26 Sept. - 2 October 2002
Issue No. 605
|Published in Cairo by AL-AHRAM established in 1875||Recommend this page|
The politics of FTAsTrade between Egypt and the US still plays second fiddle to political considerations, writes Aziza Sami
On Friday 20 September, the Bush administration stated that the US, as part of its new National Security Strategy, "will work [at initiating] free trade areas [with] South America, South Africa, Morocco and Australia as principal focal points". This put to rest any speculation that a Free Trade Agreement (FTA) between Egypt and the US might be in the offing anytime soon.
US undersecretary of commerce, Samuel Bodman, was in Egypt this week on a seven-day regional tour, that included Tunisia, Algeria and Morocco. The visit can be seen in the context of the US administration's new, post 11 September 2001, economic policy. This purports to expand "trade and opportunity for people around the world, which has become a very strong priority [for the US]. This is the real reason why I am here," Bodman told members of the American Chamber of Commerce (AmCham) in Egypt on Sunday.
He said that, with the passing of the long-awaited Trade Promotion Authority a little more than a month ago, the Bush administration now has clout in concluding FTAs with its different partners. Trade Promotion Authority gives the administration free reign to enter into trade arrangements without Congress's prior approval. "We are now open for business and will be very aggressive in seeking out additional opportunities for trade agreements, [both] multi- and bi- lateral," he added.
The issue of an FTA was raised by prime minister, Atef Ebeid, and members of the cabinet's economic group, when they met with Bodman on Sunday. It was raised as well by members of AmCham. However, when asked by the body, which represents some 500 companies doing business in Egypt, whether the Trade Promotion Authority will enable the US to contract an FTA with Egypt, Bodman responded by saying "I am afraid, from what I see right now, this will be difficult."
It is no secret that the US doesn't favour an FTA with Egypt.
When discussing Egypt, the current US administration, like its predecessor, cites the slow progress of economic reform as a major obstacle to an FTA. This includes the implementation of commitments under the WTO "particularly in the areas of privatisation, transparency of decision-making, customs reform and IPR". The US is also concerned about "foreign-exchange stability and taxation," according to Bodman.
These are legitimate concerns. Egyptian businessmen point to these same issues when complaining about the economic situation and its effect on their companies. However, it must be noted that the FTAs the US has concluded in the Middle East have tended to be more of an exercise in politics than anything else. This can be illustrated by deals with both Israel and Jordan.
Egyptian businesses seeking to expand their trade into the sizeable US market are thus caught in a vice. On the one hand, they are faced with a lack of political will for an FTA with Egypt. On the other hand, they are hampered by the inept economic policies of the Egyptian government, which have failed to bring the economy out of its post-1996 slump.
In October, Egyptian and US officials will meet in Washington to attempt to breathe life into the almost- moribund Trade and Investment Framework Agreement (TIFA). TIFA has only met twice since its inception, in 1999. Its main objective was to help overcome the obstacles that hamper free-trade on both sides. Likewise, the newly re-constituted President's Council, which consists of Egyptian as well as American private sector members, is due to meet.
However, the continuing sidelining of economic ties between Egypt and the US in favour of political considerations is problematic. The question must now be whether economic considerations might, for once, be looked at on their own merit. This may also be the politically wise thing to do. Promoting free trade between Egypt and the US will do much to serve the agendas of both sides. Given the US's newly professed aim of aggressively promoting free trade, and the Egyptian government's goal of breathing life into its faltering exports and generating jobs, the most compelling argument may be that put forward by one AmCham member to Bodman.
He stated that, "if the case for liberalisation and global integration is to be made to the Egyptian people, then an FTA, and all other means, must be utilised to promote Egypt's economic growth."
Letter from the Editor
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