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USTR Amb. Ron Kirk and Minister of Trade and Industry Rashid
March 22, 2010
Minister Rashid: First of all, I would like to thank Mr. Ron Kirk, US Trade Representative for his first visit to Egypt in light of President Obama's initiative to increase US exports in the coming five years. Egypt and the US have important strategic relations on all levels. We are happy that these relations are in steady growth on economic, trade and investment levels.
The size of trade in 2004 was nearly US$ 4 billion. This number rose to $8.5 billion in 2008. It may have been affected by last year's crisis and dropped to $7.5 billion. Yet, we see a big chance to increase investment, economic and commercial cooperation between the two states.
I had the honor to meet with Mr. Ron Kirk last year. In May, an economic and strategic cooperation agreement was signed between Egypt and the US. The treaty aims to increase exports and trade between the two states over a period of four years, as well as to foster Egyptian-American investments. The two parties were keen to form a work group to create an adequate atmosphere, removing the obstacles, and to find the tools to achieve their goals.
The visit comes in light of this agreement as well as our unique bilateral relations. We hope we will conclude the treaty soon. We talked about many issues today, including issues of bilateral cooperation with regard to trade, the QIZ and environmental initiative launched by the US, in addition to promoting US exports in Egypt's market, as well as other markets surrounding us, and WTO negotiations.
All these are important issues between the two parties. Many decisions were made with regard to these issues aimed to boost bilateral relations.
I will leave the floor now to the US Trade Representative Mr. Ron Kirk. Then we will take questions from both sides.
USTR Ambassador Ron Kirk: First of all, let me thank my colleague Minister Rashid for his extraordinary hospitality not only in welcoming me here to Cairo, Egypt for my first visit as the United States Trade Representative but also in welcoming me to the world of international economic diplomacy. I was sworn in almost a year ago and one of the very first ministers to make the effort to come to Washington and welcome me to my new position and visit me was Minister Rashid.
And over the last year we've had the opportunity to visit and to get to know one another on three or four occasions through many of our multilateral fora in Geneva and others. But the Minister has quickly become a very trusted counselor and advisor and friend.
That has been easy because we share a very firm belief that the extraordinary partnership between the United States and Egypt in promoting peace and stability in the Middle East is a great foundation on which to build a much stronger economic and commercial relationship between our two very strong countries.
As Minister Rashid noted President Obama announced during his State of the Union address and later that part of our economic recovery strategy is a goal to double our exports over the next five years. Likewise President Mubarak has also announced a similar goal for Egypt.
And on a personal note I would like to say to the Minister, all of us in the United States have been praying for and are thrilled with the news of your President's recovery and we look forward, as I know you do, to him returning to Egypt and resuming his full level of activities.
But each of our Presidents has wisely focused on exports for simple reasons. Countries that invest in and create a business environment, in which business can create products, can be entrepreneurs; can come up with the services and goods that the world wants are countries and businesses that will grow.
Businesses that export tend to grow faster, at least in the United States. They grow faster, they hire more people quickly and in the United States our businesses that export pay wages higher than businesses who don't.
So having export driven economic policies as part of the overall economic recovery strategy makes sense not only for the United States but for Egypt as well.
So my being here is both personal and practical. It is, one, to follow up on the work that Minister Rashid and I began in Washington last May with the strategic partnership, but to work in a much more focused way to see what we can do to help improve the environment to increase commercial activities between our two countries.
The Minister mentioned our collective desire to see the Qualifying Industrial Zones be much more robust opportunity for growth and he has my commitment to work with him to make sure that we have the right framework for that. We also share a very strong belief that if we can come up with the right mechanism to bring the Doha round talks to a conclusion, as President Obama said, this would not only be an extraordinary gift to the least developed countries of the world, it would be a great shot for all of the economies of the world for their economic recovery.
But to do that we need a balanced and ambitious result that has meaningful market access for all of the economies involved. And we believe that it is not only in the interest of the United States, but it's in the interest of the least developed economies in the world that all countries have access to these extraordinary new advanced developing markets like China, India, Brazil and South Africa.
