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Cablegate: Update On U.S.-Egypt Strategic Economic Dialogue

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DE RUEHEG #0245/01 0561157
ZNR UUUUU ZZH
R 251157Z FEB 10
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 0417
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHEG/AMEMBASSY CAIRO
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC

UNCLAS CAIRO 000245

SIPDIS
DEPT FOR NEA/ELA
DEPT PLEASE PASS TO USTR/SFRANCESKI

E.O. 12958: N/A
TAGS: ECON ETRD EG EAID EAGR EINV
SUBJECT: UPDATE ON U.S.-EGYPT STRATEGIC ECONOMIC DIALOGUE

REF: 10CAIRO68; 09CAIRO2172

1. (SBU) Key points:

-The U.S.-Egypt Strategic Economic Dialogue was launched in 2009,
and the USG will have to overcome weak GOE inter-ministerial
cooperation to move forward on the dialogue's goals in 2010.

-The key U.S. objectives in its economic relationship with Egypt
are deepening bilateral trade and investment, helping Egypt to
improve its domestic and international commerce, increasing U.S.
exports to Egypt, supporting the Qualifying Industrial Zones (QIZ)
program, and helping Egypt to improve its IPR climate and reduce
non-tariff trade barriers, particularly in agricultural products.

-The U.S. interagency strategy to meet its objectives includes
gathering key GOE stakeholders, offering technical assistance where
appropriate, and leveraging visits by high-level USG officials and
by working-level officials from the US and the region to move the
process forward.

Overview of Strategic Economic Partnership

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2. (SBU) The dialogue with the GOE is built upon the Plan for a
Strategic Economic Partnership on Trade-Related and Investment
Issues signed by United States Trade Representative (USTR) Ron Kirk
and Egypt's Minister of Trade and Industry (MOTI) Rachid M. Rachid
in Washington in May 2009. In November 2009, U.S. and Egyptian
private companies agreed upon the creation of a Business Leaders'
Forum endorsed by Min. Rachid and Commerce Secretary Locke, and
Min. Rachid and USTR Kirk finalized a work plan for a Joint Forum
on Trade and Investment.

3. (SBU) Since finalizing the work plan, progress has been slow,
largely because of the weak inter-ministerial cooperation on the
part of the GOE. For this reason, the USG will have to take the
lead in moving forward to advance our key objectives in our
bilateral economic relationship with Egypt, which are as follows:

Deepening the Bilateral Trade and Investment Relationship

4. (SBU) In our engagement with Egypt in a strategic economic
dialogue, we seek to deepen bilateral trade and investment. Amidst
the economic crisis in 2009, U.S.-Egypt bilateral trade fell to
$7.3 billion, a decrease from $8.4 billion in 2008. There have,
however, been a few strategic commercial successes, including the
recent $650 million Boeing contract for the purchase of eight 737
aircraft and the $50 million Hill International contract to manage
the construction of the new Egyptian Grand Museum.

5. (SBU) We seek to expand our exports to Egypt, and to work with
Egypt where appropriate to help it achieve its own ambitious goals
of doubling exports and improving domestic commerce in the coming
years. We also hope to achieve expanded trade in services,
including promoting the development of Egypt's logistics and
distribution, while liberalizing trade in U.S. services, including
franchising. We are also looking to improve labor and
environmental standards in Egypt.

Improving IPR

6. (SBU) Building on recent successes in improving the intellectual
property rights (IPR) climate in Egypt, it is important that we
identify and address remaining areas of concern. Egypt remains on
the Special 301 Watch List as much remains to be done to improve
copyright protection for US music, film and books in Egypt.
Copyright is an area of mutual interest as Egypt - historically a
center of culture in the Middle East -- has experienced economic
losses due to IPR infringement. We should focus on building on this
mutual interest, and be sure to acknowledge the fact that the GOE
has been working with IPR stakeholders in copyright and publishing,

and we should encourage the GOE to do more.

7. (SBU) We will continue to work with Egypt on PTO and USAID
training and capacity-building programs. These include economic
court judges training, assistance in finalizing a new Border
Measures Law, and best practices workshops and visits with
enforcement officials to improve Egypt's border measures against
counterfeit goods, its patent and trademark implementation, its
pharmaceutical registry, and its enforcement of laws against
pirated books, music, and film.

Increasing Agricultural Trade

8. (SBU) Another major goal is increasing U.S. agricultural
exports, by seeking Egypt's cooperation in liberalizing imports of
beef products, seed potatoes and poultry parts. The US is also
seeking Egypt's cooperation in ending 100% inspection and testing
of agricultural containerized shipments. Finally, the US is
encouraging Egypt to pass a new bio-safety law that takes a
science-based approach to agricultural bio-technology.

QIZ

9. (SBU) During AUSTR Gail Strickler's December 2009 visit to
Cairo, she energized both MOTI and the private sector when she
reiterated our commitment to the QIZ program and raised the
possibility of including additional areas and factories. Post
would like to aggressively move beyond the current impasse over
fairly modest technical issues (ref. A) to embrace the original
goals of the QIZ program: Strengthening the Egyptian-Israeli
political relationship through closer economic ties and promoting
stability within Egypt through the creation of jobs and economic
opportunity. To this end, we would like to explore ways to quickly
work with the GOE to improve this valuable preference program,
while ensuring that proper oversight of the program continues.

USG Strategy

10. (SBU) With an interagency process led by USTR and including
USAID and the Departments of State, Commerce, and Agriculture, we
will work with MOTI to help overcome the GOE's weak
inter-ministerial cooperation by bring key GOE stakeholders
together to move forward on our main objectives. Where necessary,
we will also offer technical assistance to Egypt through existing
USAID, Patent and Trademark Office (PTO) and other USG programs to
support specific goals.

11. (SBU) We understand that USTR Kirk is planning a visit to Cairo
in March for meetings. We recommend that USTR Kirk use the visit to
advance the goals outlined above in high-level meetings with the
GOE. Following his trip, we suggest that USTR build on the momentum
gained in our economic dialogue to send working-level experts and
tap into existing USG in-country officials to make progress on our
key objectives with inter-ministerial GOE decision-makers.
SCOBEY

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