Trade Agreements Under Negotiation
I. Draft Agreements with African Blocs and Countries
West African Economic and Monetary Union (UEMOA): Draft Agreement for
the Establishment of a Free Trade Zone
The UEMOA is composed of eight West African member countries (Benin, Burkina
Faso, Cote D’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo) with a total
population of approximately 70 million. The UEMOA forms one of the focal points
shaping Egypt’s increased export orientation towards the African continent through
the West African gateway, thereby complementing the export promotion strategy in
place with COMESA in East Africa and CEMAC in Central Africa, in addition to
major countries with considerable weight inside the continent, such as Nigeria and
South Africa.
In the event of its entry into force, the Agreement will be economically valuable for
the following reasons:
1- The UEMOA provides for a concerted regulatory system and integration of
trade, economic and monetary policies developed among its members, in
addition to its Euro-bound convertible currency.
2- Senegal (an UEMOA member and one of the main four gateways to the
African continent) has a storage area for Egyptian products that allows rapid
entry of commodities into this market. This also allows for direct sales and
helps resolve transport and shipping problems.
3- This market has a massive population estimated at 70 million. It is a pricebased rather than quality-based market, which allows a wider window of
opportunity for the entry of many Egyptian products, such as rice, onions,
garlic, medicinal and aromatic plants, processed agricultural commodities,
medicines, cement, ceramics and textiles. This is especially true given that
UEMOA member countries depend on exports of raw materials and imports of
manufactured products.
4- There are vast prospects for Egyptian investment in areas of mining,
excavation, contracting, agricultural and irrigation projects and the textile
industry. Through the African Growth and Opportunity Act (AGOA)
preferential treatment benefits are granted by developed countries to some
UEMOA members. These benefits include access to markets, such as the
U.S., and allows garments assembled in some least-developed UEMOA
countries to be made from textiles of other countries.
CEMAC Countries: Regional Free Trade Area Negotiations
The CEMAC group (Cameroon, Central African Republic, Chad, Congo-Brazzaville,
Gabon and Equatorial Guinea) in Central Africa was targeted to be accessed through
the Egyptian export promotion strategy during the forthcoming period to cover all of
Africa.
Economic benefits expected to be drawn from this Agreement include:
1- A positive surplus in the Egyptian balance of trade is already in place with the
total value of exports amounting to $5.3 million in 2003, while total imports
from these countries were estimated at only $820,000. This will give Egypt a
preferential position in the event of a free trade area combining the two sides,
as represented in the increased volume of Egyptian exports deemed
inconsistent with a market potential of a population 30 million. Major exports
include: plants, fresh vegetables, soap, plastic, fertilizers, tires, ceramics,
tomatoes, oranges, and potatoes. Imports from these countries similarly do not
involve risk for the Egyptian local market.
2- Cameroon represents one of the four main gateways for Egyptian exports into
Africa, which is in line with the target to establish a permanent warehouse for
Egyptian products to act as a launching pad for proceeding into the other
markets of the CEMAC member countries.
3- The economic status of CEMAC is very similar to that of the UEMOA in
terms of trading patterns with Egypt, in the sense that member countries
feature as price-based markets. Moreover, CEMAC formed a customs union
adopting a uniform currency, the convertible African Franc.
Nigeria: Bilateral Free Trade Area Negotiations
Egypt has initiated bilateral free trade negotiations with Nigeria, with the goal of
obtaining an economic preference due to the following reasons:
1- Nigeria is the economic powerhouse within the Economic Community of West
African States (ECOWAS) group and in the West African Region in general,
through which Egypt seeks regional integration into Southern Africa.
2- It is a huge market, representing a population of 120 million, and the third
largest economy in the African Continent.
3- Investment opportunities are increasing for Egyptian firms to access the
Nigerian market, especially in the fields of contracting and communication,
given its ongoing reconstruction efforts.
