CAIRO: With the demise of an immediate free trade agreement between Egypt and the United States, the time has come to shed light on other priorities of the trade and industrial development agenda.
Qualified Industrial Zones (QIZ), which were expected to be eventually made redundant by comprehensive free trade with the U.S., have now become increasingly important. Textile and garment manufacturers benefited the most from these zones since there establishment last year, and continued expansion of this sector in QIZ areas is likely. Other sectors, however, should also make the most of QIZ and the business community should investigate and invest in such opportunities.
The U.S. has increased its rhetoric on the protection of intellectual property rights. But this topic is not restricted to the American government; intellectual property rights are an annex to the World Trade Organization (WTO) agreement.
The annex, called trade-related aspects of intellectual property rights or TRIPS, requires adequate legal protection and enforcement of copyrights and patents. The government has made substantial progress on the enforcement of licenses for software, although software multinationals are demanding more work to combat illegal use of their software.
With the increasing economic contribution of the domestic information technology sector, protection of intellectual property rights for software may well be in the Egypt s national interest. But the issue of copyrights and patents in other sectors, such as pharmaceuticals, is not without contention.
And the trade agenda is not restricted to legislative changes in line with WTO requirements. The simplification of customs procedures in harmony with European partners will also clearly benefit the economy. A recent study by the World Bank and the International Finance Corporation concluded that each day of delays in shipment and customs reduces a country s export volumes by 1 percent. These delays are particularly harmful to perishable goods.
Product testing laboratories allow access to foreign markets by demonstrating that Egyptian goods meet the minimum standard required for exports to Europe and other regions. Such laboratories exist within some companies, and the government is working with donor agencies to provide testing facilities to industries that have not yet developed their own. Expanding these projects to other industries will increase the breadth of exports.
Finally, while improving the logistics of trade is helpful, it will have little impact if the output for export is not available. A common complaint of many businesses in this regard is the inefficiency of their workforce or the inability to find the right labor skills due to the lack of appropriate vocational training. The government has a vocational training fund, to which all businesses with more than 10 employees are supposed to contribute 1 percent of their profits. But this fund has had little practical impact.
One multinational company that has regional headquarters in Egypt does not complain at all about finding the right staff. It hires top-notch engineering graduates from public and private universities, and then puts them through a vocational training program at a center that it created in Egypt. This center trains not only its Egyptian staff, but others from abroad as well.
Other companies should follow suit and create their own vocational training programs. If they believe that the cost of such programs is not justifiable, then they should join hands with other businesses in their industry. This has been the approach of the tourism industry, which is building its own vocational training center through the Egyptian Tourism Federation.
If businesses don t collaborate, citing the lack of domestic training material, then there are other solutions. Many donor agencies are able and willing to support training initiatives in Egypt, and foreign training organizations can assist in providing the appropriate expertise and materials.
