, ambassador of the European Commission in Egypt spoke to Niveen Wahish about an evolving Egypt-EU relationship Egyptian and EU officials have just concluded their fourth round of negotiations on a plan of action which will shape their relationship within the framework of the European Neighbourhood Policy (ENP). The policy aims to complement and support the commitments undertaken by the two sides in the Association Agreement as well as in the Euro-Mediterranean regional context. The Action Plan with Egypt defines joint priority actions in the political, cultural and trade-related domains. Simultaneous with this plan, Egypt and the EU are preparing to launch negotiations on the liberalisation of services, the right of establishment, and further liberalisation of agriculture. How many more rounds are needed before Egypt's action plan with the EU is ready? I think we have gone a long way. There was a lot of explanation required [during negotiations]. The fourth round is not the end of the story. It focussed on political dialogue, migration, social integration, justice and security, market and regulatory reform and the people-to-people context (of cultural exchange). We are likely to conclude negotiations well ahead of the summer break [at the end of July]. Not everything will be settled at the technical level. Some points [will be] left to a political decision. Then it needs time to sell at home on both sides. This is not just an international agreement on cooperation in foreign policy issues, it concerns the full spectrum of your policies and our policies, on everything from education, agriculture and environment, to industry and energy. It is "Everything but membership", a very comprehensive and inclusive relationship and the most important policy after the EU's enlargement policy. How different is the action plan of ENP from the Association Agreement? The Association Agreement is a legally binding international agreement transcribing the principles which were made in the 1995 Barcelona Declaration. It is the basis of our relationship. The action plan is a political statement endorsed by the two sides where we establish clear priorities as to what we want to do in the various sectors. This means not just spelling out generic intentions, but also precise steps. Are any of the issues negotiated considered a stumbling block? There are sensitive areas where we had, and still have, a lot of explaining to do, but there is no conditionality or hidden agenda. We are not running your reform programme, [but] trying to tap into [it]. In economic cooperation issues we essentially cleared away all the problems and there is common ground. In the third basket of Barcelona, which is people to people contact, we pledged that there is a lot of work to be done. Europe has yet to organise itself in terms of justice and home affairs, including immigration policies. There I think we have much common ground. We also have common ground in the first basket which is the political basket. But this is also where there are still question marks. Our experience is that democratic systems, strong institutions and good governance are key ingredients. What is the importance of the 5th Euro-Med Trade Ministers' Meeting held recently in Marrakech? The Euro-Med Marrakech Trade Ministers' Meeting was the right signal at the right time [given that] quite a number of negative stories following the Barcelona Summit [of last November] claimed that the Barcelona process is dead. As a matter of fact, trade and business between Europe and our Mediterranean partners is thriving. We also must not forget the objective of creating a free trade zone with the entire Euro-Med region by 2010. People might say this is too close and unrealistic a deadline, but we are very much on track. Marrakech goes further in this direction, and gives a turbo boost to what is the key element in our economies, which is services. Some 60 per cent of your work force and GDP derives from services. For the EU, services are the main employer in the order of 2/3 of employment and wealth creation. You feel it here in Egypt, with services like tourism which are fundamental for Egypt as well as for our people, who want sunshine, culture and a short flight. Egypt is a very attractive tourist country. Opening up services will be crucial for reinforcing trade, investment and cooperation. One of the key aspects of opening up is that it leads to more competition, more efficiency and better products and quality. It is not only services [that will be negotiated] but investment and the right of establishment as well. Issues like transparency, national treatment and appropriate legal treatment are important for encouraging foreign investment and business. Egypt, Tunis, Morocco, Lebanon and Jordan, the Palestinian Authority and Israel are the first wave of countries which have declared their willingness to start negotiations on services and investment, and in due course on agriculture. Marrakech was also important in giving a boost to trade among partners in the region. It has given a boost to Agadir which remained [at a deadlock] because of [its] non-ratification by Morocco. The are now signs that this is imminent. Another boost to south-south cooperation among Mediterranean partners is the agreement to adopt, on a larger scale, the Pan Euro-Med protocol