Ambassador Margaret Scobey’s Roundtable with Senior Egyptian Editors Upon her Return from a Reverse Trade Mission to the U.S.

Ambassador Scobey: Thank you all for coming. Really, I haven’t had a chance to sit down with the press in a few weeks. And I thought I would use as an excuse the fact that I just made a trip to the United States on behalf of Egypt and America, and I wanted to tell you a little bit about that trip, but really, I’m happy to talk about anything or to answer any question you have about anything on your mind.

This was a trip organized primarily by an organization called the Business Council of International Understanding, working with the Department of State. They organized a group of nine American ambassadors from the Middle East, and the goal was in support of president Obama’s National Export initiative. Just as Egypt and the Egyptian President has announced the need to increase exports from Egypt, President Obama has also identified increasing US exports as an important goal for his administration. So, I traveled with a group of US ambassadors. There were two groups: in my group there was me and our ambassadors from Kuwait, from Qatar, from Oman, and from Tunisia. We visited New York, Milwaukee, Chicago and Houston. We were talking about opportunities to do business in Egypt.

They were each talking about their countries, but my goal was to encourage American businesspeople to think about exporting to Egypt, to think about looking at Egypt as a place to do business. I was able to describe to them the efforts Egypt has made over the last several years to increase the ease of doing business for foreign companies and foreign investment in Egypt, their efforts to cut red tape, and to make it easier to import to Egypt, and as well the various sectors of the Egyptian economy that the government has identified for future public-private partnership investment, such as transportation, communications, health, and a variety of other areas.

I also explained that the United States government itself has a capacity to help encourage exports from United States to Egypt, and frankly, to other countries as well, through government programs such as the Trade and Development Agency, which is part of the Department of Commerce, as well as the Overseas Private Investment Bank, and the Export/Import Bank that will sometimes help finance exports to other countries. I frankly found a lot of interest in Egypt from American companies. I think they recognize that Egypt’s growing economy is attractive to them. They understand that Egypt is a very large market. You are a country of 80 plus million people and growing, and you have a good position geographically, not only for your marketing here, but your neighboring countries. And they understand that you are a very diversified economy, you don’t rely on only oil and gas, but you have an oil and gas sector, an agricultural sector, and industrial sector, services sector. This represents an interesting set of opportunities for foreign exporters and investors.

And, as some Egyptians have said “Welcome; this is a good idea–but of course Egypt is interested not only in exports to Egypt, but also in investment in Egypt.” What I can point out is that when American companies have been successful exporting to Egypt, and get to know the market here, it sometimes leads to investment, because they say: “well, why should we transport this stuff all the way from the United States to Egypt if we can make it here and maybe reach a larger market?” You see a number of American companies that have done that, so exports in some cases is a first step to something else. but In any case, there is a healthy trade balance. We are also going to be doing more.

This was a very short account of my trip. It’s part of a broader effort to expand commercial activities with the government of Egypt in trade activities. Coincidentally. next month there is going to be a trip from our friends of the American Chamber of Commerce in Egypt. They are going to the United States as well, in November. And then in March of next year, Ms. Keshishian at the Department of Commerce will be bringing a large trade mission both to Morocco and to Egypt, of businesses that want to come here. In addition, throughout the year, you bring smaller groups of Egyptian business people to various sector exhibits and demonstration or trade shows in the Unites States.

We do see the commercial trade relationship between the United States and Egypt as a very important part of our relationship; we have high level discussions between our trade representative and Minister Rashid from time to time. And it is our desire to minimize the differences between us in our two trading regimes and to increase mutual trade between us. As I said, we got a lot of interest in Egypt in the audiences that we met with. I don’t have any deals to report, but we have some follow up work to do. I’m hopeful that perhaps a few new companies that had not thought about exploring the Egyptian market will do so, and that we can increase this trade relationship person by person.

So that is in a very small nutshell my visit to the United States. The other big issues while I was there was just listening about our own elections and following the debates there on a lot of things, which is exciting and it’s always fun as an American to be at home at election time.

I’m happy to answer your questions on any other issues that you may have.

Q: I know that there is always a quota of export from each country to the States, a quota for export…

Ambassador Scobey: That is not true, there used to be a quota, but that was on textiles and that was a global quota, but that’s gone now. It’s expired. Our market, the Unites States has proposed the benefits of free trade, of keeping our markets open to each other and allowing countries that have certain capacities and certain talents to be able to go with that and others to pursue other things, but let it be a truly level playing field. Most of our efforts in the World Trade Organization have all been designed to keep the playing field as level as possible, although there are challenges many countries have.

