CHAPTER 69

EGYPT
Adel M. Khalil

TABLE OF CONTENTS

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II. Egypts Accession to the GATT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III. Egypts Participation in the Uruguay Round . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Work After the Establishment of the WTO . . . . . . . . . . . . . . . . . . . . . . . . . B. Participation in WTO Ministerial Conferences . . . . . . . . . . . . . . . . . . . . . . IV. Effects of GATT/WTO Membership and the Uruguay Round Agreements on Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Economic Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Trade in Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Trade in Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Political Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Social Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Legal Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V. Egypts Attitude Toward the WTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI. An Egyptian Perspective on the Strengths and Weaknesses of the WTO . . A. Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII. Egypts Participation in the WTO Dispute Settlement Process . . . . . . . . . . . VIII. Principal Issues for Egypt in the Forthcoming Negotiations . . . . . . . . . . . . . A. Egypts View Toward a New Round of Negotiations . . . . . . . . . . . . . . . . B. Egypts Position on Particular Issues in the Doha Round . . . . . . . . . . . . . 1. Implementation of the Uruguay Round Agreements . . . . . . . . . . . . . . 2. The Mandated Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Singapore Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) Trade and Competition Policies . . . . . . . . . . . . . . . . . . . . . . . . . (ii) Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (iii) Trade Facilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (iv) Transparency in Government Procurement . . . . . . . . . . . . . . C New Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Electronic Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Trade and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93 93 93 94 95 96 96 96 97 97 97 98 98 98 98 98 99 99 101 101 101 101 102 102 103 104 104 104 105 106 106 106 106

Dr. Adel M. Khalil was First Undersecretary of Egypts Ministry of Economy and Foreign Trade and then Egypts Representative to the WTO (19962000).

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3. Labor Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Domestic Industrial Tariffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Egypts Strategy to Accomplish Its Objectives . . . . . . . . . . . . . . . . . . . . . . IX. Effects of Regional Trading Arrangements on Egypt . . . . . . . . . . . . . . . . . . . X. How Trade Policy is Developed in Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

107 107 108 108 109 110

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I. Introduction Egypt joined the GATT on May 9, 1970, then participated in the Uruguay Round negotiations (19861993). On April 15, 1994, Egypt signed the Marrakesh Agreement Establishing the World Trade Organization, and became a full Member of the WTO on June 30, 1995. Egyptian ofcials, businessmen, and academics are in agreement that the WTO provides a rule-based and transparent trading system. The WTO also provides a forum for permanent negotiations as well as for settlement of disputes. Developing country interests are preserved through the special and differential treatment accorded to those countries and embodied in the WTO Agreement. However, there is a general feeling in Egypt that WTO rules are complicated. Certain agreements, like those on Agriculture and Textiles and Clothing, stop short from achieving the goal of trade liberalization and adversely affect the interests of developing countries. Also, beneting from the WTO dispute settlement system requires costly specialized legal expertise. This chapter describes Egyptian activities and positions with respect to various WTO subjects, including demands of developing countries concerning the effective implementation of existing WTO agreements, views regarding the mandated negotiations on Agriculture and Services, as well as Singapore issues, and the subjects of the new round of trade negotiations (the Doha Round).

II. Egypts Accession to the GATT Egypt joined the GATT on May 9, 1970, after eight years of negotiations. Its principal goal was to benet from the reduction or elimination of tariffs and non-tariff barriers, to secure liberalization of trade, and to enjoy most-favored-nation (MFN) treatment from other GATT contracting parties. Egypt participated actively in both the Tokyo Round and Uruguay Round (UR) negotiations.

III. Egypts Participation in the Uruguay Round Egypts primary goals during the UR were the liberalization of world trade in general without hindering the interests of developing countries, as well as assuring that the negotiations took full consideration of the condition of developing countries. Egypt sought to gain improved market access for its textile and agricultural exports and to increase awareness of the difculties faced by net food importing developing countries like itself. Both Egyptian ofcials and businessmen feel that the liberalization of the agricultural and textile sectors did not go far enough, and that the rights of developing countries were not sufciently safeguarded by the two relevant Agreements, since both agreements maintained high tariffs, quotas, subsidies and many other measures limiting freedom of trade in those items. In order to prepare itself for the comprehensive and lengthy Uruguay round negotiations, which lasted from 1986 to 1994, in 1988 Egypt established a National Committee presided over by its Minister of Economy and Foreign Trade. Members of that committee were representatives from all concerned ministries and organizations, including those representing the private sector such as the Businessmens Association, the Federation

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of Chambers of Commerce, and the Federation of Industries. The Committee formed sub-committees to analyze and follow the different subjects of the negotiations and to prepare Egypts ofcial negotiating positions for guiding the Egyptian negotiating team in Geneva. On April 15, 1994, Egypt signed the Marrakesh Agreement establishing the World Trade Organization. Despite opposition from certain business groups who believed that membership in WTO would harm local industry, the Egyptian Parliament ratied the Agreement on April 16, 1995. A Presidential Decree1 was issued in this regard. Egypt ofcially became a member of the WTO on June 30, 1995.

