TRADE_RFP_Section_J.1_-_Prior_Activities_and_Lessons_Learned.pdf

RFP #72026319R00003

J.1 PRIOR ACTIVITIES AND LESSONS LEARNED

For the last couple of decades, through different activities, USAID/Egypt worked with a number of GOE ministries and agencies to establish a more open and modern trading system by improving its trade policy environment to reach international standards.

Two of the more recent and significant trade activities are Technical Assistance for Policy

Reform II (TAPR II) and Trade Facilitation Project (TFP). Independent evaluations concluded that these activities helped to develop the tradable sector in Egypt.

These two activities demonstrated the strategic value of involving all players in the ecosystem to be successful in activity implementation and to achieve results. Applying this lesson learned, it is important to coordinate closely with relevant government agencies even if the main focus of assistance is building capacity of the private sector and civil society.

Furthermore, a more structured and institutionalized public and private dialogue model proved to be very effective especially in reaching consensus on policies.

1. Technical Assistance for Policy Reform II (TAPR II): October 2005 –October 2010

TAPRII was an umbrella contract that had five different components, including trade environment. The overall objective of this component was to bring Egyptian import and export policies and procedures in line with international standards, increase the efficiency and institutional capabilities of border agencies, protect and enforce intellectual property rights, and promote competition policies. TAPR II assistance covered four main areas:

Customs: The assistance on customs included: simplifying procedures, providing training to improve compliance, enhancing stakeholder relations, and promoting automation.

Trade policy: The assistance on trade policy included: capacity building for the MTI’s

Foreign Trade Sector (FTS) and Trade Agreement Sector (TAS) (e.g., assisting in conducting economic impact assessments of trade policies and trade agreements);

developing points of contract in relevant GOE agencies on Sanitary and Phytosanitary

Standards (SPS); and Technical Barriers to Trade (TBT).

Trade facilitation: The assistance on trade facilitation included: conducting port assessments, implementing border measures, and establishing a Food Safety Agency

(FSA).

Product regulation and conformity assessments: The assistance on product regulation and conformity assessments included: capacity building of the Egyptian Organization for Standardization (EOS) to harmonize regulations and standards with international best practices.

TAPR II conducted a number of studies on the four areas covered by the activity (located on the DEC). These studies informed many reform actions that were later introduced by the javascript:__doPostBack('ctl00$ctl00$body$PageMainContent$ctl01','') government, including: the introduction of a new customs law; the establishment of a customs training center; the establishment of the National IT system; introduction of a risk management system in GOEIC; introduction of product standards for certain sectors; and initiating the process of establishing a food safety authority.

TAPRII achieved the following results:

Improved Export/Import Executive Regulations. TAPR II analyzed several critical areas in import/export regulations, including consolidating inspection agencies and establishing a “single window for clearance of imported goods.”

Improved Risk Management System for Imports. TAPR II conducted analysis and recommended introducing risk management systems in both GOEIC and the Customs

Authority. TAPR II helped the Customs Authority adopt a risk management system.

Streamlined Egyptian Mandatory Standards. TAPR II worked with the Egyptian

Organization for Standardization (EOS) in its last year only. The work was to harmonize textile and apparel standards with international standards. Two studies were completed and standards were reduced from over 1,000, down to seven. The TFP project continued this cooperation with EOS for other commodities and for the conformity assessment system as a whole.

Established an inter-ministerial food steering committee. TAPR II assisted in the formation of a committee, including the private sector and different working groups to establish a Food Safety Authority in Egypt.

Improved Enforcement of IPR Border Measures. TAPR II provided training and recommendations on best international practices to improve IPR border measures.

Regulatory changes were made which provided some improvement on border measures. TAPR II submitted comments and held meetings on a draft amendment to the IPR Border Measures portion of the Export-Import Regulations.

Supported Food Safety System. TAPR II provided significant assistance to establish a

Food Safety Management Unit (FSMU) within the MTI. In particular, TAPR II delivered to the MTI:

Five-year FSA strategic plan and one-year work plan;

Draft of a law establishing the FSA;

White paper on use of risk analysis in food safety

(http://pdf.usaid.gov/pdf_docs/pnadx055.pdf );

Draft general rules and procedures for inspecting different types of food establishments; and

Database of food laboratories in Egypt (first of its kind in Egypt) and a survey of these labs to determine accreditation, equipment, and training for various tests.

2. Trade Facilitation Project (TFP): June 2011-October 2015 http://pdf.usaid.gov/pdf_docs/pnadx055.pdf

The Trade Facilitation Project (TFP) was designed prior to 2011 and implementation took place over the four turbulent years that followed. The original project

Statement of Work (SOW) for the TFP had anticipated swift action on major reforms such as passage of a new customs law, reforms in the outdated export-import regulations, establishment of coordinated risk management within the border agencies system, and creation of a food safety agency. Changes in the GOE during TFP’s implementation narrowed the opportunities to implement those reforms, and hence USAID/Egypt removed them from the scope of TFP.

In 2012, USAID/Egypt pivoted TFP’s assistance to work more closely with the quasi-governmental Export Councils under the MTI, private sector business associations, and individual small businesses. Under this plan, TFP worked with export-ready SMEs covering two new tasks: 1) improve awareness and use of special export opportunities and preference programs available to Egyptian exporters; and 2) support government and private sector efforts to develop successful small and medium enterprise exporters.

TFP achieved the following significant results:

A total of 178 SMEs assisted in export promotion and energy efficiency. A total of over $17 million of export sales realized by SMEs at trade shows with USAID support, and more than $50 million of additional sales expected. On energy efficiency, USAID supported over 25 SME manufacturers increase their fuel efficiency by up to 25%.

