Zone investment) is subject to the general corporate and commercial system in Egypt; and in certain cases, the entity in question may benefit from additional investment guarantees and incentives pursuant to the Investment Law.

    

Typical Forms of Business Structures in Egypt:sole proprietorship (exclusive to Egyptian nationals) simple partnership – general and limited limited partnership by shares limited liability company joint stock company – private or public In addition to the above, there are other forms of business incorporation associated with foreign operations such as representation offices, foreign branches and franchising.

   

The most common legal vehicles used by foreign investors in Egypt are: limited liability companies joint stock companies foreign branch office representative office Choosing the correct structure depends on a number of factors, including nationality of the investors, size of the capital investment and the nature of activities to be undertaken. A successful entry into Egypt will be determined by the quality of the information and advice upon which the decision to enter the market is based. Dutch companies and/or businessmen/women are strongly recommended to seek professional legal advice before concluding any contracts in Egypt. The Economic Affairs Department of the Embassy can provide information on lawyers in the market. The Business Laws are available in English on the website of the General Authority for Investment & Free Zones (GAFI): http://www.gafinet.org, under Doing Business/Laws & Regulations.

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Laws of Business

a. Investment Laws Investment Law No. 8 of 1997 and Companies Law No. 159 of 1981 and their amendments are two key laws that regulate the investment environment in Egypt. Investment Incentives and Guarantees Law 8 of 1997 repealed Investment Law 230 of 1989. It made one authority responsible for investor incentives and guarantees - the General Authority for Investment and Free Zones (GAFI) and established a one‐stop shop for investors at GAFI to facilitate and simplify approval, registration, licensing and certification for new projects instead of having to go to 25 separate ministries. It also grouped specified activities that would automatically accrue benefits to investors. It allows 100% foreign ownership of ventures and guarantees the right to remit income earned in Egypt and to repatriate capital. Key provisions include: the guarantee against confiscation, sequestration and nationalisation; the right to own land; the right to maintain foreign currency bank accounts; freedom from administrative attachment; the right to repatriate capital and profits; free hiring of Egyptian staff, absence of price control or restrictions and equal treatment regardless of nationality. Under Law 8, investments are approved automatically for projects in 16 distinct fields, effectively creating a “positive list”. These fields include land reclamation; fish, poultry and animal production; industry and mining; tourism (covering hotels, motels, tourist villages and transportation); maritime transportation; refrigerated transportation for agricultural products and processed food; air transportation and related services; housing; real estate development; oil production and related services; hospitals and medical centres that offer 10% of their services free of charge. In April 2000, new activities were added to the package of incentives to include development of new urban zones, software design and production of electronics, establishment and management of technology zones, credit rating, factoring, river transportation activities, management of industrial projects and utilities, and waste collection and treatment projects. Some projects still require prior approval from relevant ministries in addition to GAFI, including investments in Sinai; all military products and related industries; and tobacco and tobacco products. Law 15 of 1963 prohibits foreign ownership of areas designated as agricultural lands, except for desert reclamation projects. The new Unified Tax Law No.91/2005 impacted the investment law tax incentives provisions as it revoked articles 16, 17, 18, 19, 21, 22, 23-bis, 24, 25 and 26 of the Investment Guarantees and Incentives Law 8 of 1997. Under the new tax law, exemptions as prescribed in the said articles shall remain valid for companies and establishments whose exemption period started before the effective date of the law, until the end of the period determined. Those companies that did not commence activities must do so within 3 years in order to avail themselves of those exemptions. Companies Law 159 of 1981 and its amendments covers investors in any sector not covered by Law 8 of 1997; including shareholders, joint stock, and limited liability companies and representative and branch offices. It allows for automatic registration of Page 8 of 19

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a company upon presentation of the application to the Companies Department and for acquisition of legal status 15 days after annotation in the Commercial Register. Law 3 of 1998 amending law 159 provides for the right of petition for denial of incorporation, removes the restriction that 49% of shareholders must be Egyptian, allows 100% foreign representation on the board of directors, and redefines accounting standards. b. Free Zones The Investment Law also regulates investment under the free zone system. There are two types of free zones, public and private. Public free zones are established in specific locations while private free zones are established exclusively for a specific project or company and are typically suited for large export-oriented manufacturing projects. Investors operating inside the Free Zones export more than 50% of their total production. Among the Free Zone incentives and guarantees are a lifetime exemption from all taxes and customs (but subject to a duty of 1% of the value of goods entering the free zone for storage in respect to warehousing projects and 1% of the value of goods leaving the free zones in respect of manufacturing and assembly projects); exemption from all import/export regulations; the option to sell a certain percentage of production domestically if custom duties are paid; and limited exemptions from labour provisions. To facilitate import/export procedures, Free Zones are usually located adjacent to sea ports and airports. c.

