CAIRO: Egypt is looking to mitigate the negative short-term effects of the weakening euro by diversifying its trade partners and increasing volumes with members of the European Free Trade Association, the country’s trade minister said.
“Europe is our main trading partner and the weakening of the euro is of course a problem as this instability effects trade flows and investments around the world, including Egypt,” Trade Minister Rachid Mohamed Rachid said at a press conference on Monday.
“I don’t think this will go on for long though as their have been interventions from the European community,” he said, adding that ways to mitigate the negative effects in the short run include “diversifying trade partners and trade with EFTA.”
An agreement signed with Switzerland is one example of these measures.
Rachid met with Jean-Daniel Gerber, Switzerland’s state secretary of economy, where the two signed an agreement promoting and protecting mutual investments in various fields as well as highlighting new sectors, particularly in the areas of pharmaceutical products, textiles, engineering industries and information technology.
“As Switzerland’s currency is not the euro, our trade with them is not affected by these negative affects. This agreement will give our businesses, exporters and importers a competitive advantage in this market,” Rachid said.
Gerber echoed Rachid’s concerns, saying that Switzerland is in the same boat as Egypt with the EU also being its main trade partner.
“The Swiss franc’s value is increasing compared to the euro and 60-70 percent of our exports are to EU markets. I agree with what Minister [Rachid] said about diversification,” Gerber said.
“This is why we want to maintain our exports in Europe, but also diversify our trade relations to include other markets, like Egypt,” he added.
These plans are in the framework of a free trade agreement between Egypt and the European Free Trade Association (EFTA) member states which was signed by Egypt in January 2007.
The EFTA member states include Norway, Iceland, Switzerland and Liechtenstein.
The volume of bilateral trade between Egypt and EFTA states rose from $425 million in 2005 to $871 million in 2009, increasing at a rate of 105 percent. Egyptian exports to EFTA countries increased by 170 percent since the signing of the Convention in 2007, reaching $150 million in 2009 from $55 million in 2005.
Rachid added that the size of Swiss investments in Egypt is now $685 million in 354 projects in the sectors of industry, construction, services, finance and tourism.
“Egypt is looking forward to deepening economic ties and increasing Egyptian exports to EFTA countries in the upcoming period, especially as Egyptian products now have a very competitive edge to enter the market of EFTA countries within the framework of our plan to double non-oil exports to reach LE 200 billion during the next four years,” said Rachid.
