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us miffed over gm, plays down fta
chances
last month’s issue of business
monthly featured a pair of seemingly unrelated stories: a piece
on egypt’s sudden withdrawal from a us effort to open the european
union to genetically modified (gm) foods; and an optimistic report
on how “after years of disappointment and procrastination,”
the us was finally signaling its readiness to open negotiations
for a free trade agreement (fta) with egypt.
but as the magazine was going to press, the two issues became suddenly
intertwined, in a way that few on the egyptian side expected.
in late june, us trade representative robert zoellick shocked the
egyptian government by abruptly downplaying the country’s chances
for fta status. while in amman to attend a meeting of the world
economic forum, zoellick was quoted as saying that egypt “has
a long way to go” before it could be considered a serious contender
for an fta. charging cairo with backsliding on promised economic
reforms, zoellick said, “we know egypt is the traditional heart
of the arab world. but [an fta] isn’t going to be handed to
them just because egypt is a big and important country.”
the statements – in addition to coming off as relatively harsh
by diplomatic standards – basically signaled a suspension in
talks about fta negotiations.
the country’s apparent relegation to the back of the regional
fta line is further highlighted by the fact that negotiations with
morocco and bahrain are progressing on schedule.
the exact reasons for the us about-face are a matter of ongoing
speculation. but significantly, zoellick’s comments came immediately
after cairo announced it was withdrawing support for a us-led complaint
at the world trade organization over the eu’s ban on importing
gm crops.
several published reports, therefore, have attributed the us rebuff
to simple retaliation for egypt’s reversal.
the gm foods issue is one close to the us administration’s
heart; as home to 66 percent of the world’s transgenic crops,
overcoming the eu’s moratorium on gm imports is a billion-dollar
question. european opposition also discourages most african nations
(which depend on agricultural exports to europe) from investing
in transgenic seeds – thereby reducing the us market for gm
seed exports.
the presence of egypt – the sole african representative
– on the wto complaint was symbolic, bringing moral legitimacy
to the motion. the three primary plaintiffs – america,
canada and argentina – grow 95 percent of the world’s
transgenic crops. while egypt has some gm crops, like pest-resistant
potatoes and squashes, these are intended for purely domestic consumption.
currently, the country has no immediate plans to export.
efforts to contact both us and egyptian government officials for
comment on the issue were unsuccessful. but a june 29 article in
the financial times quoted us government officials as saying that
zoellick was “furious” over the egyptian change of heart,
and his frustration with the broken pledge seemed to bleed into
some of his other statements in amman. when discussing the difficulty
of getting trade deals approved in congress, zoellick said, “when
i’m working with a colleague, i need to know their word is
good.”
now egypt finds itself in what looks like a lose-lose situation:
caught between the united states and the eu in a billion-dollar
dispute in which the country has no real stake.
supporting one side over the other, meanwhile, seems treacherous.
europe is a major market for egyptian agricultural exports, and
the egypt-eu partnership agreement is only just coming into effect.
fears of eu retaliation are widely believed to be behind egypt’s
backing out of the wto complaint.
but not everyone is convinced that the gm foods turnaround is the
sole reason for the fta disruption. one western embassy commercial
attaché said that the us administration was no doubt annoyed
by egypt’s sudden reversal. but he added that fta negotiations
are extremely intricate, with a momentum all their own, and are
unlikely to be stopped or started based on short-term flare-ups
of temper. “it would have to be a more rational reason than
that,” he said. “decisions like that aren’t going
to come from a single incident.”
according to economist essam montasser, it was entirely likely that
zoellick meant exactly what he said – that egypt’s
reluctance to initiate serious economic reform had slowed down its
fta prospects, and that the us wasn’t going to rush to offer
a country an incentive it hasn’t earned. some moves, like the
floating of the pound, were concrete steps in the right direction,
but areas such as customs, legal system reform and privatization
remain stalled.
montasser predicted that the gm foods controversy would quickly
blow over, and that egypt would find a way to make it up to washington.
“we have our reasons to try everything we can to please the
us,” he said.
meanwhile, egyptian officials sound like they’re working hard
to keep both sides happy. even after the withdrawal from the wto
complaint, minister of economy & foreign trade youssef boutros-ghali
proclaimed towards the end of june that cairo still supported the
us initiative to open european markets to gm crops. “there
is no difference between the two positions [of the united states
and egypt],” he said. “there may be a difference in approach,
but there is no difference in our positions.”
ashraf khalil
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us policymakers feel slighted
washington, july 15 – what do genetically modified
foods have to do with free trade between the us and egypt?
apparently everything.
efforts aimed at launching negotiations for a us-egypt free
trade agreement (fta) looked promising in mid-june. twenty-seven
members of the us senate, including senator richard lugar
(r-indiana), chairman of the foreign relations committee,
and senator lincoln chafee (r-rhode island), chairman of the
subcommittee on near eastern & south asian affairs, signed
a letter on june 12 to president bush expressing their support
for fta negotiations with egypt. the letter expressed the
importance of egypt as a market for us agricultural exports
and commended cairo on recent reforms vis-à-vis intellectual
property rights, money laundering, banking and foreign exchange.
the letter also stressed the importance of egypt’s role
in achieving peace in israel and the occupied territories,
and as a us ally in combating terrorism.
bolstered by this effusive support, many in egypt were surprised
when, addressing the world economic forum in jordon on june
23, us trade representative (ustr) robert zoellick chastised
the pace of egypt’s economic reform, indicating that
fta negotiations weren’t likely to begin in the foreseeable
future. some in washington, however, suggest that egypt’s
surprise reflects geopolitical naiveté.
congressdaily reported on july 9 that the reason behind zoellick’s
criticism was egypt’s eleventh-hour decision to withdraw
from a us-led suit lodged with the wto against eu trade restrictions
on genetically modified foods. collectively, the eu represents
egypt’s largest market for exports, prompting some to
suspect that egypt had slighted washington to protect its
interests in the eu.
as a result, the ustr – reportedly furious over the move
– bumped negotiations with egypt to the bottom of his
free trade to-do list.
cairo’s decision to withdraw from the case has generated
doubt in washington that egypt is up to honoring its trade
commitments with the wto and the us. egypt, according to the
buzz in the capital, would have been smarter to refuse joining
washington’s gm case from the get-go, rather than withdraw
its support at the last minute. the turnaround has left many
here with the impression that egypt is not a trustworthy negotiating
partner. given the herculean reforms still ahead, many feel
that the time and difficulty involved in negotiating an fta
is currently not worth the effort.
richard nills, a ustr spokesman, expressed disappointment
with egypt’s reversal, but stressed the willingness of
the us to work with egypt in undertaking institutional overhauls,
mentioning the customs regime in particular. when asked about
a time frame for fta negotiations, he said that the us was
happy to continue working with egypt through the trade &
investment framework agreement (tifa) – aimed at
strengthening investment and bilateral trade – to
advance necessary reforms. negotiations for an fta, nills
explained, would depend heavily on egypt’s reform progress
through the tifa process.
according to stephen hourahan, chafee’s press secretary,
the senator continues to support a free trade agreement with
egypt, but hourahan refrained from answering questions about
whether the senator would push for fta negotiations in light
of zoellick’s june 23 comments. the lack of public comment
from the senators who signed the june 12 letter suggests that
an agreement with egypt is not in the offing any time soon.
underscoring the damage done, the us house of representatives
decided to withhold a letter to president bush supporting
the immediate commencement of negotiations.
for the time being, therefore, it would appear that an fta
with egypt isn’t a priority in washington.
mariya a. talib
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