of origin. This allows preferential access to our markets for products which have a large input from another partner. But are not many of Egypt's services already to a large extent liberalised? Not really because they are not bound by international WTO schedules. They might not be bound by schedules but they are liberalised on the ground. Some areas like computer services and tourism are to a large extent liberalised but more is needed. In other areas like the financial sector, Egypt is proceeding with substantial reform. We are cooperating with Egypt in this field along with the European Central Bank and member states' central banks. But this is an area where Egypt is not yet in a position to liberalise . We do not ask Egypt to open the gates wide [but] we try to find common ground. We just think it is a key element to doing business together. How different is this liberalisation of services from what is taking place in compliance with the WTO? We have already negotiated full liberalisation and full access for industrial goods which is much more than you would normally get under the WTO. The more you push for liberalisation under the WTO, the more you erode preferential arrangements of the kind we are discussing here. The Doha [WTO Ministerial Conference of 2001] remains our top priority. We firmly believe that the global trade-off between rich and poor countries is only possible in global arrangements -- not only in trade but with a strong development component. What we are talking about here is a regional arrangement which must be WTO compatible but also go further than the WTO. As part of the liberalisation of services how will the question of mobility of labour be tackled? With patience. We now have the opportunity to upgrade our relationship within the framework of the Neighbourhood Policy which cuts across the cultural and political in addition to the economic domain. This means we must allow goods that are of a certain standard to circulate in the entire economic region. The same applies to services and must also apply to people. We have specified in the [draft] action plan the areas in which we would like to do business together. Immigration and migration belong to those areas. The movements of people go both ways. [Egypt] has an issue related to minimum foreign employment, and the EU has visa and labour permit problems. We know that we need young people [and] a workforce because of the [inverted] age pyramid. Yet, we close borders and do not allow the mobility of people -- one which would be beneficial to both sides. Studies show how important remittances can be, for economies which send people abroad. This is one area where in the next three to five years Egypt and Europe will have the potential to cut ice. What is the time frame for concluding negotiations on the liberalisation of services? They will start this year. How fast they move is difficult to tell. I don't think there is going to be another Uruguay round. The point is not the time but content. We need to improve on areas that are already partially liberalised like tourism and work on more delicate areas like financial services. The EU has also called for a further deepening of the liberalisation of agriculture. Why is that so? The EU is the largest importer of agricultural products from the developing countries. We need products from other countries to satisfy our consumers' needs. We also want to have quality standards for our consumers that will be compliant with our market requirements. Egypt has the weather and it is near. You can produce things which are in high demand in our market, like organic food. This is in our interest. And we have traders who are ready to invest in this area. We have gone a long way towards dismantling tariffs substantially, opening up quotas and adding new products. We now want to move faster in this direction. The ultimate aim is free access but there are going to be some sensitive products where we have to have a long phasing-in period and keep quotas. To what extent will European farmers be willing to accept this? It will depend on the schedules as well as tariffs and quantities. We will have to wait and see. Under the ENP, a new financial support instrument will be adopted starting January 2007. How different will this assistance be? As of the first of January 2007, we will have a new system of cooperation where the action plan gives us a sense of direction as to where financial support is needed. However, the structure and funding of (this assistance) is still not clear. We have a financial perspective for 2007-2013. How much in it is for ENP and Euro-Med is not clear. Since the Barcelona Declaration we have had on average one billion euro for the region. The political commitment is that it will increase, not decrease. But what is new is that there will not be a quota for each country. Countries will receive support on a competitive basis. There will be a strong element of first come first served. Those who are moving faster will get more out of a certain part of this financial support instrument. This is why we want to get the action plan ready because Egypt must be on board. Up until now, disbursement of funds from MEDA, the EU's current financial instrument, has been based on the national indicative programme set by the beneficiary country and the EU.
