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Al-Ahram Weekly 23 - 29 March 2000 Issue No. 474 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 23 - 29 March 2000 Issue No. 474
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Trading places
By Aziza SamiWithin the framework of the government drive to reinforce the Information Technology (IT) and telecommunications sectors, Egyptian-US trade relations are currently prioritising the building of the necessary infrastructure to facilitate sizeable US investments in this domain. In Washington, President Mubarak is scheduled to meet with the CEO's of several major IT companies, contacts that will be followed by a visit by the Minister of Information Ahmed Nazif, who will tour high-tech ventures in several states.
Both the government and American positions are neatly summed up by the statement by Salama Shaker, Assistant Foreign Minister for American Affairs that, "Egypt is well positioned to become a regional trade hub for the export of software."
Currently an importer of soft-and hard-ware, Egypt is nonetheless the second largest IT market within MENA. There already exist 30,000 qualified software programmers, a potentially valuable resource which remains, as yet, under- used.
"We are taking very seriously the focus on high-tech given by President Mubarak. Oracle and Microsoft have announced investments (in Egypt) this year, and we hope the pattern will grow in the future, " US ambassador Daniel Kurtzer said on Monday.
In October last year, a joint Egyptian-American statement on e-commerce set legal and technical guidelines, while US companies such as Microsoft are already assisting the Egyptian government in its policy of spreading the use of PC's among school and university students, and in government agencies.
The US-Egypt Partnership for Economic Growth and Development's technology committee is busy redirecting its focus away from applied research and towards high-tech projects involving the Egyptian and American private sectors .
The drive appears to be succeeding, as American IT companies' begin to direct increased attention on to the Egyptian market. A top-level marketing delegation from Oracle, the US software giant, was in Cairo this week to scout out opportunities to develop trade links between American and Egyptian IT companies.
Internet Security Systems, (ISS) a US provider of security management solutions for electronic businesses is investing LE10 million over the next two years in a joint-venture with Egyptian partners.
"There is increasing awareness in the market here of the importance of IT. The laws have improved and there is a great potential for growth," ISS chairman Mustafa Sarhank told Al-Ahram Weekly.
Telecommunications and IT are also being promoted by a special task force formed beneath the umbrella of the Trade and Investment Framework Agreement (TIFA), signed between Egypt and the US last year.
In Washington President Mubarak and US Vice-President Al-Gore -- joint chairmen of the US-Egypt Partnership for Economic Growth and Development -- will review the performance of the Egypt-US partnership, the main channel through which USAID funds are now directed.
Over the past five years the Partnership's four committees, overseeing economic policy, technology, environment and education, have initiated policies tailored towards promoting greater economic liberalisation while at the same time earmarking a proportion of funds for environmental projects and for securing the educational and health needs of low-income groups. "President Mubarak and Al Gore will also discuss new areas, and plan new strategies for the areas ahead," said Kurtzer. "We have a very sophisticated dialogue on economic policy and reform...testing what we can do to change the economic environment and laws."
Under the Trade and Investment Framework Agreement (TIFA) signed last July during President Mubarak's last visit to Washington, a US-Egypt Council on Trade and Investment has already been formed, partially funded by USAID.
The Council is intended to resolve contentious, as well as routine trade issues, as they arise. TIFA's mandate covers agricultural and industrial standards, intellectual property rights, the elimination of non-tariff barriers, market access, private investment, customs procedures and trade-related aspects of labour, environmental issues and dialogue between the private sectors .
The TIFA Council in its turn has created task forces for export promotion and technical assistance, military procurement, e-commerce and to discuss the establishment of qualified industrial zones -- the latter being conditional on the inclusion of Israeli partners. Two similar zones have already been set up between Jordan and Israel. And in a bid to promote better export practices a visit by some 20 Egyptian commercial attachés to the US has been arranged this month. They will receive the same training as that of their US counterparts.
"There is also a direction to expand on an agreement signed during the Camp David Peace Accords, giving Egyptian companies the right to bid on US military contracts, mostly for the provision of non-defence commodities, which affords these companies the same treatment as American companies. But Egyptian companies don't use it enough," an American embassy trade official told Al-Ahram Weekly.
Like last year, President Mubarak's economic agenda will be topped by the promotion of Egyptian exports to the US and soliciting more US foreign direct investments in Egypt. In 1999 US exports to Egypt stood at $25.4 billion while Egyptian exports to the US stood at $650.7 million.
Out of $17 billion worth of US investments in 1999, $15 billion were in the petroleum sector. US companies cite red tape and a lack of legal transparency as impeding more substantial investment in Egypt. Egypt's nascent private sector and exporters, on the other hand, say they need more support in promoting products in the US market.
A free trade area will, in the eyes of some Egyptian exporters, specifically in the textiles sector, provide the necessary boost to Egyptian exports to the US market. It is also given political significance by the Egyptian government since it would put Egypt on a par with Israel, which enjoys tax-exempted free trade arrangements with the US.
But US officials are more cautious, arguing that the two countries' economies lack the complementarity requisite for a free trade area. "They are vastly different," says Kurtzer. Such reservations aside, the establishing of such an area would also require the lengthy process of obtaining congressional approval, with its concomitant political lobbying.
The imposition by the Egyptian government of tariffs on US dairy and agricultural products is another thorn in the side of TIFA, alongside the entry of US pharmaceuticals companies into the Egyptian market.
Egypt is one of the largest pharmaceuticals markets in the MENA region, and is in its turn a producer and potential exporter. Pharmaceuticals, in fact, is one of the few sectors in which the US-Egyptian trade balance is actually in Egypt's favour. US Trade Department statistics reveal that while US pharmaceutical exports to Egypt in 1998 reached a little over $29 million, Egypt exported $58 million worth of pharmaceuticals to the US market in the same year.
Disagreement so far has focused on the timing of Egypt's implementation of IPR laws. US companies demand immediate enforcement while Egyptian manufacturers, supported by the government, want to take full benefit of the GATT prescribed grace period, due to end in 2007.
These issues will once again be laid on the table in Washington in the hope that some, at least, might be resolved.
Additional reporting by Niveen Wahish
