CAIRO: US-Egyptian economic relations are healthy and growing, despite absence of a free trade agreement (FTA), said US Ambassador to Egypt Francis Ricciardone.
“In 2004, our bilateral trade was a little over $4 billon . In only two years, in 2006, we got over $6 billion in bilateral trade, he explained. “It is very nearly a 50 percent increase in our bilateral trade in only two years . even in the absence of an FTA.
Figures prove that the US is Egypt’s single largest trading partner. In 2006, US exports to Egypt increased by 30 percent while Egyptian exports to the US increased by 15 percent.
“The trade balance is in favor of the US, but if you look at growth of bilateral trade from 2000 until 2006 . Egyptian exports have grown in a much faster [pace] than US exports to Egypt, and the QIZ [Qualified Industrial Zones] is the number one reason for that, pointed out Amer Kayani, counselor for commercial affairs at the US embassy.
US exports to Egypt – which soared to $4.1 billion in 2006, up from $3.16 billion in 2005 – are mainly agricultural products (19 percent), transportation equipment (21 percent), IT and electronic products (10 percent), chemicals (6 percent) and fabricated metal products (5 percent). On the other hand, top Egyptian exports, totaling $2.2 billion in 2006, are textiles (34 percent), petroleum and related products (42 percent), and iron and steel (14 percent).
“Even in the absence of a free trade agreement, we’ve had the QIZ agreement, another spectacular advance in trade between our two countries, the ambassador said. “Trade has increased spectacularly at least by three times in those past two years . and in 2006, we had over $600 million in Egyptian textiles exported to the United States, primarily textiles, under the QIZ agreement.
Consequently, he added, over 100,000 Egyptian jobs have been created, jobs that might have been lost to China or India, other low cost producers.
The ambassador’s remarks were made during the “Business with America conference, organized by the Global Trade Matters organization. The event brought together business communities from both countries to explore means of enhancing bilateral trade and investment. It provided practical tips on doing business with the US, including information on identifying and negotiating an agency agreement with US companies, trade finance, and business visas.
Given the fact that politics rubs on business, US officials confirm that 9/11 has not harmed US-Egyptian economic and business ties.
“Proof is in the pudding. Since 2004, bilateral trade has virtually doubled. What does that tell you? The effect is that 9/11 has had no effect, and proof is in numbers, Kayani said.
The US also tops the list of countries investing in Egypt. It is the largest petroleum and second largest non-petroleum foreign direct investor in the country. By the end of 2006, US total investment in Egypt crossed the $5.57 billion mark, constituting 10.8 percent of US foreign direct investment in the Mena region.
“Promising sectors for US investment in Egypt are oil and gas, franchising, consumer goods, power generation, petrochemicals, and food products, stated Kayani.
Among the giant US corporations operating in Egypt are Apache – the largest oil foreign investor in the country – Google, HP, Microsoft, Cisco and Oracle in the field of IT, Procter and Gamble, PepsiCo and Coca-Cola in consumer goods, and Citibank. Alternatively, the most prominent Egyptian investor in the US is Oriental Weavers, an evergreen success story with several factories operating in the US.
“Economic growth is what improves lives. It’s what gives young people hope. It’s what increases jobs, Ricciardone said. “Trade and investment are the engines of economic growth. Economic assistance can contribute. We can help, but only to the extent [that] our economic assistance helps Egypt in what it wants to do anyway.
The ambassador explained that the nature of bilateral relations has now shifted from aid to trade, which is a big part of success in relations. “Too many Egyptians in my view have come to measure the relationship on the basis of dollar amounts of American assistance going to Egypt. Thirty years ago, when Egypt’s GDP was about $20 billion, and our aid was perhaps 10 percent of that GDP, that was a significant measurement of one aspect of the relationship, he clarified.
“But today your GDP has grown by at least five times; you’re well over a $100 billion in GDP. And our aid has shrunk in percentage terms of the GDP . to a little over one percent. But still there’s a fascination, a fixation on that figure. So I ask you, please focus on trade not aid as a measure or one of the principal measures of the health of the friendship between the US and Egypt.
US assistance to Egypt focuses on building and improving infrastructure – mainly in roads and water – as well as human capital. “Egypt’s economic growth has created tremendous need for skilled labor and Egypt cannot [cope with] that demand, he said. “For example, Egypt cannot meet demand in the IT sector. At the embassy, we [lack] people who can analyze and produce data in good English.
That is why, the ambassador concluded, the US has chosen to help the government in building human capacity at the bottom.
“Starting in 2008 and for the next three years, we will send 330 Egyptians to the United States for technical and industrial scholarships to come back to Egypt and teach those skills here to elevate the level of Egyptian workforce and be competitive on the world stage, he said.