Q: Inaudible

Ambassador Scobey: The question was, “which fields are the Americans interested in?” This is quite anecdotal, because it’s based simply on the people I talked to, not a scientific survey, because I think you could find a number of American exporters interested in just about anything. Relatively few American companies export because our domestic market has been so big that many companies have been very successful only limiting themselves to our own market. We are a big market, but we know, and our President knows, and I think our country knows, the value of foreign trade and how it strengthens us in our economy.

For example, a company was saying to me: “We think this would be a great product for Egypt.” It was a technique and a system related to agricultural productivity, and it was a very controlled way to grow seeds, not food, but the seeds, so you can make your own food. They have developed this process where you can rapidly produce a potato seed. They said Egypt now imports all its potato seeds from, I think, Europe, and here is a system that would allow Egypt to make its own seed. It was a system that would do it under a controlled environment. If it would take six weeks to plant a potato to create a seed naturally, this is a system that allows you, because of the light and the way they feed it, to do it maybe six times as fast, so you could produce more. I thought, “Egypt cares about food security, very much. Egypt cares about expanding its agricultural base– here is a way to replace an import with a nationally produced thing!” So, we are going to follow up on it and make sure that they meet up with potential Egyptian partners who might buy it. It sounded like a good thing to me.

One of the companies wanted to sell a new technology for cleaning water, and I didn’t understand this at all, but we are going to follow up on it, because you don’t have to build a whole water treatment plant, but it was a biological way to clean water for community usage. Another one was a company that has created a system for creating large concrete building panels, structurally strong building panels. They are exporting the machinery so that you can make these. It was interesting.

These are relatively small and medium sized US companies that don’t now export around the world, but we also went to talk to big companies. We spent a day at Boeing, and of course Boeing has a long term relationship with Egypt Air, as does Airbus, and they are very interested of course in the Egyptian market. I got to welcome earlier this year the first 777 Boeing aircraft to the Egypt Air fleet.

I should also say that the purpose of my trip was to encourage American companies to export. The US does welcome exports from other countries. In addition to the QIZ regime that is available to some factory activities in Egypt, there is also the generalized system of preferences, which lowers US tariff rates on a wide variety of possible exports from Egypt to the Unites States. We found last year when our our Department of Commerce colleagues did workshops in Alexandria, Cairo, and in 10 Ramadan, that a lot of Egyptian exporters were not even aware of this preference, and that with just a little help, they could identify and not only save money, but they could make their products more competitive because they pay less tariff if they can document them in a certain way.

Q: Arabic.

Ambassador Scobey: This is an issue that gets asked very frequently, and I think the most definitive statement was provided several months ago, when our US Trade Representative, Ambassador Kirk was here for his meetings with Minister Rashid. He had to say that at this time the United States is not entering into negotiating any new Free Trade Agreement (FTA). Although President Obama recently, several months ago, expressed his intention to work with the US congress on the ratification of previously negotiated agreements, we have previously negotiated with Colombia, South Korea, and one other. He expressed an interest in trying to get those agreements ratified.

For us, an FTA is a treaty, and for us a treaty has to be approved by the Congress of the United States, by the Senate, and as I said, at this point we are not entering into any new negotiations. Politically I have to tell you, if you have been to the United States, these issues are not very popular right now, people are worried about our own employment problems, and jobs in particular, because rightly or wrongly, there is some concern that FTAs mean more jobs go outside the United States. It’s not true, we believe—I mean some jobs do go, but some new jobs come, so there is a strong case to be made for them.

I wanted to add, that even though we may not be pursuing an FTA, we do want to have a very open and serious discussion on trade issues. There are a number of things we can talk about. As I said, we are trying to improve the operations of the new QIZd that are in Menya and Beni ElSweif, so that they can be more effective. We also want to have working groups on ways to identify and reduce non-tariff obstacles in other ways. If we can finds things that are preventing our mutual exports to each other from getting in to each other’s markets, we want to identify and try to eliminate the obstacles. We also want to have a dialogue on Intellectual Property Rights. Egypt has made enormous progress in being able to enforce its respect for IPR, but there are still a few problem areas that we want to talk about.

Q: Arabic.

