CAIRO, 14 November 2004 — Trade Minister Mohammed Rashid will seek to boost Egypt’s troubled economy by proposing to revive a dormant project for a free trade deal with the United States when he travels to Washington today.
Rashid, a businessman who joined the government in a reshuffle in July, is due to meet US Trade Representative Robert Zoellick during his four-day visit, Egyptian-US Chamber of Commerce Chairman Mohammed Mansour said. His meetings in the United States will focus on how to boost US investment in Egypt, which according to international surveys has dropped to the bottom of the list of most attractive countries in the region for foreign direct investment.
The idea of a free trade agreement between Egypt and the United States had made no progress for several years.
The United States argued Egypt had made insufficient progress in liberalizing its trade regime to clinch such a deal, while Egypt insisted US conditions were too harsh.
The US chamber of commerce organized a conference on the issue in Cairo Wednesday during a visit by a US congressional delegation.
“We’ll be ready when you are,” was the main message of the US delegation to the Egyptian participants, according to one of them.
The Egyptian bid to secure a preferential agreement with the United States comes a month after a request from the Egyptian textile lobby.
They fear that the scrapping of the so-called “Multifiber Arrangement” quota system in January 2005 will harm the sector’s competitiveness and slash exports to the United States.
According to the US chamber of commerce in Egypt, the textile sector accounts for around half of Egyptian exports — oil excluded — and employs up to 2.5 million of the country’s 70 million inhabitants.
Leaders of Egypt’s crucial textile sector — already facing growing competition from China — have urged the government to create a “Qualifying Industrial Zone” like those already operating in Jordan.
Products manufactured in a QIZ enclave can enter US markets free of duty and excise.
The Egyptian government has so far baulked at one of the project’s clauses which specifies that 11.7 percent of QIZ product inputs must be of Israeli origin, but the new trade minister has signaled his country could soften its position. The United States is Egypt’s second largest trading partner after the European Union, with a total volume of $3.8 billion in 2003 but the balance tipped heavily in US favor.
Egypt receives some $3 billion a year in foreign direct investment from the United States, as well as $1.3 billion in military aid and around $700 million in civilian aid.
