15 - 21 March 2001
Issue No.525
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Al-Ahram Weekly On-line 15 - 21 March 2001 Issue No.525 |
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New trade winds
President Hosni Mubarak's visit to Washington, scheduled for the beginning of April, signals another turning point in Egypt-US bilateral ties and comes at a time when the new US administration has indicated that it is reappraising its political priorities in the Middle East.
How such a reappraisal will impact on Egyptian-US trade remains to be seen. Twenty five years have passed since economic ties were initiated, falling soon after within the context of the Camp David Peace accords, and in the past two decades the US has provided over $24 billion in economic assistance, a politically significant fact regardless of criticisms directed towards USAID and scepticism over its contribution to sustainable economic development. The level of economic assistance, in short, reflects Washington's vested and strategic interest in the positive regional role being played by Egypt. And it is against this backdrop that the agenda for President Mubarak's visit to Washington will be set.
The fate of the US-Egypt partnership formed following the Mubarak-Gore initiative in 1994, is likely to be high on that agenda. The partnership provides the mechanism whereby trade and investment priorities are set, and acts as the conduit for the channeling of USAID funds. Yet, as US Secretary of State Colin Powell made clear on his recent visit to Cairo, "that channel has left with the previous administration".
The future of another offshoot of the Mubarak Gore initiative, the US-Egypt Presidents Council, comprising business representatives from both sides, is also still to be determined. Which raises an inevitable question -- does a change in the US government automatically mean a change in strategy. When economic ties are undergoing transitional change, as is the case with Egypt and the US, stable institutional forms take on even greater importance. Yet it remains unclear what, if anything -- apart from the Trade and Investment Framework Agreement (TIFA) -- will follow the expected termination of the Partnership. How is even a modicum of continuity likely to be preserved?
The possibility of an Egypt-US free trade area, which in principle, at least, gained political acceptance in the latter days of the Clinton administration, will also be discussed during the visit. Should these discussions lead to the negotiation of an actual agreement, it will be an arduous process, entailing more liberalisation in the Egyptian economy. And this process will bring to the fore several contentious issues related to intellectual property rights laws and customs tariffs, details of which were outlined by US Ambassador to Cairo Daniel Kurtzer in an address to the Egyptian Centre for Economic Studies last July.
Moves towards establishing an Egypt-US free trade area are viewed in Cairo as politically desirable -- a means of transforming the strategic partnership that has existed between the two countries in the 25 years since Camp David into a more dynamic form of economic interaction.
Trade and investment decisions are never entirely divorced from political injunctions. There must, then, be some coherent, institutional framework that is mandated to encourage American companies to fully examine the investment possibilities that exist within the Egyptian market. As yet, this has not really happened, despite Egypt's ongoing economic liberalisation, despite the country's obvious political and social stability, and despite its having made peace with Israel. Herein lies the predicament of Egypt-US economic ties.
The only exception to the general picture outlined above have been American oil companies working in Egypt. They account for over half of US investments here and, tellingly, their activities in Egypt date back, in many cases, to the mid-1950s, long before Camp David was born.
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