Egypt-US free trade deal at risk: US official

Agence France Presse

Egypt-US free trade deal at risk: US official

Wed Jan 18, 2006

CAIRO (AFP) - Egypt risks missing its chance to clinch a free trade agreement (FTA) with the United States if talks do not kick off in the coming weeks, an official with the US Congress said.

Washington, which has voiced concern over Egypt’s recent human rights record, has hinted that further economic cooperation with Cairo could be made conditional on political and democratic reform.

The congressional staffer, speaking on condition of anonymity, said that if FTA talks were not launched "within three weeks to a month, you could lose the opportunity until 2010 ... that’s the grim reality"

"The FTA has been taken off course by unrelated events," he added without specifying whether concerns over democracy had slowed down the process.

Another congressional staffer, addressing a breakfast of Egyptian businessmen organised by the US chamber of commerce (Amcham), suggested that reform would inevitably weigh in on any trade deal.

"Progress on political reform is going to have an impact on congressional FTA vote," he said.

In 2004, Egypt and Israel signed their first ever trade deal, allowing Egypt to export products manufactured in designated locations to the United States customs free as long as they contain 11.7 percent of Israeli components.

The next step was supposed to be a US-Egypt FTA but negotiations have not yet started, although Egyptian Trade Minister Rashid Mohammed Rashid held preliminary talks late last year.

US President George W. Bush currently holds so-called "fast-track" powers which allow him to directly negotiate trade agreements.

"This power won’t exist anymore next year. An agreement needs to be negotiated and concluded within that timeframe," said Akram Farag, an Amcham member and the chairman of Digital Systems Middle East.

"It is unlikely the next US president will acquire the same powers during the first two years of his term" which will start in 2008, he explained. "If we miss this opportunity, it could be four years before it comes up again."

The Washington Post published an editorial Tuesday claiming that the US administration had scrapped the visit to Washington of an Egyptian delegation to discuss the launch of FTA talks.

"The Bush administration has taken a first step toward adjusting its relationship with Egypt following President
Hosni Mubarak’s flagrant violation of his promises to lead a transition to democracy," the newspaper said.

The US administration has criticized Mubarak’s regime over the December jailing of opposition Ghad party leader Ayman Nur, who had challenged him in the September presidential election.

The Egyptian government was also taken to task over the violence and fraud that marked the parliamentary elections after it emerged in the first round that the Islamist opposition was making substantial gains.

"We believe that these things are interlocked: democratic reforms, good governance, going hand in hand with the expansion of economic opportunities and the expansion of trade," US State Department spokesman Sean McCormark said Tuesday.

In 2004, Egypt’s exports to the United States reached 1.1 billion dollars while imports topped three billion dollars. Receiving about two billion dollars a year, Egypt is the second largest recipient of US foreign aid after Israel.

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source: AFP