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Egyptians
Wake Up to Controversial Israeli Trade Deal
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Olmert
(L), Rashid (C) and Zoelick sign the QIZs agreement
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CAIRO,
December 14 (Islamonline.net) – The signing of a trade
agreement by Egypt and Israel on Tuesday, December 14, has placed the
Egyptians between a rock and a hard place, leaving them wondering
whether they should really listen to the “government reason” to
revive a sluggish economy or oppose the change of heart and the
fait-accompli policy apparently imposed by the United States.
A
majority of businessmen, no wonder, rejoiced at the Qualified
Industrial Zones (QIZs) agreement, inked by the onetime foes with the
United States, becoming the first strategic partnership accord in trade
and industry since the historic 1979 peace treaty.
Lay
people and their representatives in the People’s Assembly (the lower
house of parliament), on the other extreme, rejected the “hugs and
kisses” exchanged by Cairo and Tel Aviv, saying they cannot tolerate
seeing their motherland making comprises every now and then at
Washington’s pleasure.
The
December 5 release of Israeli spy
Azzam Azzam came as a bitter disappointment for them and now, as they
are left outside the political landscape, question the QIZs
effectiveness and are increasingly convinced that Israel was the main profiteer.
Singed
by Egyptian Foreign Trade Minister Mohammad Rashid, Israeli Deputy
Prime Minister Ehud Olmert in the presence of US Trade Representative
Robert Zoellick, the QIZs deal will help, in a nutshell, Egyptian
products with Israeli components enter the coveted US market duty
free.
In
other words, companies in seven designated Egyptian industrial zones
can export to the United States without duty or quota restrictions if the goods contain at least 11.7
percent Israeli input.
Rashid
described the agreement as a positive step toward “regional
prosperity and in achieving a just and comprehensive peace in the
Middle East.”
“It
goes far beyond the ... business and the trade. This is another
statement by two major forces in the Middle East
that they are looking forward to greater cooperation,” added Olmert
in statements carried by Agence France-Presse (AFP).
QIZs
Merits
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Egyptian
journalists protest at the entrance of their union against the
Egyptian, Israeli and US trade agreement
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QIZs
fans brag about the great economic benefits in the agreement, which
copes with Egypt’s political stance as the key peace sponsor in the troubled
Middle East
region.
Textile
sector, which would benefit the most by the agreement, would be harmed
by the cancellation of the quota system with the implementation of the
General Agreement on Tariffs and Trade (GATT) in January 2005
and in light of the fierce competition with products of southeast
Asia.
The
government puts the American market share of Egyptian textile exports
at 46 per cent. It is expected that Egypt’s textile and ready-made garment exports to the
US market would up to US $4 billion over the coming five years.
The
QIZs advocates further argue that selected industrial zones
(representing roughly 60 percent of the country’s industrial
installations) would definitely attract more foreign investments to
the country estimated by the government at $5 billion over the coming
few years.
The seven zones targeted by the agreement include four in the Greater
Cairo area, two near the Mediterranean port
of Alexandria
and one in the Suez Canal city of Port Said.
The
QIZs supporters further argue that some 150,000 job opportunities will
be spared as they are threatened by the annulment of the quota system
pursuant to the GATT, let alone generating around 250,000 jobs for
Egyptians.
QIZs
is further the first step toward the establishment of a Free Trade
Zone with the United States on a par with the Egyptian-European partnership agreement.
According
to statistics of the Egyptian Foreign Trade Ministry, the US
is Egypt’s first importer and second exporter with 39 and 25.2 percent
respectively.
"QIZs
will be instrumental in Egypt's efforts to encourage growth, increase exports and attract foreign
direct investment. The QIZs agreement is expected to deliver tangible
benefits to ordinary Egyptians in the form of job opportunities, an
improved standard of living and peace," the Egyptian government
said in a statement carried by Reuters news agency.
Saving
the Yarn Industry
Businessmen
claim that the Israeli component would not be a problem for Egyptian
yarn and textile companies, because Egypt
did not import yarn from Israel, adding that the Israeli component would be limited to labels, packs
and hangers.
They
further argued that thanks to this small Israeli component, the
industry would save up to 78 percent of taxes levied on some
commodities in addition to an average of 33 percent for the clothes
industry.
Critics
say that Cairo
had resisted the US-backed deal for several years, but its hand was
forced by new US
textile import regulations which will come into force on January 1
that could have a dealt a knock-out blow to Egypt's key sector.
The
new regulations could have cost $479 million in lost Egyptian exports
and the scrapping of 200,000 jobs, according to Egypt's Finance Minister Youssef Boutros-Ghali.
Egyptian
businessmen's association president Gamal El-Nazer said the free-trade
zones were the only means to rescue the textile sector and stimulate
direct foreign investment, which reached a low of 400 million dollars
in 2003.
QIZ
Demerits
QIZs
opponents, on the other hand, are made up of different cross-sections
of Egyptian society, including lawmakers, economists and
anti-normalization activists.
Questioning
the timing of the agreement, they wonder, if it would really carry a
prosperous future following a period of boom and bust, why was it put
forward now though it has been put on the back burner since 1996?
They
consider the deal as a realization of the Middle East dream of Israeli
Labour Party leader Shimon Peres, who hoped to see Israel as a melting pot for Arab economies.
As
far as economy is concerned, they said the government is misleading
the public into believing that the implementation of the GATT would
kill the yarn and textile industry stone-dead, noting that the
Egyptian product would not live up to the cut-throat competition from India
or giant China.
The
government is ballooning the Egyptian textile exports to the US
when it put them at $600 million, while FY 2004-03 estimates showed
that Egypt had exported only $613 million in commodities to the entire world,
they added.
According
to the statistics of the Ministry of Trade, they maintained, the
proportional distribution of textile exports in 2003 put the EU on the
top with 36 percent and the US second with 28 percent.
They
are also asking naively why has not the government benefited from the
Egyptian-European partnership or the agreements with the Common Market
of Eastern and Southern Africa (COMESA) just to keep the wolf from the
door?
It
is also feared that the agreement would open the door wide before
Israeli spying services, citing the case of Azzam, who was working in
the field of textile manufacturing in the 10th of Ramadan
satellite city and convicted for spying mainly on the country’s
industrial sector.
Journalists
and activists received the agreement with a peaceful demonstration
before the Egyptian Press Syndicate, holding placards reading “Egypt’s Workers Not For sale”.
The
protesters said the “script” for the industrial zones was
American, the management Israeli, the finance from the Gulf and only
the workers Egyptian.
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