Mandelson on Egypt reforms: Carefully and sensitively, we need to let the hand brake off
CAIRO: European Union (EU) Trade Commissioner Peter Mandelson says the Euro-Egyptian Association Agreement, paving the way for a free trade zone between the two sides by 2010, has found success considering the reforms implemented by the Egyptian side since the signing of the agreement in 2001.
In an exclusive interview with The Daily Star Egypt Monday, the last day of Mandelson s two-day official state visit, he added he is optimistic that the current round of negotiations due to wrap up next month will move the agreement forward.
I think [the agreement] has seen difficulty in the formulation of words concerning weapons and individual rights, Mandelson said without elaboration. I don t think those are important enough to warrant a hold up in these negotiations. Each side needs to come to the other in the coming month, and I think they will, because this is an important action plan and it needs to go ahead.
The requirements for completion of Egypt s action plan, as set by the EU to join the Euro-Mediterranean Partnership (EMP), include a gradual reduction in customs, taxes and protectionism of public companies. The EU also agreed to increase bilateral trade relations by lowering tariffs on Egyptian products, most importantly, agricultural ones.
EMP was signed in 1995 between the EU and 10 Mediterranean partners including Morocco, Algeria, Tunisia, Lebanon, Jordan and Israel. Since then, the agreement has expanded to include other Mediterranean Basin countries with each following a specific bilateral action plan to implement a free trade zone by 2010.
In 2005, the EU accounted for nearly 40 percent of Egypt s trade with 11.5 billion euros in total trade between the two sides. Liquefied natural gas represented more than 40 percent of exports, followed by textiles and ready-made garments with 15 percent and agricultural products with about 10 percent. EU foreign direct investment in Egypt amounted to 1 billion euros.
Mandelson said although the reforms implemented since 2004 were long overdue, they have shown early results and should continue to pay off with the incentive of a free trade zone in 2010 now in sight. Still, he adds, more needs to be done.
In some cases I know, Egyptian businesspeople feel that they re travelling along reasonably well in their motor car at a reasonable speed with the hand brake partially on, Mandelson said. Carefully and sensitively, we need to let the hand brake off so that enterprise can do what it s best at, which is creating business, translating business ideas into opportunities and [inspiring] trade growth.
On the World Trade Organization s current round of negotiations in Doha, Qatar, Mandelson expressed hope, but said few realize the consequences of another failure to reach agreement. Negotiations are now deadlocked over the United States demands for developing countries to accelerate liberalization of their agricultural sectors in order to create more export opportunities for US farmers.
Mandelson says the US needs to understand the agricultural sensitivities of developing countries. On the other hand, developing countries need to understand they have more to gain from the agreement, and therefore, more to lose, should the current round of negotiations fail.
I m not asking for unilateral moves. I m asking for a collective effort. That s indispensable if we re going to reach agreement . None of us are going to be winners for the failure of the Doha round. We re all going to be losers, Mandelson said, adding he expects December will feature intensified efforts at the ministerial level to reach agreement.
With China s increasing role in the African economy, Mandelson said the EU welcomes cooperation between the two sides, but added Africa needs to make sure it gets the benefit of its developing relationship.
