CAIRO: Egyptian and American trade leaders convened Monday to discuss ways of maximizing trade potential between Egypt and the United States.
The event, put on by the American Chamber of Commerce, featured speakers from the office of the United States Trade Representative (USTR) and the Egyptian Ministry of Trade and Industry.
US Ambassador Margaret Scobey delivered the event’s keynote address.
“Despite turbulent economic times, we know that increased trade can bring many benefits to developing, as well as developed countries, Scobey said. “In the case of Egypt, we believe this includes a deepening and broadening of our bilateral trade and investment relationship.
Titled the Generalized System of Preferences Conference, the morning event delved deeply into tariff issues, as government officials from both countries advised the assembled business community on the nuances of tariff law.
Egypt and the US have historically had a deep trade history marked by diversity and growth.
“It is important for us all to keep in mind [that] the United States is currently Egypt s single largest trading partner, Ambassador Scobey said. “In 2007, our two nations conducted a record $7.9 billion dollars worth of business together, a 75 percent increase in just three years.”
The year 2008 has seen a continuation of the trend with a 19 percent trade increase. Thirty-three percent of all Egyptian exports are sold to the US, said the Ambassador.
President of the American Chamber of Commerce and President of Exxon Mobile Egypt Tom Walter introduced the business crowd to Generalized System Preferences (GSPs), a mechanism through which developing countries are given a competitive trade advantage in the US.
GSPs represent a list of goods that developing countries are allowed to export to the United States without the typical imposition of tariffs levied on most developing countries.
The GSP program was established in the mid-1970s.
“Egypt has actually made little use of the GSPs so far, Walter said.
Only 2.6 percent of goods exported to the US from Egypt were sent with the GSP exemptions.
Other countries have taken far better advantage of the system: 22 percent of India’s exports to the US, 25 percent of Turkey’s and 40 percent of Tunisia’s all went to the US as GSPs.
GSPs have mutual advantage both for Egypt and the United States, explained member of the USTR and GSP expert Marideth Sandler.
They give “enhanced access to the US market, but they also give US consumers increased choice and cost competition.
Of 3,400 eligible products under GSP, Egypt only exports 364 of them under the program.
This figure, noted Sandler, is comparatively impressive, but Egypt’s shortcoming with regard to the GSP system has less to do with breadth than with depth.
Despite massive bilateral trade relations overall, Egypt ranks only 32nd in exports to the US under GSP as of August, 2008.
And data available for 2008, even excluding the financial meltdown, illustrates a decline in GSP for Egypt.
In 2006, Egypt exported $70 million in GSP. Through August 2008, Egypt exported only $34.7 in GSP, mathematically on track for $52 million for the entire year.
Among the items eligible for the GSP exemption are base metals, which account for 30 percent of Egypt’s GSP exports; certain agricultural products, which account for 22 percent of GSP exports; and machinery and glassware, which make up 14 percent.
Certain goods have been deemed ineligible to receive the tariff exemption in the GSP program. These items were disqualified by the USTR as part of an effort to protect US industry and include most textiles, apparel, watches, footwear and leather goods.
Marideth Sandler encouraged the business community to consider a handful of goods that Egypt exports to other parts of the world but not to the US.
She also noted that these items are being exported to the US in amounts to small to satiate US consumer appetite. The list included hand woven cotton fabrics, iron and steel products, sugar confections and copper alloys.
From the question and answer session that followed the speeches, two concerns in particular rose to the surface. Some attendees expressed exasperation that the program had not been better advertised.
In fact, roughly 10 percent of GSP eligible goods sent to the US from Egypt were not marked appropriately and did not, therefore, receive the tariff exemption.
Others in the audience worried that a policy requiring Egyptian manufacturers to account for adding at least 35 percent of the value of the product proved cost prohibitive.
Sandler noted that the 35 percent stipulation was unlikely to change.
The conference carried out like a basic information session, teaching Egyptian business owners the ABCs of GSPs, perhaps in acknowledgement of the awareness gap on this issue.