Special Economic Zones (SEZ) The SEZ Law was promulgated in June 2002. It provides for the establishment by Presidential Decree of special economic zones (each an SEZ) for industrial service or agricultural activities to be located outside existing urban areas and possibly attached to a port. The North West Suez Special Economic Zone stretches over 20 square kilometres is located adjacent to the Sokhna Port (about 45kilometers southeast of Suez City) near the southern entrance of the Suez Canal. Incentives and Guarantees include a 5% flat rate on personal income tax; integrated custom administration; tax administration; dispute settlements; licensing as well as general investors services for projects incorporated within the zones; 10% tax rate on all activities within the SEZ; Egyptian certificates of origin for SEZ – based exporters, allowing them to make use of Egypt's international trade agreements.

d. Investment Zones Investment Zones regime is one of the latest investment schemes that was recently formulated in 2007 under Law No. 19/2007. Establishment of the investment zones are allowed across all sectors (i.e. tourism, finance, agriculture, industry and services projects). Investment zone is run within a well- developed administrative frame in terms of timing and facilities granted concerning license issuing and dealing with entities through an integrated one stop-shop affiliated to the General Authority for Investment and Free Zones (GAFI). The zones do not have any tax privileges, are not restricted to the industrial sector and private companies can construct these zones following the same regulatory procedures as industrial zones.

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Indirect Investment

a. Commercial Agents Law no. 120 of 1982 regulates commercial agencies. According to the law, foreign companies wishing to engage in any type of consulting or other services, or to tender on government agency bids (except sales to the Ministry of Defence) may do so only through a registered local agent or intermediary. A foreign company cannot establish in Egypt a scientific, technical, or consulting office or any similar kind of offices unless it appoints an Egyptian commercial agent. To work as a commercial agent or intermediary, the person must be either an Egyptian national or an Egyptian juristic entity whose name has been registered at the “Commercial Agents Record” or “Intermediaries Register” at the Ministry of Foreign Trade. Registration in the record requires also the submission of the commercial agency contract showing the nature of work of the commercial agent, and the responsibilities of the principal and the agent, the percentage of the agency commission, the conditions for paying it to the agent and the currency of payment. Registration in the “Commercial Agents Record” must be renewed every five years. b. Distribution A distributor is a person who sells products in the country on its own account by buying the products directly from the foreign supplier or from the foreign supplier’s agent and re-sell at a profit. There are no specific laws governing distribution and franchising agreements. These are governed by the general provisions of the Egyptian Civil Code and the Commercial Code. There is no need to register as a distributor, as long as the distributor does not carry out marketing activities on behalf of the foreign supplier. A foreign producer may appoint both an agent and a distributor, which is common. The agent would carry out the marketing on behalf of the foreign producer as well as the importation process, and the distributor(s) would buy from the agent and re-sell for their own account. There are no nationality restrictions for distributors. c.

Franchising Franchising agreements are treated the same way as distributor agreements. In addition, if a franchise agreement involves a transfer of technology, it must be governed by Egyptian Law and any disputes in connection with that agreement must be resolved by the Egyptian courts or by arbitration in Egypt under the Egyptian Arbitration Law No. 27 of 1994.

d. Technology Transfer and Licensing Agreements The foreign producer or supplier may also enter into a technology transfer or licensing agreement with an Egyptian enterprise. In such cases, an agent is not required as there is no marketing of foreign products within the country. Rather, the Egyptian enterprise that is producing under license from the foreign enterprise would be marketing its own products. However, the royalties payable to the foreign enterprise are subject to Egyptian taxation at the rate of 20%, and are to be withheld at the source.

