[WPRT 108-13]
[From the U.S. Government Publishing Office]
108th Congress
2d Session COMMITTEE PRINT WMCP
108-13
_______________________________________________________________________
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
__________
R E P O R T
ON
TRADE MISSION to TUNISIA, JORDAN, OMAN, and EGYPT
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
JANUARY 2005
__________
Prepared for the use of Members of the Committee on Ways and Means by
members of its staff. This document has not been officially approved by
the Committee and may not reflect the views of its Members.
COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana GERALD D. KLECZKA, Wisconsin
JIM McDERMOTT, Washington JOHN LEWIS, Georgia
DAVE CAMP, Michigan RICHARD E. NEAL, Massachusetts
JIM RAMSTAD, Minnesota MICHAEL R. McNULTY, New York
JIM NUSSLE, Iowa WILLIAM J. JEFFERSON, Louisiana
SAM JOHNSON, Texas JOHN S. TANNER, Tennessee
JENNIFER DUNN, Washington XAVIER BECERRA, California
MAC COLLINS, Georgia LLOYD DOGGETT, Texas
ROB PORTMAN, Ohio EARL POMEROY, North Dakota
PHIL ENGLISH, Pennsylvania MAX SANDLIN, Texas
J.D. HAYWORTH, Arizona STEPHANIE TUBBS JONES, Ohio
JERRY WELLER, Illinois
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
LETTER OF TRANSMITTAL
----------
U.S. House of Representatives, Committee on Ways
and Means, Subcommittee on Trade,
Washington, DC, January 3, 2005.
Hon. Bill Thomas,
Chairman, Committee on Ways and Means,
Longworth House Office Building, Washington, DC.
Dear Mr. Chairman: I am pleased to transmit to you the
enclosed congressional delegation report on the recent
Committee mission to Tunisia, Jordan, Oman, and Egypt. This
report contains an overview of the mission as well as summaries
of meetings with foreign officials.
The report describes the trade, investment, and security
issues which were investigated during the trip.
Sincerely,
Angela P. Ellard,
Staff Director and Counsel,
Subcommittee on Trade.
Enclosure.
MEMBERS OF THE DELEGATION
MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES
HON. BILL THOMAS, Chairman, Committee on Ways and Means
HON. NANCY L. JOHNSON, Chairman, Subcommittee on Health, Committee on
Ways and Means
HON. MICHAEL R. McNULTY
HON. PHIL ENGLISH
HON. RON LEWIS
COMMITTEE ON WAYS AND MEANS
Angela P. Ellard, Staff Director and Counsel, Subcommittee on Trade
Stephanie Henning, Professional Staff, Subcommittee on Trade
Stephanie Lester, Professional Staff, Subcommittee on Trade
Mary Sue Englund, Special Assistant, Committee on Ways and Means
CONTENTS
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Page
Members of the Delegation........................................ IV
Outline of Trip Conclusions...................................... 1
Discussion of Trip Meetings...................................... 6
Tunisia...................................................... 6
Jordan....................................................... 10
Oman......................................................... 18
Egypt........................................................ 25
INTRODUCTION
From November 4-13, 2004, a bipartisan delegation of
Members of the Committee on Ways and Means traveled to Tunisia,
Jordan, Oman, and Egypt. The purpose of the delegation's trip
was to focus on trade, investment, and security issues in the
region. The delegation in particular was cognizant of the
recommendation of the National Commission on Terrorist Attacks
upon the United States (the ``9/11 Commission'') that the
United States encourage economic development in the region
through trade agreements.
The United States already has a trade agreement in place
with Jordan, and the delegation sought to explore how that
agreement has operated. Tunisia, Oman, and Egypt have
established Trade and Investment Framework Agreements (TIFAs)
with the United States, which provide a forum for high level
officials from each country to meet to advance trade and
investment issues. The delegation's goal was to explore whether
any of these countries is a potential candidate for a free
trade agreement with the United States. In the case of Oman,
Ambassador Zoellick notified the Congress of his intent to
negotiate a free trade agreement with Oman in the week
following the delegation's visit, after consultation with
Chairman Thomas.
Ambassador Zoellick also notified Congress of his intent to
negotiate a free trade agreement with the United Arab Emirates
(U.A.E.) at that time. The delegation was planning to visit the
U.A.E., but postponed that segment of the trip out of respect
for the period of mourning for the President of the U.A.E.,
Sheik Zayed bin Sultan Al Nahyan, who passed away the week
before the delegation's visit to the region.
