Attempts are underway to expand Egypt's association agreement with the EU to further facilitate trade, finds Niveen Wahish from Brussels Egypt's association agreement, which was finalised in June last year, followed eight years of negotiations. Yet a little over 12 months after the agreement came into effect and negotiators from both sides are once again around the table. The subject this time is the joint action plan that will provide a framework for relations between the EU and Egypt within the European Neighborhood Policy (ENP). Michele Villani, responsible for Euro- Mediterranean trade relations at the European Commission in Brussels, says the discussions have been "very fruitful and prospects are encouraging". "While economic and trade issues seem to find common ground more easily than the political file the two sides are committed to defining a common set of jointly agreed actions in all domains of their enhanced partnership." Villani expects more meetings to be held in the coming weeks. ENP aims at defining a range of priorities with partner countries which, once realised, will further cement ties with the EU. These priorities will be integrated within jointly agreed action plans covering key areas -- including legal frameworks and energy and transport -- as partners prepare for greater participation in the internal market. ENP seeks to build on association agreements signed between the EU and its various Mediterranean partner countries. The association agreement with Egypt, says Villani, has already begun to yield encouraging results with EU- Egyptian trade reaching 11.5 billion euros in 2004 compared to an average of 10 billion euros since 2000. The impact of the Association Agreement has been felt strongly in the agricultural sector: 2004 trade figures show a 45 per cent increase in Egyptian agricultural exports, with peaches, melons, oranges and a range of vegetables all improving their position in the European market. Under the current association agreement Egypt exports industrial goods tariff free to the EU while EU exports are being gradually liberalised until 2015 when they will be able to enter Egypt tariff free. Agricultural exports to the EU had been a major stumbling block in the eight year-long negotiations that preceded the association agreement. The Common Agricultural Policy effectively blocks open access for agricultural goods from outside the EU, though Egyptian negotiators did manage to secure larger tariff free quotas and custom duty discounts for amounts above the quotas. Though implementation of the agreement has been so far successful the EU, according to Villani, hopes to "complete unfinished business" and broaden the liberalisation of the agricultural and services aspects of the agreement. The European Commission hopes that by November it will have a mandate to renegotiate articles on agriculture, should its partners be willing to do so, and bring them closer to the targets set by the Barcelona process, the overall framework for association agreements between the EU and its various partners. The association agreement with Egypt already provides for the renegotiation of articles concerning agriculture within three years. Given the EU has already begun efforts to liberalise the agriculture sector on a multilateral level, says Villani, it is now seeking to kick-start the process with its closest partners. EU policy, says Villani, is increasingly directed towards liberalising the agricultural sector, with agricultural subsidies being redirected towards supportive action in the field of rural development rather than towards production. Opening the European agricultural market to Egyptian exports would be a welcome move given that Egypt is already using all of its agreed quotas. Egypt, though, would be expected to reciprocate by opening up its own market. "We cannot go for a deal unless everybody is satisfied," says Villani. The new negotiations are focussing on processed foods and fisheries as well as agricultural produce. The EU is also seeking to promote further liberalisation of services and the right of establishment, with a possible negotiating trade off between easier movement for individuals in return for greater access to the Egyptian distribution and telecommunication sectors for European companies. Ongoing discussions will also address rules of origin. The EU hopes to adopt a new protocol whereby EU partner countries will be able to manufacture jointly and label the product as being of EU origin. To this end the EU will work with Egypt on technical legislation covering standards and specifications. Investors, says Villani, currently deal with two sets of legal specifications that involve a duplication of costs. "If we jointly progress towards harmonising product-related legislation we will create regulatory trade corridors to facilitate exports back and forth."
