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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Special Features Travel Sports People Time Out Chronicles Cartoons Letters Adjusting the balance
By Dina EzzatMore US investment in Egypt, greater opportunities for Egyptian exports to the US markets and bilateral cooperation in the areas of electronic commerce and software technology are issues that will top the future agenda of Egypt-US economic cooperation.
Egypt and the US will discuss setting up a Trade and Investment Framework Agreement, which should entitle Egypt to a larger share of US investment and access to US markets. The two countries will also examine opportunities for using Egypt as a base for utilising and exporting US technology for Arabic software -- once Egypt has introduced sufficient copyright regulations. The country is also being considered as a potential base for US electronic commerce in the region.
The future plan was agreed on during the annual meeting of the Economy, Business and Investment Sub-Committee of the Mubarak-Gore Partnership, held in Cairo late last week. The Egyptian delegation was chaired by Finance Minister Mohieddin El-Gharib and Trade Minister Ahmed El-Goweili, while the US delegation was headed by the US Under-Secretary for Economic, Business and Agricultural Affairs, Stewart Eizenstat.
The aim of the partnership is to increase the volume of US investment in Egypt, which currently stands at $2.3 billion -- of which $1.5 billion are in the petroleum sector -- and to adjust the $4.5 billion lopsided bilateral trade that stands largely in favour of the US, which exports $3.8 billion worth of goods a year to Egypt. More US investment in Egypt could help the annual growth rate move from 5 per cent to the 7 or 8 per cent the government is hoping to achieve.
Enhancing Egypt-US economic cooperation will require serious political will on the side of the US administration, which will have to sell investment in and trade with Egypt to both the US Congress and the private sector. It will also require the Egyptian government to reduce red tape and speed up the privatisation process.
After last week's meeting, Eizenstat said that while Egypt had done a very good job so far with its economic liberalisation programme, the market would have to be freer to offer US investors less costly but more rewarding investments. "A special vigilance is required," Eizenstat said.
During the meeting, Egyptian and US officials and economic experts discussed ways to maintain the momentum of liberalisation and introduce more investor-friendly laws and regulations. Neither side, however, claimed the delegations saw eye-to-eye on all the details.
For example, the understanding in Egypt is that the establishment of the Trade and Investment Framework Agreement would eventually lead to the establishment of a free trade agreement between the two countries. The US delegation, however, is working under a Congress-imposed Fast Track Authority, which means the US Administration cannot enter into such agreements without first securing the approval of Congress.
Furthermore, the US delegation appeared confident that now is the right time to speed up the liberalisation of the Egyptian economy and introduce less centralised trade and investment regulations. Egyptian officials, however, who insist that Egypt is committed to do more in terms of economic liberalisation, are still subscribing to a more cautious approach.
In other words, Eizenstat was advocating the need for Egypt to take decisive and fast steps towards reducing tariff barriers and introducing serious privatisation regulations to the banking and insurance sectors, while El-Gharib was saying that this will happen in due course and that current regulations should make it easier for US businessmen to invest in Egypt.
US officials appear to be making it a condition that a better climate of regional cooperation, which should not exclude Israel, will boost Egypt's position as a regional base for US businesses and industries. Egypt, however, believes that for Israel to be fully integrated in economic cooperation with the Arab world, the Israeli government will have to first honour its peace commitments. Furthermore, Cairo believes that its current trade agreements with other Arab and African countries are enough to establish Egypt as a regional base for US companies wanting to manufacture in and distribute from Egypt.
Given these differences, what the US would be prepared to deliver may well fall short of Egyptian expectations.
