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Cablegate: Rachid Reviews Trade Ties, Upcoming Trip to U.S

VZCZCXYZ0017
PP RUEHWEB

DE RUEHEG #1932/01 2811717
ZNY CCCCC ZZH
P 081717Z OCT 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 3809
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

C O N F I D E N T I A L CAIRO 001932

SENSITIVE
SIPDIS

USAID/ME, STATE FOR USTR, ALSO FOR F, NEA AND EB

E.O. 12958: DECL: 10/08/2019
TAGS: ETRD ECON PREL EFIN EAID EG
SUBJECT: RACHID REVIEWS TRADE TIES, UPCOMING TRIP TO U.S. REF: A. CAIRO 1793 B. CAIRO 1550 C. CAIRO 1522 Classified By: Ambassador Margaret Scobey for reasons 1.4 (b) and (d)
1.(SBU) Key Points: -- Minister of Trade Rachid plans to spend November 17-19 in Washington and New York and hopes to meet with USTR Kirk and Secretary Locke. He will attend a New York event aimed at promoting U.S. business interests in Egypt. -- Rachid is interested in exploring ways to increase U.S. wheat exports to Egypt and has offered to meet with major U.S. exporters of agricultural commodities while in the U.S. -- Rachid remains unsatisfied with the agenda proposed by USTR for a strategic economic partnership. He wants Egypt's concerns - primarily areas of technical assistance - reflected in the work plan. MOTI senior advisors subsequently advised that they continue to regard the latest USTR draft work plan as a basis for agreement and will provide comments and suggested changes soon. -- Septel recounts Ambassador's conversation with Rachid on the bilateral relationship.

2. (SBU) The Ambassador and Minister of Trade and Industry (MOTI) Rachid Rachid met September 29 to discuss his upcoming trip to the U.S., now scheduled for November 17-19, the formation of the Business Leaders Forum (BLF), and the latest developments in USTR-MOTI efforts to agree on an action plan for a Strategic Economic Partnership on Trade-related and Investment Issues. Agriculture, Commercial, and Economic Counselors accompanied the Ambassador. ---------------------- Rachid's Visit to U.S. ----------------------

3. (SBU) Rachid explained that the postponement of his U.S. trip originally scheduled for early November was due to the timing of two other events requiring his presence: the ruling-National Democratic Party (NDP) conference on November 3 and the November 6 Forum for China-Africa Cooperation (FOCAC) at Sharm al-Sheikh. He added that, as part of his outreach to U.S. companies, a day had been added to his trip for "a big business event" in New York. Rachid welcomed the Ambassador's suggestion that while in Washington he meet with EEB U/S Hormats. ---------------------- Business Leaders Forum ----------------------

4. (SBU) Rachid noted that he had met September 28 with the Egyptian membership of the proposed Business Leaders Forum (BLF) (ref. b) and added that senior members will be accompanying him to the U.S. The Ambassador said that Coca Cola, which has taken the lead in engaging the U.S. private sector on the initiative, had recently reported favorable replies from U.S. companies to a letter soliciting interest in BLF membership. Formation of the U.S. membership to the BLF, however, would not likely be completed in time for a proposed inaugural meeting during Rachid's November visit. The Ambassador suggested that the trip's postponement may allow sufficient time for the MOTI and Department of Commerce to agree on the latest draft MOU supporting the BLF. (Comment: A signing ceremony with Secretary Locke and Rachid during the visit would offer an alternative means of highlighting the BLF than the previously planned but now highly unlikely inaugural meeting. End Comment.) ---------------------- Bilateral Trade Issues ----------------------

5. (SBU) Rachid touched briefly on the lack of progress on expanding Qualified Industrial Zones (QIZ) to Upper Egypt, specifically the current impasse with USTR (ref. a.). He noted that he had raised the issue with USTR Kirk during September 3-4 WTO meetings in New Delhi. Rachid said that he had spoken to President Obama and NEC Director Summers on the subject during Mubarak's visit to the U.S. Rachid asserted that President Obama was aware of the issue and supported it.