A. Work After the Establishment of the WTO When the WTO was established as a permanent forum for negotiations, dispute settlement, and trade policy review, Egypt transformed the National Committee for the Preparation for Uruguay Round Negotiations into a committee to follow up the application of the Uruguay Round agreements under the chairmanship of the Minister of Economy and Foreign Trade. Nine sub-committees were established: Market Access, Services, Trade-Related Investment Measures (TRIMS), Agriculture, Textiles and Clothing, Trade and Environment, Protection of Local Production, Technical Specications, and Trade-Related Aspects of Intellectual property Rights (TRIPS). The Committees mandates and responsibilities included:

r Taking into account the national as well as the sectoral point of view when r Taking measures to maximize the positive aspects of the Agreements and taking
full advantage of the special and differential treatment provided by the Agreements for developing countries, such as exibility measures, transitional periods, as well as technical and nancial assistance; Suggesting amendments to local laws and decrees to conform to the Uruguay Round Agreement; Making sure that the bilateral agreements signed between Egypt and other countries are in conformity with the Uruguay Round Agreement; Educating Egyptian Ministries and Organizations concerning various aspects of the Uruguay Round Agreement, including how to benet fully from its rules, and how to handle its obligations; Preparing ofcial Egyptian positions concerning subjects under negotiation in the WTO to guide the Egyptian negotiating team in Geneva. considering different subjects relating to the WTO;

r r r r

Not all committees were equally successful. Some Ministries kept changing their representatives in the sub-committees. Many of the representatives were not able to contribute useful information regarding the opinions, needs, plans, and policies of their respective Ministries and Organizations, thus leaving the ofcial representative to the World Trade Organization in a position where he had to suggest Egypts position concerning many WTO negotiating items then seek the Committees approval of his suggestions.

No. 72 for the year 1995.

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B. Participation in WTO Ministerial Conferences Egypt participated actively in the four post-Uruguay Round WTO Ministerial Conferences which were held in Singapore (1996), Geneva (1998), Seattle (1999), and Doha (2001). The Egyptian Delegations to the four Conferences contributed both to the preparatory work and during the conferences. The Egyptian Delegation to the Singapore Ministerial Meeting played an important role in helping to reach an acceptable solution, from the point of view of the developing countries, concerning the paragraph on core labor standards in the Singapore Declaration. The developing countries opposed linking trade to labor standards, and insisted that labor standards should only be discussed in the International Labor Organization (ILO) which is the competent body to tackle this issue. The Egyptian Delegation also played an important role in formulating many other paragraphs in that Declaration concerning subjects of importance to the developing countries such as: marginalization, regional agreements, accession, implementation, treatment of developing countries, least developed countries (LDCs), textiles and clothing, trade and environment, investment and competition, transparency in government procurement, and trade facilitation. The consensus reached on those paragraphs allowed for the issuance of the Singapore Declaration. In the Geneva Conference, the decision by Egypt to accept the Declaration on Global Electronic Commerce paved the way for its acceptance by many other developing countries. During the preparatory work for the Seattle Ministerial Meeting, Egypt, together with ten other developing countries in Africa, Asia and Latin America formed a group called the Like-Minded Group (LMG).2 This group played a very important role in formulating the position of developing countries with respect to many of the topics under discussion in the preparatory process for the Conference. The role of Egypt was not conned to working through the LMG; it also participated in the African Countries Group and the Committee on Trade and Development in the World Trade Organization. In Seattle, the Egyptian Delegation was one of the few delegations to attend the Green Room meetings where approximately twenty key WTO Members (developing and developed) were invited to discuss and try to reach an acceptable text for the Ministerial Declaration to be issued by the Conference. Egypt tried during those meetings to convey the views of the developing countries to the limited number of delegations attending the Green Room meetings. Though it had been a common practice in the GATT/WTO to try to reach important decisions in small informal groups, the Seattle Ministerial was somehow different as a result of the general view of developing countries that the situation required that the Members hear individual points of view concerning the implementation problems of the existing agreements, as well as the unaffordable burden of adding new areas to the negotiations in a new and comprehensive round of trade negotiations. The Egyptian Delegation to the Seattle Ministerial Meeting believed that reasons for the failure of the Meeting included: the failure in the preparatory process to agree on an acceptable text that left only a few points of difference of a political nature for

2 This group consisted of: Cuba, Dominican Republic, Egypt, Honduras, India, Indonesia, Malaysia, Pakistan, Tanzania, Uganda and Zimbabwe.

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the Ministers to settle; the insistence of the developed countries on opening many new subjects for discussion without allowing for the proper implementation of the existing agreements; the short time allowed for meetings of trade ministers as a result of the demonstrations that delayed the start of the meetings; and the fact that very few general meetings were held as a result of the focus on the Green Room meetings, thus excluding the majority of delegations from taking part in the decision-making process when many important issues had been left open for discussion in Seattle. IV. Effects of GATT/WTO Membership and the Uruguay Round Agreements on Egypt A. Economic Effects 1. Trade in Goods Egyptian industry has enjoyed considerable protection since Egypt began to adopt socialist policies in 1961. Most private sector companies were nationalized during that period. Even when Egypt started applying an open-door policy in the mid-seventies and encouraged the private sector to assume a role in the economy, the government chose to provide a good deal of protection to the private sector, including high tariff rates on competitive imported goods, as well as a ban on the importation of certain articles. This structure was progressively reformed when Egypt joined the GATT and later the WTO. Egypts reform program has and still gives rise to objections from some local industries, in particular producers of textiles, clothing and some agricultural products. The reduction or removal of many tariff and non-tariff barriers in importing countries has helped Egypt little due to its limited capacity to export as a result of high production costs, the low quality of some products, high prices of components and inputs in the Egyptian market resulting from protectionism, the lack of external marketing experience, and strong competition from other WTO Members, in particular Asian countries. The government, in cooperation with business associations, is working hard to improve this situation through programs for restructuring, rehabilitation, training and privatization of industries, as well as reducing tariffs on inputs and improving exporting capacities for producers through market research and regional agreements, especially with Arab, African, and EU/Mediterranean countries, as well as seeking to sign a Free Trade Agreement with the United States. Other concerns with the impact of the Uruguay Round Agreements include:

r Egypt is a net food importing developing country. The reduction of domestic

subsidies pursuant to the WTO Agreement on Agriculture has raised fears that Egypt will have to pay higher prices for many food items that it needs to import, especially wheat, our, and edible oils. In fact the general reduction in international market prices of those items during the rst years of the implementation of the Agreement together with the successful policy of the government to increase production of those crops, has helped Egypt to avoid a difcult situation in this respect. r Egypt cannot take advantage of Article 27.2(b) of the Agreement on Subsidies and Countervailing Measures that allows some developing country members to continue to provide export subsidies, since its per-capita GNP exceeded US$1,000 in 1998 and it has thus lost the preferential treatment accorded by Annex VII(b) of the Agreement.

