USTR - Remarks After Signing of the Qualified Industrial Zone Agreement by Rachid Mohamed Rachid, Minister of Foreign Trade and Industry, Egypt, Edud Olmert, Deputy Prime Minister and Minister of Trade, Israel, and Robert B. Zoellick, United States Trade Representative
Office of the United States Trade Representative

 

Remarks After Signing of the Qualified Industrial Zone Agreement by Rachid Mohamed Rachid, Minister of Foreign Trade and Industry, Egypt, Edud Olmert, Deputy Prime Minister and Minister of Trade, Israel, and Robert B. Zoellick, United States Trade Representative
Office of the Prime Minister, Cairo, Egypt 12/14/2004

DR. MAGDY RADI, SPOKESMAN OF THE PRIME MINISTER: Welcome to the Cabinet of Ministers of the Arab Republic of Egypt to witness today the signing protocol and the legal document to establish the Qualified Industrial Zones in Egypt. The protocol will be signed by Minister Rachid Mohamed Rachid, Minister of Foreign Trade and Industry of the Arab Republic of Egypt and Mr. Ehud Olmert, Vice Prime Minister and Minister of Trade, Industry, Labor and Communication of Israel. The legal document, which will bring the designation of the Qualified Industrial Zones into force, will be signed by Ambassador Zoellick, the United States Trade Representative. The event is honored by the presence of his Excellency Mr. Ahmed Nazif, Prime Minister of Egypt and Mr. Ahmed Aboul Gheit, the Minister of Foreign Affairs of the Arab Republic of Egypt. Now, we will witness the signing of the two documents.

Minister of Trade, Foreign Trade and Industry of the Arab Republic of Egypt will deliver his Statement.

MINISTER RACHID: Ladies and Gentlemen, today my colleagues, Ambassador Robert Zoellick, the United States Trade Representative, Mr. Ehud Olmert, Vice Prime Minister of State of Israel and myself have signed a very important trade protocol to established seven Qualified Industrial Zones in Greater Cairo, Alexandria, and the Suez Canal Zone.

Negotiations to reach these arrangements have been tough as such negotiations are. I would like to thank my colleagues for their effort and their cooperation in achieving this result.

The signing of the Qualifying Industrial Zones is significant for Egypt. It is consistent with the government’s effort to open up the economy, increase growth rates, and help job creation, and promote exports. It confirms our determination to move forward on all aspects of serious economic reform and to integrate Egypt into the global economy.

We have high hopes that this arrangement will contribute to economic prosperity in the region. Indicators for success are very promising. No less important is the fact that the signing of this protocol today will help us start negotiating with our U.S. counterparts for a free trade agreement. However, economic interests are not our only goal for cooperation.

It is our deep belief that the establishment of Qualified Industry Zones will contribute to just and comprehensive peace in the region - a peace that started many years ago with Egyptian-Israeli peace treaty. The time has come now to work hard, to spare no effort, and to leave no stone unturned as we strive to further the progress of peace in the region.

In the midst of much unpleasant news emanating from the Middle East, today’s event is a positive step for the future.

Thank you. (Applause)

DR. RADI: I now invite Mr. Ehud Olmert, Vice Prime Minister, Minister of Trade, Industry, Labor, and Communication of Israel to deliver his statement.

MINISTER OLMERT: Thank you very much. Ambassador Zoellick, U.S. Trade Representative, Mr. Rachid Mohamed Rachid, Minister of Industry and Foreign Trade of Egypt, distinguished Ambassadors, officials from the Egyptian government, from the American government, from the Israeli government, ladies and gentlemen, I am very proud to have been proud to have been part of this ceremony today. I am very proud that we all today signed an agreement, which will do good business to all of us and which will also be one more important ingredient in changing the atmosphere in the Middle East with two of the major countries and a great friend of peace in the Middle East, the United States of America.

This is a good business for the State of Israel, and I wish to thank my two partners for making a good business for the State of Israel. I think, it is a good business for Egypt, and I am sure that when there is a good business for two friends, America is doing very well also.

Thank you very much for your efforts and Ambassador Zoellick for the contribution that America made and for the efforts that you personally invested with your staff in order to make this agreement possible. I am very proud that this agreement became possible because of the Free Trade Agreement between the State of Israel and the United States of America, and I hope that it will be a precedent for many other countries in the Middle East and that additional countries will find out that having peace with Israel means not just good neighborly relations, but opens up great opportunities for economic trade, business relations, and the improvement of the quality of life for all peoples involved.