TFP assisted the development of export consortia – in both the home textiles and auto parts sectors - to group together SMEs with complementary products so they may cooperate among themselves and compete more effectively in international markets with better product offerings and lower cost of promotion.

TFP assisted in identifying major buyers – including Zara Home Company – and helping SMEs market directly by tailoring Egyptian products to major buyer specifications.

TFP organized for the first time in Egypt the “Exporters’ Souk Events” in Cairo and

Alexandria that connected hundreds of exporters with key export service providers.

TFP published a new version of the IPR book that is used as one of the textbooks in the

Faculty of Law, Cairo University and in many other associations as reference material in IPR issues.

TFP produced a SWOT assessment and a financial analysis of the Foreign Trade

Training Center (FTTC)’s operations. This resulted in a strategic plan for the Center and improvement of its website and online curriculum, as well as higher quality of training for SME exporters.

TFP produced four directories of export companies for the four export councils: home textile, engineering, food processing, and ready-made garments. These directories helped in facilitating communication between Egyptian companies and international buyers.

TFP produced an exporters’ toolkit that was made available to any Egyptian exporter online (http://eecegypt.org/SME_Export_Toolkit.pdf).

TFP conducted an important study on Qualified Industrial Zones (QIZ) entitled: “QIZ

In Egypt Opportunities for Export Diversification.”

(http://pdf.usaid.gov/pdf_docs/PA00KK9V.pdf). This study helped the Embassy in trade discussions with USTR and programming assistance with MTI’s QIZ Unit.

USAID/Egypt conducted an end-of-performance evaluation for the TFP, which was completed in January 2016 (http://pdf.usaid.gov/pdf_docs/pa00mf1s.pdf). The evaluation presented a number of recommendations.

Adopt a long-term (at least five-year) period for activity implementation. Given the tentative, resource-constrained, and risk-averse nature of most small businesses, a new activity must be capable of providing sustained support for an incubation period of several years before SMEs achieve levels of self-sustaining production, marketing and investment growth.

Introduce more rigorous eligibility criteria for selecting SMEs to receive activity assistance. More stringent criteria are needed, and the activity should consider reaching out to other Egyptian associations (excluding the Export Council) for a pool of promising SME prospects. For example, implementers of a new activity should assess

SMEs more carefully with respect to their readiness and capacity to export. SMEs could be categorized in terms of the level of their knowledge about exporting and their previous experience to identify the type and level of assistance required and to tailor training according to recognized deficiencies. Similarly, a new activity should customize the type of technical assistance services to SMEs by size, experience and sector of selected firms.

Develop and implement a systematic and coordinated SME training plan. Training should be periodic, beginning far in advance of trade shows and assign firms training activities that they can do on their own, between training events. For example, as part of hands-on training, SME managers would be required, on their own, to research markets, seek B2B contacts and tailor product selection to markets. Subsequent training would grade their progress and condition their admission quality of performance.

Set up clear standards and guidelines for trade show selection, SME eligibility for trade show participation and trade show follow-up support. Positioning enterprises in visible, high-traffic locations at trade shows is important for improving the numbers of visitors, clients, purchase agreements and export transactions. Trade shows should also be complemented by other types of technical assistance; some SMEs recommend seeking other areas of intervention, like assistance on trade missions, trade tours to improve the quality of training and trainers, and assisting formation of export consortia.

javascript:__doPostBack('ctl00$ctl00$body$PageMainContent$ctl01','') http://eecegypt.org/SME_Export_Toolkit.pdf http://pdf.usaid.gov/pdf_docs/PA00KK9V.pdf http://pdf.usaid.gov/pdf_docs/pa00mf1s.pdf

Assure that implementing partners undertake more rigorous selection of training staff.

As mentioned above, more specialized and advanced trainings need to be provided.

This will require more advanced and experienced trainers, or it may involve training of trainers by activity implementers.

Offer incentives to export consortia for bringing SMEs together. New assistance could include advocacy, advisors and services to existing and new export consortia to offer incentives for membership and participation by SMEs. Such incentives could include access to online communities of practice, how-tos in marketing and export guides, mentoring of SMEs by larger B2B partners or clients and jointly shared trade fair exposition space with emphasis on providing a unique type of technical and marketing services required by SMEs.

Introduce systems for more comprehensive and systematic monitoring and record keeping of activity interventions. Activities with multiple tasks need systematic and sustained performance tracking, comprehensive data collection and sustained recordkeeping that generate information to assess the costs and benefits of each activity in order to evaluate their absolute and relative effectiveness.

Design and implement a dissemination plan for sharing information on international best practices. A follow-on activity could include a dissemination plan for training, electronic media and other mechanisms suitable to the Egyptian context for sharing environmental best practices—e.g., clean energy and energy efficiency—that are within the capabilities of small to medium Egyptian enterprises to adopt. For example, SMEs may benefit from support for solar thermal energy installations for hot water heating as an alternative to current traditional use of fossil fuels. Also, future activities could arrange to conduct trainings in industrial zones where the firms are located, during off peak hours, and offerings at two levels - on general and sector/industry-specific topics.

Finally, technical reports should be translated into Arabic for greater accessibility and use.

Recruit short-term specialized trainers for conducting advanced training workshops that fit SMEs with longer experience, higher expectations and stronger export capacity. The evaluation findings highlight that not all SMEs have the same level of management, marketing and production skills; training should be tailored to SMEs’ levels of skill and experience, and trainers selected accordingly.

Adopt phasing-in/phasing-out strategy for SME capacity building. The goal should be for every SME to “graduate” to self-sustaining export market participation. This requires a clear SME graduation strategy based on needs assessments that provide training and other support reflecting a firm’s export-readiness and more advanced training for firms with greater capabilities.