Although the US trade representative's visit to Egypt this week appears to have been no more than a photo opportunity, there is much more than meets the eye, writes Niveen Wahish Egypt is aggressively moving on various fronts to expand its markets. It is expanding frontiers in neighbouring countries like Syria, working on completing a free trade area with Russia and a Comprehensive Economic Cooperation Agreement (CECA) with Singapore, but on the US front it seems to be stuck in place. This week, Ron Kirk, US trade representative, was on his first visit to Egypt. Yet the visit passed as uneventful -- no major agreements signed. Kirk and Egyptian Minister of Trade and Industry Rachid Mohamed Rachid told journalists at a joint press conference that negotiations over a strategic partnership are still in process. A Ministry of Trade and Industry press release said: "The visit was designed to expedite the negotiations currently underway to identify priority cooperation sectors and fields of investment." Both Rachid and Kirk further underlined the interest of Egypt and the US in doubling their exports in the next five years. Kirk and Rachid signed a memorandum of understanding in November 2009 stating the interest of both countries to double trade and investments. The trade volume between Egypt and the US reached $8.4 billion in 2008, up from $4.3 billion in 2004, but it fell again in 2009 due to the global financial crisis. And US investments in Egypt amounted to $8.8 billion in 2008. During the press conference, Kirk highlighted that in the US, businesses that export tend to grow faster, hire more people and pay higher. "Having an export- driven economic policy as part of your overall economic recovery strategy is one that makes sense for the US," he said, adding the same goes for Egypt as well. Both officials also said that they would work jointly on ensuring the expansion of Qualified Industrial Zones (QIZs) and the inclusion of new areas in Beni Sweif and Minya, as well as diversifying the products exported within the framework of that agreement, all aiming to establish a more robust trade framework. Part of that is cooperation on priority areas. These include trade facilitation, particularly customs-related cooperation, to help streamline customs laws and procedures and simplify them. There is also a focus on standards and compliance with international regulations. Another key area is that of services where the two countries will work to bolster key sectors such as logistics, distribution, delivery, energy, and environmental and financial services. In the area of intellectual property rights, both Egyptian and US counterparts will set out how to work together to combat counterfeit and pirated goods and to increase the efficiency and transparency of the process through which trademarks are issued. Other mutual interest areas include agriculture, investment, labour and environment. The role of the two governments, Kirk told members of the American Chamber of Commerce in Cairo (AmCham), is to "level the playing field" so that the business community can do what it does best. But that seems as far as the trade and economic relationship will go at this stage, according to an observer who requested anonymity. He explained that it is not in the interest of the Obama administration to enter into a preferential trade arrangement at the moment. "Obama would not want to be blamed for causing a loss of jobs at home," he explained, adding that he could only take such a risk if and when he is re-elected for a second term. For years Egypt had pursued a Free Trade Area (FTA) with the US, but that hope had dwindled during the Bush administration. And last year Egyptian officials clearly stated that an FTA is no longer negotiable. However, Kirk did not rule out an FTA altogether. Speaking to AmCham, he said Egypt does not have an FTA "yet". And he stressed the need to work on the existing partnership first. The anonymous source said that US interest to work with Egypt and other countries around the world is to regain some clout lost during the Bush administration. And, he said, the US wants to secure its interest by strengthening its ties with Egypt's elite business community and the government at a time Egypt is heading into a period of political volatility, with parliamentary elections soon to be followed by presidential elections. The current framework of cooperation, according to the source, enables the US to do that. It is also in the interest of Egypt to be "in the picture" for the US, he said: it gives it weight on the international front and in international institutions such as the WTO and the OECD. "Both parties at the political level have something to gain by appearing to work closely together on trade related issues. In fact, a study entitled Re-engaging Egypt: Options for US- Egypt Economic Relations published by the Peterson Institute for International Economics, points out that "the US has a vested interest in helping Egypt through enhanced commercial ties to develop its economic potential and improve the living standard of its people. In so doing, the expanded US-Egypt partnership would encourage Egypt to continue to play a constructive role in the Middle East, strengthen its economic ties with regional partners and help the US pursue a more cohesive and sustainable policy in the Middle East." With this in mind, the anonymous source insisted that, "it is not our economy that they are after," highlighting that the size of Egypt's GDP is less than what a Fortune 500 company would earn in 90 days. And the US does not need Egypt to tap into third markets. But Hisham Fahmy, executive director of the American Chamber of Commerce in Cairo (AmCham), believes otherwise. He pointed out that AmCham has launched the "Egypt as a Hub" initiative that seeks to market Egypt as a point of entry to procure preferential status for US goods into third markets such as COMESA, the EU and an Arab Free Trade Area. He said that during this spring's annual "door knock mission", which ran from 14-20 March, this initiative was welcomed. "To double their exports, they need more markets," he explained and this is where Egypt comes in handy. And as Kirk told AmCham members, Egypt is increasingly seen by businesses as a growing market in its own right due to the size of its population and as a vital commercial hub for the Middle East and Africa regions. Fahmy explained that US companies could export parts or raw materials to Egypt where value is added and they are then re-exported to Egypt's many trading partners. It is a win-win situation, he says, whereby Egypt receives US investment, creates jobs and exports, and the US exports also. "Each has a competitive advantage in a different area from the other," he added. The AmCham mission also carried a message stressing the need for peace in the region so that companies could prosper, and the need for US efforts in that direction. "Companies need a long-term vision for peace and stability," he said.