This is a period of change in the Middle East, and I am very much encouraged by the good words of President Mubarak, who said today when we met, that this agreement is the beginning of extending and broadening relations between the State of Israel and Egypt and, hopefully between, Israel and other Arab countries.

I wish to thank all those who were involved. I know that the effort started with Minister Yousef Boutros Ghali and then Rachid Mohamed Rachid took the lead and vigorously pushed through all the hurdles to make it possible.

Thank you, Minister Rachid, and all of your staff. Thank you, Ambassador Zoellick, and all the staff of the U.S. Trade Representative, and I wish to take this opportunity to thank my staff for making a wonderful effort so that all of us will be able to celebrate it today.

Thank you very much.

DR. RADI: I now invite Mr. Robert Zoellick, Ambassador Robert Zoellick, the United States Representative, to deliver his speech.

AMBASSADOR ZOELLICK: It’s a real privilege to be here today with Ministers Rachid and Olmert, two good friends, and I want to start by recognizing both their leadership and their service to their countries.

We’ve worked together to create a fresh opportunity. This is the most significant economic agreement between Egypt and Israel in twenty years. The United States welcomes it and I personally salute those who brought it into force.

At one level, today’s agreement is very straightforward. It removes all U.S. tariffs on goods produced in these Egyptians QIZs using Israeli inputs. At another level, this agreement sends a broader message. It sends a signal across the Middle East of what can be accomplished.

President Bush has advanced a strategy to employ economic opportunity in very practical ways to try to create hope and further opportunity - opportunities for working people to improve the conditions for their families and to have a stronger stake in growing, peaceful, and open societies - opportunities for countries to build better work bonds on a more solid economic foundation of integration and cooperation. And I want to thank the U.S. Congress for creating the QIZ authority and for working with us to draw on it.

Last month, Congressman Bill Thomas, the Chairman of a committee that governs trade relations in the United States in the House of Representatives lead a Congressional delegation to Egypt and after the Congresspeople returned to the United States, Chairman Thomas and I had a chance to talk to about how best we could work with Egypt, including today’s step, and I want to thank them for their support along the way.

I appreciated the opportunity I had today to meet today with President Mubarak and the Prime Minister because their leadership is creating new opportunities in economic development in Egypt. When Minister Rachid visited me in November, we talked at length about Egypt’s reform plans, and I appreciate his very early efforts to help us work together. We discussed the role of these QIZs within Egypt’s broader economic reform program, and we explored how Egypt, the United States, can do more together, bilaterally, regionally, and in the global trade negotiations.

And I think we both recognize that it’s the Egyptian business community that must be the engine that drives the opportunities that are available for the apparel business, but also, we hope, for other sectors as well.

I want to thank the Vice Minister, Vice Prime Minister Olmert for his leadership and his energy. We had a chance to meet in Jerusalem in October, when he introduce me to some of the Israeli businesspeople who are here today, who told me that they want to support business opportunities and the creation of jobs here in Egypt. And it was the Vice Premier who kept pushing to see what we could accomplish here today, so I want to thank him and his staff as well. They believe that the benefit from QIZs can enable all of Egyptian business workers to compete with those operating in the global economy.

So today’s signing marks another practical step towards President Bush’s goal of a Middle East free trade area, or a MEFTA, that could unite economies from the Magreb, through this region, and on to the Persian Gulf.

The United States has been making progress across the region: with some countries, to join the WTO; with others, trying to develop trade preference agreements; with others, trade and investment framework agreements; and of others, leading on to free trade agreements. The trade and, we hope, the prosperity that we are building will benefit U.S. businesses, workers, farmers, and consumers as well.

So I am exceedingly proud to have this opportunity to participate in this historic agreement. It marks the conclusion of one effort, and I hope it marks the beginning for all of our economies and countries in the region to add to that opportunity.

Thank you very much.

(Applause)

DR. RADI: Ladies and gentlemen, we would like to thank you all. Thank you.

*****************

Press Availability

United States Trade Representative Robert B. Zoellick

Following Signing

of Qualified Industrial Zones (QIZ) Agreement

Office of the Prime Minister

Cairo, Egypt

December 14, 2004

REPORTER: (Houston Chronicle) What is the approval process in the agreement with the Americans? Will it be ratified before Congress, or has that already taken place?

