Egyptian-Turkish trade is earmarked for growth, writes Sherine Nasr Turkey and Egypt have finalised the details of the free trade agreement they are due to sign early next year. "The agreement is a step towards boosting trade between the two countries. We are aiming to increase trade to at least $3 billion instead of the current and very modest $750 million," said Rachid Mohamed Rachid, minister of foreign trade and industry, during the ninth meeting of the Egyptian/Turkish Business Council held in Cairo. Under the staged agreement, trade will eventually attract zero customs. Duties on imports from Turkey will be gradually phased out beginning with raw materials, followed by intermediate goods, consumer products and finally automotives while all Egyptian exports to Turkey will be duty-free once the agreement comes into effect. The ninth round meeting of the Egyptian/Turkish Business Council brought together senior Egyptian officials and businessmen. The Turkish delegation was headed by Ali Coskun, Turkish minister of industry and trade. "The free trade agreement represents a good start that can be further developed for the benefit of both countries," said Rachid. Egypt and Turkey are both signatories to the EuroMed agreement and the bilateral free trade agreement is viewed by both as a step towards greater cooperation in preparation for the Euro- Mediterranean free trade area due to come into effect in 2010. Cooperation between the two countries will be led by the private sector. "Both governments are relying on the private sector to take the initiative. The potential benefits of cooperation are immense and the timing is perfect," said Coskun. Egypt hopes that its geographic position, pool of qualified and inexpensive labour and increasingly investment friendly atmosphere will attract Turkish investment across a range of industries including chemicals, pharmaceuticals, tourism, transport and construction. Attending the meeting was the Turkish Contractors Association (TCA) whose members account for 90 per cent of Turkish contracting activities overseas. According to TCA President Cumhur Kaur in 2004, the 269 construction companies belonging to the association have completed 3,500 projects, worth $135 billion, in 36 countries, including Libya, Morocco, Algeria and Sudan. "We are very interested in seeing Egypt in the forefront of countries where the TCA does business," said Kaur. Turkish delegates at the meeting underlined the importance of greater flexibility across the trade spectrum and cited ongoing problems over the acceptance of letters of credit from Turkish banks as well as obstacle to concluding contracts in Turkish currency as major areas of concern. Mohamed Youssri Hussein, a consultant to the Egyptian Federation for Contractors, points out that Egyptian contractors face fierce competition from several neighbouring countries "with Turkey on the top of the list". Many internal problems, says Hussein, have yet to be addressed, including difficulty over initiating approvals, complex tax structures and bureaucracy within the banking sector. "Entering into partnerships with Turkish construction companies may prove to be a way of surviving in this ever more competitive environment," he noted. During negotiations the Turkish side showed particular interest in the Qualified Industrial Zones (QIZs) which allow duty-free entry to US markets for products incorporating a minimum of Israeli inputs. "The bilateral agreement will allow Turkish companies to operate in Egypt and take advantage of low labour, utility and site costs and ensure free access to the US market, the largest consumer market in the world," said Adel Gazarin, president of the Egyptian/Turkish Business Council. Turkey is the Eurasian region's second largest economy. In 2004, Turkish GDP stood at $293.3 billion and is expected to grow by 10 per cent. Last year Egyptian exports to Turkey reached $235 million with rice, cotton, crude oil, iron, steel and cement topping the list. According to Turkish statistics Egyptian exports to Turkey grew by 31 per cent from 2003 to 2004. In some areas -- including molasses, salt and polyethylene, the growth was even more dramatic, at 84 per cent, 400 per cent and 100 per cent respectively. Egyptian imports from Turkey increased by 34 per to more than $350 million in 2004. Direct foreign investments (DFI) in Egypt, however, remain low compared to Turkish DFI in other neighbouring countries. "More effort is needed to attract Turkish DFI and capitalise on the interest Turkish businessmen have shown in Egypt's QIZ," said Gazarin.
