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Washington drags its feet over US-Egypt free-trade agreement

Daily Star, Beirut

Washington drags its feet over U.S.- Egypt free-trade agreement

Study reveals a pact could boost Egyptian economy by up to 3 percent

By Paul Cochrane

Daily Star staff

19 May 2005

BEIRUT: Egypt and the United States want to negotiate a free trade agreement but have not agreed on a date to begin talks, Egyptian Prime Minister Ahmad Nazif said after talks with U.S. officials in Washington. A study released by the Institute for International Economics (IIE) said that a comprehensive free trade pact between the two countries could boost Egypt’s economy by up to 3 percent. The United States would benefit far less economically, the report said, but the shortfall would be made up through better relations with an Arab state that is a political, economic and cultural role model for the Middle East.

In an interview with Nazif published in USA Today on Tuesday, the Egyptian premier said that relations between the two countries have at times seen differences.

"Egyptians are very kind people by nature. And kind people are easy to influence. Even if they think the U.S. today is not as nice as it should be, they still have hopes for the relationship in many ways. That is why I am here. To make sure we mend this image," he said.

The IIE expects the United States to announce by the end of the year the beginning of free trade talks with Egypt, which has been pushing for negotiations since President George W. Bush took office in 2000.

Egypt damaged its chances on entering talks a few years ago when it backed out of a U.S.-led trade case against the European Union over policies blocking imports of genetically modified crops. That issue appears to have been put by the wayside, but the Bush administration is currently in the middle of a tough battle in Congress to win approval of a free trade agreement with Central America.

"The United States has its own internal constraints, its own internal politics. But I think in the global sense, there is a desire on both sides ... to build on our relationship a little bit more and definitely an FTA is a good cog in that respect," Nazif said.

Cairo "appreciates very much" the efforts Washington is making to promote democracy in the region and "we take that as a commitment that the United States will help the region to grow," Nazif said. A free trade pact would lock in and expand the economic reforms Egypt has already made, he added.

Since coming into office last year, Nazif has introduced a raft of economic reforms that have proved to be a boon for Egypt’s stagnant economy.

"Last year, the total foreign investment was $408 million, very meager. In nine months, since we came to office in July, till March, that number exceeded a billion. That is not our target yet. Our target is $3 billion per year and I think we’re well on our way," he told USA Today.

Nazif said investment revenue is mainly for tourism, but also for oil and gas exploration.

The premier added in the interview that the privatization program currently underway has generated remittances over the past nine months four times what it was in the past five years. Nazif said that last month’s attack on tourists in Cairo’s Khan El Khalili had not affected the country’s tourism industry. Nazif met with Bush on Wednesday. - With agencies