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r Egypt is not eligible to apply import restraints under GATT Article XVIII and
the Understanding on Balance-of-Payments Provisions of GATT 1994, since its balance of payments has been in surplus since 1995, even though the Egyptian balance of trade in goods has and still suffers from a huge decit. The surplus in the Egyptian balance of payments results mainly from transfers from Egyptians working abroad, tourism receipts and Suez Canal dues. r The rules of the Agreement on Textiles and Clothing have allowed developed importing countries to continue imposing quotas on clothing and textile imports from developing countries until 2005, thus permitting a continuation of restrictions on clothing and textile imports from developing countries. This quota system, together with the misuse by certain developed countries (especially the EU) of anti-dumping laws, has harmed Egyptian exports of textiles and clothing. 2. Trade in Services Egypt participated actively in the negotiations on trade in nancial services that resumed after the conclusion of the Uruguay Round. Egypt accepted a high level of liberalization for banking, insurance and capital market services. This liberalization was welcomed by the developed country Members, especially the United States and the EU countries. Egypt will benet from its decision to encourage foreign investment in its services sector, in particular through access to new technology, since new technology usually accompanies investments in sectors such as nancial services, telecommunications and data processing centers. Although Egypt has not signed the Basic Telecommunications Agreement, the government has also taken important steps to liberalize this sector. Egyptian service providers will also benet from the increase in foreign market access opportunities in sectors such as construction and engineering, health, education and professional services that will be negotiated in the new round. 3. Intellectual Property Rights The Agreement on Trade-Related Intellectual Property Rights (TRIPS), has provided Egypt with an important means to protect patents, copyrights and neighboring rights, especially in Arab and African markets. Strictly-applied enforcement measures in Member countries have helped Egyptian industries to protect rights in areas like printing, entertainment (audio, video and motion pictures) and broadcasting. However, Egypt has faced great pressure, especially from the United States, to abandon its right to apply a ten-year rather than a ve-year transitional period for implementation of the TRIPS agreement with respect to pharmaceuticals. Local industry, government ofcials and the public oppose abandoning this right because of the expected effect on both local industry and the price of medicine. B. Political Effects Views in Egypt differ among political parties and business associations concerning the WTO. Some (the majority party and the Federation of Chambers of Commerce and many economists) believe that Egypt cannot turn its back on the WTO, which is in the best interests of the Egyptian economy. Others (the opposition leftist party and the Federation of Industries) view the WTO as a danger that will ruin the local economy by opening the door to imports of all kinds of goods at a time when most local industries are still unable to compete.

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C. Social Effects Views in Egypt differ concerning the effect of WTO membership on local industry. Some believe that opening the door to imports of foreign goods will harm local industries and deprive many workers of their jobs and benets. Others believe that the restructuring of the local economy is bound to happen as a result of the governments Economic Reform Program, which included privatizing many important industries. These same people also believe that well-managed privatized industries would be more capable of competing locally and abroad, thus creating the long-term possibility of more employment. The actual effects on the traditional industries of textiles and clothing are not yet clear since Egypt maintained a prohibition on the importation of fabrics until January 1, 1998, and on apparel and made-ups until January 1, 2002. However other new industries like carpets, ceramics, iron and steel and aluminum products have ourished and are witnessing a high export rate. D. Legal Effects In order to comply with the WTO Agreement, Egypt changed or promulgated laws in areas such as customs, market access, anti-dumping, services, technical barriers to trade and intellectual property rights. These laws are strictly monitored by the competent authorities. Egypt has also established a new department within the Ministry of Economy and Foreign Trade to handle dumping, subsidies and safeguard matters. V. Egypts Attitude Toward the WTO Some Egyptian citizens, economic writers and industrialists believe that globalization, facilitated by the WTO, is a new form of economic colonialism, and that the economic superpowers are using it to control the economies of developing countries, so that they serve only as markets for developed country products. Other Egyptians (mainly academics and businessmen) believe that Egypt is part of the world economy and should not stay isolated from international developments. According to the latter view, Egypt should maximize benets from the WTO Agreement, and minimize losses by negotiating better conditions, utilizing the available special and differential treatment for developing countries, as well as modernizing its economy to cope better with developments. Most Egyptian political leaders were in favor of joining the WTO since this complemented the on-going economic reform program proposed by the International Monetary Fund and the World Bank which was aimed at modernizing local industries and increasing exports. VI. An Egyptian Perspective on the Strengths and Weaknesses of the WTO A. Strengths The WTO provides a rule-based trading system that offers predictability and transparency. This is good for exporters and policy-makers in Egypt. The WTO also provides a forum for settling trade disputes on equal terms for all countries, large or small. The WTO offers a permanent forum for trade negotiations. This forum offers the possibility that better rules can be negotiated and market access conditions improved if Members so agree. Another strength is that WTO decisions are usually taken by consensus. This means that the vote of every Member is, in principle, equally important and the agreement of all

