QIZ credited with shift; possible movement in coming months on FTA
CAIRO: The balance of Egyptian-American trade recorded a $395 million surplus after the first three quarters of 2006, U.S. Embassy Commercial Advisor Amer Kiyani told the Egyptian Businessmen s Association (EBA) Wednesday.
Egypt has traditionally recorded annual deficits in trade with the U.S. In 2005, the trade deficit stood at $700 million with Egypt importing more than $2 billion in U.S. goods. Kiyani and others credit the implementation of the Qualified Industrial Zones Agreement (QIZ) with the shift in numbers.
We have to go beyond the numbers, says EBA Secretary General Mohammed Youssef. Some trade agreements which the U.S. has taken part of, such as QIZ, have had a positive impact on Egyptian businesses and consumers.
According to Ministry of Trade and Industry figures, Egyptian textile exports to the U.S. recorded 30 percent growth to $252 million during the first four months of this year relative to same period in 2005.
Free Trade Agreement (FTA) talks broke down between both sides at the end of last year after the U.S. condemned a series of events, including reported presidential and parliamentary election fraud and the imprisonment of opposition leader Ayman Nour, as setbacks to political reform. Minister of Trade and Industry Rachid Mohamed Rachid then announced the indefinite postponement of talks, adding Egypt does not view a potential FTA as a gift.
Kiyani says efforts to reinitiate FTA talks are ongoing and denies the notion that past talks have failed. He says the coming months will see at least five Egyptian business delegations visit the U.S. as well as U.S. businessmen visiting Egypt to increase existing investments. U.S. businesses accounted for more than $2 billion of foreign direct investment in 2005, totaling $3.8 billion.
Egypt has recently made a point of publicizing its efforts to increase trade with China as an alternative to Western markets, including the U.S. and European Union. Rachid, just back from a nine-day trip to China s political, industrial and technological production capitals, says he predicts China will become Egypt s top trading partner in six to eight years. Bilateral trade with China came reached $2.3 billion last year, compared with about $5 billion with the U.S. and $17 billion with the EU.
We have to be realistic; China is one of the major players in the global market today, says Youssef. We have traditionally not been able to benefit from China. We receive only low-quality products that we can afford to buy. But Chinese manufacturing has proven itself all over the world. So now is the time to benefit from Chinese know-how and expertise to help us produce high-quality products.
Youssef adds Egyptian businesses can learn from their Chinese counterparts how to achieve the standards of production accepted by Western markets as far as modernization and reduction of bureaucratic procedures.
The more you grow economically, the more you can use it as a bargaining chip anywhere in the world, not just with the United States, he says.
Economist Magdy Sobhy of Al Ahram Center for Political and Strategic Studies says Egyptian-American trade should continue to grow but FTA talks remain unpredictable. While most of the American demands as far as economic reform have been met by the Nazif government, political reform has fallen short, but also no clear indication of U.S. requirements has been made, he says.
It s clear FTA has become more of a political issue, says Sobhy. But I don t think Egypt has a willingness to shift its political alignment to China. We can learn from them and try to tap into their huge market. But politically, and thus economically, we have to continue relying on the U.S., at least for now. Sobhy s words echoed those of Kiyani at the EBA gathering a day earlier.
The United States does not object to Egypt improving its trade relationship with Asian countries, Kiyani says. The United States will remain Egypt s most important partner.