US-Egyptian partnership check

By Nevine Khalil

Clearly, the private sector is taking the lead in improving investment and trade relations between Egypt and the US. And the Presidents' Council, whose members include leading business people on both sides, has played a vital role in advising the two governments on ways of achieving that end. Since 1994, Egypt has carried out numerous economic and legislative reforms based on recommendations provided by the Council.

Shafiq Gabr, chairman of ARTOC and a Council member, told Al-Ahram Weekly that both sides have a common agenda, namely promoting Egypt as a high-profile investment venue. "There are no differences between the Egyptian and American sides," Gabr noted. "We both want to achieve the same objective of more investment and exports." He added that many efforts have been made towards realising that goal, and "clearly, we are moving along the right path, because over the past year, there's been a rise in non-oil US investment in Egypt as a result of policy changes here."

Gabr explained that the Council's efforts have resulted in greater US and multi-national private sector investments in the country. "Companies have become multi-national and multi-dimensional," he said, "and investment in the age of globalisation no longer comes from a single state."

High on the Council's future agenda is promoting Egypt's "competitive" edge for information technology and software. "The Council believes that Egypt has great potential, like India and Ireland, for information technology," added Gabr.

Jack Tyman, chairman of the US side of the Council, said that TIFA is a "precursor which institutionalises a dialogue between the two governments," prior to discussions that will lead to a Free Trade Agreement. The same procedure was used by the US and Mexico before the North Atlantic Free Trade Agreement (NAFTA) was signed.

Tyman described it as a "very good step" towards an FTA, adding that, in tandem with the government dialogue, the Council will hold symposia and conferences in the US with key people in the private and public sectors, government and legislative bodies to raise support for an FTA.

Ibrahim Kamel, chairman of the Egyptian side, said that both parties impressed on Gore that a US-Egypt FTA "is a very important point." Tyman agreed that studies have shown how an FTA would increase trade both ways, as well as technology sharing and joint investment. "The private sector is encouraging both governments to expedite this dialogue," Tyman said.

Last year, Congress rejected a "fast track policy", that would allow the administration to conclude FTAs with any country it chose. As a result, the possibility of finalising an agreement with Egypt has dimmed until the Congress-administration dispute is resolved. "Egypt is in the same situation as other countries," explained Tyman, who believes that TIFA and the corresponding private sector dialogue would prepare both sides for FTA discussions when the time comes.

Gamal Mubarak, spokesman for the Egyptian side, said that free trade has been high on the Council's agenda over the past two years, although it is "not an easy process for either side". "We hope that [TIFA] could eventually lead us along the road to a free trade agreement," Mubarak added.

Although Mubarak conceded that there has been a surge in US investment in such fields as power and telecommunications over the past few months, he said that Egypt's "aspirations" have not yet been met.

Kamel affirmed that there is progress on all fronts -- direct investment and technology transfer -- adding that "very soon" major companies in the fields of education and human resource development will initiate operations in Egypt.

During their discussions with the president and vice-president, the Council focused on the initiatives undertaken since the beginning of this year. President Mubarak stressed the government's determination to continue efforts to improve Egypt's business and investment climate and give the private sector the opportunity to realise these goals. Gore affirmed his government's support for Cairo's efforts to attract direct foreign investments, which will promote economic growth and technology transfer and increase Egyptian exports.

Tyman told reporters that, "guided by the priorities of the government of Egypt", the Council chose two industries which it will promote for direct US private sector investment. These are agro-industrial investment projects and hi-tech industries where policy changes are needed to encourage investors.

Contacts with leading US companies in the field of agro-industry are underway, and so are preparations to host presentations in the US to raise awareness of investment opportunities in the Egyptian agricultural and agro-industrial sectors. Certain leading US Council members from the hi-tech industry, including software development, are already proving instrumental in providing insight into ways of attracting investments to Egypt's hi-tech industry, and potentially also in directly contributing to investments in that sector.

In the insurance investment sector, Egypt is ready to amend existing legislation to usher in private expertise and managerial skills. To this end, the Council began preparations for round-table discussions with a group of 15 leading US insurance sector companies to announce reforms and direct investment opportunities once the new legislation is passed.

On investment promotion, the US Trade and Development Agency (TDA) has agreed to organise and sponsor an investor conference in the US towards the end of the year. The conference will highlight 50 specific privatisation and infrastructure investment opportunities which the TDA will pre-qualify. The conference will be funded by the US Agency for International Development (USAID). "We're really making some exciting advances in these areas," Tyman said.

The Mubarak Professional Development Initiative (MPDI) was previously launched for young Egyptian professionals, and an NGO is under formation to maintain this focus on human resource development and to ensure the continuity of the project. Also, the Council supports cooperation between the Small Business Administration (SBA) and the Social Fund for Development (SFD), which resulted in an agreement between the two governments to provide Egypt with technical assistance in creating small business development centres in Egypt.

The Council supported the new Procurement Law currently being discussed by the Egyptian parliament, and committed itself to capitalising on improved economic conditions to increase investment opportunities, technology transfer, trade and human resource development.

On the governmental level, Sub-committee I, concerned with economic, trade, investment and foreign funding policies, reported that Egypt will carry out new reforms to further encourage investments, giving the lead to private sector initiatives. More structural and legislative reforms are still needed, however, especially improved patent rights protection to encourage US high-tech companies to set up shop in Egypt. On trade, both sides want continued dialogue on improving trade relations, export and import services at Egyptian ports, reducing custom duties and continued cooperation in training and technical assistance related to the implementation of WTO agreements.

Sub-committee II, working on technology, assists in improving the technological capabilities of the private sector, by focusing on industrial technological requirements, and encouraging joint scientific research. It reported that it will work on enhancing the dialogue on improving technological and scientific development in Egypt.

Sub-committee III, working on environment and sustained development issues, focused on three major projects, namely the reduction of lead pollution in the air, especially in the Greater Cairo area; developing environmental tourism projects on the Red Sea coast; and development and management of cultural sites and protection of national heritage. The sub-committee's future agenda includes: outlining a national strategy on the best use of energy sources, improving health services in rural areas and the implementation of Egypt's 1994 Environment Law.

Dealing with education and human resource development, Sub-committee IV reported that, in coordination with other subcommittees and the Presidents' Council, it has worked on improving the skills and technical abilities of Egyptian workers, in addition to the education of women and girls. The sub-committee also played a vital role in enhancing cooperation between the private sector and government bodies through training programmes.