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members is essential to adopt a decision. Lastly, Egyptian policy-makers welcome the special rules throughout the WTO Agreement that provide more favorable treatment for developing countries. B. Weaknesses WTO rules are not easy to understand for most businessmen and traders, and government needs to make greater efforts to explain trade rules to the public. The Egyptian government does this occasionally in connection with certain measures to be taken, such as lifting the prohibition on importation of ready-made clothes, but not as a permanent educational process for businessmen and the public. Beneting from the WTO dispute settlement system requires costly specialized legal expertise that is beyond the means of many developing countries. That is why Egypt joined the Advisory Centre on WTO Law, which provides legal services to developing countries at reduced rates.3 The need to take decisions by consensus can place smaller WTO Members under great pressure from economically or politically stronger countries to reach a decision. However this system is better than a system that gives the larger countries more voting power. Rules in favor of developing countries do not always benet these countries, due either to a lack of expertise or a lack of nancial assistance to improve capacity. Egypt was able to benet from some technical assistance provided by WTO experts, particularly in areas such as customs valuation, competition law, TRIPS, the lifting of the prohibition on textile imports, and notications under the Agreement on Agriculture. With regard to agricultural issues, the Agreement on Agriculture does not go far enough to open agricultural markets, especially to developing country products. The Agreement on the Application of Sanitary and Phytosanitary Measures has not caused problems with respect to Egypts agricultural trade. Even when the EU took measures against the import of Egyptian potatoes, this dispute was settled without having to bring the case to the WTO. The Agreement on Textiles and Clothing maintains many forms of protection in favor of developed countries until 2005, such as non-tariff barriers, including quotas and restrictions on imports, administrative arrangements, and transitional safeguard measures, thus limiting the market for exports from developing countries. The WTO Agreement applies to many new areas such as services and intellectual property rights. Many developing countries are not capable of applying all the rules adopted due to lack of experience, the need to revise or promulgate local laws, and the lack of knowledgeable administrative bodies to handle these new subjects. VII. Egypts Participation in the WTO Dispute Settlement Process Since the establishment of the WTO, two Egyptians have served as members of the WTO Appellate Body, Dr. Said Al-Naggar (19952000) and Dr. Georges-Michel Abi-Saab (2000-present). This reects the importance of the WTO to Egypt and its active participation in WTO activities. The WTO Dispute Settlement Understanding is considered by many Egyptian ofcials, diplomats and some economic writers as one of the most important achievements of the
3

See infra note 4.

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Uruguay Round. Egypt and other developing countries welcome the following special provisions for developing countries:

r Developing countries have a right to at least one developing country panelist; r Time limits for certain stages of the dispute settlement can be extended if a r Panel reports involving developing country Member must indicate how special r The special situation of the least developing countries is to be taken into account
at all stages of a dispute involving these countries. Egypts practical experience with the WTO dispute settlement system is limited, having been conned to two cases (discussed below). Among the difculties faced by developing countries, including Egypt, are: and differential treatment has been taken into account; developing country is the defendant;

r A lack of legal expertise required to participate effectively in such a complicated r The high costs involved in pursuing a dispute; r The length of time taken for the implementation of decisions; and r The limited effects of the special and differential treatment provided to developing
countries by the DSU in view of the lack of resources needed by them to nance comprehensive legal assistance. The establishment of the Advisory Centre on WTO law,4 of which Egypt is a member, may help to solve some of these problems. Between 1995 and 2002 Egypt was involved as a party in only two WTO dispute settlement proceedings. In the rst, Egypt participated as a third party in the dispute against the European Communities concerning Anti-Dumping Duties on Imports of Cotton-Type Bed-Linen from India.5 Egypt supported India in this case, led briefs, participated in oral arguments, and beneted from the panel and appellate bodys rulings in this case in favor of India. The second case was brought by Turkey against Egypt and concerned Denitive AntiDumping Measures on Steel Rebar from Turkey.6 This request concerned an anti-dumping investigation by the Egyptian Ministry of Trade and Supply with respect to imports of steel rebar from Turkey, which resulted in the imposition of anti-dumping duties ranging from 22.6361.00 percent. Turkey challenged the dumping and injury determinations. The Panel Report was adopted by the DSB on October 1, 2002.7 The Panel found for Egypt on the vast majority of issues, but with respect to the investigation of two of the ve rms involved, it found a violation of Article 6.8 of the Anti-dumping Agreement and Annex II(6) concern the Egyptian authoritys use of facts available.8 It also found that the investigative authority had acted inconsistently with Article 3.4 of the Anti-dumping Agreement by failing to evaluate certain factors, including factors related to productivity and cash-ow, in its injury determination.9 system;

The Advisory Centre was established in Geneva in 2000, and provides legal services to developing countries that join the Centre at fees that vary with the volume of the trade of the country and that are considerably lower than those charged by private law rms. The Centres website address is www.acwl.ch. 5 WT/DS141. 6 WT/DS211. 7 Report of the WTO Panel, EgyptDenitive Anti-Dumping Measures on Steel Rebar From Turkey, WT/DS211/R (2002). 8 Id. 7.266 9 Id. 7.51.
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VIII. Principal Issues for Egypt in the Forthcoming Negotiations10 A. Egypts View Toward a New Round of Negotiations During the preparatory process for the Third WTO Ministerial Meeting (Seattle), developing countries, including Egypt, considered that improved implementation of the existing Uruguay Round Agreements was a prerequisite before becoming involved in any further negotiations on new agreements or new obligations.11 The Egyptian position was that it is committed to beginning the mandated negotiations on agriculture and services, and to addressing the other elements of the built-in agenda in accordance with the review provisions of various agreements. Egypt is also committed to continuing the exploratory work on the issues raised in Singapore.12 The Egyptian Delegation made it clear that Egypt would not accept any commitments to negotiate new issues without considering implementation difculties in a satisfactory manner and discussing the impact of these new subjects on developing countries. However, some slight changes in Egypts position began to emerge before the Doha Ministerial meeting. The press release issued at the end of the consultative meeting attended by Ministers of Economy, Trade and Finance from fourteen Arab Countries13 held in Cairo on July 1718, 2001, stated that Arab nations are ready to discuss the possibility of initiating a balanced round of trade negotiations on the condition that all WTO Members agree to establish a mechanism to guarantee that developed countries implement their obligations set forth in the Uruguay Round Agreement, and that a clear vision of the subjects to be included in the new round is established in a way that fulls the interests and aims of developing countries, and helps to provide wider market access for the products of those countries, as well as maximizing the participation of developing countries in the WTO decision-making process. During the preparatory process for the Fourth Ministerial Meeting (Doha) developing countries reiterated their position and succeeded in having the Conference issue a separate Decision on Implementation-Related Issues and Concerns.14 The main Doha Ministerial Declaration15 refers to this Decision in paragraph12. B. Egypts Position on Particular Issues in the Doha Round 1. Implementation of the Uruguay Round Agreements During the preparatory process of the Third and Fourth WTO Ministerial Meetings many developing countries, Egypt included, demanded that a review of the implementation of the existing Uruguay Round commitments be a prerequisite before commencing negotiations on new agreements or new obligations. These countries made it clear that the implementation review should take into consideration: (1) the overall implementation
10

