Free trade, minus the warmth and the longing

The Daily Star (Beirut)

Wednesday, March 22, 2006

Free trade, minus the warmth and the longing

By Maria Golia

In Egypt, just because a couple is engaged doesn’t mean they’ll get married. Securing and furnishing a flat involves setbacks, some monetary, others not. Just when things look good, the wedding date is postponed. Tensions build between prospective partners, alongside expectations. There are bound to be arguments, followed by warm reconciliations and renewed longing for union.

The Free Trade Agreement (FTA) talks between Egypt and the United States resemble this scenario, minus the warmth and, most recently, the longing. Preliminary discussions have started and stopped on a variety of pretexts since the late 1990s. But recent American demands for political reform have disillusioned even the most stalwart FTA lobbyists.

According to Taher Helmy, president of AmCham-Egypt, "with the 16 Qualified Industrial Zones very generously given by the U.S., we now have open access to their market without the downsides of reciprocity, and without the conditionality that was increasing everyday."

Egypt’s business community once felt that an FTA would force their government to abandon its centralized economy and embrace an open, private-sector-driven one. With significant Cabinet postings in the hands of entrepreneurs, Helmy affirms that, "we now have a government with a strong commitment to economic reform, so the FTA is no longer necessary as a catalyst." In other words, thanks but no thanks.

The tune was different earlier this year, with Trade and Industry Minister Rashid Mohammad Rashid predicting the imminent start of FTA negotiations. But after Vice President Dick Cheney’s January 17 meeting with President Hosni Mubarak, a Washington Post editorial linked Egypt’s political performance ("autocratic backsliding") with its diminished chances for an FTA. In a subsequent press briefing, State Department spokesman Sean McCormack downplayed intimations of high-level disagreement by describing American relations with Egypt as "good," "broad and deep" and "excellent." On February 17, Secretary of State Condoleezza Rice announced that the FTA was off: "[I]t’s not a matter of punishment, it’s just ... the timing being not quite right."

While the FTA debacle may embarrass some, the news is far from bad. American FTAs are not the cure-alls for developmental ills they’re cracked up to be. In the decade after entering the North American Free Trade Agreement (NAFTA), the percentage of Mexicans living in poverty rose from 58 to 79 percent; in woman-headed households it rose 50 percent. More than a million Mexican farmers and families have abandoned their land and livelihoods, unable to compete with U.S.-subsidized food crops. They migrate to cities, or America, posing problems to both. It’s hard not to draw predictive comparisons with Egypt.

Yet Egyptian commentators tend to view the FTA as economically desirable, a gesture of America’s commitment to partnership, a sign of approval, virtually ignoring the potentially grave impacts. By contrast, the Central American Free Trade Agreement (CAFTA) was vigorously opposed by religious, humanitarian, development, labor and public policy organizations based on the distressing outcomes of NAFTA. American FTAs involve stipulations that can effect domestic legislation, advancing investor rather than public concerns. Opponents also argued that the trade agreement should be discussed within a framework of democratic accountability. These issues were hardly raised in Egypt, where people are used to decisions being made for them and complaining afterwards.

Guatemala ratified CAFTA in March 2005, amid tear-gas-dispersed demonstrations that claimed two lives. The agreement was designed as a prelude to the Bush administration’s master plan for a Free Trade Area of the Americas (FTAA) covering much of the Western hemisphere. However, the latter has drawn widespread criticism and is currently on hold. Similarly, the U.S. "fast track" trade authority has made deals with five Arab countries, a precursor to a Middle East Free Trade Area, another grand scheme scheduled for 2013. Egypt’s stalled FTA allows time for regional groups and governments to seriously question what they stand to gain from these agreements, if anything.

America has long sought to equate free trade deals with democratization, even though the agreements are negotiated behind closed doors without voter participation. Nor is the awarding of FTAs solely dependent on favorable economic conditions. Egypt’s was previously delayed until "the investor environment" improved. This translates into wider latitude for corporate interests. But when Egypt’s economic climate brightened, political conditions were tacked on. Indeed, FTAs may be seen as a kind of tip for compliance with U.S. foreign policy. Chile’s FTA, for example, was postponed because of opposition to the second United Nations resolution regarding the invasion of Iraq. When the U.S. says its national security is contingent on democratization, prospective partners like Egypt must toe the line, for their own good, of course.

Ostensibly, the U.S. reconsidered Egypt’s FTA in response to human rights abuses: voter causalities and poll rigging during recent parliamentary elections, Ayman Nour’s imprisonment and the deaths of 27 refugees in Cairo during a police raid. Commentators cite Egypt’s stance on Iran’s nuclear program, on supporting Hamas, and on refusing to either pressure Syria regarding the Rafik Hariri assassination investigation or to send troops to Iraq as the real points of contention.

It’s hard to know what Washington really wants. Diplomacy may be the art of not saying much, but Rice’s role of late has been to say two different things almost at once. In a February 22 interview, Rice remarked that she’d had an excellent meeting with Mubarak, "a wise man" and a "good friend of the United States." She had nevertheless rebuked Egypt’s foreign minister in a joint news conference the day before, saying Egypt’s political reforms were prone to "setbacks and disappointments." Just prior to her Mid-East tour she voiced dismay at the rescheduling of Egypt’s municipal elections, speaking to a group of Arab journalists. People denied a legitimate outlet "express themselves through extremism," she warned.

At the same gathering, Rice acknowledged America’s role in abetting precisely such a lack of expression ("60 years of turning our backs on democracy in the Middle East and favoring ’stability’ has given us neither stability nor democracy") - and presumably, therefore, abetting extremism. But she also noted that things were not so rosy in the Middle East in the first place, in other words "before the overthrow of dictatorship in Iraq," saying, "you had such a freedom deficit that people were expressing themselves by flying airplanes into buildings."

Is Rice suggesting that now that America has made things worse, they’re somehow actually better? Perhaps this is an example of the new "transformational diplomacy" Rice mentioned to television interviewer Mervat Mohsen, who had memorably asked "when we would see a [U.S.-Egypt] relationship among friends, not [Egyptians] being given commands like ... coolies?’ The new diplomacy, Rice explained, involves "working with our partners around the world to try to help people ..."

"Transformational" is a big word, and if appropriate when describing U.S. diplomacy, then only if it suggests the belief on behalf of officials that if they repeat a fallacy long enough, it will somehow be transformed into the truth. With the FTA opportunely tabled, one wonders how the U.S. plans to work with Egypt’s wise leader to help his people next.

aria Golia is author of a book on Cairo titled "City of Sand." She wrote this commentary for THE DAILY STAR.

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