Ambassador Scobey: There are a number of them made. Egypt has made a lot of progress in protecting software, but there are still problems on text books. for example. Text books get pirated, where you have a text book maybe published in the United States and people will make Xerox copies of it and sell it or parts of it–(it’s a publication and it’s copied without permission). We have done workshops here, and I know that the Egyptian customs authority and others are trying to address the issue as well of fake products being imported into Egypt. These are trade mark—you can bring a piece of clothing that is marked with a high end brand’s label, but in fact, it’s not that brand. We have done workshops with the folks to help share with them the techniques for better being able to identify this stuff. A lot of the challenge here is the enforcement, and your enforcement is decentralized. Different ministries have different enforcement obligations. but don’t necessarily always have strong resources to enforce. It’s an issue that we know the government of Egypt takes seriously, but there are still some challenges for full enforcement.

Q: Arabic.

Ambassador Scobey: The Egyptian consumer is being fooled sometimes. I think as Egypt itself moves more into a knowledge-based economy where it’s your young engineers and software experts and designers and movie makers and writers, they will also be disadvantaged, unless there is a strong enforcement regime in place to protect their rights, not only in Egypt, but globally.

Q: Arabic.

Ambassador Scobey: I think as well of the fabulous movies and music the Egypt has produced. So what happened to their movies? They were just bought or taken away, and so all these wonderful actors and directors and actresses that contribute so much and they get very little if anything, because their rights weren’t protected, so Egypt has a huge interest in this area.

Q: Arabic.

Ambassador Scobey: Not in any great detail, but I can tell you from time to time in these large audiences, people follow the issues here, and they know Egypt is having an election, and so they wonder “what about the future of Egypt?” What can I tell them? I try to share with them the process, Egypt’s long history of stability, and the commitment of the government to assuring stability. Egypt is a big and important country, so people do ask questions. We talked a little bit about democracy and the challenges of political reform in Egypt.

Q: Arabic.

Ambassador Scobey: This was mostly focused on trade.

Q: How do they see our elections?

Ambassador Scobey: I think here I need to go into the US government’s point of view on this, and it’s shared by many in the United States. As I said, the US sees Egypt as a major leader, a major influence in this region, and certainly in the Arab speaking world, you have been a pioneer with social, political and economic reform. The United States strongly supports in Egypt and around the world, a universal standard of respect of human rights and (inaudible) democracy. In regards to Egyptian elections, certainly we have no preference as to the outcome; the only thing we have ever encouraged is the issue that the process be free and fair and transparent.

Yes– we have encouraged the consideration of international monitors because it has become very much a practice around the world, and we think it builds confidence in the process. It is something that countries should be increasingly proud of to have foreign visitors to their elections. In addition to that, Egyptians will decide this for themselves. There is equal importance of domestic monitors, of empowering Egyptian citizens themselves to have an opportunity to observe the electoral process. I know that candidates get to do that, but there are a number of civil society groups that also hope to train monitors and to put them out to build confidence in the process.

Q: Arabic.

Ambassador Scobey: Egypt is an important country. What happens here is important, not only to Egypt, although that’s the first and foremost, but the region.

Q: Arabic.

Ambassador Scobey: The United States is still deeply engaged in working with the parties– with the Israelis and the Palestinians– to get them back into direct negotiations. The US has long concluded that the solution here is a comprehensive peace for the region that includes two states. Israel needs security; Palestinians need a viable, independent state. The only way they get there is through direct negotiations. We are working with the parties to try to create the circumstances so that they can get back together and to do that.

Q: Arabic.

Ambassador Scobey: The US was disappointed with the renewal of settlement activity, and our position has not changed. We believe their continued settlement activities is not a legitimate process. We are working with both parties to recreate the circumstances where they can get together. We see no alternative to direct negotiations– it is the only way peace has been achieved in this region. Nobody can impose conditions on these two parties– they have to get there on their own– but support from their friends: the US, Egypt, Europe, and friends in the region, we think that support to get them back to direct negotiations is important.

Q: Arabic.

Ambassador Scobey: I think we all read about this in the newspapers and heard about it. It was clearly a very disturbing development. Our President took very quick actions to mobilize our entire interagency government process to secure our population from this threat, but it is a global challenge. We believe this originated from Al Qaida, the Arabian Peninsula, from Yemen. It’s still clear that there are elements wanting to cause great damage to innocent civilians, and it demonstrates once more how we work together in this region. Those who reject absolutely the use of terror and we will continue to work very hard with our friends from this region and elsewhere to address this threat, this challenge.

Thank you all very much.

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