Al-Ahram Weekly On-line 28 Sep. - 4 Oct. 2000 Issue No. 501
Published in Cairo by AL-AHRAM established in 1875

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On the right track

By Yasser Sobhi

Christian Falkowski

As the Egypt-EU Partnership agreement nears its final phase of ratification, some important details are still being worked out. Enhancing the competitiveness of Egyptian exports to EU markets is one of the key issues dealt with in the agreement. Falkowski, a German national, emphasised that both sides concur on the substance of the partnership, but he implied that each approaches the agreement differently and urged the Egyptian side to take measures to accelerate its decision-making procedures.

After five years of difficult negotiations between the European Union and Egypt, it seems that the partnership agreement is nearing completion. How would you assess the course of these negotiations?

The long negotiations indicate that both sides are serious [about] concluding the best possible agreement. The fact that negotiations took place over a period of one and a half years indicates the depth of our discussions. We have concluded the negotiations, and now, we're witnessing [how] the political process in Egypt is approving the negotiations package, which is something [approval] that the European side already gave more than a year ago. I hope that the green light to initial and sign the agreed upon package will be given as soon as possible so that the momentum generated during negotiations can be maintained through implementation.

The recent visit by Minister of the Economy and External Trade Yousef Boutros Ghali to Brussels aimed at, as has been announced, modifying the actual text of the partnership. What is the EU's position on this?

We must distinguish between the negotiated package, which was agreed upon, and the reopening of the negotiations -- which I think nobody wants to do. A lot of [the more recent discussions] were related to the implementation rather than the text as such. I think that these important discussions on implementation should be held once we have initialled and signed the agreement, otherwise it will be delayed. We cannot [begin] the process of implementation before having the legal basis for doing so.

What will be the mechanisms for ensuring that the agreement is enforced?

In the agreement itself, there is a very long list of various committees [and] consultative mechanisms. At the highest level of these is a partnership council for which the chairmanship alternates between the Europeans and the Egyptians. There are also many subcommittees that can arrange special meetings on different issues. As soon as the agreement is signed, we should look into to mechanisms for implementation, which are also [included in the agreement].

Following the implementation of the partnership agreement, what, in your opinion, will be the challenges facing Egyptian industries given increased competition?

Some Egyptian industries will face serious challenges. For this reason, we have given strong support to the Egyptian initiative [to embark on] an industrial modernisation programme worth LE1 billion. [This programme is currently Europe's largest project, in terms of funding, for a non-European country.] The programme is not working as we expected, but we believe that it will increase the competitiveness of Egyptian industry.

Why has the EU assistance programme not met your expectations?

This is due to the fact that the programme hasn't really started yet. From our side, the first financial tranche has been delivered. Indeed, the political decisions that should be made by Egypt to implement the programme have not been made yet. So, in terms of implementation, the programme hasn't started.

Since 1996, according to the EU's annual reports, Egyptian exports to the EU have declined. How in your view can trade relations between Egypt and the EU, its main trading partner, regain some balance?

There are a lot of concessions and privileges for Egyptian agricultural and industrial products within the partnership agreement that could increase Egyptian exports. Many agricultural products will benefit. It is also expected, following the agreement, that foreign investments, especially from Europe, will be established that could help the competitiveness of Egyptian products.

Egypt was the first beneficiary, among south Mediterranean countries, of the MEDA 1 financial programme. Will Egypt retain this privileged status under MEDA II? [MEDA is the EU's financial assistance programme for Mediterranean countries.]

The MEDA programme does not have pre-allocated amounts for each country. The programme, in fact, is financing projects rather than countries in the region. So, the funding that Egypt receives under the new programme, depends on the projects and programmes it proposes which fit within MEDA's mandate.

The Barcelona Process of 1995, to which 27 Mediterranean countries are signatory, is not witnessing any real improvement. Do you think that this slowdown is due to a lack of enthusiasm on the part of some European countries toward the region, in favour of other regions? What do you expect from the ministerial meetings of Barcelona Process countries that will be held in Marseilles in November?

The EU has made it clear, since the launching of the Barcelona Process in 1995, that relations with the Mediterranean region are as important for us as our relations with East and central Europe. This position has not changed. We have fulfilled our commitments in this process. Indeed, the slowdown in the process is principally due to the slowdown of negotiations, and in concluding partnership agreements with countries in the region. Therefore, the Barcelona Process, which is directed at creating a Euro-Med Free Trade Zone within the region over the next 11 to 15 years, is not moving fast.

We hope that the next ministerial meetings, which will be held under the [EU's] French presidency in Marseilles, will give a push to the process.

What is your assessment of the outlook for the Egyptian economy, and what are the main challenges facing it?

Egypt has been working on economic reforms since the beginning of the 90s with the International Monetary Fund. Since then, it has pursued an economic policy to increase its integration into the region and beyond. These activities have to continue to [ensure] that the economic growth rate is maintained at 6 per cent, at the least. They must also continue so that the real impact of changing the economic structure is achieved. I think Egypt is on the right track -- but there are still challenges. The speed for both growth and economic liberalisation need to be maintained. This is not a process that takes a year, thus it [should be dealt with from] a longer perspective.

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