US Ambassador David Welch speaks at AmCham's Annual General Meeting on "Enhancing the US-Egypt relationship in a changing Middle East"

With the end of the war in Iraq and the announcement of the US-sponsored regional "Road Map" for peace, the place of Egypt in the changing Middle East is a timely and important topic, said guest speaker David Welch, US Ambassador to Egypt, at the May 28 AmCham Annual General Meeting.

The Israeli government's recent approval of the Road Map and the United Nations Security Council's decision to lift sanctions on Iraq - both of which occurred in May - are ushering in "a new day" of changes in the region. "Whatever happened in the past is past. Change is here now and with that change there is opportunity," Welch said.

Welch emphasized that through reform in three areas - trade and investment; democracy and reform; and education - Egypt could become a regional leader.

He added that the Egyptian government has been working to attract investment and expand exports via several measures, most notably: the flotation of the local currency; the passing of the Intellectual Property Rights law; the accession to the World Trade Organization's information and technology agreement; and the pursuance of new labor, banking and competition laws.

Egypt has also made "enormous progress" in preparing for a Free Trade Agreement (FTA) with the United States, Welch said, pointing to the US-Egypt Trade & Investment Framework Agreement (TIFA) Council as a "building block to an FTA." The US administration aims to create a free trade area covering the entire Middle East by 2013, Welch said, and will be signing bilateral agreements to reach that end.

But Welch pointed to a number of remaining obstacles to free trade, including an "unjust" ban on meat products from a prominent American firm, a ban on textiles imports through tariff and non-tariff barriers and the lack of customs reform. "No other measure that the government can take is as important [as customs reform] for attracting investment," he said.

Economies in the Middle East and in Eastern Europe - including Jordan and Poland - have grown in leaps and bounds in recent years, and Egypt risks falling behind if it doesn't pursue economic and political reforms more vigorously, Welch maintained. He cited governmental accountability to the people, increasing transparency in legal rulings and the development of the craft of journalism as areas in need of improvement.

The education system, meanwhile, is crucial to political and economic development. But the secondary education system suffers from gaps that force millions of students to resort to private lessons, while universities leave graduates ill-prepared for the modern workforce. These drawbacks require reform from within, Welch said.

The ambassador went on to emphasize the central role that AmCham could play in the reform process, referring to the private sector body as "one of the great pillars of the American relationship" with Egypt.

For full text of the ambassador's speech, click here.

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