M E N A A S S O C I A T E S

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1 M E N A A S S O C I A T E S Mandatory Registration to Import Products into Egypt (Khaled Ragheb) 1 March 2016 Introduction On January 16, 2016, Decree No. 43 of 2016 by the Minister of Trade and Industry (the Decree ) was published in the Official Gazette. The Decree was issued in amendment of Decree No. 992 of 2015 which the same Minister promulgated on December 30, The Decree basically sets-out additional constraints on the importation of foreign products to Egypt. According to the ongoing discussions amid the Egyptian business community, it appears that the Decree has been issued for the purpose of (i) alleviating the foreign currency shortage that Egypt has been facing for the past few years by reducing the amount of imports, and (ii) limiting the access of low quality (or counterfeited) products into the Egyptian market by involving the trademark owner in the statutory filing. The efficiency of the Decree is still under scrutiny. According to article 4, the Decree will enter into force after the lapse of a period of two months from the date of its publication (i.e. after March 16, 2016). Under the Decree, foreign companies exporting their products into the Egyptian market are now required to register with the General Organization for Export and Import Control ( GOEIC ) (the regulatory authority overseeing import and export affairs within the Egyptian territory) and present certain documentation to ensure the quality and source of the incoming products. The Decree addresses (i) the foreign company that is manufacturing the respective products (i.e. the producer of the goods), and (ii) the company that actually owns the trademarks that these products are bearing. If not the same, each entity is required to submit certain documents for the purpose of being registered with GOEIC under a special register drawn up to that effect. Failure to observe this registration requirement will have the effect that the imported products will be blocked at customs and will not be released until satisfaction of such requirements (article 1 (2) of the Decree). Products Falling Under the Decree According to Annex (1) of the Decree, registration is required in case of export of any of the following products to Egypt for trading purposes (i.e. not for assembling and manufacturing purposes): MUNICH BERLIN DUBAI RAS AL KHAIMAH CAIRO BAGHDAD BASRA ERBIL

2 Milk and milk products for retail sale in packages of 2 kg or less Preserved and dried fruits for retail sale in packages of 2 kg or less Oils and fats for retail sale in packages of 2 kg or less Chocolate and food products containing cocoa for retail sale in packages of 2 kg or less Sugar confectioneries Pastries and food preparations of cereals, bread and bakery products Fruit juices for retail sale in packages of 10 kg or less Natural, mineral and carbonated water Make-up cosmetics, oral and dental care products, deodorants, toiletries and perfume preparations Soap and surfactants intended for use as soap, for retail sale Floor coverings Bath tubs, sinks, wash basins, toilets, toilet seats and covers thereof; Toilet paper, cosmetic paper, diapers, and towels Tableware, cutlery and kitchenware Table glassware Reinforced iron Household appliances (stoves, fryers, air-conditioners, fans, washing machines, blenders, heaters) Home and office furniture Regular bicycles, motorbikes, motorized bikes Watches Lighting devices for home use Toys Textiles, clothing, furnishing, carpets, blankets and footwear except PPE and medical use clothes Carpets Footwear 2

3 Entities Required to Register Under the Decree, both the foreign company/factory that is manufacturing the exported products and the company that actually owns the trademarks that these products are bearing must apply for registration with GOEIC. According to the verbal information received from GOEIC, the file at GOEIC will be opened in the name of the trademark owner. Under such file, all licensed factories and distribution and export centers of the trademark owner should appear. (1) Factories Factories must file an application for registration accompanied by a number of documents, including: (i) (ii) (iii) An official certificate showing the legal form of the manufacturer (such as trade license) and the license of the factory (such as industrial register or operation license of the facility); A certificate by the manufacturer listing the products it produces, the trademarks that appear thereon and their owner (if different from the manufacturer); Proof of ownership of the relevant trademark if owned by the manufacturer; and (iv) Certificates to prove that the factory has a quality control system, issued by an accredited body by the International Laboratory Accreditation Cooperation (ILAC), or International Accreditation Forum (IAF) or from an Egyptian or foreign government body approved by the Ministry of Foreign Trade. The Decree did not deal with the case of manufacturing under license or the case where the manufacturer of the product is different from the exporter. Given that the Decree has been issued very recently, it remains to be seen how GOEIC will handle such cases and adjust the requirements under the Decree accordingly. (2) Trademark Owners The trademark owner (if different from the manufacturer) must also apply for registration with GOEIC. A number of documents must be enclosed with the application form, including: (i) A certificate proving the ownership of the trademark by the applicant; (ii) (iii) A certificate from the trademark owner listing the distribution centers which are authorized to distribute products with this trademark. (iv) A certificate to prove that the trademark owner has a quality control system, issued by a body recognized by the International Laboratory Accreditation Cooperation (ILAC), or International Accreditation Forum (IAF) or from an Egyptian or Foreign Governmental body approved by the Ministry of Foreign Trade. Applicants may be expected to provide exhaustive lists of all factories retained for manufacturing their products and all of their distribution and export channels worldwide, be it relevant to Egypt 3

4 or not. However, given that providing such exhaustive lists could in some cases be an extremely cumbersome and costly process (since all documents must be accompanied by certified translations and be legalized by the Egyptian Consulate abroad), it is our view that providing information only with respect to factories and exporters relevant to Egypt would be sufficient for the purpose of registration with GOEIC. All documents mentioned above under sections (1) and (2) above must be approved by the Chamber of Commerce in the respective State, legalized by the Egyptian consulate, and accompanied by certified Arabic translations. Timeline for Registration According to article 1 (3) of the Decree, the final decision to register the factory/trademark owner does not depend on the due submission of the documents, but on the decision of the Minister of Trade and Industry. The Decree does not set-out a timeline for the Minister to issue his decision. This is one of the additional setbacks of the Decree. Exemption from Registration According to article 1 (3) of the Decree, the Minister of Foreign Trade may grant an exemption from all or part of the registration requirements at his sole discretion. The Decree is silent as to the criteria for granting such exemptions or the conditions therefor. Failure to Register As previously mentioned, the Decree will enter into force as of March 16, Starting that date, it is expected that no shipments of products which are subject to the Decree will be released by the customs units unless the concerned trademark owner and factory are duly registered with GOEIC. Due to the complexity of the documents required, we expect that the Minister of Trade and Industry may consider extending the date of entry into force of the Decree for a few more weeks. According to GOEIC s verbal confirmation, goods which have already been shipped prior to the date of the issuance of the Decree (i.e. January 16, 2016) will not be subject to the aforementioned restrictions. Conclusion The Egyptian government has been endorsing the usefulness of the Decree. It can however be argued that Egypt s monetary and general economic structural policies are more prone to mitigating the ongoing foreign currency crisis. The Decree can be also seen as an additional blow to the industrial sector which relies heavily on imports with respect to intermediary goods that are consummated during the production cycle. In addition, limiting imports will inevitably reduce the customs proceeds of the State. Aside from the tedious and cumbersome set of documentation required to fulfill registration requirements, the actual registration is dependent on the consent of the Minister, which, more importantly, is not subject to any statutory timelines. 4

5 There have been rumors that the date of entry into force of the Decree might be postponed due to the current business climate and the increasing concerns of the business community. So far, only few companies have been able to register. If you would like to know more about the subjects covered in this publication or our services please contact us. Khaled Ragheb Amereller Legal Consultants Mena Associates, Cairo 5