Up in the air

Speculation is rife on when, or even if, the Egypt-EU association agreement will be signed
Egypt is trying to contain increasing EU concerns over the future of the Egyptian-EU association agreement for economic and social cooperation. EU worries have been fuelled by reports of cabinet splits over the agreement and delays in the signing, scheduled for 14 May. And though, according to a senior Ministry of Economy official, the agreement has now been approved by all members of the cabinet, the announcement by Prime Minister Atef Ebeid earlier this week that the agreement would be signed at the end of June did little to reassure the Europeans.
"The EU has still to decide whether this date will be convenient," said one European source, noting that Ebeid did not consult with the EU before issuing his statement. Other EU officials, however, tried to be more diplomatic. "There is no problem for us," said Vittorio Ghidi, charge d'affaires of the EU delegation in Egypt. "We're ready to sign at any moment."
But Cairo is aware that the Europeans are irked. One informed Egyptian government source told Al-Ahram Weekly that the Europeans are reluctant to reschedule the signing ceremony because "they were neither offered a clear reason for the delay, nor consulted before the new tentative date was declared." According to this source: "The Europeans seem to be upset."
Negotiations for the agreement, which will open up European markets, virtually tariff-free, to Egyptian goods, were concluded in June 1999, after almost five years of arduous bargaining. The text of the agreement was initialled last January.
Although Egypt concedes that the EU has accommodated most of Egypt's demands on agriculture, opponents of the agreement continue to argue that opening Egyptian markets to European goods will spell disaster for local industry.
The Federation of Egyptian Industries (FEI), though, is supporting the agreement: "It is very important for Egypt," says FEI Deputy Chairman Ahmed Ezz. "The opportunities it creates are in equal proportion to the challenges it brings."
Ezz added that the agreement will reduce the gap between the two sides in technology, management, information exchange, investments, and trade, and this could help Egypt improve its chances to access other global markets.
The delay in the conclusion of the agreement is unlikely to be without costs. EU officials in Brussels say the delay will make it difficult to allocate funds to Egypt within the MEDA II programme from which countries like Tunisia, Morocco and Jordan, that have already signed agreements, will benefit. MEDA II, worth 5.35 billion Euros, is intended to finance projects in the South Mediterranean countries over the next seven years to help them cope with competition. Also, the privileges Egypt has secured in agriculture could become less significant with time, as the EU opens its markets further within the context of its commitments under the World Trade Organisation.
But the most important casualty of the delay is likely to be in the field of investments. European and foreign companies are always inquiring about Egypt's position on the agreement, said one European official: "It's not the details of the agreement or what's in the text, that count, but Egypt's commitment to enhancing relations with the EU that they consider important."
In addition to local proponents of the agreement, the government is coming under external pressure to sign. Egypt may have to move faster in the direction of signing or face serious economic challenges within its own Mediterranean Arab environment. On Tuesday the foreign ministers of Arab Mediterranean countries that have negotiated association agreements with the EU met in Rabat as part of the Euro-Med Forum, to discuss inter-Arab Mediterranean cooperation. Out of the four -- Jordan, Tunisia, Morocco and Egypt -- it is only the latter whose association agreement has yet to move beyond the first-letter signing stage.
The declaration issued by the four countries underlined the need for a collective Arab Mediterranean effort to counter-balance the EU's collective economic weight.
"We need to formulate new rules [in the Arab countries] to deal with the new economic facts in our surroundings," said Morocco's Foreign Minister Mohamed Bin Issa.
"There is a pressing need for Arab Mediterranean states to coordinate their rules of origin to allow themselves a better competitive edge in European markets," commented Jordan's Foreign Minister Abdel-Ilah Al-Khatib.
The objective of the Rabat meeting was to launch a group for Arab Mediterranean economic cooperation. For Egypt to be an influential party in this process, it may need to consider a quick signing of its agreement with the EU.
By Dina Ezzat in Rabat, Yasser Sobhy in Cairo
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