6. (SBU) The Ambassador asked for the MOTI's initial opinion of the latest USTR draft work plan for the Strategic Economic Partnership. Rachid replied that it "needs some meat on it." His senior advisor, Dr. Samiha Fawzy, interjected that her comments on the first draft could be applied equally to the most recent one. (Note: Fawzy told Econoffs October 7 that the MOTI continues to regard the USTR draft work plan as the basis for an eventual agreement and will provide USTR with comments and suggested changes in 7-10 days. End note.) (Comment: A visiting USTR team reviewed a first draft with MOTI senior advisors August 2-3 (ref. b). Discussions at that time and MOTI comments provided August 5 indicated that the MOTI is placing greater emphasis on securing technical assistance in specific areas than in establishing a formal mechanism for advancing a long-term dialogue on trade-related and investment issues. End Comment.)

7. (SBU) Rachid said that given the impact of the global financial crisis, deficit spending, and other issues before the Congress, he expected "a bit of wait and see" before the U.S. Administration could provide greater clarity on its trade policies. With "obviously not enough support for USTR to move," Rachid said he wondered "if USTR is the right place to focus on trade" at this time. Rachid said he still wants to continue the bilateral dialogue on trade issues, but prefers a greater emphasis on technical assistance in areas that will advance bilateral trade, such as IPR, standards, legislative reforms, and trade facilitation. (Note: See para. 9 for possible USG funding for much of the technical assistance requested. End Note.) ---------------- U.S. Wheat Sales ----------------

8. (SBU) The Ambassador advised that, due to a recent change in regulations governing commodity purchases through Cash Transfer Programs, it is no longer required that a portion of U.S. wheat purchases be shipped by U.S. flag vessels. Rachid said that Egypt "would definitely want to buy more U.S. wheat" but purchases are made through a competitive bidding system and the higher cost of shipping U.S. wheat has been an issue. He welcomed the change and also expressed interest in exploring other ways of increasing U.S. agriculture commodity purchases, such as through investment in silos and other infrastructure. He offered to meet with international grain exporters during his U.S. visit. --------------- U.S. Assistance ---------------

9. (SBU) Comment: USAID has funds to enable the USG to provide much of the assistance that MOTI is requesting, both from existing programs as well as from a new program designed to support the USTR-MOTI negotiations. In the customs area, for example, USAID can support GOE efforts to update the Executive Regulations and start a pilot project for an electronic "Single Window" which would allow importers and exporters to deal with one portal and handle all the different ministries that control trade. USAID can also provide technical assistance allowing the GOE to harmonize Egyptian standards and regulations in two priority sectors: textiles/garments and cosmetics/detergents. It can also help the GOE strengthen IPR enforcement generally, but most importantly with respect to border measures. (Note: Egypt imports most of its counterfeit goods.)

10. (SBU) With respect to internal markets, USAID will be able to help the GOE strengthen governance laws and procedures, making it easier for the GOE to deal with deceptive advertising, register companies, fight counterfeit medicines, and improve food safety, all of which provide opportunities for the sale of U.S. goods. Experts from USDA are also helping MOTI to improve food standards, while the Department of Commerce is supporting the development of a highly desirable law on franchising that will open up market opportunities to American firms.

11. (C) Rachid has been persistent in pressing for greater U.S. engagement on bilateral trade, his planned visit to the U.S. being his next effort. Although his enthusiastic public launch of the Business Leaders Forum (BLF) and naming of its Egyptian members was premature (ref. c), U.S. private sector interest in the BLF appears to be growing, offering greater promise that it will become a viable means of strengthening and expanding the U.S-Egypt commercial relationship. Rachid's personal interest in helping to stem the decline in U.S. grain exports to Egypt is also welcome. USG-GOE direct talks on other aspects of the bilateral trade relationship, however, have revealed significant differences in perspective on how best to move forward. Rachid's signing of the Strategic Economic Partnership framework agreement with USTR in May 2009 strongly suggested a serious GOE commitment to a long-term dialogue on standard trade-related and investment issues. Subsequent discussions and exchanges of documents, however, indicate that the MOTI currently considers specific technical assistance -- with tangible and more immediate results -- a greater priority than a typical bilateral trade dialogue. The two approaches, however, need not be mutually exclusive. The Strategic Economic Partnership work plan, by better incorporating -- if possible -- ways to address MOTI immediate interests, may draw the GOE into engaging more seriously in a formal bilateral dialogue on trade and investment which will ultimately help in meeting Egypt's longer term economic goals. Greater clarity on respective USG and GOE objectives and preferred approaches -- particularly in the lead up to Rachid's visit -- would help advance the bilateral trade and economic dialogue. Scobey

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