This section is drawn from statements and position papers prepared either by the writer of this chapter, who was the Egyptian Representative to the WTO from 1996 to 2000, or by his assistants under his supervision, either separately or in co-operation with other developing countries delegations such as Cuba, Dominican Republic, Honduras, India, Indonesia, Malaysia, Pakistan, Tanzania, Uganda and Zimbabwe. 11 WT/99/4797/Rev. 3, November 18, 1999 and paragraphs 21 and 22 of the Draft Ministerial Text, WT/ 99/5868/Rev. 1, October 19, 1999. 12 Trade and Competition Policy, Trade and Investment, Transparency in Government Procurement, and Trade Facilitation. 13 Egypt, Jordan, Bahrain, Tunisia, Algiers, Saudi Arabia, Sudan, Oman, Qatar, Kuwait, Libya, Morocco, Mauritania and Yemen. 14 WT/MIN(01)/W/10, November 14, 2001. 15 WT/MIN(01)/DEC/W/1, November 14, 2001.

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difculties facing the developing countries; (2) imbalances in some agreements;16 (3) implementation of some agreements in letter but not in spirit, such as the Agreement on Agriculture and Agreement on Textiles and Clothing,17 (4) the misuse by developed countries of certain rules in the agreements in a way that limited market access for developing country products, i.e., abuse of the rules on anti-dumping,18 and (5) a review of the Agreements on Technical Barriers to Trade (TBT)19 and Sanitary and Phytosanitary Measures (SPS).20 As a result of the discussions during the course of preparation for the Third Ministerial Conference, two lists of implementation issues, one for immediate decision and the other for action within one year, were included in paragraphs 21 and 22 of the revised Draft Ministerial Text21 that was supposed to be agreed upon at the Seattle Ministerial Meeting. The failure of the Ministerial did not stop developing countries from insisting on the discussion of implementation issues during the meetings of the WTO General Council that followed the Ministerial Meeting. During these meetings, the Council recognized that the implementation of some WTO agreements and decisions had given rise to serious concerns among many developing country Members. The Council also recognized that progress in addressing these implementation concerns would enhance condence in the multilateral trading system. Members agreed on December 15, 2000 that the General Council, meeting in special sessions, would address outstanding implementation issues and concerns, particularly those raised during the preparations for the Third Ministerial Conference, and that the process should be completed not later than the Fourth Session of the Ministerial Conference. The Fourth Ministerial reached a decision in this regard22 that was accepted by Egypt. 2. The Mandated Negotiations (a) Agriculture. Egypts general goals with respect to the new negotiations on agriculture can be summed up as follows:23
For example, the Agreement on Subsidies and Countervailing Measures, in which subsidies commonly used by developing countries for their industrialization and development have been included in the actionable or banned (prohibited) category, while some of those commonly used by developed countries (certain types of research and development, regional, and environmental subsidy) are in the non-actionable category. See Chapter 16 of this book. 17 For example, the dirty tarifcation of non-tariff barriers to agricultural imports practised by some developed countries that often resulted in higher effective barriers to trade being in place after the Agreement on Agriculture than before, and the back-loading with respect to the Agreement on Textiles and Clothing that meant that most quotas imposed by the United States and the EU under the Multiber Arrangement were to remain in place until the very end of the ten-year implementation period. See Chapters 6 and 9 of this book. 18 For example, initiating repeated investigations against the same product from the same country within a short period of time. 19 For example, setting some international standards without the presence of countries at different levels of development and from all geographical regions in a standard-setting organization. 20 For example, applying rules in favor of developing countries in Article 10.2 concerning period for compliance with a new SPS measure, and paragraph 2 of Annex B concerning intervals between the publication of an SPS regulation and its entry into force. 21 WT/ 99/5868/Rev. 1, October 19, 1999. 22 WT/MIN(01)/W/10, November 14, 2001. 23 This is the ofcial position of the Egyptian Ministry of Agriculture, and the Committee established in the Ministry of Economy and Foreign Trade to follow up the application of the UR Agreements, as conveyed to the Egyptian Delegation to the WTO.
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r Achieving a higher level of liberalization in international trade in agricultural r

goods, and the removal of price-distorting practices and measures facing this trade. Enhancing market access opportunities by achieving a real reduction of customs tariffs (especially in light of the reduced tariff rates applied by Egypt), as well as eliminating the impediments facing the exports of developing countries, in particular by reducing tariff peaks and tariff escalation. Achieving a signicant reduction in the eld of domestic support accorded by various countries, especially developed ones, thus allowing developing country exports to achieve a higher degree of competitiveness in developed country markets. Eliminating or signicantly reducing the export subsidies granted by various countries, mainly developed countries, with the aim of increasing competitiveness of other countries exports to third country markets. According effective and practicable special and differential treatment to developing countries. Eliminating non-tariff barriers and formulating a set of rules to eliminate disguised arbitrary or unjustied measures taken by some Member countries, especially developed ones, including in the eld of sanitary and phytosanitary procedures, as well as requesting Members applying tariff quota systems for agricultural products to liberalize them and to operate them transparently and fairly. Developing a practicable mechanism to implement and render effective the Marrakesh Decision on Measures Concerning the Possible Negative Effects of the Reform Program on Least-Developed and Net-Food Importing Developing Countries.

