Re-energised Egypt-US relations could take economic cooperation between the two countries to new levels, Niveen Wahish reports The Egypt-US Business Council has recently been reincarnated. For the past eight years its activity, or lack thereof, was reflective of the Egypt- US relationship at large. In its new form, the council includes not only businessmen but also academicians, Central Bank of Egypt and National Investment Bank representatives, as well as a representative of the chambers of commerce. "The more diversified the members on the council and the deeper their understanding of both markets, the more effective the council will be." Egyptian Minister of Trade Rachid Mohamed Rachid told Al-Ahram Weekly in an emailed statement. Magda Shahin, director of the Trade-Related Assistance Centre affiliated to the American Chamber of Commerce in Cairo (AmCham), believes the formation of the council "is indicative of a larger, deeper and more substantive relationship in the making between the two countries". The revitalisation of the business council and the upcoming visit by President Mubarak to the US are all part of an effort to open a new page in Egypt-US relations. This comes on the back of a renewed sense of optimism that accompanied the advent of the Obama administration. "Obama's speech was a step of friendship and opens up the way to ushering in new bilateral relations. It has raised expectations to new levels," said Taher Helmy, partner of the law firm Helmy, Hamza and Partners and head of the new council. However, he points out, "We have our homework to do. We need to understand what this administration means by its overture to the Arab world." The first task for the council, according to Helmy, will be to understand where things are going, and how the high expectations will be met. Shahin agrees that it is as yet unclear how things are going to develop. "This is a new beginning for a relationship that had been dormant in the last few years. We are working on the basis for change." But Egypt and the US have a good foundation to build on. Rachid explained to the Weekly that even over the past eight years, when there was a public perception that the relationship between Egypt and the US was weak, bilateral trade went from $4.36 billion in 2004 to $8.4 billion in 2008. "This is a clear indication that the economic ties between the two countries have continued to grow," he said. US investments in Egypt during the same period also grew to $7.5 billion. This growth, Rachid said, will continue. "There is a commitment from both Egypt and the US to double bilateral trade over the upcoming four years." In that context Helmy, who is also former president of AmCham, notes that a good political relationship will help move the economic agenda forward."You can not have a deteriorating relationship and expect investors to take risks," he explained. He acknowledged the fact that the US is the largest single country investor in Egypt, "yet we can do more." He hopes that Egypt can grab a piece of the large cake of US foreign investment. "If US investors feel comfortable to do business in Egypt, they'll come." Helmy also believes that the US government has to assist in laying the best foundations. Agreements between the two countries have to be struck in a way that encourages investment. Steps have already been taken. Rachid signed earlier this summer a "Plan for a Strategic Partnership" with US Trade Representative Ron Kirk. The plan aims to further promote economic cooperation between the two countries. Both sides acknowledge that dialogue should occur on issues of mutual interest. The plan instructs senior officials on both sides to develop, within three months, a framework for cooperation in a number of trade and investment areas. Those three months are up, and officials should be ready with more details. In past years, Egypt had scrambled to sign a free trade agreement (FTA) with the US, but to no avail. Earlier this summer, Rachid had said that Egypt was "not excited about [FTA] discussions anymore". "There has been significant progress taking place even without an FTA." Rachid explained that for an FTA to be mutually beneficial, both sides have to be ready and committed to it. "Right now, this is not something that either side is looking for. Also keep in mind that there are other special trade programmes that are offered by the US that can give other Egyptian products advantages," he told the Weekly. Such agreements include the Qualified Industrial Zones Protocol and the Generalised System of Preferences. Egyptian and US observers told the Weekly that despite an FTA not being on the cards, the US is aware that Egypt wants more than what the Trade and Investment Framework Agreement (TIFA), signed with the US in 1999, can offer. Observers said that the US is willing to oblige Egypt to insure its support when it comes to the multilateral trade front of the Doha negotiations. Egypt is important given its influence on the African Group within the World Trade Organisation (WTO) and it has considerable leverage within the G20. For Helmy and the council the first order of business is to "better understand how far they [the US side] are willing to go. There are many areas we can work on. We need to identify our priorities and their priorities and see how we can work together. We have to come up with a common agenda to service the best interests of both countries." One of the challenges ahead, according to Helmy, is education and vocational training. He said Egypt has to upgrade its human resources to meet the requirements of the economy. "The business council needs to be the catalyst in making something happens in this area." Other areas of importance include environment as well as services, labour, intellectual property rights, corporate governance, rule of law, combating corruption and upgrading the institutional system. According to Helmy, these are all issues important to trade and investment." They are also issues where US assistance is needed to enable Egypt to conform to international standards, observers believe. Shahin acknowledges that trade was good in recent years, but "There was no view or objective. It all depended on individual private sector initiative." She wants to see a strategy whereby the US helps with issues such as trade facilitation. She is also looking forward to greater US investment in sectors other than oil. That can happen, she says, if Egypt can market itself as a hub for US business and springboard into Arab, African and possibly European markets. Shahin further pointed out that Egypt's goods, due to its regional trade agreements with parties such as the EU and the COMESA (Common Market for Eastern and Southern Africa), are able to enter tariff free -- or at very low tariffs -- into these markets. She invited US investors to take advantage of that potential by opening up factories in Egypt where value is added through additional processing and the products are then exported. She gave the example of ketchup, which is exported tariff free by Egyptian manufacturers to the EU, whereas US manufacturers export it from the US at a 14 per cent tariff. "Agro industry is an area where the US can also benefit from Egypt." However, she insisted, it must be made clear that Egypt does not intend to affect the US labour market by having factories move into Egypt. Rather, "We want US companies to sell more goods." In the end, she said, Egypt would be marketing their industry, designs, machines and technology in arenas where they have no access." In the meantime, she stressed that Egypt has to tackle issues such as red tape, trade facilitation and intellectual property rights. "This is what the strategic dialogue is about; to discuss the sensitive issues and to find solutions. It is a new way of negotiating issues without everyone straight- jacketing themselves." Helmy agrees. "Communication and continuous dialogue," is what the new relationship is about. And he believes the private sector has a crucial role to play in that regard, "working closely with government, and lending advice in what we believe is in our best interest and that of the economy."
