CAIRO — As the Egyptian government prepares to issue a special incentive strategy to boost the local automotive industry in mid-2018, its Dec. 28 decision to suspend the reduction of customs duties on imported European cars — which was due to be implemented at the beginning of 2018 — made the headlines and came as a shock to Egyptians wishing to buy cars.

Egypt had agreed to reduce customs tariffs as per the 2001 Euro-Egyptian Partnership Agreement that has been in force since 2004. The agreement provides for a gradual customs reduction of 10% per annum on European exports to Egypt from 2004 until such duties are eliminated in 2019. However, Cairo only started reducing customs on cars in 2010, and it stopped in 2014 for a year. Customs on European cars have been reduced by 70% so far.

Paragraph 6 of Article 9 of the Euro-Egyptian Partnership Agreement allows Egypt to suspend the customs reduction timeline for a period not exceeding one year.

The government's decision comes despite the fact that car sales in Egypt have stagnated and Egyptians’ purchasing power has dwindled. According to an October 2017 report by the Egyptian Automobile Marketing Information Council, car sales declined by 37% in 2017 compared to 2016.