r r r

Although Egypt cannot deny the importance of non-trade concerns in the eld of agriculture (often referred to as multi-functionality), including the desire to guarantee food security, rural development, and certain environmental considerations, Egypt stresses the need to achieve consensus on a denition of such concepts, designed to ensure that they will not be used as disguised protectionism. In his speech to the Fourth Ministerial,24 the Egyptian Minister of Economy and Foreign Trade summarized the Egyptian position concerning negotiations on Agriculture, stating that WTO Members should aim for its full integration into the WTO framework. (b) Services. During the preparatory meetings for the mandated negotiations on services, Egypt emphasized that the negotiating guidelines should include the following elements: progressive liberalization, fewer sectors of liberalization for developing country Members, and consideration of national policy objectives and the level of development of individual country Members. Furthermore, negotiations should be conducted under the current principles and existing structure of the GATS, and take into account the unilateral liberalization measures undertaken since the conclusion of the Uruguay Round. In addition, market access negotiations should be conducted on a request-offer basis, and should be supplemented, if necessary, by other approaches on a voluntary basis, to avoid using a rigid framework for negotiations for all countries despite their different levels of development and the different pace of liberalization. Flexibility should be provided
24

WT/MIN(01)/ST/36, November 10, 2001.

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for developing countries in terms of the time limits to submit proposals and requests or offers. The creation of new bodies for services negotiations should be avoided in order not to increase the burden on developing country delegations, usually limited in numbers, when they follow the negotiation process. The importance of increasing participation of developing countries in trade in services, as provided for in Article IV of the GATS, should be emphasized. In addition, the report of the Trade Ministers of Eastern and Southern Africa following the joint preparatory meeting held in Cairo by the members of the Common Market for Eastern and Southern Africa (COMESA)25 and the Southern African Development Community (SADC) on July 30, 2001 to prepare for the fourth WTO Ministerial Conference (Doha)26 provides that:

r The existing architecture of GATS, in particular the positive list approach must r The effective implementation of GATS Article IV and XIX(2) concerning the
liberalization of market access for developing countries and LDCs in sectors and modes of supply of export interest to them, are called for (30); and r The liberalization of the movement of natural persons (mode 4) must be undertaken by eliminating barriers to market access (31). In his speech to the Fourth Ministerial,27 the Egyptian Minister of Economy and Foreign Trade reiterated the Egyptian position concerning negotiations on services stating that WTO Members should aim for the creation of opportunity in a wider spectrum of sectors; with special emphasis on sectors and modes of interest to the less-advantaged Members. (c) Singapore Issues. Egypt had formulated clear positions regarding the Singapore issues. They are summarized in the following sub-sections. (i) Trade and Competition Policies. In Egypts view it is important that the Working Group on Trade and Competition Policies pursue its mandate as stipulated in the Singapore declaration, by: (1) Pursuing the analytical and educational work regarding the synergies between trade and competition policies; (2) Studying the effect of the various proposals submitted by developing countries, especially those dealing with the non competitive practices of the concerned institutions, as well as detecting and reviewing the integration process taking place amongst these institutions, and its effect on international competition; and (3) extending the study to explore the means of coordination between the WTO, and the other relevant intergovernmental organizations, such as UNCTAD and the World Bank, especially with respect to the resources available for technical assistance and capacity-building in the developing and least developed countries. (ii) Trade and Investment. Egypt believes in the importance of pursuing the analytical and exploratory work tackled by the Working Group on Trade and Investment, in particular the need to study the synergies and interaction between trade and investment. The Working Group should, while fullling its task, shed light upon issues of importance to developing countries, especially those related to the positive or negative
25 26 27

be maintained (29);

Egypt is a member of COMESA. The Report is available at http://www.comesa.int/news/newsdoha.htm. WT/MIN(01)/ST/36, November 10, 2001.

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effects of foreign direct investment upon the developmental goals or objectives of the host countries; the extent of exibility accorded to the host countries in setting policies to fulll such objectives; and investors obligations towards the host countries and vice versa. In this respect, the Report of the Trade Ministers of Eastern and Southern Africa following the COMESA/SADC meeting held in Cairo, on July 30, 2001 to prepare for the Doha Ministerial mentioned in paragraph 48 that . . . in any future work in this area, it would be necessary to ensure that the outcome will contribute to facilitating investment ows to their countries while preserving their policy space and exibility to pursue their national development objectives.28 The press release issued at the end of the consultative meeting attended by the Arab Ministers of Economy, Trade and Finance held in Cairo July 1718, 2001, stated that the participants could look at the possibility of participating in the negotiations on trade and investments if the following considerations are taken into account: (1) any agreement on trade and investment should have a structural framework similar to the GATS agreement; (2) the negotiations should take into account national economic policies and developmental needs; and (3) technical and nancial assistance should be provided to developing countries for capacity building; and investments should include transfer of technology, and to increase work opportunities. In his speech at the Doha Ministerial,29 the Egyptian Minister of Economy and Foreign Trade summed-up the Egyptian position with regard to Investment and Competition as follows: [the] study should focus on modalities and processes that improve FDI ows, at the same time maintaining exibilities for developing and least-developed countries to pursue their national development objectives. The Minister added: In this regard, before we agree to negotiate, we should agree on what it is we want to negotiate. This position of Egypt, stems from what was agreed upon by the Trade Ministers of Eastern and Southern Africa referred to above. (iii) Trade Facilitation. With respect to trade facilitation, Egypt supports pursuing the analytical and exploratory work tackled within the framework of the Council of Trade in Goods, and utilizing the experience of the relevant international organizations, such as the World Customs Organization (WCO) and others in the eld. While tackling the analytical and exploratory work, problems that confront developing countries in the area of implementation should be explored further and addressed, especially in the eld of activating and studying the provisions dealing with special and differential treatment and the technical assistance to be accorded to countries within the framework of the relevant agreements, such as the Agreement on Customs Valuation, Rules of Origin, Technical Barriers to Trade, and Sanitary and Phytosanitary Measures. It should however be noted that the press releases issued at the end of two separate meetings, the rst for the Arab Ministers of Economy, Trade and Finance held in Cairo on July 1718, 2001, and the second for Trade Ministers of Eastern and Southern Africa held also in Cairo on July 30, 2001, stated that the participants expressed a lack of conviction that, at this stage, WTO rules should be negotiated with respect to trade facilitation. In his speech at the Doha Ministerial,30 the Egyptian Minister of Economy and Foreign Trade asked, on the trade facilitation issue, for the following: a negotiated framework of
28 29 30

Supra note 26. WT/MIN(01)/ST/36, November 10, 2001. WT/MIN(01)/ST/36, November 10, 2001.