USTR ZOELLICK: No, Congress passed a law in 1996 that authorized the President, the Executive Branch, to create these Qualified Industrial Zones under certain conditions. And so, Jordan started to take advantage of it in 1999, and it helped their trade move from about $37 million dollars to about $700 million dollars, and it led to the creation of a free trade agreement. So under the authorization, the President delegates that to the Trade Representative. So when my Israeli and Egyptian colleagues, a few months ago, started to complete this agreement, then I started to work with them to try to shape it. And so today I signed a Federal Register Notice and as soon as that is published, this goes into effect. So it should go into effect in a matter of days.

Yes, sir?

REPORTER: (Al Hurra TV) Egypt has proposed, for a long time, a normalized relation with the Israelis. As you know, it isn’t great for the peace process at this time, but now this atmosphere has been changed regarding what we are saying. How can you guarantee that this agreement won’t be stopped if the situation deteriorates?

USTR ZOELLICK: Well, there are no guarantees in life, and I am not a Foreign Minister. I am a modest Trade Minister. But what we have created is an opportunity, and I think this is the heart of what the strategy that President Bush has set out on the economic side. We’re saying that this agreement, and the Qualified Industrial Zones it can create, opens a special trade access to the U.S. market, and thereby it creates the opportunities for jobs, for investment, for growth, for development, and for hope in Egypt.

Now it stems, in part, from some of the business ties with Israel, but, as a good example, when I was in Jerusalem in October coming back from visiting some of the Gulf countries, I met some Israeli businesspeople that Vice Premier Olmert introduced me to. And they emphasized that with the benefits of the Qualified Industrial Zones, they believe that the Egyptian producers could compete with China and India. And this is part of the message I’ve been trying to have to this region. As opposed to just looking at one another, one has to look at the wider world.

So if people don’t take advantage of it, frankly, the problem will be more the lack of seizing an opportunity. And that is for the business communities themselves to decide. So after I met with President Mubarak today, I mentioned a point that Minister Rachid and I discussed, which is that this is only a framework. It’s now up to the business communities to make it into something real. And so that will be the next step.

Yes, ma’am?

REPORTER: (Dubai) As we all know, a successful business relationship has to find a safe environment, so do you have any agreement on the talks maybe to guarantee some steps in the peace process in the next few months or weeks regarding this agreement between Egypt and Israel?

USTR ZOELLICK: Let me try to respond with three points. One, remember this agreement is with Egypt. So one of the Qualified Industrial Zones is the Greater Cairo Area; another is Alexandria; another is the Suez Canal. And so I think there is peace in those regions so as to create jobs and opportunity.

Second, I just came from your country, the United Arab Emirates and Oman, where we are now starting to negotiate a free trade agreement. So obviously there’s stability and peace there.

The third point is: maybe that’s a message for the whole region, which is that as opposed to moving beyond conflict and destruction, if people create an opportunity, who will really benefit? - The average person who can get a job, create a better life for their family.

So those are the opportunities that we’re trying to create here economically. As part of our Free Trade Agreement with Israel, we have a free trade opportunity with the Palestinian region, but why doesn’t money go there? Well because investors aren’t going to go where they’re afraid to do business. Okay? You know, I can’t create a peace process. I can create a model, an opportunity and hope and create a sense in both the Arab countries, as well as Israel, that their future is in terms of trying to create a better livelihood for their people. And that obviously, I keep trying to emphasize, is vitally important because the rest of the world keeps moving on, and we want to try to give an opportunity here for reformers to succeed in more open societies.

Yes?

REPORTER: (Reuters) You said it could take a couple of days to take effect, but if the Egyptians and Israelis take their time, will this affect your timetable?

USTR ZOELLICK: No. They can speak for their own legislative processes, but from the U.S. side in other words, that prepares it to go into effect. But the Egyptians and Israelis have their own internal procedures, and it’s probably more appropriate you speak on that. What I was saying is, from the U.S. perspective, we wanted to try to make this prepared to go into effect right away, particularly because, as I mentioned, you have the end of these global textile quotas at the end of the year.

Yes?

REPORTER: (inaudible) American investments decreased through last year. Do you think that this agreement or this protocol will increase the American investment in Egypt?