But the important thing is the Minister and I have moved to follow up on what was our initial meeting and commitment to set the tone and the framework for a much more robust commercial relationship between our two great countries and we look forward to continuing to work with the Minister and others to make that happen. And finally I might also like to express my gratitude to our U.S. Ambassador here, Ambassador Scobey, for her assistance in helping us with this trip and her commitment to also working with us to make that export initiative a reality. Thank you.
Q: Question to the USTR. (translated from Arabic)
The United States is suffering of a big and dangerous deficit. Though there is extra support for the sake of financing the wars in Iraq and Afghanistan. Is that not considered a big conflict between the economic policy of the United States which aims to create job opportunities, and between the new goal which is an extra support of military expenditures?
USTR: No, it is not. The United States is a country that has been richly blessed because of two things. Our commitment and our belief that given the freedom, individuals have extraordinary power to transform their own lives with their communities and their countries if they have the freedom to invest themselves through their education, they have their resources to invest in their families by good employment and their creativity to come up with jobs, the products, the services that any of us would like, in having that creative spirit, that commitment to allowing the market to determine an individual's worth and productivity we think has helped make us the most dynamic economy in the world.
Secondly, our underlining principles and commitment to freedom and democracy and human rights we think makes us an even more attractive environment for investment and partnership, but has also given us extraordinary ability, combined with our economic spirit, our commitment to ideals and freedom to be a leader within the world. And the United States has been uniquely privileged and challenged to not only lead an economic spirit but also in helping to keep our people secure.
We are also working with strategic partners, like Egypt , we have the opportunities in some cases to bring peace to the world. And the two cannot be seen in conflict with one another. If we have learned anything from this protracted conflict in some regions of the world, whether it's in the Middle East or other parts of the world, is that it is hard for business, for people to flourish when countries are continually at war with one another.
In part of an overall economic security has to be an effort to make sure that people are safe in their environment. Our investing in our security and our economy have to go hand in hand and they are not at all contradictory to one another.
Q: (translated from Arabic) There is a mutual interest from both the Egyptian and the American sides to double the Egyptian and the American exports. I want to know what can the American side offer the Egyptian side to achieve double its exports. Is there a concrete response for the Egyptian request with regards adding new regions in the QIZs agreement?
Also the Egyptian request to add a new commodity to the system of preferential treatment? Is there a response from the American side? And what does the American side require from Egypt in order for Egypt to double its exports?
USTR: Briefly, what I referred to in our remarks is what Minister Rashid and I have agreed that our teams will begin to work immediately to resolve the issues regarding a more active expansion of exports from the QIZs. We believe that serves the United States' interest for the reasons that the QIZs were initially put in the place and that it helps our strategic initiative by helping provide stability when people have access to gainful employment.
We will come up with an approach, an acceptable resolution to whether there should be more activity within them as well as the product mix. Part of that has to be working in concert with the Minister to find out what meets Egypt's objectives. I know the Minister he can speak for himself, but he wisely believes that the diversifying the exports through the Industrial Zones is one smart way to achieve that objective.
Minister Rashid: I agree with what Mr. Ron Kirk has said regarding the QIZs. There is a strategic goal between Egypt and the US to make these zones a success, and the increase of Egyptian exports under this protocol over the past period proved that this system is effective in developing the Egyptian economy, and that it has become a cornerstone in the Egyptian-American economic relations.
We agreed to expand our work in these zones and there is an agreement to have a work group of the two parties to help introduce new sectors. We have the textile industry, which is very successful and will continue and expand, but we are keen to add new industrial sectors to the QIZs.
Hence, we have agreed to have work group and to involve the business sector or the business community through the Egyptian- American Council to promote new industries in the QIZs, such as electronics, environmental industries, equipments, and leather industries. All these industries are part of our goal.
We have also agreed that all mechanisms to expand and activate the QIZs will be settled in the upcoming period in order to have flexibility in the newly approved Upper Egyptian areas, including Beni Seuf and Minya, so we achieve our goal from these zones in the QIZs and increase the investments.