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general non-binding guidelines, coupled with a comprehensive and integrated effort in technical cooperation, nancial support and human and institutional capacity-building. (iv) Transparency in Government Procurement. With respect to government procurement Egypt seeks to avoid the discussion of matters that go beyond transparency, such as market access or dispute settlement.31 The scope of any new Agreement on Government Procurement should not cover services. It should be limited to the area of goods and applied only to procurement and tenders allowing for the participation of foreign suppliers. The transparency provisions should take into consideration the level of development in developing countries. Transparency in government procurement should not limit the right of a government to use any kind of tenders including limited tenders. The Government Procurement Agreement should not include any reference to issues falling beyond the WTO mandate, such as corruption or bribery. Lastly, the Agreement should include provisions for technical assistance, special and differential treatment for developing countries, including transitional periods, and higher minimum thresholds for tenders on which the provisions are to be applied. C. New Issues 1. Electronic Commerce Egypt would like to see the analytical work mandated to the four relevant WTO bodies32 pursuant to the Electronic Commerce Work Program adopted by the General Council,33 pursued further, and the educative process accelerated. Egypt believes that the commitment of the Members to continue the current practice of not imposing customs duties on electronic transmissions should be continued until the studies are nalized. 2. Trade and Environment Before the Seattle and Doha Ministerial, Egypt did not object to discussing trade and environment in the WTO, as long as the discussions did not go beyond the analytical work undertaken by the Committee on Trade and Environment. Egypt also believes that the Committee on Trade and Environment should: (1) take account of the developmental dimension while studying environmental issues, in order to achieve the objective of sustainable development, as well as to guarantee that no unnecessary environmental barriers impede developing country exports; (2) urge developed countries to supply more technical assistance to developing countries as stipulated in the Rio Declaration, before asking those countries to adopt and implement certain standards; and (3) deal cautiously with the concept of processes and production methods (PPMs) and ecolabeling programs since they could create unnecessary obstacles to developing country exports, including food items. In two separate meetings, referred to above, the Ministers of Economy, Trade and Finance from Arab and African countries, meeting in Cairo in July 2001, noted that the issue of trade and environment was not yet ripe for negotiations, that the WTO Committee on Trade and Environment should continue its work program, and that Members should
Egypt is not a signatory to the plurilateral Agreement on Government Procurement. These are the Council for Trade in Services, the Council for Trade in Goods, the Council for TRIPS and the Committee for Trade and Development. 33 WT/L/274, September 25, 1998.
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insure that environmental concerns would not be used as barriers to impede the ow of exports from developing countries. In his statement to the Doha Ministerial,34 the Egyptian Minister of Economy and Foreign Trade noted that Environment must not be a tool for protectionism. Any discussions or clarication of existing environmental rules within the WTO must take special care not to provide the opportunity for any member for a return to trade protection. In Doha the Members agreed35 to start negotiations on the relationship between existing WTO rules and specic trade obligations set out in multilateral environmental agreements (MEAs). They agreed that the negotiations shall be limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question, and that the negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question. Members also agreed that the Committee on Trade and Environment, in pursuing work on its agenda should give particular attention to certain matters, among them the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them. In the Doha Declaration the Members also recognized the importance to developing countries, in particular the least-developed among them, of technical assistance and capacity building in the eld of trade and environment. 3. Labor Standards Egypt opposes any linkage between trade and labor and is presently against discussing this issue in the WTO. The reason is that labor standards could be used for protectionist purposes to the particular disadvantage of developing countries. Egypt supports the conclusion presented in the Singapore Declaration which states that the International Labor Organization (ILO) is the competent body to tackle this issue.36 In his statement to the Doha Ministerial,37 the Egyptian Minister of Economy and Foreign Trade reiterated Egypts position in this regard, noting that on Labor Standards, we must reject, the use of labor standards for protectionist purposes. Hence, we reiterate the views expressed at the Singapore Conference that the ILO should remain the only organization in charge of this issue. The Doha Declaration38 provided as follows with regard to core labor standards: We reafrm our declaration made at the Singapore Ministerial Conference regarding internationally recognized core labor standards. We take note of work under way in the International Labor Organization (ILO) on the social dimension of globalisation. Egypt believes that this text maintains the ILO as the only organization in charge of labor standards, and thus this matter will stay outside the Doha Round of trade talks. 4. Domestic Industrial Tariffs The Egyptian government is aware that the reduction and elimination of tariffs on industrial goods could affect income from customs revenues, while not immediately increasing exports. Economists in Egypt are in agreement that increasing exports requires, in
WT/MIN(01)/ST/36, November 10, 2001. Doha Ministerial Declaration, WT/MIN(01)/DEC/W/1, November 20, 2001, reproduced in the Appendix to this book. 36 WT/MIN(96)/DEC, December 18, 1996. 37 WT/MIN(01)/ST/36, November 10, 2001. 38 WT/MIN(01)/DEC/W/1, November 20, 2001.
34 35

