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Cablegate: Reports of Canada-Egypt Fta Talks Inaccurate


DE RUEHEG #2403/01 3641525
P 301525Z DEC 09

C O N F I D E N T I A L CAIRO 002403



E.O. 12958: DECL: 12/27/2019

REF: A. 09CAIRO2189 B. 08CAIRO01352 C. 09CAIRO2371 Classified By: Minister-Counselor for Economic and Political Affairs Don Blome for reasons 1.4 (b) and (d).
1.(C) Key points: -The Commercial Counselor at the Canadian Embassy in Cairo told us that Canada and Egypt have no plans for FTA talks, despite the GOE's public statements that such talks would occur. -He also told us that Canadian investment in Egypt was limited in part due to problems with the government bureaucracy, and that Canadian agricultural trade with Canada is harmed by standards-related barriers. ---------------------------------- No Egypt-Canada FTA on the Horizon ----------------------------------

2.(C) In a meeting between the economic, commercial, and agricultural sections of the U.S. and Canadian embassies in Cairo, Canadian Commercial Counselor John Broadbent dismissed talk of an Egypt-Canada free trade agreement (FTA). Despite Minister of Trade and Industry Rachid M. Rachid's public comments to Egyptian businessmen in November that he would begin FTA talks with his Canadian counterparts at the WTO ministerial meeting in Geneva in late November (ref. A), Broadbent told us that Rachid never requested a meeting with Canada and that no such meeting occurred. Broadbent says that he doubts Canada will open FTA talks with Egypt because of a lack of interest on the Canadian side.

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3.(SBU) Broadbent told us that Egyptian trade officials have viewed Canada as a back-door to reaching the U.S. market, and feel that boosting trade with Canada will expand their access to the U.S. ------------------------ A Tough Business Climate ------------------------

4.(SBU) told us that Canadian companies doing business in Egypt have had significant problems with contract enforcement and the GOE bureaucracy. Broadbent told us that companies "can't make a deal with (a ministry in) the government of Egypt and expect that the rest of the government will follow it."

5.(SBU) Broadbent cited the cases of Agrium and Methanex, two Canadian companies that have experienced difficulties with the Egyptian Parliament and local authorities after signing deals with Egyptian ministries (ref. B). Agrium, a fertilizer giant, signed a deal with three state-owned Egyptian companies and the Ministry of Petroleum for a $1.2 billion facility in Egypt. After pressure from local officials and Parliament, however, the Egyptian Cabinet canceled the deal in August 2008 and gave Agrium's tender to a Egyptian state-owned energy firm.

6.(C) Broadbent also told us that a Canadian oil company recently had drilling concessions it had agreed upon with the Ministry of Petroleum revoked by the Egyptian military without explanation. ---------------------------- Agricultural Import Barriers ----------------------------

7.(C) Broadbent told us that Canadian companies have recently had wheat shipments to Egypt rejected for failing to meet a 8.5% protein requirement, often falling just short at 8.1 or 8.2%. When Broadbent raised the issue with the GOE's Ministry of Agriculture, he says he was told by the GOE to just "mislabel the shipments like the Russians do."

8.(SBU) Canadian agricultural exporters to Egypt also faces barriers against importing cattle over a certain age and struggle with halal slaughtering and labeling requirements, which are imposed by the Egyptian Veterinary Service. Canadian lumber exports to Egypt also face standards-related import restrictions. ------- Comment -------

9.(C) The problems reported by Canadian companies investing in Egypt and exporting to Egypt echo problems faced by American companies. While the GOE's Ministry of Trade and Industry has talked up expanded trade agreements and doubling trade with several nations and blocs, particularly outside of its traditional trade partners in the EU and the U.S., its own lack of follow-through and problems coordinating with other ministries has slowed progress toward finding new export markets (ref. C). Scobey

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