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Import and Trade Regulations

Importation for trading purposes and commercial agency activity are both restricted to Egyptians or business firms wholly owned by Egyptians. Law no. 121 of 1982 on “Importers Register” requires that any natural or legal person wishing to import goods for trading purposes should be registered in the Importers Register. Importation of materials for manufacturing purposes, and importation of capital assets such as machines and transport means to be used in the activity of the business firm and not for trade, can be carried out directly by the concerned business firm without the involvement of a registered importer. a. Import Tariffs In 2004, the Egyptian government reduced the number of ad valorem tariff from 27 to 5. It also dismantled tariff inconsistencies, rationalized national sub-headings above the six-digit level of the Harmonized System (HS) and eliminated services fees and import surcharges ranging from 1% to 4%. These and other changes have significantly reduced request for customs arbitration over the past 5 years. The government has significantly over the past three years reduced import tariffs on 1,114 items including foodstuffs, raw materials and intermediate and final goods. In April 2008, tariffs were completely eliminated on steel rebar, cement (Portland, aluminous, hydraulic and white), toilet paper and similar paper items. The reforms reduced overall weighted tariff average from 14.6% to 5.5.%. Tariffs on the majority of goods entering Egypt are below 15%, except for vehicles, alcohol and tobacco, which are still 40% or higher. Egypt’s Customs website: http://www.customs.gov.eg/Default.aspx b. Import Requirements and Documentation All goods imported into Egypt, except those destined for the free zones, must be accompanied by a customs declaration, irrespective of their value. Other documents required are the original commercial invoice, bill of lading, packing-list, pro-forma invoice, a form specifying the mode of the payment, delivery order from the carrier in return for the bill of lading, and if appropriate a content analysis of the commodity. In certain cases, additional certificates may be required by the customs authorities including chemical certificates for imports of food additives and other material used in the food processing industry; quality control certificates for as number of products. Sanitary certificates are also required for a number of products. Plant and animal products are subject to inspection by the Agriculture Quarantine Body and the Animal Quarantine Body. Ministerial Decree 619/1998 requires that all imported consumer goods to be shipped directly from the country of origin to Egypt. Decree 619 subsequently was adjusted in late 1999 to allow the shipment of imported consumer goods from the main branches of the producing company and its distribution centers. Regulations also were implemented to facilitate the ability of firms to meet the requirement for a certificate of origin. The certificate of origin must be authenticated by the Egyptian consulate/embassy in the country of origin.

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c.

Movement Certificate (EUR.1) The EUR.1 Certificate, which is a document confirming the origin with respect to preferential treatment, need no further legalisation after entry into force of the Association Agreement (Article 1 of Ministry of Finance Decree 1859/2004). This is mainly because Egypt's Customs Authority has been notified of the forms (models) of the seals of EUR.1 certificates of all EU member states. Should a EUR.1 certificate name goods with EU origin and another of non-EU origin, in this case the EUR.1 certificate needs to be legalized by the Egyptian Embassy in The Hague. The EUR.1 is not a mandatory document. It is only required if the importer applies for preferential treatment. However, this document is important as it may be of financial advantage. The EUR.1 is to be submitted by the exporter. Various imported goods are liable to quality control inspection by the General Organization for Export & Import Control (GOEIC) within one week of the date of import. The Organization is entitled to examine a random sample of 1% of the total number of packages in each consignment and up to 2% of the contents of the chosen packages. The procedures for sampling are laid down in Ministerial Decree 1186/2003. Advanced clearance centres have been established at the Ports of Alexandria, Port Said, Suez and Cairo to simplify entry procedures.

d. Packaging, Marking and Labelling Packed goods must be in packaging that ensures their preservation. The product should occupy the space of the packaging in full; wooden containers must be accompanied by an official certificate declaring the containers to be free of insects and pests. For imported non-food commodities, Decree 396/1994 established that the remaining shelllife should be at least half the original shelf-life. All foodstuff must be labelled with the following information in Arabic and at least one other language: name of the producer, country of origin, description of the commodity, name and address of the importer, production date, expiry date for consumption, preservation and storing conditions for easily perishable goods, mode of preparation for goods to be prepared before consumption, net and gross weight, and additives and preservation included. Appliances, machinery and equipment must be accompanied by: a manual in Arabic containing illustrative drawings of the parts; assembly and operating instructions; maintenance; details of the electric circuitry for electronically operated appliances; and security precautions. e. Importing Used Machinery and equipment into Egypt Law 275/1991 and its amendments outline the regulations concerning the import of used machinery. This law states that second-hand capital equipment and commodities including machines, instruments, materials, production requisites and spare parts, may only be imported after obtaining permission from the General Organization for Industrialization (GOFI). The capacity of the machinery must not exceed that of the machinery it replaces or for which prior permission has been obtained from the GOFI. To obtain GOFI’s approval, the applicant should provide full details of the type, specifications and number of machines required together with a certificate from an authorized inspection office. This certificate should be legalized (by the relevant Chamber of Commerce in the Netherlands, the Egyptian Embassy in the Netherlands, Page 12 of 19

