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fta future uncertain
by rehab el-bakry
the tortuous road to an egypt-us free trade agreement (fta) looks
longer than ever as washington's attempts to link economic reform
to a political agenda have put fta talks on the back burner. while
neither side would come out and say it, the general perception is
that the fta issue has reached a stalemate.
the first warning came on january 18, when a visiting us congressional
staffer told the press the us might consider halting fta negotiations
if it were dissatisfied with the pace of political reform. washington
has been critical of egypt's political process, particularly following
the conviction of opposition leader ayman nour.
more ominously, the staffer pointed out that if formal negotiations
did not begin within a month egypt might have to wait four years
for another opportunity. us president george w. bush currently holds
"fast track" power, which allows him to expedite negotiations
for an fta with any country. should a deal be concluded, congress
can either accept or reject it outright, rather than pick it apart
line by line.
"the problem is that bush's fast track authority will expire
in mid-2007," explains islam azzam, a professor of economics
at the american university in cairo. "if this authority expires,
then we will have to wait until a new president comes in and serves
the first two years of his term before he's granted the fast track
authority. so in reality, if we don't start the negotiations within
the upcoming two weeks, then we will have to wait until around 2010
before we have another chance at fta negotiations."
the staffer's comments on january 18 were the first hint that the
fta was in jeopardy and seemed to catch everybody - including egyptian
government officials - with their pants down. just weeks earlier,
everything seemed on track. minister of foreign trade and industry
rachid mohamed rachid had stated upon returning from washington
in late december that egypt and the us had reached a consensus on
13 issues that would be tackled in the negotiations, which would
kick off by january 2006.
by late january, however, the mood was decidedly different. everyone
suspected the fta was on hold, but official statements were mired
in ambiguity. during a five-day visit to egypt last month, however,
us secretary of state condoleezza rice all but spelled it out. "i
do believe a free trade agreement will benefit egyptians and will
benefit the economic reform in egypt - i think that it is an important
element. but we are at this particular point just not in a position
to pursue it very actively although we will continue to talk about
it," reuters news agency quoted her as saying.
at a press briefing before her trip, rice denied the current stalemate
is a rap over political reform. "it's not a matter of punishment,
it's a matter of the timing not being right," she said. "egypt
needs to stay on the democratic course. it needs to keep pushing
ahead on [it]."
but azzam says the kind of reform the us is demanding is not the
type that can be achieved in a span of two weeks. "it was very
clear that what they were seeking on the political reform front
was not going to be achieved in 2005, and yet they gave no indications
that the negotiations were on shaky ground, yet alone halted."
the us currently has ftas with four arab states - jordan, signed
in october 2000; morocco, signed in june 2004; and bahrain and oman,
both signed in january 2006. comments from both sides of the atlantic
indicate an egypt-us fta is tied to political reform. yet the bush
administration has been willing to overlook a certain degree of
autocracy in other middle east states. "when compared to the
political systems of the region, the egyptian political system is
among the most liberal," says azzam. "jordan, which has
a horrible human rights record - much worse than egypt - was granted
an fta. so why is it okay for jordan and not okay for egypt?"
while egypt recognizes the importance of reform to the country's
development, it does not believe in linking its political reform
to a bilateral trade agreement. "political reform is a cornerstone
of our reform agenda, as outlined in president mubarak's election
program," read a statement issued by the ministry of foreign
trade & industry issued on january 27. "our progress on
that front remains a domestic issue that we are actively pursuing
through our legal and constitutional channels."
cabinet members have gone on record as saying political and economic
reform measures taken over the past 18 months were geared towards
preparing for an fta with the us. political reforms cited include
egypt's first ever multi-candidate presidential elections and greater
political participation. on the economic front, the government has
implemented customs reform, revised the tax code, kick-started privatization
and signed the qualifying industrial zones (qiz) agreement, which
is widely viewed a transition step towards an fta.
according to the us census bureau, egypt's exports to the us reached
$2.1 billion, while imports topped $3.2 billion. an fta would give
egyptian products duty-free access to the us market, the biggest
consumer market in the world. "the fta in itself for us is
a very serious economic reform that should have been seen separately,"
rachid was quoted as saying in the financial times. "i know
from all my life experience that investors and traders want to make
sure that their investments and trade are not linked to politics,
because politics will always have ups and downs."
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