OUTLINE OF CODEL CONCLUSIONS
Tunisia
The Trade and Investment Framework Agreement with
the United States has been a successful forum for addressing
trade issues between the two countries. The delegation agreed
to encourage USTR to continue the TIFA process, particularly by
scheduling another meeting within the next few months.
The delegation believes that accelerating through
the TIFA process and building on the TIFA relationship through
the negotiation of an FTA with Tunisia would augment the
existing FTA with Morocco, forming a Northern African market
that could provide an incentive and opportunity to draw in
Algeria and Libya across Northern Africa.
The delegation emphasized that while the Tunisian
government has demonstrated a strong and serious desire to
negotiate an FTA with the United States in addition to its
already strong relationship with Europe, an FTA with the United
States, unlike the Tunisian relationship with Europe, would
require significant reforms of the economy and further
liberalization, particularly in investment and services, to
garner Congressional support. While Tunisia has been managing
its economy successfully, these reforms are necessary to take
it to the next level.
Accordingly, the delegation encouraged Tunisia to
undertake such reforms.
In particular, the delegation noted that an
improved climate for U.S. investors would underscore
Tunisia's commitment to economic reform and
international competitiveness and would generate
employment, training, technology transfer, capital
infusion, and tax revenues. Such steps are necessary
given Tunisia's young population and need for
employment opportunities.
U.S. companies face many obstacles in
establishing franchises, particularly Tunisia's case-
by-case approval process. This lack of uniform,
transparent rules discourages U.S. investment and makes
it more difficult for an FTA to pass Congressional
muster because it does not meet the standards
established through all other U.S. FTAs.
Intellectual property protection contributes to
a favorable investment climate, but U.S. companies are
concerned over widespread trademark counterfeiting and
copyright piracy.
Other barriers caused by bureaucracy, a
traditional viewpoint of protecting domestic jobs, and
lack of transparency discourage U.S. investment.
The delegation also observed that Tunisia's
Euro-centric trade policy (80 percent of its trade is
under its EU Association Agreement) deprives Tunisia of
much-needed investment opportunities with the United
States.
The delegation welcomed the Prime Minister's
commitment to open the telecommunications sector in the near
term.
The delegation is pleased that English is
beginning to be taught in schools; this will help increase the
profile of the United States and the investment opportunities
it presents.
The delegation offered to discuss opportunities to
provide textile benefits to Tunisia as short term relief when
the WTO Multifiber Agreement expires in January 2005--an
interim step before an FTA is negotiated.
The delegation observed the work of the Middle
East Partnership Initiative (MEPI) in supporting political,
economic, educational, judicial, and sociological (role of
women) reform across the Middle East.
Jordan
The delegation recognizes the productive and
growing relationship the United States has with Jordan stemming
from the FTA between the two countries.
In particular, Jordan's exports have grown 42
times since 1998, with a diversification to new areas
outside textiles.
Foreign direct investment in Jordan has grown 4
times since 1995 as firms seek a safe, competitive,
pro-business base in the region.
Jordan's commitment to intellectual property
has stimulated investment and increased the
competitiveness of the local pharmaceutical industry.
Because of the FTA, Jordan has increased its
economic performance and competitiveness by increasing
regulatory transparency, opening services sectors,
privatizing government-owned entities, and fostering
new areas of its economy such as e-commerce.
The delegation agrees with the Jordanians that a
MEFTA agreement is valuable because it would lead to cumulation
of inputs among the member countries.
The delegation agrees with Jordan that sustained
U.S. support and technical assistance is essential to continued
Jordanian progress.
The delegation asked Jordan to lead by example--to
show other countries in the region that a country with the same
cultural and economic background can reform and develop a
strong, productive, and mutually beneficial trading
relationship with the United States.
The delegation observed that a fundamental
weakness that could undermine Jordan's ability to accelerate
its economic development and realize its potential is the lack
of efficient and effective shipping options. The delegation
intends to examine how U.S. technical assistance could be
helpful, particularly with respect to the port of Aqaba.
With respect to the Jordanian QIZs, the delegation
observed:
The existing QIZs are based mostly on Asian
capital and employ a large segment of non-Jordanian
workers, although the number of Jordanian employees is
growing.
The QIZ requirement that a share of Israeli
inputs must be used makes the Jordanian product less
competitive because these inputs are so expensive. As a
result, the delegation advised that Jordan move quickly
to use the FTA qualifying rule instead of the QIZ.
