Doorknock March 2004   Mission Statement Delegates' Profile Mission Report   Missions To The U.S.

AmCham Egypt Doorknock Mission to Washington D.C. (March 29-April 6, 2004) An Update on Reforms in Egypt

Mission Statement:

The American Chamber of Commerce in Egypt (AmCham) is dedicated to strengthening the historic U.S.-Egypt partnership as a means of promoting bilateral trade and mutual understanding.

The strategic partnership shared by Egypt and the United States reflects common commitments to regional peace and security, as both nations share similar visions vis-à-vis trade liberalization and political stability. Throughout their long relationship, Egypt and the United States have cooperated on a plethora of issues, including the global war on terrorism, and initiatives to further economic development and progress. Based on Egypt's unique geo-political position in the region, the U.S. and Egypt must work together to build for this generation and future generations a Middle East dedicated to peace, stability and sustainable economic growth.

AmCham, for its part, believes that following the war in Iraq, we are in a new environment and that the way forward lies in promoting even greater cooperation particularly in the economic arena. Egypt's private sector, represented by AmCham, seeks to expand and deepen the commercial and trade relationships between our two countries. As the foremost advocates for the private sector in Egypt. AmCham feels that the need for a strong relationship with the U.S.. We know the direct connection between increased U.S.-Egyptian commercial and investment ties can and will result in greater democratization.

Furthermore, we feel that a Free Trade Agreement between the United States and Egypt will provide an important substantive and psychological springboard to stimulate further reforms of the Egyptian economy, while simultaneously benefiting the U.S. Such an agreement would have manifold significance: through increasing trade ties, the United States would signal its readiness to step up its economic relationship with Egypt so as to be on par with the political relationship the two countries already share.

Over the course of the last year, despite the economic difficulties brought about by regional circumstances, Egypt has managed to take several highly relevant steps towards market reform. The following are some of the political, economic and legislative reforms recently adopted by Cairo:

• National Council For Human Rights: In January 2004, the Egyptian Shura Council (the lower house of Parliament) decided to appoint former secretary general of the United Nations (UN), H.E. Dr. Boutros Boutros Ghali, as Chairman of the National Council For Human Rights and the former Minister of Information, H.E. Ahmad Kamal Abu al-Magd, as his deputy. The council includes 25 political and opposition leaders and activists in the area of human rights as well as public figures.
  
  
• National Council for Women (NCW): The National Council for Women (NCW), headed by H.E. Mrs. Suzanne Mubarak, the First Lady of Egypt, has been extremely active over the last year. The NCW aims to enhance the status of all Egyptian women, maximizing their contribution to the growth and development of Egypt, while narrowing existing socio-economic gender gaps.
  
  So far, the NCW has established a Women Business Development Center (WBDC), which addresses women's strategic needs in business to provide social and political empowerment. The NCW also played a vital role in the issuance of a nationality law, which conferred citizenship for the children of Egyptian women married to foreigners.
  
  
• National Democratic Party (NDP): In December 2002, President Hosni Mubarak announced a major restructuring of the NDP’s General Secretariat, following a one-year-long NDP internal review. NDP changes aimed at: declaring its support for free market principles and reaffirming its commitments to the country’s younger generations.
  
  The restructuring was followed by the 2003 NDP Conference, held under the theme of Citizen's Rights. Today, the NDP has been injected with new blood; better reflecting Egypt's diverse and relatively young population. The Secretariat now includes eight cabinet ministers, eleven women, seven Coptic Christians and more young members.
  
  
• Egypt Reduces Textile & Import Tariffs : In January 2004, by order of Presidential Decree 35, Egypt reduced its tariffs on apparel and textile imports following consultations with the U.S. Egypt has dropped apparel tariffs to 40 percent, home textile tariffs to 35 percent, fabric tariffs to 22 percent and yarn tariffs to 12 percent. The reductions also include a customs exemption for textile machinery and dye-stuffs.
  
  
• Egyptian National Competitiveness Council (ENCC): In February 2004, the Egyptian National Competitiveness Council (ENCC) was established at the Davos meeting of the Arab Business Council. The ENCC intends to define emerging issues of national importance and set priorities for reform, change and sustainable development in Egypt, communicating its solutions to decision makers and civil society to take action.
  
  
• Egypt Removed From Money Laundering Blacklist: In February 2004, the Financial Action Task Force (FATF), the international body leading the campaign against money laundering announced the removal of Egypt from its blacklist of Non-Cooperative Countries and Territories (NCCTs). Egypt was also one of the main participants in a seminar on combating terrorist financing at the FATF held with a group of Middle Eastern and Asian countries.
  