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and finally the Ministry of Foreign Affairs in Egypt) confirming that the machines are in an acceptable running condition. Approval for second-hand equipment for foreign oil and gas contractors should be submitted to the relevant Ministry for approval providing the information detailed above. The relevant Ministry will then inform the customs authorities through the Ministry of Finance of the status of the equipment. Permission may then be given for the equipment to be released either on temporary basis (i.e. for export after termination of the project) or after payment of the appropriate custom duties.

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Main Trade Laws and Regulations

Tender Law The Tender Law No. 89/1998, and its executive regulations, governs procurement of goods and services by all Egyptian governmental entities, including governorates and local authorities. It generally requires administrative units to procure goods and services through tender or competitive negotiation, although in extraordinary cases procurement is allowed via direct agreement. Both tender and competitive negotiation requires the administrative unit to use similar procedures to develop specifications, receive offers, and evaluate technical offers. The procedures are slightly more complex for a tender, but the major difference between the two types of procurement is the methodology for selecting a winner. The procedures for both tender and competitive negotiation require that only technically acceptable offers be eligible for contract award. The methodology for selecting the winner of a tender process is to select the lowest priced technically acceptable offer. The methodology for selecting the winner of a competitive negotiation is to arrive at the best conditions and lowest price through negotiation with all of the technically acceptable bidders. The competent authority can chose which procurement method to use, but once a decision is taken to procure via tender, the procedure cannot be changed into a competitive negotiation. Law 89/1998 and its executive regulations establish the conditions and procedures for the use of each type of procurement. Non-Banking Financial Services The non‐banking financial sector has witnessed several legislative and institutional developments. Therefore, it plays a great role in economic growth with regard to providing various sources of finance and broadening the base of the beneficiaries of the non‐banking financial service sector. In the context of implementing Phase Two of the non‐banking financial services sector reform program, FY2008/2009 has witnessed the endorsement of Law No. 10 of 2009 on organising control over markets and non‐banking financial instruments. The law states that control over the non‐banking financial services should be unified within the Egyptian Financial Supervisory Authority (EFSA) to enhance the institutional development of the non‐banking financial service markets, and improving supervision over non‐banking financial activities. This new body is to replace the Egyptian Insurance Supervisory Authority, the Capital Market Authority, and the Egyptian Mortgage Finance Authority. The new body, which was enacted on July 1, 2009, acts as the main authority responsible for financial leasing. Intellectual Property Rights Intellectual property rights and rules of protection are set out in the Intellectual Property Rights Law No. 82 of 2002 (“IPR Law”). The law met certain key TRIPS (TradeRelated Aspects of IPR) requirements, including providing data exclusivity and exclusive marketing rights. The law also addressed IPR protection in areas such as trademarks, copyrights, patents, industrial design, integrated circuit layout design and new plant varieties. The law protects trademarks for a period of ten years. The specified penalty for violation is a maximum fine of LE20,000 or a prison term of up to two months or both. Penalty for copyright violations is a fine of LE5,000 – 10,000 or a prison term of up to one month or both. Patents are protected for a period of 20 years from the filing Page 14 of 19

