In his early childhood, when he smuggled imported clothes from Port Said Free Zone to sell them at Alexandria’s Libya Market, Sayed Hassan used to carry along a book to read during his long journey. Traders used to call him ‘Sayed the Student.’

In his early childhood, when he smuggled imported clothes from Port Said Free Zone to sell them at Alexandria’s Libya Market, Sayed Hassan used to carry along a book to read during his long journey. Traders used to call him ‘Sayed the Student.’

That was in the 1970s after President Anwar Sadat issued the October Paper in 1974, in which he said Egypt’s economy was in “urgent need of foreign resources” and “openness to the whole world, east and west.” Soon after, Law 118 of 1975 was issued, which allowed the private sector to import and export goods. In January 1976, Port Said was declared a free zone.

Protectionist state

Prior to that happening, Gamal Abdul Nasser isolated Egypt’s economy and nationalized the Suez Canal, foreign banks, Banque Misr and related industrial companies. He also distributed agricultural land to farmers, after feudal lords descending from the family of Muhammad Ali of Egypt and their entourage controlled most cultivated areas. As a result, Egypt was self-sufficient in terms of agricultural crops. Abdul Nasser also embarked on huge locally funded industrial projects without any foreign loans or donations.

Imports were very limited and only done through El Nasr for Import and Exports Company, the largest public sector company in the field of foreign trade. Egyptian shops displayed and sold domestic products, including furniture, household appliances and garments. However, some foreign goods of food, clothing and appliances were smuggled. Law No. 66 of 1963 imposed imprisonment and/or a fine of US $75-1,250 on smugglers, which was a large sum of money at the time.

The only market at which Egyptians bought their needs of imported clothing, chinaware and household supplies during the 1960s and before 1967 was the old Gaza market in Gaza Strip. Regular journeys by buses transporting families and school and university students from Cairo and the Canal governorates to Gaza were very common. That market was so famous for Egyptians that Egyptian traders, when all the roads to the Gaza Strip were closed in the aftermath of the Six-Day War in 1967, built a market in Zawia Hamra district in Cairo, and called it Gaza Bazaar.

Due to Egypt’s occupation with its open military front in Sinai after 1967, the authorities eased their control over the border with Libya and turned a blind eye to the prospering smuggling business between the two countries. As a result, Libya’s imports increased to meet the demand for smuggled goods at a district called the Smuggling Street or Libya Market in the city of Mersa Matruh, west of Alexandria. People from Alexandria, Damanhur, Tanta, Giza and Cairo traveled to that district to buy their needs of quality smuggled goods at reasonable prices.

President Sadat called for an open economy, however, the middle class could not stand the social consequences of that kind of rapid disintegration of the Nasserite socialist model with all its past social gains, followed by a booming service economy mainly based on trade, distribution, import, export, brokerage, money exchange, luxurious housing, private transport and upscale tourism. These changes and the rising cost of living triggered off the so-called bread uprising of January 18 and 19, 1977.

Life of trade

“During the 1970s, the government turned into a soft state,” says Jalal Amin in his book ‘Egypt and Egyptians under Mubarak.’ Ministers’ standing diminished, and some civil servants would go to the office in the morning and then trade in currency in the black market in the afternoon. Everything was subject to negotiation, bargaining and sneaky methods.”

Like many others, Hassan, who comes from an Upper Egypt family engaged in selling clothing in villages and hamlets, sought to try his luck in this source of livelihood that came from Egypt’s open gates to the western and eastern world. He traded in clothing imported through Port Said.

Port Said traders trusted Hassan so much that they used to give him imported clothing without him having to pay for them up front. After that, he would agree with a smuggler to get the goods out of the free zone without paying customs duties. Smuggling charges were paid according to the number of the smuggled consignments.

“The smuggler sometimes agreed with the driver of a seven-passenger Peugeot vehicle, which transported passengers among governorates, to hide the smuggled goods inside it,” says Hassan. “The clothes would be hidden inside the doors of the vehicle, under the driver’s seat or under the pedals. Sometimes he agreed with a customs officer to facilitate the exit of the smuggled goods in return for a negotiated commission.”

Hassan would then take the goods to sell them in Alexandria’s Libya Market, which became very popular with the open policy where one could find household appliances, perfumes, cosmetics, shampoos, sweets, shoes and clothes. Russians were said to have sold many things, including cameras, and buying leather products at that market.

“Libya Market then was the only market selling imported garments in Alexandria,” says Hassan. “It used to serve the entire Delta region, including Damanhur, Kafr el-Dawwar, and other cities. At the beginning, it was a square where traders displayed their merchandise either on the floor or on a table. Back in the 1970s, the imported clothes came from Italy and Lebanon, and they were heavily in demand due to their quality.”