Q: Sir, you said you would like to increase the exports to Egypt. Wheat and corn, especially wheat, is a big area that the U.S. used to export a lot to Egypt. But recently because of price, freight and different issues, the U.S. has been losing a great deal of market share in Egyptian imports, and Egypt is the world biggest wheat buyer, we are just wondering what you think about this and how you see the outlook on that particular one and whether there are any bilateral long term or agreements like mutual agreements on this issue, thank you.
USTR: Well, you are correct. Our agricultural exports make up a very important part of the overall U.S. 5 billion dollar exports to Egypt. Agricultures about a half a billion dollars of that. Egypt is a very important and attractive agriculture market.
We would love nothing more than to resume the levels that we had before. And we very much welcome the openness of Minister Rashid and his team to working with this to see what we can do to address whether it is our competitiveness or whether there are other issues that might stand in the way of doing that.
We do understand that with our not having frankly a free trade agreement and Egypt wisely moving for free trade agreement with other countries, to some degree this is of our own doing. But I will tell you this, that President Obama and I firmly believe that if we have a level playing field and if our exporters can compete equally with others, then we will do just fine.
Q: (translated from Arabic) There was an agreement between Egypt and the United States for Egypt to be committed to the Qualifying Industrial Zones and the United States to be committed to implement the free trade agreement. But what we saw that Egypt kept its commitment but the United States did not. Why?
USTR: Minister Rashid and I had to make a judgment very early on whether we would rehash the past challenges that did not allow us to have a free trade agreement or whether we would look forward and come up with a more appropriate mechanism to meet the desired objective of both of our leaders to have a more robust commercial relationship between our two countries.
And recognizing the challenges with FTA, we signed an agreement in May for the strategic economic partnership that we think allows us to meet many of those objectives. I am very pleased that we have been able, not only with my being here today, but that Minister Rashid and his team, have worked very aggressively to follow up with our agreement last May to see if we can use this mechanism as a way to increase trade.
And the QIZs have been a success. The exports in those regions have doubled over the last couple of years, but they are still we both believe an unacceptably low level. So we think working together we can not only increase the exports from the QIZs but also come up with an acceptable framework for more robust trade between Egypt and the United States.
USTR: The Minister is a remarkably talented man. You are more than welcome to ask him. I don't want to be such an ungracious guest.
Q: (translated from Arabic) My question to the USTR: We see that President Obama's plan with regards to the health care is facing opposition from a number of American companies. The American companies give priority to find or create new job opportunities. What do you expect in regards to this conflict or differences?
USTR: Well, first of all, thank you for giving me an opportunity to applaud my President and our Congress for what was I think a very historic and courageous vote last evening in which our U.S. Congress passed and sent to the President the most comprehensive health care reform in our country in over some 65 years.
We, fortunately, live in a world in which judging by this audience, the United States and Egypt have one thing in common and that is an abundance of press, a 24 hour press.
There were elements of our business community that were concerned obviously about our health care. There were just as many elements that supported it for one simple reason. No matter what Minister Rashid and I might do to set a framework for increase exports, one of the single biggest costs for businesses in America, whether it is a big company like Boeing, whether it is a small company like some of yours, is health care costs.
Every economist in America predicted that it if our Congress did not address our escalating costs in our health care system, then those costs would have increased up to seventy percent over the last ten years.
This year alone we saw cost increases by some insurance companies up to thirty, forty percent. We believe that was unsustainable and would have been crippling to our economy. And I won't bore you to taking you through all of the elements of the reform bill, but we think this was an appropriate and necessary measure.
First of all, to ensure that every American has access to affordable low cost health care, that no family could be denied coverage because of a preexisting condition, that just because you changed employment -- and in the United States we live in one of the most mobile communities now in which young people may work for 4, 5 different employees -- that you should be able to take your insurance with you, and that we would begin to rein in costs.
And all the estimates show that over the next ten years, in fact, implementing the health care reform as President Obama asked Congress to do will actually help reduce our deficit by over 130 billion dollars.
So we think this was not only a courageous and a historic vote but it absolutely makes great economics sense for U.S. consumers and businesses.