Egypt seeks to expand US trade zones

Reuters | 9/8/2009

Egypt seeks to expand US trade zones

CAIRO: Egypt has asked the United States to expand preferential trade industrial export zones in southern Egypt, but a bilateral free trade deal is “off the table” for now, Trade Minister Rachid Mohamed Rachid said yesterday. In an interview, he said Egypt and Africa would push for greater market access and a cut in agriculture subsidies in the US and other major economies amid efforts to re-energise the Doha round of world trade talks. Egypt, as coordinator for the Africa group in the Doha talks, plans to host a meeting of African officials in October.

“On the bilateral (front), we are keen to see our trade and investment growing with the United States,” Rachid said, adding a deal he signed three months ago aimed to double trade in four years from $8.5bn and boost U.S. investment in Egypt. “We agreed that within a period of 90 days, that actually ends this week, we will have in place an agreement between the two countries on how to proceed forward with an environment that could increase trade even further,” he said. A free trade deal with the US was “off the table at the moment”, Rachid said.

But goods from specified zones in Egypt, known as Qualified Industrial Zones (QIZs), enjoy preferential terms in the U.S. market provided a certain percentage of Israeli goods are used. “We have specifically asked for extension of the QIZ areas into upper (south) Egypt. The United States has already approved an extension to two areas, Beni Suef and Minya. At the same time we are also asking this to be expanded all the way to Aswan,” he said. Aswan is in the far south of the north African country.

Egypt, which signed a peace treaty with Israel in 1979, has been a key partner for Washington in efforts to secure Middle East peace, and is one of the biggest recipients of US military and economic aid. But the trading relationship lags in comparison. Former US President George Bush negotiated free trade deals with some other Muslim states but not Egypt, in part because of concerns over its commitment to democratic reform. Rachid said Egyptian President Hosni Mubarak and US President Barack Obama discussed boosting trade ties when the Egyptian leader visited Washington this summer. On world trade talks, Rachid said Obama had to outline US trade policy to help along the Doha round.

“I think the negotiations are very close to conclusion. What is really missing now is the political will, specifically from the United States, we have to get some clarity,” he said.

Africa and Egypt, also part of the Arab group of nations, were seeking better market access and wanted the U.S, Europe and Japan to cut agriculture subsidies.

“Cotton is a very sensitive issue for Africa and Egypt, and this is very much related to the subsidies and the support the U.S. government is giving to the cotton growers in the United States and the distortion that is taking place there,” he said. African nations exporting textiles and clothing to the U.S. have sought an extension to a US law giving them favourable market access, African Cotton and Textile Industries Federation (ACTIF) said last month.

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source: The Peninsula