A Breakfast Briefing and Discussion

Date: December 21 st, 2005.

Topic: “The Outcome of the WTO Ministerial Conference in Hong Kong, and Progress towards a U.S.-Egypt Free Trade Agreement” Guest Speaker: H.E. Rachid M. Rachid, Minister of Trade & Industry The AmCham Trade Related Assistance Center (TRAC) hosted Minister of Trade and Industry H.E. Rachid Mohamed Rachid on the 21st of December, 2005 for a breakfast briefing and discussion on “The Outcome of the WTO Ministerial Conference in Hong Kong, and Progress of the U.S.-Egypt Free Trade Agreement”, which was attended by 158 members and 121 non-members.

Event Brief

Minister of Foreign Trade and Industry Rachid Mohamed Rachid briefed AmCham members and guests on the importance of trade agreements and Egypt’s progress during recent WTO talks in Hong Kong.

Following a brief introduction by AmCham President Taher Helmy, who welcomed the minister back from his trip and congratulated him on becoming a grandfather, twice in one week, Rachid stated that Egypt’s goal since day one has been to “integrate positively in the global economy for the benefit of Egypt, and for the benefit of Egyptians and Egyptian economy.” Pursuing this goal has led to greater activation of bilateral, multilateral and regional trade agreements over the past 15 to 16 months.

He went on to highlight the most significant of these trade agreements to Egypt, indicating that the government was respecting and fulfilling their conditions. He explained that these agreements encourage foreign investment, lead to more technology transfer and create employment opportunities.

Rachid described the COMESA trade agreement with Africa as “more challenging” than others, because the countries involved are very poor. “But that’s not the reason it shouldn’t work,” he declared. “The reason why we are having a serious disruption with Africa is because of the infrastructure of trade.”

The Egypt-EU Association Agreement, meanwhile, has offered more immediate rewards. Rachid indicated that exports to Europe increased more than 50 percent in the first 12 months of the agreement’s implementation. In addition, the partnership “creates an incentive for both parities to explore a possibility to go further in areas like services… and full liberalization of agriculture and food products exports to Europe.”

A section of the Egypt-EU Association Agreement outlines mechanisms for EuroMed cooperation, which encourages trade among countries in the Mediterranean region. One positive result has been the newly-signed Egypt-Turkey free trade agreement, which “allows the accumulation of origin, which means that factories from Egypt can use inputs from Turkey and other countries like Jordan or Tunisia and then export them to Europe.”

Turning to agreements with the US, Rachid announced that the QIZ agreement has attracted over 400 Egyptian companies in its first year. He described it as a “stepping stone” to a free trade agreement with the US, adding that recent talks in Washington along this track were “extremely successful.” He pointed to recent discussions held under the Trade and Investment Framework Agreement (TIFA), a precursor to any future FTA. “The purpose of this meeting was to have a final assessment of on where Egypt and the US stand on each of the issues,” he said.

While he emphasized the progress, he also cautioned that even in the best case scenario a FTA would not be granted until at least mid-2007. Moreover, it would only happen if the outcome were beneficial to both sides. “The FTA is not a gift… there has to be a mutual interests,” he said.

Finally, Rachid spoke of Egypt’s position during WTO talks in Hong Kong in mid-December. He explained that the WTO began these negotiations in 2001 and it would still take years to reach a final agreement. “Usually a trade round like Uruguay or GATT takes 7 to 8 years – this is not a kind of an agreement that would end in 6 months or a year,” he said.

He said the Cancun WTO meeting was a failure due to the deep divide between developed and developing countries on agricultural issues, but the Hong Kong meeting succeeded in finding some common ground, including an agreement to end all agricultural subsidies by 2013 and a decision to give 32 “poor” nations duty- and quota-free access to developed countries. “It was a success is because everybody agreed before the meeting that this would not be the end of the negotiations,” he explained, adding that further discussions would take place in March and April.