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Al-Ahram Weekly 30 Sep. - 6 Oct. 1999 Issue No. 449 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 30 Sep. - 6 Oct. 1999 Issue No. 449
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Features Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Latin opportunities
By Niveen Wahish and Dina Ezzat
Egypt has started taking serious steps to establish closer economic ties with Latin American countries. A plan to exchange visits and increase contacts with the governments and business communities of the key Latin states is already under way and is expected to gain more momentum in coming months.
Sallama Shaker
A high-profile Egyptian delegation has just returned from a 13-day Latin American tour, which included stops in Chile, Uruguay and Mexico.
Uruguay is the location of the general secretariat of MERCOSUR (The Spanish acronym for the South America Common Market), a giant economic block of Latin nations that is considered the fourth largest grouping of this kind in the world.
Chile is the most active of all the Latin states and the one with the biggest overseas investments.
Mexico is obviously the golden gate to the economies of the US and Canada.
Egypt is seeking common ground with Latin states as part of its wider strategy of coordinating with Third World countries to face the challenges posed by globalisation and the Worth Trade Organisation (WTO). Uruguay and Chile see eye to eye with Egypt on many international issues, and officials in the respective trade ministries are creating a detailed strategy for expanded trade relations.
The Egyptian delegation, headed by Sallama Shaker, assistant minister of foreign affairs for the Americas, was the first of many that will visit the region. The delegation, Shaker said, provided their hosts with a thorough explanation about potential trade and investment opportunities in Egypt.
"Egypt has always had friendly political relations with the countries of this region, but unfortunately our economic ties with them have never gone very far," commented Shaker. "Now, we are determined to change this; and we are determined to bring about this change as soon as possible."
In 1998 the collective volume of foreign trade with Latin American states reached over $700 billion. In the same year, these countries managed to attract foreign investments of about $73 billion.
Given the signs of a good recovery that these countries have shown after being hit by recent economic crises, it is expected that these figures will continue to rise.
Egypt's exports to this part of the world have never exceeded $50 million a year. In fact, data on these exports reflect a very unstable situation, depending primarily on Egypt's oil exports.
Egypt traditionally exports oil and cotton to Latin America but could expand trade to include other goods such as T-shirts and handicrafts as well as services.
What makes this low level of trade very regrettable is the fact that Egypt's exports could do better in Latin markets than in the markets of the EU or the US. Moreover, unlike the case with the US and the EU, there are no quota constraints on Egypt's exports to Latin markets.
The geographical distance that separates Egypt from this part of the world is considered one reason for the small amount of trade. Another factor is lack of information about the potential of these markets and the legal framework that regulates Egypt's trade and investment with these countries.
In Chile, Uruguay, and Mexico, the visiting official Egyptian delegation worked on cementing the legal framework for economic cooperation. The Egyptian-Chilean joint committee signed an agreement for the mutual protection of the two countries' investments, providing a new foundation on which the private sectors from both countries can build. In Uruguay a joint committee discussed ways of strengthening Egypt's economic ties with the four countries of the MERCOSUR -- Brazil, Argentina, Uruguay, Paraguay -- possibly through a trade and investment cooperation arrangement.
The committee also agreed to study the possibility of a Trade and Investment Framework Agreement (TIFA) between Egypt and Uruguay similar to the one Egypt signed with the US, which would pave the way for future partnership agreements.
Cairo is expecting a Chilean delegation in October, to be followed by a Uruguayan delegation in November.
In Mexico, the delegation discussed with diplomats and trade officials the possibility of establishing an agreement for cooperation between the ministries of trade in both countries. They also considered the possibility of creating a TIFA. In the pipeline of Egyptian-Mexican trade relations is the probable signing of a joint investment development and protection agreement.
These different agreements will help produce the legal framework that will encourage the movement of capital and attract the private sector which will act as a catalyst to increase trade and investment.
With this in mind, the Egyptian delegation made sure that members of the Egyptian private sector were included. "We talked to businessmen and big entrepreneurs before we left. Only one representative of the Arab Contractors joined us," said Shaker. However, the Arab Contractors executive did not regret going on the long trip to Latin America since he came back with some good potential deals.
Officials from the Foreign Ministry will be approaching more businessmen in the future to encourage them to explore these new markets, Shaker said. The ministry will also work on encouraging Latin government officials and businessmen to come to Egypt to meet their counterparts.
"We want these Latin American countries to put us on their map, just as we need to push our private sector to get involved in Latin markets," said Shaker.
For its part, Egypt could be the gateway for the Latin states and their economic groupings to enter the Arab and African worlds, especially since Egypt has trade agreements with many countries in this part of the world such as the Common Market for East and South Africa (COMESA) which Egypt recently joined. And in the near future Egypt is expected to sign a partnership agreement with the European Union. Egypt is also a member of the G-15 group that includes several Latin states.
"So far Latin America has been a lost opportunity. We do not need to have more losses," Shaker said.