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date while industrial designs and models are protected for renewable periods of 10 years. the penalty for break is a fine of up to LE50,000 or a prison term of up to three years or both. Semiconductor chip layout designs are also protected under the IPR Law. Labour Law and Employment The labour market in Egypt is governed by the Unified Labour Law No. 12 for 2003 (“Labour Law”), which governs all employees working in Egypt regardless of their nationality. The new Law comprises 257 articles that address all the legal aspects regulating the Egyptian labour market. A National Council for Wages has been formed to determine minimum wages at a level reflective of the cost of living and to balance between salaries and prices. The Council of wages has set that minimum annual raises should not be less than 7% of an employee’s base salary. In addition to the Labour Law, several ministerial decrees also govern the employment relationship and are considered complementary to the Labour Law. The Labour Law and all relevant ministerial decrees aim at increasing private sector involvement and achieving a balance between employee and employer rights. Customs Customs are regulated under Egyptian law No. 66 for the Year 1963. Imports are subject to custom tariffs at variable rates depending on the product. No custom tariffs are collected for exports. The competent authority in implementing the law and regulating the customs field is the Egyptian Customs Authority as a part of the Ministry of Finance. The Ministry of Finance issues decrees dealing with custom tariffs for each imported product. Commercial Register Law The process of registration whether for agents or companies, is governed by the Commercial Register Law No. 34 of 1976 and its amendments (98/1996). The basic rule is that anyone carrying on a commercial activity must register in the Commercial Register. All registrations must be renewed every 5 years. Law No. 114 of 2008 The Egyptian Tax Authorities have introduced a new law in 2008 (Law No. 114) that amends some provisions of existing laws including the Income Tax Law, Investment Law and Sales Tax Law. The law specifies that no licenses will be granted to any establishments for free zone projects in the following sectors: Fertilizer industries; Iron and Steel; Petroleum manufacturing and Manufacture, liquefaction and transportation of natural gas. Economic Courts Law No. 120 of 2008 concerns the establishment of economic courts specialised in settling large financial disputes between any independent persons. Each appeal court is required to form an economic court to address large financial disputes, excepting those that fall within the jurisdiction of the Council of State. Dispute Settlement There is also a separate judicial system for administrative disputes involving government ministries and agencies. These administrative courts fall within the jurisdiction of the Council of State, which is empowered to hear actions brought by persons challenging the validity of presidential decrees and ministerial decisions as well as disputes involving contracts with the government. The Council of State also has a Page 15 of 19

Legislative Department that reviews draft legislation and government contracts and renders legal opinions for the government. Under Article 175 of the Egyptian constitution, the Supreme Constitutional Court is “vested solely with judicial control over the constitutionality of laws and regulations”. The Constitutional Court also reviews administrative decisions and conflicts of law between the civil and administrative courts. Arbitration Most international contracts provide for some form of international arbitration for the settlement of contractual disputes. The Court of Cassation has confirmed on a number of occasions the validity of such arbitration clauses. An Egyptian court will respect an arbitration clause and stay proceedings brought before it. Arbitration may be conducted under any set of rules. One of the most popular set of rules is the International Chamber of Commerce (ICC) rules. Arbitration under the rules of the ICC may be upheld in Egypt or abroad. Egypt signed a series of agreements/treaties with the Netherlands and a number of countries for the encouragement and the reciprocal protection of investment. The agreement on encouragement and reciprocal protection of investments between the Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt was signed on 17 January 1996. Generally, the agreements/treaties provide that arbitration awards issued in one country may be enforced in the other if the award is supported by written evidence of the parties’ agreement to arbitrate. Then the dispute in question may come under arbitration in the country where it is to be executed, and the award does not conflict with public policy. Where no international convention applies, the provisions of law 27 of 1994 must be satisfied for a foreign arbitral award to be enforced.

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Bilateral Agreements between Egypt and the Netherlands

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Agreement between the Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed on 21 April 1999.

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Agreement on encouragement and reciprocal protection of investments between the Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt, signed on 17 January 1996.

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Agreement on economic and technical cooperation between the Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt, signed on 10 May 1975.

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Memorandum of Understanding between the Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt on the Dutch Cooperation Programme for Emerging Markets (PSOM) in Egypt 2003-2006, signed in 2003.

-

Memorandum

of

Understanding concerning

Trade

Cooperation

between

the

Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt, signed on 21 April 1999. -

Memorandum of Understanding between H.E. Mr. Gerrit Ybema, Minister for Foreign Trade of the Kingdom of the Netherlands and H.E. Eng. Maher Abaza, Minister of Electricity and Energy of the Arab Republic of Egypt, signed on 20 April 1999.

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Protocol of Bilateral Cooperation between the Government of the Kingdom of the Netherlands and the Government of the Arab Republic of Egypt on Improvement of Transport and Logistics in North East Egypt, signed on 24 November 1997.

-

Protocol concerning cooperation between the Ministry of Transport, Public Works and Water Management of the Kingdom of the Netherlands and the Ministry of Transport

and Communications

of

the

Arab

Republic of

Egypt

concerning

cooperation in the fields of Communications and Postal Banking, signed on 24 November 1997. -

Protocol concerning cooperation between the Ministry of Transport, Public Works and Water Management of the Kingdom of the Netherlands and the Ministry of Transport and Communications of the Arab Republic of Egypt in the field of RailTransport, signed on 24 November 1997.

