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Egypt-Israel-US trade pact sparks demonstrations

Afrol News | 16 December 2004

Egypt-Israel-US trade pact sparks demonstrations

By staff writers

afrol News, 15 December - As the first Arab nation, the government of Egypt yesterday signed a trade pact with its neighbour Israel that will help breaking the latter’s economic isolation. After the controversial trade agreement was made known, demonstrations broke out throughout the Egyptian capital, Cairo.

The trade deal signed on Wednesday is to establish partial free trade between the neighbours of Egypt and Israel, but also with the United States. The US government has been key to the negotiations that led to the new trade pact.

The agreement will create so-called "Qualified Industrial Zones" in greater Cairo, Alexandria, Port Said and around the Suez Canal, which will have free trade access to Israel and the US. The zones will also be open to investments from these two countries.

As the new trade pact with Israel was known in Egypt, spontaneous demonstrations broke out in Cairo and other cities. Although Egyptians mostly celebrate the formal peace with their north-eastern neighbour, the continued Israeli oppression of fellow Arab Palestinians assures the maintenance of hostile feelings.

While Israel has preferential trade deals with the US and Europe, the Arab world so far has used a trade blockade as an economic weapon against its traditional foe. Combined with political violence in Israel, this has contributed to damage the country’s otherwise strong economy. For many Egyptians, a trade deal with Israel thus means betraying the Arab pressure against Israel to negotiate a return of occupied territories with Palestinians and Syria.

Today’s demonstrations in Cairo however generally went peaceful and authorities managed to stop larger crowds from gathering. At most, several hundred protesters managed to gather at one spot. Egyptian authorities have a strong tradition in controlling potential riots.

There were however voices in Egypt welcoming the new trade deal as a new hope for economic and industrial development in Egypt. The "Qualified Industrial Zones" will be allowed to export tax free to the US given that a minimum 12 percent of the goods are manufactured in Israel. Especially the crisis-ridden textile industry sees this as a new opportunity to regain export markets.

For Israeli investors, the relatively cheap but qualified labour in neighbouring Egypt may also produce new opportunities. Critics in Egypt however fear that the country’s industry and workers will be sold out to the ex-enemy, resulting in an increasing Israeli control of the Arab industry.

The US government, on the other hand, welcomed what it called "a very important development." US State Department Spokesman Richard Boucher told the press in Washington that his government had been working on this deal for many months. "We think it is a very positive thing and offers opportunities to Israelis and Egyptians, in terms of business, jobs, exports and modernisation of their economy," Mr Boucher added.

The US government also has its proper interests in the new trade deal, apart from strengthening the economic integration between its two major allies in the region. There is a current race between the European Union (EU) and the US to establish free trade agreements with North African countries, which will bind this strategic region more closely to Brussels or to Washington.

The EU is working on its Euro-Mediterranean initiative, a slow process that is to establish an enormous free trade zone combining the EU, North Africa, Israel, Palestine, Jordan, Syria and Turkey by 2010. The US, on the other hand, is promoting bilateral free trade agreements with countries in the region, such as Morocco, Israel and Egypt.