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More stick than carrot
Last month, we optimistically reported
that, “For Egypt’s business community and government,
the launch of official negotiations for a Free Trade Agreement with
the United States may finally be imminent – seriously
– after years of disappointment and procrastination.”
The assertion has since been proven premature.
Just as Business Monthly went off to press at the end of June, comments
made by US trade representative Robert Zoellick – in Amman
to attend a World Economic Forum conference – began to hit
Cairo.
Zoellick, whose name has become a byword for American capriciousness,
was quoted as saying that Egypt “has a long way to go”
before it could be so much as considered for an FTA. He had, apparently,
gone on to say that Cairo had reneged on promised reforms, and that
Egypt wouldn’t be handed an FTA simply because it was “a
big and important country.”
That’s harsh.
The sticking point, according to USTR spokespeople, is the Egyptian
customs regime, long the bugbear of the local private sector.
Zoellick hinted at the existence of a list of companies on the verge
of quitting Egypt due to the difficult business environment (a mad
dash by journalists to get their hands on the list, however, has
so far proven fruitless).
It’s no secret that the customs system is Byzantine. Businesspeople
– both Egyptian and multinational – bitterly complain
of the crippling effects the change-resistant authority has had
on profits and corporate morale. (I can empathize: my last trip
to the post office required me to shell out £E 1,400 simply
to pick up a package sent from abroad.)
Nevertheless, on several other fronts, Egypt can boast some very
real progress made over the course of the last year. FTA advocates
know the list well: an IPR law, a banking law, anti-money laundering
legislation and – perhaps most radically – the devaluation
of the currency.
These, for the time being, anyway, appear not to be enough.
That Zoellick’s comments came just after Cairo’s withdrawal
of support from a US-led complaint at the WTO over EU bans on GM
crops left many on the Egyptian side to wonder if the announcement
hadn’t been made out of spite. And the fact that FTA talks
with Morocco and Bahrain are progressing on schedule has no doubt
augmented the feeling in Egypt of being held up to exceptionally
high standards. The statements left many in the Egyptian private
sector, and presumably in official circles, feeling let down.
The Egyptian government – while still having a lot of work
to do, especially with customs – has stuck its neck out. Much
of the recent reformist legislation has rattled various special
interests, while the controlled currency float – long the No.
1 condition for FTA talks – inspired a barrage of popular protest,
which will become louder as commodity prices rise.
Sure, there are still problems. Loads of them – as there are
in Jordan and Morocco and Chile. But what’s wrong with a little
quid pro quo to grease the wheels of international diplomacy? To
boost the feeling of evenhandedness that the Bush administration
so badly needs in the region, if its so-called Road Map is ever
to bear fruit? Israel, after all, was the first country to be granted
an FTA by the United States, back in 1985, while Jordan got hers
shortly after signing a peace agreement with Tel Aviv.
I’m being naïve of course – at the end of the day,
under the thin veneer of diplomatic niceties and talk of free trade,
the throbbing heart of realpolitik never stops beating.
But as the Bush administration behaves with increasing unilateralism,
Cairo is becoming hard-pressed by domestic opposition to validate
its close ties with what is perceived as an unappreciative hyperpower.
By pursuing a policy of undermining its own allies, Washington might
only end up hurting itself – along with the country it represents.
Adam Morrow
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