Endangered business

During 1980-1985, the total value of Egyptian imports reached L.E. 6,274 million, according to an article by professor of agricultural economy at Cairo University Riad Amara. The average exports value totaled L.E 2,271 million, which meant a trade balance deficit of L.E. 4,003 million. The imported clothes market remained active despite the exports’ rationalization policy launched over 1979-1980 and covered garments, pottery and perfumes up to L.E 100 million.

Hassan eventually graduated from law school and continued his trade in imported jeans, shirts and sports clothes. He then came to be known in the market as ‘Sayed the Lawyer’ and his trade grew even more. His smuggled merchandise was transported in containers rather than in bags, and by small trucks. With the increased size of goods, his business was at stake, despite paying off customs.

“Even if you pay off customs, you will face problems with the police,” says Hassan. “They get bonuses when they confiscate imported goods. To them, any imported goods are smuggled, even if the contrary has been proved.”

The adventure of transporting goods from Port Said to Alexandria started soon after leaving the free zone. The most risky part of the journey was when a truck drove through the roads overlooking Lake Manzala in Port Said and crossed checkpoints. “The journey needs a daring driver,” says Hassan. “I mean a driver who does not stop when he sees flying checkpoints. Since my early years in this business, my life has been at stake.”

He recalls the risks involved with getting imported goods into Libya Market while anti-smuggling police continuously sealed off its entrances. Market merchants had their private entrances that the police knew nothing about. Unloading of goods was carried out in no time. “There was a nonstop movement in the market where people bought and sold,” says Hassan. “The market kept that busy pace until the early 2000s, after which point it came to a standstill.”

To retaliate upon Abu el-Arabi

While Mubarak was waiving from his car to people during his visit to Port Said in 1999, a man who went by the name Sayed Suleiman, aka Abu el-Arabi, rushed towards his motorcade with a sharp instrument, attempting to assassinate him. The attempt was foiled and Mubarak was slightly injured, while his chief bodyguard sustained serious wounds in the hand while trying to keep the attacker at bay. Abu el-Arabi was shot dead by one of the president’s guards.

Abu el-Arabi’s family however denied the story told by Mubarak’s guards and said he was in fact holding a piece of paper in which he complained to the president about the unpleasant living standards of Port Said’s population. According to their story, the president’s guards hastily fired on him. Whether that story was true or not, Port Said had to pay the price and bear the brunt.

An economic blockade was imposed on the city, leaving it with scanty chances of livelihoods with the issuance of Law No. 5 of 2002, which revoked a law and regulation aimed at converting Port Said into a free zone.

Social problems like unemployment, divorce and crime spread due to deteriorating economic and commercial conditions. Port Said went through bad times, and merchants headed to the market of the city of Qantara Gharb, south of Port Said, which replaced the free zone in Port Said, especially with increased number of imported clothing smuggled from Port Said harbor without customs duty. The proximity between the two cities also helped the movement of garments, furniture and household appliances between them.

Stagnant Libya Market

Within a short time, the market in Qantara Gharb became one of the most famous markets for imported and local goods at reasonable prices in Egypt, especially for nearby governorates like Ismailia, Al Sharqia, Damietta, Cairo, North Sinai, South Sinai, Suez, Dakahlia, and some Upper Egypt governorates.

“Since the market in Qantara Gharb began to flourish, Libya Market has been going from bad to worse,” says Hassan. “The reason is the increasing means of transport and the safe roads between Qantara Gharb and other governorates. In addition, shops have changed and imported goods are now found everywhere not only in Libya Market – not to mention the changes of the present customs systems.”

In 1999, Egypt became a contracting party of the Harmonized System (HS), an internationally standardized system of names and numbers to classify traded products. The first Egyptian customs tariff in line with the HS was issued by virtue of Decree No. 300 of 2004 as amended by Decree No. 410 of 2004. Later, the 2007 Tariff was issued in accordance with Decree No. 39 of 2007 in keeping with the World Customs Organization amendments of the HS, which was later amended twice in 2008 and 2009 without changing its structure. The amendments dealt with customs tax categories of certain commodities. The last amendment came with the issuance of Decree No. 184 of 2013.

“In the past, customs tariff on garments was charged by piece and people used to mislead the customs authority by importing clothes of one piece comprised of several pieces,” says Hassan. “Some would tie trousers to a shirt and declare them as one set. Nowadays, tariffs have increased and it is charged according to the clothes’ weight, reaching US$7-14 per kilogram. This new system caused us losses because garments are heavy. A pair of jeans weighs half a kilo, let alone the heavy winter clothing,”

According to the Central Bank of Egypt, the volume of imported ready-made clothes was US$647.5 million over 2006-2007 up from US$310.5 million in 2005-2006. This figure rose to US$ 994 million during 2012-2013.

“People prefer imported stuff,” says Hassan who now deals in clothing imported via Dubai. “This is because Egypt-made garments are not as good as imported ones.”