USTR ZOELLICK: When I checked the statistics, there is still about $3.2 billion dollars in U.S. foreign direct investment in Egypt. But I think, where this agreement would help with that, is that I see this agreement as just one part of a larger Egyptian reform effort. And when Minister Rachid visited me in November, we spent a lot of time talking about the banking reforms, the reforms in some of the industrial policies, as well as the trade reforms, the customs reforms. And so we hope, and this is the intention, that by showing some of the benefits of a more open trading system and economic integration, it will help this new economic reform team to take on some of the other issues that have hindered investment. So people have talked about other aspects in our bilateral relationship, but we have some businesses here, who frankly were worried about they may have to pull out because the tax policies created disincentive, but the government is now starting to fix that. So I think what we hope to do is to use this as part of a larger effort to support the reform team in their broader efforts, which will create opportunities, not only for Israeli investment, but Egyptian investment, U.S. investment, European investment.

And that’s indeed what happened with Jordan, where we went from a QIZ to a Free Trade Agreement, and they are not only growing investments in the apparel sector, but their growing in the knowledge industries – pharmaceuticals, Microsoft, and others. So I see this as part of a larger building effort.

Yes, ma’am?

REPORTER: (Hadia Mustapha from Egypt Today Magazine) Where do the negotiations stand on the Egypt free trade agreement right now?

USTR ZOELLICK: Well, I hope this will help advance the process. As I mentioned, what President Bush has set out is to try build a Middle East free trade area with all the countries and integrate them. But each country is at a different stage of development, and, of course, we have to acknowledge that. So some, like Saudi Arabia - we need to bring them into the WTO first. Some, like Morocco and Jordan, we now have Free Trade Agreements. Bahrain, we’re adding. We have to get it through the Congress.

This is a step that I hope will help build confidence on both sides. Build support in Egypt and then, as part of that step, what we’ve discussed is, first, trying to make sure this agreement gets implemented properly so it works and creates the jobs; second, to deal with some of the bilateral trade issues on the investment side or some of our agriculture goods that have had a hard time coming in - to build confidence and support of the United States; and third, discuss the elements of this free trade agreement to make sure that the government has a sense of how it wants to integrate that in its overall reform process. Because these are comprehensive, they’re not easy to do. The government has a lot of different items, but together I hope this will move ahead, and it’s obviously a topic I talked about with President Mubarak, and I know he will talk about more with President Bush as well.

REPORTER: (NBC) Is this the first step for more free trade agreements between Egypt and Israel and other Arab countries?

USTR ZOELLICK: You know, those are really decisions for Egypt and Israel to make. What we in the United States can do is try to create a context for cooperation that shows the average people the benefits in terms of jobs and a better life for their children and their families. And we can partly do that through the U.S. market. So yes, this helps create the integration between the economies just as there is greater integration with Israel and Jordan. But we also want to integrate the other economies in the region - those in the Gulf, those in the Maghreb and, equally important, we want to make sure that the countries in the region can compete globally. You have to keep in mind it’s a global competition. And so, while all the discussion is on, sort of, Israel and Egypt, or the peace process as you had, please keep in mind, there are big countries out there - China, India, Brazil - and they’re playing very actively in the global game. We’re trying to give Egypt a little bit of a leg up here and, in the process, help some reformers who deserve support.

Yes, ma’am?

REPORTER: (Pittsburgh Tribune) There’s always a political dimension to these economic agreements, and how do you see this affecting the street level?

USTR ZOELLICK: Well, that’s a very good question. And I think it partly goes back to what I said is that to make this really come into force, it’s going to depend on the businesspeople in Egypt, and it’s going to depend on them helping to create jobs and opportunity in Egypt. And so our hope is - if you look at the Jordan experience, it’s created between 35,000 to 50,000 jobs. It’s the estimate in Jordan – and there are estimates here that are larger and particularly if you look towards a free trade agreement over time. And so we hope that this working with the reform team will show that, if you can create a better chance for people to meet their family’s livelihood, to give their children a better opportunity and education for the future, that starts with having a job. And so this can help people compete globally and to, frankly, earn higher wages over time as they add value. So that does fit into the overall environment and again - this poor woman seems so frustrated - all I can say is I am not the Foreign Minister. I can’t tell you how you are going to make Middle East peace, but I can say that, if we help people recognize the benefits of working together as opposed to shooting one another, that’s a good step.

Thank you.

 
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