Jordan should diversify production in the QIZs
away from textiles and should vertically integrate to
more value-added operations beyond mere cut and sew.
While the QIZs have not been as productive as
full implementation of the FTA, the QIZs have been
beneficial to Jordan. In particular, they have
empowered Jordanian women employees, established
employment opportunities, gave Jordanian industry the
skills to make them more nimble, and provided lessons
in mass production and management.
The delegation welcomed Jordan's support in the
war on terrorism and in Iraq. A stable Iraq is critical for
Jordan and the region.
Oman
Oman's high-quality accession to the WTO shows a
commitment to trade liberalization.
The delegation strongly supports the negotiation
of an FTA with Oman and is pleased to see the commitment and
drive by Oman to conclude such negotiations. An FTA with Oman
would complement an FTA with Bahrain and the United Arab
Emirates and would encourage others in the Gulf Cooperation
Council (Saudi Arabia, Qatar, and Kuwait to undertake reforms
and become part of the process as well). Oman recognizes that
trade with the United States is much more significant than its
trading relationship with the rest of the GCC.
The window of opportunity is short, however,
because of the expiration of TPA in July 2004 and the always
difficult environment in Congress for trade agreements.
Therefore, the delegation hopes that an agreement can be
concluded by the middle of next year, by the time of the
Smithsonian Folk Festival in Washington, D.C. featuring Oman.
Oman has undertaken significant economic and
political reforms in a short time, particularly in the banking
and insurance sectors, demonstrating its capacity and
willingness to use objective, transparent standards.
Such objective standards are essential to
obtaining Congressional support for an FTA because any
departure from the standards used in U.S. FTAs will raise
questions and opposition from Members.
Congress will expect strong commitments on
investment and services, such as telecommunications.
The delegation believes that the focal issue to be
addressed by Oman is labor standards, particularly the
right of association and the right to strike. The
Omanis seem to recognize this reality and expressed a
commitment to bring their labor laws up to
International Labor Organization standards, using the
Bahrain laws as an example.
In addition, the delegation believes that other
processes must be transparent, such as the
``Omanization'' policy (requiring a certain percentage
of employees to be Omani) and the investment policy
requiring approval if foreign investment in a
particular entity is to exceed 70 percent.
The delegation observed that Oman is committed to
increasing the strength of the private sector and reducing the
influence of the public sector. In addition, Oman appears to be
embarking on effective policies to train Omani workers and to
improve opportunities for women. Its young population means
that such programs are essential for economic development.
The delegation expressed its appreciation for
Oman's role as a partner in the war against terror and its
action to limit terrorist financing.
Egypt
While a multilateral agreement through the WTO is
the delegation's primary goal, regional or bilateral FTAs,
particularly the Middle Eastern Free Trade Agreement, are
valuable because they provide intermediate benefits.
The delegation is committed to expanding the U.S.
economic relationship with Egypt, agreeing that an FTA is vital
to shared bilateral interests and is a key element in President
Bush's vision of a Middle East Free Trade Area.
A key stepping stone to an FTA is a positive and
sustained record of concrete economic reforms and steps to
improve the bilateral economic relationship.
The delegation approaches the prospect of a free
trade agreement with Egypt with more doubt than with some of
the other countries in the region because there has been hope
before, ultimately unfounded, that Egypt was ready. This time,
however, the delegation acknowledged a recent record of
significant advancement that may allow moving forward if
sustained and improved.
Specifically, the delegation is encouraged that
recent measures concerning customs administration, tariff
reduction, and tax reform by Egypt's new cabinet are steps in
the right direction, and President Mubarak seems committed to
continuing these reforms. However, the delegation agrees with
the Administration that action on a range of issues affecting
U.S. companies is essential for building constituencies in
Congress before FTA negotiations can begin. Mubarak
acknowledged to the delegation that there is a short window for
continued reforms before the Egyptian election next year.
There are particular problem areas where it is
essential for reforms to be continued:
Egypt's authorization of copycat versions of U.S.
pharmaceuticals
Egypt's unwarranted suspension of U.S. beef imports
without scientific basis due to BSE concerns that the
United States has addressed
Egypt's unjustified ban of imports of chicken and
restrictions on turkey for failure to meet Halal
[Islamac dietary] requirements when the United States
has met these standards elsewhere and even in Egypt
with respect to other products.
