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AmCham Egypt Doorknock Mission to Washington D.C: Egypt Moving Forward (March 7-March 11, 2005)

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 American Chamber of Commerce in Egypt (AmCham Egypt) promotes trade and investment between Egypt and the United States. Since 1981, AmCham Egypt has provided a forum for its members to identify and discuss the challenges facing the private sector in an increasingly globalized economy, and to present the views of the business community to the Egyptian and U.S. governments.

The strategic partnership between 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. AmCham Egypt seeks to expand and deepen the commercial and trade relationship between Egypt and the United States.

Egypt has long been a reliable U.S. ally and is central both to maintaining stability and opening up potentially lucrative Arab and African markets to U.S. business. Already, hundreds of American companies have launched operations in Egypt’s domestic market of 70 million, which boasts a strong industrial base and outstanding human resources. Additionally, major monetary reforms and a raft of crucial economic legislation will help improve the economic climate and attract foreign investment.

During our spring 2005 mission to Washington, DC, AmCham Egypt delegates hope to promote dialogue on these important issues, with the ultimate aim of enhancing economic cooperation for the mutual benefit of both countries.

US-EGYPT TRADE & COMMERCIAL TIES

AmCham, believes the way forward lies in promoting even greater cooperation – particularly in the economic arena. In December 2004, Egypt in a renewed commitment to free trade, foreign investment and regional economic cooperation, signed the historical QIZ Agreement with Israel and the United States, establishing seven QIZ zones in Egypt.

Egypt’s private sector, represented by AmCham, seeks to expand and deepen the commercial and trade relationships between our two countries. The QIZ agreement came about in large measure due to the active lobbying of Egypt’s private sector business leaders, who also are leading the way in advocating for a U.S.-Egypt Free Trade Agreement (FTA). 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.

• 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.
• An FTA will accelerate and make permanent Egypt’s business and trade reform and modernization efforts, as it has done in other countries, which have completed FTA’s with the United States.
• An FTA will strengthen Egypt’s ability to serve as a business platform for the MENA region by stimulating long-term growth, job creation and economic diversification of the Egyptian economy.
• An FTA will advance the Bush administration’s initiative to create a free trade zone across the entire Middle East region.
• As the largest market in the region, Egypt is a critical element to a successful regional free trade area.
• A U.S.-Egypt free trade agreement already enjoys strong support from Egypt’s private sector.
• The initiation of U.S.-Egypt negotiations over an FTA would give a powerful boost to those in Egypt who have taken risks in pushing for the QIZ and economic reform measures, and embolden them to push for even more extensive reforms.
• It also would be an important “victory” for the new, pro-business members of the Egyptian cabinet.

In July 2004 a new dynamic cabinet, representing a younger generation and the private sector, was appointed. The cabinet includes several outspoken advocates of reform who understand and appreciate the private sector, taking genuine and key reforms to move Egypt forward:

• Former Minister of ICT and the youngest member of the outgoing cabinet, Dr. Ahmed Nazif was made Prime Minister.
• Dr. Mahmoud Mohieldin, the youngest member of the cabinet and former head of the economic committee of the National Democratic Party (NDP), was appointed head of the newly created Ministry of Investment.
• The new Foreign Trade & Industry Minister, Rachid Mohamed Rachid was also part of the NDP party policy committee and an AmCham Egypt member. As a former executive board member of Unilever, one of the world’s largest corporations and former chairman of Unilever Mashreq, Rachid was instrumental in attaining the QIZ Agreement and will lead the way on US-Egypt FTA negotiations.
• Ahmed El Maghraby Minister of Tourism is another prominent member of the private sector - as partner and shareholder with Accor, one of the world’s largest hotel franchises - and perfectly matched to his appointment.

Egypt has accelerated its commitment to economic reform and has taken the following relevant steps:

Customs Reform:

In September 2004, President Hosni Mubarak approved several steps aimed at simplifying customs procedures and cutting the average tariff rate from 14.6% down to 9% on around 6,500 imported items, bringing down the customs ceiling from some 104% to 40%. Basic commodities such as sugar, oil, wheat and rice will enjoy the minimum tariff rate of 2%. The decision has made people's lives easier; it has meant cheaper prices for consumers and cheaper production inputs for manufacturers. The decision also reduced the number of tariff bands from 27 to six, and canceled all imports customs service fees, which ranged between 1%and 4%.

Reducing the Diesel Subsidy:

In September 2004, the government announced a 50% increase in the retail cost of diesel fuel. The move was aimed primarily at easing the government’s subsidy costs amid rising crude oil prices, which were peaking at that time at $50 a barrel. Despite Egypt being a net petroleum exporter, export receipts from the relatively small local oil sector were not enough to offset the cost of fuel subsidie

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.

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