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Joint Declaration between the Ministry of Transport, Public Works and Water Management of the Kingdom of the Netherlands and the Ministry of Transport and Communications of the Arab Republic of Egypt in the field of Transport and Communications, signed on 14 November 1996.

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Preferential Trade Agreements

Egypt is involved globally in several intra and inter-regional trade agreements, both multilateral and unilateral, including preferential trade agreements with the E.U., the U.S., Arab, African and European countries, some of which are listed below. EU - Egypt Association Agreement The EU/Egypt Association Agreement entered into force on 1 June 2004, after ratification by the Egyptian People’s Assembly, the European Union and the European Union Member States. It provides a framework for the political, economic and social dimensions of the EU-Egypt partnership, having as its main goals to create a free trade area over a period of twelve years, which implies reciprocal tariff liberalisation for industrial and agricultural goods. This agreement is of particular importance for Egypt, as the European Union is its most important trading partner, its main source of FDI, and its principal bilateral donor. With the exception of some products (including wool, cotton, hides and skin, various oils), imports into the EU of Harmonized System (HS) chapters 25 to 97 originating in Egypt, are allowed free of customs duties. Customs duties on imports into Egypt originating in the EU are to be phased out over a maximum period of 15 years, depending on the product and according to four product lists annexed to the agreement. The agreement also specifies that the EU and Egypt shall gradually liberalize a greater share of their trade in agricultural and fisheries products. More information on the Association Agreement can be found on the website of the EU Delegation in Egypt: http://ec.europa.eu/delegations/egypt. Agadir Agreement with Jordan, Morocco and Tunisia Egypt signed a free-trade agreement with Jordan, Morocco and Tunisia on 25 February 2004 for entry into force on 1 January 2006. The so-called Agadir Agreement committed the parties to removing substantially all tariffs on trade between them by 1 January 2005, and to intensify economic cooperation with regard to standards and customs procedures. The agreement also covers government procurement, financial services, contingency measures, intellectual property and dispute settlement. The conclusion of this agreement is considered to be a major step towards the objective of creating a Euro-Mediterranean free trade-zone in 2010, as it also contains rules on bilateral and diagonal cumulation. Greater Arab Free-Trade Area The Greater Arab free-trade area (GAFTA) programme, signed on 19 February 1997 to implement the Agreement on Facilitation and Development of Trade among Arab Countries, entered into force on 1 January 1998. This agreement is considered as the backbone of Arab economic integration. It encompasses all the members of the Arab league, and aims to create a vast Arab free-trade area by 2007 by dismantling customs tariffs by 10 percentage points annually over a decade. The principal entity responsible for implementing the programme is the Economic and Social Council of the Arab League. Common Market for Eastern and Southern Africa (COMESA) COMESA aims to deepen and expand the integration process for member countries by adopting general measures to liberalize trade. These include the removal of all tariff Page 18 of 19

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and non-tariff barriers and the adoption of a common external tariff; free movement of capital, labour and goods, and the right of establishment in the region; the adoption of a common set of standards, technical regulations, quality control procedures, certifications systems and sanitary and phytosanitary regulations; tax harmonization (including VAT and excise duties), and provisions on industrial cooperation in spheres such as company law, intellectual property, and investment; implementation of a harmonized competition policy; and the establishment of a monetary union. The COMESA has been ratified by the WTO under the Enabling Clause. Egypt became a member of the 20-nation COMESA in June 1998. COMESA’s Common External Tariff (CET) was to be in place by 2004, with rates of 0%, 5%, 15% and 30% on capital goods, raw materials, intermediate and final goods respectively. However, by December 2004, the CET had not been implemented; members’ states are conducting studies to reach a decision on the timing of its implementation. In October 2000, Egypt together with eight other member states eliminated tariffs on COMESA – originating products. More information on COMESA can be found on their website: www.comesa.int. QIZ (Qualified industrial Zones) Under the US umbrella, Egypt and Israel signed a trade protocol on 14 December 2004. The protocol establishes the “qualified industrial zones” in Egypt. The QIZ agreement will enable Egyptian textiles and garments to gain free market access to the US market. In order for a jointly produced Egyptian Israeli product to benefit from duty free treatment in the US, Egyptian and Israeli companies should together contribute two thirds of the minimum 35% (at least 11.7% from each side) of local content required under the QIZ legislation. More information on the QIZ is available on website: www.qizegypt.gov.eg.

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