Egypt, US aim to double bilateral trade

Annelle Sheline
6 Min Read

CAIRO: Minister of Trade and Industry Rachid Mohamed Rachid and United States Trade Representative (USTR) Ron Kirk said both nations plan to “double the US-Egyptian trade volume in the next four years.

Acknowledging that trade volumes sank under the recent economic duress, from $8.4 billion in 2008 to $7.2 billion in 2009, Kirk highlighted the intentions of their respective presidents to boost their countries’ economies through export-driven growth.

Kirk pointed out that following his appointment as USTR last year, Rachid represented one of the first foreign officials to visit him, and has proved a “trusted advisor and counselor.

Rachid listed qualified industrial zones, cooperation to promote the export of US goods in the region and the resolution of the Doha trade negotiations as the areas given particular attention in their meeting.

The Doha trade negotiations, or the Doha Round, now in their ninth year, represent a point of contention between the developing countries and the US in particular. Last year head of the World Trade Organization Pascal Lamy confirmed that the US had agreed to lift the contentious Farm Bill’s protection of US agricultural products, yet back-pedaling since then seems to have once again stalled the talks.

Kirk stated, “If we can come up with the right mechanism to bring the Doha roundtable to a conclusion, [it would provide] an extraordinary gift to the least developed countries of the world and benefit global economic recovery.

“We need a balanced and ambitious result with meaningful market access for all countries involved. It is in the interest of the developed world that all countries have access to new developing markets like China, India, South Africa and Brazil.

He concluded that Rachid has “agreed to follow up.for a more robust commercial relationship, between the US and Egypt, without providing specific actions to be undertaken.

Egypt is one of the few countries with which the US has a trade surplus; in 2008 Egyptian exports worth $2.3 billion were sent to the US, while $6.0 billion in imports were received. In the same year, the US became the primary recipient of Egyptian industrial exports, followed by Italy and Saudi Arabia.

While Egypt and the US have not established a Free Trade Agreement (FTA) – Kirk clarified that such an agreement is not expected at present – Qualified Industrial Zones (QIZ) represent one aspect of Egypt’s “special relationship with the US.

Established in 2004, QIZ represents a trilateral agreement with Israel, whereby goods with a minimum 10.5 percent Israel-made content are finished in Egypt and shipped for tax-free import to the US.

Currently the top four QIZ areas in Port Said, Alexandria, Tenth of Ramadan and South Giza produce primarily textiles, yet Kirk and Rachid expressed plans to initiate QIZ manufacture for additional sectors.

The US imports several Egyptian products without tariffs under their longstanding Generalized System of Preferences (GSP) agreement, a contract extended to many developing countries to allow specified goods to enter the US duty-free. Initiated in 1976, the GSP agreement will be up for renewal at the end of 2010.

At their first meeting last May, Kirk and Rachid organized the signing of a strategic partnership plan to bolster economic ties.

Kirk and Rachid’s friendly relationship, and the increased warmth following the Obama administration’s acknowledgment of Egypt as a strategic ally, coupled with less grandiose language from the White House about democracy-building, inspired a chummy feel at the press conference. Yet questions from journalists revealed ongoing suspicion about concrete American intentions to benefit Egypt.

An initial inquiry probed the disparity between America’s alleged commitment to economic partnership and its pursuit of military action in the region. Kirk’s response, that “investing in security and economy are not at all contradictory, lapsed into the pro-democracy language of the previous administration.

He said, “Our underlying commitment to freedom, democracy, human rights. have given us the ability.and freedom to be a leader. His then expressed wishes for President Mubarak’s renewed health and swift return to his duties.

Additional questions demanding specificity on additional goods to be covered by the GSP agreement and manufactured in the QIZ’s, as well as the import of American wheat, were largely deflected.

An FTA may never materialize with the US; Kirk explained that “Minister Rachid had to make a judgment early whether we would rehash the past challenges that did not allow an FTA, or to come up with a more appropriate mechanism to meet the desired objective of both leaders.

Yet Egypt is currently in free trade negotiations with India and Russia and already enjoys FTA’s with the EU, Turkey, and the Middle Eastern countries included in the Pan Arab FTA.

Manufacture represents the prime contributor to Egypt’s GDP growth, which is expected to return to its pre-crisis level of 7 percent and higher over the coming years, while industrial production represents Egypt’s most rapidly growing sector, according to the Ministry of Trade and Industry.

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