  
• Floating Currency System: In January 2003, policymakers abandoned the currency’s managed peg system in favor of a floating currency system. The move elicited broad approval from the IMF and the World Bank, as well as ratings agencies Standard & Poor’s and Fitch. Since the flotation of the Egyptian pound, the official dollar exchange rate jumped from LE5.35 to LE6.20, as of March 2004, representing a drop of almost 16 percent in the value of the local currency.
  
  
• Public Banks Managed by Private Sector: under the government’s current reform strategy, bankers with private sector experience are being appointed to head Egypt’s biggest state-owned banks. So far, the policy has improved management practices, including technical and personnel training, the introduction of new technology and the implementation of stricter lending practices.
  
  
• Telecom Licenses in the Hand of the Private Sector: The government decided from the start to delegate the Telecom GSM licenses to the private sector, awarding both contracts to private operators. Today the market has two major players: MobiNil and Vodafone Egypt. In addition to the public authority operating pay phones, there are two separate private sector companies providing this service.
  
  
• Cairo & Alexandria Stock Exchange (CASE): The Cairo & Alexandria Stock Exchange (CASE) has issued new accountability procedures for listing to increase transparency. As a result, 80 companies were de-listed for not meeting the requirements.
  
  
• Agricultural Sector: The sector has undergone significant reform over the past decade. Today, all agricultural land is in the hands of private owners.
  
  
• Petroleum Industry: The liberalization in the industry has resulted in the deregulation of gas distribution. Today, 80 percent of all oil & gas services are operated by the private sector with 90 percent of all exploration activities carried out by foreign multinationals.
  
  
• Transportation Sector: Egypt today has a number of private sector run ports, including the Ain El Sokhna Modern Port, the East Port Said Container Hub, and the Marsa Alam Port.

Throughout 2003-2004, the government has also passed several pieces of important legislation:

• The Anti-Money Laundering Law, which aims to help law enforcement capture and prosecute money launderers.
  
  
• The Special Economic Zones Law, designed to boost manufacturing activities and export-oriented industries through tax and customs incentives.
  
  
• The Export Promotion Law , which aims at boosting Egyptian exports and narrowing the country's trade deficit. The law focuses mainly on the elimination of the bureaucratic hurdles hindering exports.
  
  
• The Intellectual Property Rights Law , which makes it easier for businesses to register trademarks and protect companies' vital trade secrets. The law also guarantees protection for newly developed plant varieties and requires proofs of origin on goods sold in the Egyptian market. Additionally, it sets fixed dates on which patents for pharmaceutical products become public domain.
  
  
• The Telecommunications Law , which will increase transparency in the licensing process and consultation with stakeholders; it will also institutionalize a universal services regime, and adopt competition safeguards.
  
  
• The Unified Labor Law , which aims at increasing private sector involvement in human resources while simultaneously achieving a balance between employees' and employers' rights. Among the most important issues that the new law addresses is the right of an employer to fire an employee and the right of employees to organize strikes.
  
  
• The Unified Banking and Central Bank Law , passed in June 2003, aims to restructure the financial sector; attract foreign investment by increasing transparency and streamlining regulations.
  
  
• Egypt has also acceded to both the WTO Basic Telecommunications Agreement and the WTO Information Technology Agreement .

The Parliament is also discussing drafts of the following laws:

• The Anti-Competition Law , designed to prevent the incidence of monopoly agreements and the violation of proper market-entry rules. The Central Bank of Egypt is already in the process of establishing a Financial Intelligence Unit to monitor the market.
  
  
• The E-signature Law , aimed at recognizing E-signatures in commercial transactions.
  
  
• The Investment Facilitator , designed to promote foreign direct investment. Additionally, the General Authority for Free Zones & Investment (GAFI) has set up a “one stop shop” to eliminate hurdles facing businesses, including streamlining the process of company registration.
  
  
• The Customs Law, aimed at reforming customs regulations, removing bureaucratic impediments and making the overall customs process more efficient. The Ministry of Finance has already implemented an automated system for temporary admission/duty drawback customs systems at select ports of entry.
  
  
• The Unified Tax Law, aimed at reforming income tax rates and expanding corporate tax exemptions for the private sector. The Ministry of Finance has already lowered the effective tax rate on soft drink manufacturers.

Egypt is a steadfast friend and ally of the United States, and has been for thirty years. Although our governments may not always agree, America and its people are widely respected and admired by the Egyptian people. Most importantly, Egyptians at all levels want to stay strongly engaged with the United States. AmCham stands for the notion that greater dialogue promotes a better understanding of the other side's grievances, and expands lines of communication between both people and nations. The most important thing the United States can do to encourage greater democracy in Egypt is to engage Egypt and Egyptians at all levels. Defining the economic and political goals of the U.S.-Egypt partnership, therefore, and exploring the means of achieving them, continue to be priorities for AmCham.

Top