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An opportune moment
The lines of politics and economics have always run parallel. These
days they’re pretty hard to tell apart. As talks re-open regarding
a Free-Trade Agreement with the United States, it’s worth remembering
that such an arrangement has been in the offing, although hesitantly,
for quite a while. Since Camp David in fact. But after that, Israel
was the first to benefit, followed by Jordan.
The need to raise Egyptian-US economic relations to the same level
of importance as our political alliance was implicit in trade talks
from the first. Now that America’s urgency to win Middle East
cooperation in its efforts to combat terrorism and spark a faltering
economy is more apparent than ever, the reasons should be placed
in perspective.
Renewed interest in an Egypt-US free-trade agreement need not be
regarded as a reward for cooperation, but as a necessary feature
of US economic policy. Access to the oil and consumer-rich Arab
and Gulf markets is crucial to the United States, and Egypt is a
gateway to that market.
The current administration in Washington is unlikely to go down
in history as an altruistic one. This is a staunchly pro-business
government, and it has pushed from the start to establish a Trade
Promotion Authority whose purpose is to slice through bureaucratic
procedures and achieve “fast-track” approval for bilateral,
multilateral and regional trade deals.
The US administration is anxious about lost opportunities for trade
agreements. The United States currently has seven such treaties
with other countries, including the recently ratified agreement
with Jordan. The European Union, a major competitor, has over 70.
Talks with Egypt had previously heated up in February, and the
FTA was at the top of AmCham Egypt’s agenda during our DoorKnock
mission to Washington, DC. Egypt’s trade deficit (which largely
favors the United States) was one big reason, while the downsizing
of USAID assistance (which relies in any case on US-produced goods)
was another, as was the inequity of US military and economic assistance
to Israel as compared to Egypt.
If the administration sounded receptive, this was not because an
FTA with Egypt meant doing the right thing. Rather, it was something
that needed to be done. Now more than ever, the United States is
looking after its interests. Meanwhile, the administration’s
current popularity has permitted the current push to legislate a
fast-track trade authority into being.
Egypt, as a country that must create more than 700,000 jobs annually,
could take a page or two from that book. Earlier this year, the
prime minister announced that priority would be given to policies
helping the economy to attain a giddily optimistic 8-percent growth
rate. Analysts suggest that such growth would require us to attract
a whopping $25 billion per year in foreign investment. Consider
that in 1999-2000, FDI in Egypt stood at just $1.6 billion and you
get a sense of what we’re up against.
An FTA would stimulate growth by lifting restrictions on the export
of several types of Egyptian goods to the United States. We’d
be on the receiving end of tech-transfer injections that would help
to raise the standards for manufactured goods. And, with an FTA
in the offing, the Egyptian business community could hope for a
renewed reform effort by a government anxious to demonstrate its
willingness to help pave the way.
Last month’s visit to Egypt by US Department
of Commerce deputy assistant secretary Molly Williamson and a memorandum
signed by Minister of Economy & Foreign Trade Youssef Boutros
Ghali and US Secretary of Commerce Donald Evans in Washington around
the same time represent small but necessary steps towards greater
trade cooperation.
Here in Egypt, the prospect of an FTA with America comes as a welcome
morale booster in a time of uncertainty. As we celebrate the Muslim
and Christian feasts in the weeks ahead, our prayers will be for
peace, and for the strength to overcome the difficulties that arise
in its absence.
Mohamed L. Mansour
President, AmCham Egypt
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