4- All these factors offer an ideal market for Egyptian industrial and agricultural
products, especially given that the import structure in Nigeria corresponds
perfectly to Egyptian export capabilities.
Tanzania: Bilateral Free Trade Area Negotiations
Egypt recently submitted a draft free trade agreement with Tanzania, in the wake of
the latter's withdrawal from COMESA. The Agreement is perceived to be of
substantial economic value to Egypt for the following reasons:
1- Tanzania has a population of 36 million, thus forming a vast, vibrant market
for many Egyptian products, especially since Tanzania is largely oriented
towards highly distinctive commodities, such as machines, textiles, building
materials, medicines, fertilizers, chemicals, petroleum products and foodstuffs,
all of which Egypt maintains a relative advantage in, in terms of their
production and export. Main imports of Tanzania include coffee, kajo, sisal,
tea and tobacco.
2- Investment opportunities are available in Tanzania, as a result of its strategic
location and population and incentives laid out in the 1997 Tanzania
Investment Act.
3- Tanzania is a member country in a number of economic gatherings. It is
believed this will help to open a window of opportunity for Egypt to access
broader markets, for example, through Tanzania’s membership in the East
Africa Community (EAC) and Southern African Development Community
(SADC). Tanzania is also party to 11 bilateral agreements. Finally, it benefits
from the EU and ACP association programs and enjoys a preferential dutyfree status for its exports into EU market.
II. Draft Agreements with Latin American Countries
South American Common Market (Mercosur): Draft Preferential Trade
Agreement
Mercosur submitted two draft agreements, a framework agreement and a preferential
agreement, with Egypt as a step towards the establishment of a free trade area
between the two parties in response to the Egyptian draft. The framework agreement
was studied, reviewed and signed in Argentina on 7-7-2004 on the sidelines of the
Mercosur Summit meetings and en route to the initial negotiations on the preferential
agreement.
The creation of a preferential agreement with the Mercosur is deemed the best option
from a practical point of view to access the markets of its member countries as an
alternative to a trade agreement.
Therefore, the focus of this Agreement shall be on the list of highly distinctive
Egyptian commodities, whether agricultural or industrial, with greater potential for
access to Mercusor markets for products such as wooden furniture, marble and
ceramics, cement, medicines, medicinal and aromatic plants, chemical and organic
materials, cotton, rice, dried vegetables, tomatoes, potatoes, and garlic.
Furthermore, accessing the Latin American market constitutes one of the main
purposes of the Egyptian export promotion strategy in its third stage.
III. Draft Agreements with Asian and Eastern European Countries
Romania: Draft Free Trade Agreement
Two rounds of negotiations were held between Egypt and Romania to establish a free
trade agreement. The first was held in Cairo during February 2004, the second in
Bucharest during the period of 8-12 March, 2004.
Turkey: Draft Free Trade Agreement
Four rounds of negotiations between Egypt and Turkey to establish a free trade area
were held, with the fourth round taking place in Ankara in May 2003.
The following are among the positive aspects of this Agreement:
1- The liberalization of industrial exports of products originating in Egypt will
positively impact the speedy entry of Egyptian commodities into Turkish
markets.
2- Turkey has substantial production of livestock, which increases the likelihood
of Egypt importing cheaper livestock products from Turkey relative to other
countries. Turkey’s large population of 70 million constitutes one of the
advantages of this Agreement.
IV. Draft Agreement with the European Free Trade Area
European Free Trade Areas (EFTA): Draft Free Trade Agreement
Eight rounds of negotiations were held between Egypt and EFTA, which comprises
Iceland, Liechtenstein, Norway and Switzerland, the latest of which took place in
Cairo in November, 2004. As a result of these negotiations, industrial exports of
products originating in Egypt shall be immediately allowed duty-free once the
Agreement enters into force. This provides for Egypt a favorable market for its
products to conform to standards set by these countries.
The duration leading up to the final liberalization of Egyptian imports is 12 years,
taking into account variance in the production structure and industrial capability
between Egypt and major countries.