Interview: Gamal Moharam
What progress is being made towards a US-Egypt free trade agreement (FTA)?
GAMAL MOHARAM: We are again seeing talks of a potential US-Egypt FTA after a long absence of it from the agenda. Working towards a bilateral FTA is of critical importance and in the best interest of both Egypt and the US. In the short- to medium term, we must turn our attention to laying the foundation for this agreement by taking the steps that would bring Egypt in line with FTA requirements. The ongoing political fluctuations make near-term reforms unlikely, but on a longer time horizon, continual efforts to advance trade liberalisation between Egypt and US may indeed bear fruit.
What impact will the recent political tensions between Egypt and the US have on future aid and bilateral economic ties?
MOHARAM: Egyptian-American bilateral ties are multifaceted. The two countries have strong partnerships in economic, political and social spheres, and tension over one issue should not overshadow the generally sound Egypt-US economic ties on multiple fronts. Economic cooperation cannot and should not be contingent on day-to-day political developments. As such, the emphasis on direct economic aid has shifted in recent years to a greater focus on trade. Overall bilateral trade and investment with American partners dwarf total US economic aid to Egypt. The mutual profitability of these arrangements will continue to drive the relationship forward alongside government cooperation.
How can further trade liberalisation help bolster the Egyptian economy?
MOHARAM: Efforts to overcome the current economic lull must be multi-pronged – spanning everything from infrastructure development to skills training – in order to have the fullest impact. Foreign trade clearly has a significant role to play in a comprehensive strategy to drive growth and increase Egypt’s attractiveness as a trading partner. However, gaining preferential market access is one thing; fully taking advantage of this access is another. We must work to educate and assist Egyptian companies in seizing the opportunities offered by established trade agreements, as well as those that will be negotiated in the future.
To what extent has Egypt’s attractiveness to investors been affected by the revolution?
MOHARAM: Difficulties stemming from recent political change have, unfortunately, been compounded by rough global economic conditions. Still, Egypt remains an excellent choice as a place to do business. As both the domestic political situation and the global economy stabilise, this should become increasingly clear.
Egypt continues to possess a number of advantages. In addition to its large domestic market, Egypt has much potential to serve as a focal point within the global economy. Skilled labour is both abundant and affordable, while infrastructure is relatively developed. These assets have not disappeared in the face of challenging economic conditions, and will continue to serve Egypt and its business partners moving forward.
How can local small and medium-sized enterprises (SMEs) be integrated into global supply chains?
MOHARAM: Much of the groundwork for Egyptian companies to successfully participate in global supply chains is already in place. Geographic location, access to market, infrastructure and affordable labour all remain fundamental strengths. However, there are concrete steps to ensure that SMEs fully benefit from these advantages alongside of larger Egyptian companies.
First, SMEs must train their workers to conform to global standards. The government and non-governmental organisations have roles to play in supporting their ability to do so. Second, increasing these enterprises’ access to credit would enable them to compete more effectively in the world economy. Steps should be taken to increase the attractiveness of lending to SMEs, including incentives for banks where necessary.
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