Thursday, March 02, 2006

Egypt rejects political conditions for US free trade deal

Agence France Presse
Thu Mar 2, 2006

Egypt said talks on a free trade agreement with the United States can be launched only if Washington stops attaching political strings to the deal.

"Trade relations should not be tied to any other circumstances, political or otherwise," Foreign Trade Minister Rashid Mohammed Rashid said after talks with visiting US Commerce Secretary Carlos Gutierrez.

"We are not prepared today to enter a trade agreement tied to any other conditions other than those related to trade and investment," Rashid told reporters at a joint news conference with the US official.

Washington said last month it was delaying the launch of talks on a free trade agreement (FTA) with Egypt, a key US ally in the region, over concerns about Cairo's commitment to democratic reforms.

The move came after Cairo decided to delay by two years the holding of municipal elections and followed the jailing last December for forgery of prominent opposition leader Ayman Nur.

Gutierrez refused to say if his government's decision to postpone the launch of talks on the FTA was directly related to the political climate in Egypt.

"The environment has to be right. We don't have a list of criteria, but it's a matter of judgment. It's a matter of judging and evaluating and deciding when the time will be right," he said.

While both Gutierrez and Rashid agreed that the current conditions did not favor the launch of the talks, they disagreed on the definition of those conditions.

"The view we have is that the FTA is not a gift or something that the US is giving to Egypt because Egypt is doing or not doing something," said Rashid.

"Until we reach a stage where we are both convinced enough that this is really in the interest of our companies, in the interest of our economies... and not necessarily linked to any other ups and downs in any part of the relationship, that's the right time we start," he added.

"When we have an agreement, we want to win, we want to get it through, we want to succeed," Gutierrez said. "We want to avoid a situation whereby the environment doesn't enable the agreement to succeed."

Despite the apparent gap, both officials said they wanted to see closer and stronger trade ties between their countries.

"In the meantime, we encourage Egyptian government leaders to move forward on reforms that will further liberalize the economy and create an attractive business and investment climate," said Gutierrez.

"At a time where trade is so important, unfortunately there are some protectionist tendencies. We have to ensure that we can convince people that this is not the time for protectionism... On our side we have to convince a lot of people," he added.

In 2004, Egypt's exports to the United States reached 1.1 billion dollars while imports topped three billion dollars.

Last year, exports to the US rose to around 1.8 billion dollars and the volume of bilateral trade reached some five billion dollars, a 16-percent increase compared to the 2004 figures, according to Rashid.

Gutierrez and Rashid signed a memorandum of understanding to reconstitute the US-Egypt Business Council, a body established to promote economic ties and trade between the two countries.

"I believe that today we have signed not only a memorandum of understanding, but we have initiated a new era in economic relations between the US and Egypt," the US official said.

Receiving about two billion dollars a year, Egypt is the second largest recipient of US foreign aid after Israel.

The US commerce secretary, who also held talks with Prime Minister Ahmed Nazif, arrived in Cairo on Wednesday on the last leg of an eight-nation Middle East tour to encourage economic reform and promote trade.

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