Cablegate: Embassy Cairo

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DE RUEHEG #1793/01 2581435
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FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 3629
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

C O N F I D E N T I A L CAIRO 001793

SIPDIS

COMMERCE FOR VINEYARD, DEPT PASS TO USTR WILSON AND MOWREY

E.O. 12958: DECL: 09/15/2019
TAGS: ETRD ECON PREL PGOV EG
SUBJECT:TRADE MINISTER INTENT ON EXPANDING US-EGYPT TRADE TIES REF: A. CAIRO 1522 B. CAIRO 1550 Classified By: Ambassador Margaret Scobey for reasons 1.4 (b) and (d)
1. (C) Key Points: -- Minister of Trade and Industry (MOTI) Rachid Mohamed Rachid is engaging the USG on several fronts in an effort to deepen and expand bilateral trade relations. -- Rachid has requested meetings with Secretary Locke and USTR Kirk during his November 2-5, 2009 visit to Washington, DC. -- Rachid has written to USTR Kirk separately seeking agreement on procedures needed to complete QIZ area expansion to Al Minya and Beni Sueif in Upper Egypt. -- Rachid recently requested Ambassador's support in expediting USTR-MOTI agreement on a work plan for the US-Egypt Strategic Economic Partnership MOU signed in May 2009. Talking Trade -------------

2. (SBU) In the latest in a series of trade-related events featured prominently in the local press, Minister of Trade and Industry (MOTI) Rachid met with MERCOSUR ambassadors August 31 to reaffirm Egypt's commitment to a free trade agreement with the South American trade bloc, affirmed as African Group Coordinator for the WTO Ministerial meeting in New Delhi September 3-4 the need to expeditiously conclude the Doha Round, and discussed on September 8 with EU ambassadors Egypt-EU economic ties. Rachid has spoken frequently of efforts to expand US-Egypt trade ties, including his early August announcement of a revived US-Egypt Business Council (ref. A) as well as the ongoing "Strategic Trade Dialogue" with USTR (ref. b). Washington Visit -----------------

3. (SBU) Rachid in late August wrote separately to Secretary Locke and USTR Kirk advising both of his plans to travel to Washington, DC in early November and requested appointments with each during his visit. In a separate letter, Rachid invited USTR Kirk to participate in the informal African Ministerial meeting to be held in Cairo October 27-79, 2009. (Note: We have confirmed that the Egyptian Embassy conveyed the letters to Commerce and USTR. End Note.) QIZ Areas ---------

4. (SBU) In an August 23 letter to USTR Kirk, Rachid expressed his appreciation for USTR's designation of Al Minya and Beni Sueif in Upper Egypt as QIZ areas, but reiterated MOTI opposition to limiting qualified companies to those already producing in the two cities. Rachid explained that the MOTI's request to place QIZ areas in Upper Egypt was intended as a means of encouraging investment and greater business activity in this economically depressed part of the country. He said that preventing new companies and companies currently operating elsewhere from locating or expanding to these QIZ areas area "negates completely the objectives for which we requested the inclusion of Upper Egypt." (Note: Rachid has stated publicly that he hopes to add additional QIZ sites "all the way to Aswan." End Note.) Rachid also offered assurances that QIZ area expansion will not be to the detriment of U.S.-based industries. He also asserted that Egyptian authorities are adhering to the QIZ protocol, particularly in regard to trans-shipments and employment of non-Egyptian labor. Strategic Dialogue Action Plan ------------------------------

5. (SBU) In a letter received August 31, Rachid requested Ambassador's support in expediting USTR-MOTI agreement on a work plan intended to finalize areas of cooperation under a May 2009 MOU for a Strategic Economic Partnership on Trade-related and Investment Issues. He noted that meetings in early August between visiting USTR officials and the MOTI has been "very constructive and fruitful" but the MOTI is still waiting for new draft work plan from USTR. Rachid said that the MOU's deadline for this process was about to expire. Comment -------

6. (C) Rachid has been tenacious in advancing an expanded trade relationship with the US but may not be fully informed on the status of some initiatives. One current impediment to movement on QIZ areas, for example, is the MOTI's QIZ office's failure to provide USTR with a revised list of qualified companies for the two Upper Egypt sites. During their August 2-3 meetings with MOTI advisors (ref. B), USTR officials indicated that, due to a number of factors, including differences over treatment of labor, investment and environment issues, it would be 6-8 weeks before new draft action plan would be provided. Rachid appears genuinely committed to achieving progress in US-Egypt trade ties, although an FTA "remains off the table." Scobey

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