Egypt, Russia to negotiate FTA in early 2010

Annelle Sheline
5 Min Read

CAIRO: Egypt and Russia are looking to establish a free trade agreement (FTA) and may cooperate on the construction to Egypt’s first nuclear power plant, officials said Wednesday.

They also discussed ways to increase Russian wheat imports to Egypt.

Egypt’s Minister of Trade and Industry Rachid Mohamed Rachid and his Russian counterpart Victor Khristenko said negotiations on the bilateral FTA will start in the first quarter of 2010.

The two sides, which are also looking to double the volume of trade, signed a memorandum of understanding for the FTA in 2007, but negotiations were delayed due to Russia’s entry into an agreement with Kazakhstan and Belarus, a ministry statement said.

“During our meeting, we discussed that joint desire of both governments to double our bilateral trade from $2 billion to $4 billion over the upcoming few years, Rachid said.

Russia also discussed the possibility of helping Egypt construct its first nuclear power plant.

Earlier in the week Egyptian President Hosni Mubarak and Prime Minister Ahmed Nazif met with Russia’s Foreign Minister Sergey Lavrov to discuss enhancing economic ties and bilateral investments.

Mubarak and Nazif visited Moscow in November and met with Russian Prime Minister Vladimir Putin.

Because Russian-Egyptian economic cooperation and investment has received headlines in the past, the latest announcements may evoke a sense of déjà vu, but the economic crisis had delayed the actual establishment of the Russian Industrial Zone and proposed FTA.

The zone will be constructed in a million square meters of Burj El- Arab, an industrial city 30 km southwest of Alexandria.

Egypt looked to increase imports of Russian wheat, heavy machinery and nuclear expertise.

We are talking about a framework to support buying wheat, so we are looking at things like linking prices to global prices and greater understanding on issues like quality and shipping, Reuters quoted Rachid as saying.

Egypt was looking at how to find a mechanism to guarantee these (increased wheat) quantities will always be at best prices and best specifications, he added.

Rachid pointed out that the Russian-Egyptian trade relationship was one of those least affected by the economic crisis. Trade volume with Russia jumped from $800,000 million in 2004 to over $2 billion by 2007.

Rachid expressed confidence that trade would reach the targeted level of $4 billion over the coming years.

Russian investment in Egypt topped $727 million last April, and Russia hopes particularly to focus on automotive, aircraft and heavy machinery manufacture.

Rachid said the FTA would be similar in nature to Egypt’s current trade relationship with the Arab region and the EU.

Egypt’s relationship with Russia was under pressure in June after a dispute over the quality of grain sent from Russia. This was settled by Russia’s agreement to inspect wheat shipments to Egypt, the world’s largest wheat importer.

The relationship appears strong again, particularly as Egypt tests the sensitive subject of nuclear power production.

Responding to questions on the nuclear plant, Rachid said, “Egypt is convinced that Russia is one of the most experienced countries in nuclear power generation. The Minister of Electricity has laid down certain rules for how companies will be chosen for involvement in the building of a nuclear power plant in Egypt.

Minister Khristenko replied that Russia is happy to share its expertise, and is currently constructing 28 new domestic nuclear power plants.

Although the trade ministers voiced their mutual interest in establishing an FTA, Rachid explained that, “In light of developments on the Russian side regarding a unified customs system between Kazakhstan and Russia, Egypt will need to coordinate with all three parties, reaffirming the agreement to take steps to coordinate.

Bilateral trade between the two countries reached $2.07 billion in 2008, with Egyptian exports to Russia reaching $191.6 million and imports from Russia reaching $1.88 billion.

From January to May 2009, bilateral trade reached $793.6 million with Egyptian exports to Russia dropping.

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