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addition to the liberalization of trade, improving the quality of local production, reducing its costs, increasing worker productivity, and improving marketing capabilities thereby enabling Egyptian products to compete abroad. The economists agree that this will require considerable internal effort coupled with sufcient assistance from abroad. The Egyptian government accepts the fact that the ultimate objective of the WTO is to liberalize international trade. Hence, the government agreed to the initiation of a new round of negotiations on industrial tariffs, provided that any agreement reached should include exibility provisions for developing countries, such as exemptions of some industrial sectors, longer implementation periods, transitional periods, and lower tariff reductions for developing countries. The statement of the Egyptian Minister of Economy and Foreign Trade to the Doha Ministerial39 sums up Egypts position concerning the subjects of the negotiations. He stated that: In Non-Agricultural Market Access, tariff peaks, escalation, and non-tariff barriers should take precedence; while maintaining a fair and differentiated treatment for developing and least-developed members. Egypt accepted the consensus reached and reected in the text of the Doha Declaration in this regard. Members agreed to negotiations that shall aim to reduce, or as appropriate, eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. The Declaration went on to say that product coverage shall be comprehensive and without a priori exclusions. The Declaration also provided that the negotiations shall take fully into accounts the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments. D. Egypts Strategy to Accomplish Its Objectives Egypt is trying to accomplish its objectives relating to the new issues by working in cooperation with other Members that hold the same views, especially other developing country delegations and groups, including the Arab countries, African countries, the G-15, the G-77. In fact, the position of Egypt and other developing country members at Doha was more exible than their positions at Seattle with respect to negotiations on the new issues. This happened as a result of other efforts to make this Conference successful, including the adoption of the Decision on Implementation Issues, and the acceptance by developed countries to enhance support for technical assistance and capacity-building wherever needed to insure the full participation of developing and least-developed countries in the negotiations on these new issues. IX. Effects of Regional Trading Arrangements on Egypt Egypt welcomes regional trade arrangements to the extent that they help to achieve more trade liberalization. Egypt has trade agreements with Arab countries (the Greater Arab Free-Trade Area or GAFTA) and some African countries (the Common Market for Eastern and Southern Africa or COMESA). It is also a party to the Euro-Mediterranean Agreement with the European Union. It is currently negotiating free trade agreements with the EFTA countries and is seeking a free trade agreement with the United States.
39

WT/MIN(01)/ST/36, November 10, 2001.

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Egypt has also signed a number of bilateral trade agreements to accelerate regional trade liberalization. Despite the fact that EgyptianArab cooperation is the oldest of these agreements, the steps taken are rather limited and implementation of the agreements is slow. Intra-Arab trade in the year 2000 represented only 8.4 percent of total Arab foreign trade in that year. Egyptian membership in COMESA and its agreement with the EU are rather recent and evaluating the results at this early stage is premature. Egypt is signatory to the Global System of Trade Preferences (GSTP), and Egypt exchanges tariff concessions with other signatories on a range of specied products. The members of this system are developing country Members of the G-77. This system has a limited effect on Egypts trade due to the fact that it involves a limited number of goods enjoying a rather small reduction in tariffs. Egypt believes that there is a need to adopt better rules and mechanisms to alleviate the adverse effects of regional trade arrangements, mainly potential trade diversion, especially with respect to the exports from non-member developing countries; and to ensure that non-member developing countries benet to a certain extent from the liberalization of trade resulting from those arrangements. Paragraph 7(b) of the Report of the Preparatory Meeting of the Trade Ministers of Eastern and Southern Africa (COMESA/SADC), held in Cairo on July 30, 2001 to prepare for the fourth WTO Ministerial Conference, states that the Ministers agree that regional integration initiatives are compatible with the multilateral trade system. In particular, it is imperative they ensure that there is coherence between commitments in the framework of regional integration and under the multi-lateral trade system.40 X. How Trade Policy is Developed in Egypt Responsibility for trade policy formulation in Egypt rests with the Ministerial Economic Committee, chaired by the Prime Minister, which drafts legislation to be introduced in the Peoples Assembly (the parliament) for approval. The Ministry of Foreign Trade implements trade policy, and coordinates implementation by other ministries and agencies. Inter-ministerial consultations are also carried out to assess the impact of major policy changes on various sectors of the economy. The Cabinet Policy Committee, which is headed by the President, establishes and monitors broad economic and social policy issues and sets guidelines for trade policy. The Economic Group of Ministers, which is usually chaired by the Prime Minister, is responsible for the coordination of rules and regulations governing trade and other economic activities. Informal advice is sought from academia and organized interest groups, including: the General Federation of Chambers of Commerce, the Federation of Egyptian Industries, the Egyptian Businessmens Association, and trade associations. Other civil society groups in Egypt, which are rather new and have limited membership, are not inuential and have a very limited role in formulating Egypts formal trade policy. However their role in Egypt is increasing slowly. Political parties, such as the National Democratic Party, which enjoys a large majority in the Peoples Assembly, and many small opposition parties with limited support, play their role inside the Assembly, discussing and adopting legislation.
40

Supra note 26.

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Newspapers, radio stations and T.V. stations, mainly owned and manned by the State although there are a few exceptions in recent years, enjoy a wide range of freedom of expression and are the main vehicles for promoting the views of individuals and groups, including civil society, so that their opinions are known by the public and policy makers. XI. Conclusion The multilateral trading system, as given effect by the WTO Agreement, brings many advantages, but also poses some challenges. It provides a predictable, transparent, rulebased trading system where decisions are taken by consensus, and small countries enjoy the same rights as larger ones. However, the scope of coverage of the WTO Agreement is wide and increasing. Complying with the terms of the WTO Agreement requires laborious efforts on the side of developing countries that often exceeds their limited nancial, administrative and technical capacities. Trade is a two-way street. Countries cannot concentrate only on efforts to increase their exports while doing their best to impede imports. Efforts to assist developing countries to improve their production and marketing capacities will result in improving standards of living in those countries and therefore the ability of their people to consume more goods, local and imported. It will require an honest and serious effort on the part of the Members if an agreement is going to be reached in conformity with the Doha Ministerial Declaration and the Decision on Implementation. It will be necessary to make concessions in favor of all Members, developed and developing, and to rectify the imbalances in the existing agreements in order to achieve success.