CAIRO: Egypt became the sixth Arab country on Tuesday to adopt an Action Plan in the framework of the European Neighborhood Policy, paving the way for the establishment of a free trade zone inclusive of the European Union and neighboring countries by 2010.
A delegation of ministers headed by Foreign Minister Ahmed Aboul Gheit signed the agreement in Brussels with European Commission (EC) officials, represented by Benita Ferrero-Waldner, commissioner for External Relations and European Neighborhood Policy. Negotiations have been ongoing for 18 months with the main differences lying inissues of human rights, trade liberalization, and declaring the Middle East a nuclear weapons free zone.
Neither side commented immediately on the final resolutions reached. In 2005, Israel, Jordan, Lebanon, Tunisia and Morocco began implementation of their respective Action Plans. Syria and Libya now remain the only two Arab countries yet to sign on to the agreement.
Ferrero-Waldner arrived in Cairo last week to present a ?558 million (LE 4.2 billion) package to help improve the quality of Egyptian exports to the EU. The Action plan gives Egypt four years to implement economic and political reforms agreed upon with EC and requires Egypt to provide regular reports on its progress.
The funds will be allocated over four years beginning this year. The aid package is not subject to approval by the People s Assembly, since it is considered part of an already approved trade agreement. According to a European Commission statement, the funds are designed to support the modernization of Egyptian industry in addition to economic and political reform.
Egypt is already in the process of implementing the Euro-Med. Charter for Enterprise, a parallel agreement designed to qualify more Egyptian industrial products for export to the European market.
The charter, signed in Oct. 2004 by all 10 Southern Mediterranean countries seeking membership in the Euro-Med. Partnership Agreement, calls for the implementation of 10 programs including improving education, labor training and access to credit and building strong business associations to support small and medium enterprises.
The privileges we have gained from the Association Agreement are far greater than those from the [World Trade Organization], Hany Barakat, first undersecretary for industrial and technological development at the Ministry of Foreign Trade and Industry told The Daily Star Egypt.
I have the advantage right now of tariff-free access to the European market for my industrial products. The question is how can I best take advantage of this privilege? Because a free trade agreement is a license. It does not guarantee your right to penetrate it.
In 2005, the EU accounted for nearly 40 percent of Egypt s trade with 11.5 billion euros in total trade between the two sides. Liquefied natural gas represented more than 40 percent of Egyptian exports, followed by textiles and ready-made garments with 15 percent and agricultural products with about 10 percent. EU Foreign direct investment in Egypt amounted to 1 billion euros.
Egyptian agricultural exports to the EU soared 70 percent in 2005, from 248 million euros (LE 1.9 billion) in 2003 to 404 million euros (LE 3.1 billion) after the beginning of implementation of the EU-Egypt Association Agreement in 2004.