Egypt Summary
Introduction
After successful macroeconomic stabilization reforms in the early
1990s, Egypt solidified its position as middle-income country with one of the largest and strongest economies on
the African continent. [1] Despite this position and its high levels of trade with its fellow Arab neighbors in the Middle East and North Africa, Egypt has nonetheless established
itself as an advocate for developing countries, including its many African Least Developed Country (LDC) neighbors.
The government opposes the implementation of labor and environmental standards for fear that such provisions will end up favoring the interests of the rich nations. Outside of its participation in the WTO, Egypt is a member of the Common Market for Eastern and Southern Africa (COMESA), the Greater Arab Free-Trade Agreement (GAFTA), and it has signed several free trade agreements, including an important agreement with Indonesia in 2003. About a third of its trade is with the European Union, with trade relations deepening following a 2003 bilateral free trade agreement. Trade with
other African nations accounts for only about 5% of total trade.
Arab Relations
Egypt is the largest country in the Arab world and one of only 11 states out of 22 in the Arab League to hold WTO membership status. [2] It has promised to provide technical assistance and advice to fellow Arab states interested in joining the WTO. [3] A traditional ally of the US, Egypt suffered heavy losses in the tourism industry following the September 11 attacks in the United States, however these were ameliorated by a marketing campaign and the depreciation of the Egyptian pound in January 2003. Increased oil exports have also helped to compensate for some losses, and non-oil exports have also risen due to
devaluation of the currency. After Saudi Arabia, Iraq is Egypt's second largest Arab market, having grown since the two countries signed a free trade agreement in 2001. Egypt has set up an Arab Free Trade Zone with Tunisia, Morocco and Jordan in an effort to establish a joint quadrate council as a foundation for a larger Arab free trade area and common Arab Market.
Relations with Africa and the G-20
In the fall of 2001 Egypt took up a position on the steering committee of the New Partnership for Africa's Development (NEPAD) along with South Africa, Nigeria, Algeria and Senegal. Though the NEPAD had at that point scarcely been on the country's foreign policy radar, Egypt was formally allotted the task of managing the agriculture and market access initiatives of the development plan. While the government is exploring means of liberalizing its own agricultural trade, it also seeks to open new European markets for Egyptian crop exports. Egypt supports proposals to start reducing agricultural subsidies gradually in a step towards
eliminating them altogether.
Egypt is a member of the G-20 bloc of emerging market and developing countries that coalesced at the WTO ministerial in Cancun in October 2003 to push for the elimination of agricultural subsidies in rich countries, serving to emphasize the unfulfilled promise of the Doha Development Round to produce trade policies that would especially benefit developing countries. The origins of the new era of developing-country unity in the WTO was seen during the mini-ministerial meeting in Sharm el-Sheikh, Egypt, in June 2003 when trade ministers from Egypt and South Africa worked together closely to plan their push for developing-country objectives in Cancun. [4]
Currency Liberalization
In January 2003, Prime Minister Atef Obaid announced the shift of the Egyptian pound from a fixed peg to a market-determined rate. The liberalization of the foreign currency market was expected to improve the country's investment climate, and the additional depreciation of the pound that followed produced growth by the increased competitiveness for Egyptian exports. The International Monetary Fund praised the transition, commenting that "The floating of the pound in the foreign exchange market is a promising sign of the Egyptian authorities' commitment to proceed with market-based reforms to stimulate trade and investment."[5] The government has had some difficulties in battling the sharp rise in inflation following the float; however, exports and tourism have benefited from the devaluation of the pound. [6]
Conclusion
Within its own borders, Egypt has followed a slow but steady plan to meet its WTO commitments. It has removed most non-tariff barriers, decreased tariffs, liberalized foreign investment policies, and privatized public sector companies. Recent concerns expressed by the United States about Egypt's customs duties on textile and garment imports have been met with willingness to consult and negotiate through the WTO, [7] and the government is moving ahead with plans to lower customs duties on iron ore imports. [9] Egypt's continued alliance with developing countries within the G-20 group in the WTO will ensure it continues to be actively engaged in the ongoing debate about the trade-offs to be made between developed and developing countries as the Doha Round continues.
Last updated May 2004
[1] World Bank Middle East and North Africa Frequently Asked Questions list
[2] The other 10 Arab League WTO members are Bahrain, Djibouti, Jordan, Kuwait, Mauritania, Morocco, Oman, Qatar, the United Arab Emirates and Tunisia.
[3] "Egypt ready to help Arab countries interested in joining WTO - trade minister" MENA news agency, 24 Jul 2003.
[4] Egypt And SA Must Improve WTO Deal" Business Day, 20 Jun 2003.
[5] Business Day. "IMF endorses float of Egyptian pound." "Business in Africa" section. 4 Feb 2003.
[6] The Economist Intelligence Unit Report on Egypt, April 2004.
[7] "Egypt Would Participate In Trade Talks With US Through WTO - Minister" BBC Monitoring International Reports, 26 Dec 2003.
[8] "Cairo adopts new year resolutions." Middle East Economic Digest, 16 Jan 2004.
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