Egypt does not seem to have a sense of urgency
about the timing to negotiate an FTA and seems instead to rely
on its size in the region, its relationship with the United
States, and its strategic importance. The delegation supports
proceeding quickly in the region and would like to include
Egypt. However, bilateral trade agreements receive favorable
Congressional consideration only if they meet a set of
objective standards that all FTA partners must reach, unlike
the European model, which is based on a more mercantile
approach. Egypt must meet those same standards, or the
agreement will be very difficult to move through Congress for
approval and implementation. If Egypt is unable to meet those
standards, the MEFTA process will continue without Egypt.
Movement by Egypt is essential in the next six
months to one year if Egypt intends to be part of this process.
The delegation discussed Egypt's request for
approval for seven Qualified Industrial Zones.
It is unfortunate that Egypt waited so long to
utilize the QIZ process, as the expiration of the
Multifiber Agreement on January 1, 2005, means that any
benefits might easily be overtaken by the predominance
of Asia.
Egypt's best chance to receive Administration
approval for the QIZs is to diversify as much as
possible beyond textiles.
The fact that Egyptian and Israeli capital, and not
Asian, will be used is positive.
In any event, the relationship between the United
States and Egypt must be broader than the QIZ program.
Allowing individuals with private sector
experience to hold key government positions is important to
continuing the reform process. However, to attract such
experienced officials, it is essential to make such positions
available without requiring personal financial sacrifice.
The delegation expressed its appreciation for
Egypt's support in promoting a stable Iraq. Egypt is hosting a
major international conference to build international support
for this effort on November 22-23, 2004. The conference will
include representatives from the G-8 nations, the European
Union, United Nations, Arab League, Gulf Cooperation Council,
the Islamic Conference, and Iraq's neighboring states
(including Syria and Iran).
DISCUSSION OF CODEL MEETINGS
TUNISIA
Country Team Briefing with Ambassador William Hudson and Deputy Chief
of Mission David Ballard
Ambassador Hudson and his team gave the delegation a
briefing on the political and economic issues facing Tunisia
with special attention to the trade relationship between the
United States and Tunisia. The Ambassador opened by
highlighting the many progressive steps that Tunisia has taken.
He noted that Tunisia has a 90 percent literacy rate and
maintains equal rights for women, which has led to women
comprising more than 50 percent of university students. It is a
very tolerant society, which includes nearly 2000 Jewish
people, and a moderate secular state that does not repress
religion. In addition, the military is not part of the
governing structure in Tunisia. On the other hand, there is no
press freedom in Tunisia and the political system is closed.
The Ambassador noted that Tunisia and the United States have a
strong military-to-military relationship.
Tunisia is a middle income country that was once rigidly
controlled and is now quite liberalized, although there is
still state control of certain strategic sectors, including
telecommunications and energy. Agriculture and tourism are the
primary economic sectors, but the growth potential is in small
goods manufacturing. The primary barriers to trade include an
extensive bureaucracy and the lack of transparency. Eighty
percent of Tunisia's trade is with the European Union, although
there are 58 American companies operating in Tunisia.
Chairman Thomas asked to what extent Tunisians remained
influenced by their French roots and whether European and
French companies received preferential market access through
the case-by-case approval process practiced by the Tunisian
government. The Economic Officer agreed that a traditional pro-
European mentality continued to pervade the Tunisian government
and that the President is very worried about job protection,
but she noted that the country's orientation to France is
fading and that English is being taught in the schools now at
every level, in addition to or even in lieu of French.
The Defense Attache briefed the delegation on Tunisia's
military structure. Tunisia has forces of approximately 27,000
in its army, 6,000 in its air force, and 4,000 in its navy.
Nearly half of Tunisia's military officers have been to the
United States for training. The military is pro-Western and has
good relations with the United States. Tunisia's primary
defense concerns are its borders with Algeria and Libya and its
maritime border. The military is in the process of reorienting
to fight terrorism, but it has been an uphill battle for the
United States to obtain cooperation on antiterrorism issues.
The Middle East Partnership Initiative, which was launched
in December 2002 to support reform in the Middle East, operates
in Tunisia. The program's focus is to develop reformers on the
ground. Four areas of work for the program are setting
standards, evaluating performance, training administrators, and
using technology in the classroom. The Embassy hopes that
Tunisia will partner with other countries in the Middle East on
education reform and women's rights.
Embassy staff also mentioned that there is a field school
for American foreign service officers to learn Arabic in Tunis.
The school used to host approximately 15 people per year. This
year there are 22, and they hope there will be 60 in the
future.
Wreath Laying Ceremony at the North Africa American Cemetery and
Memorial in Tunisia
The delegation met with Superintendent Michael Green at the
North Africa American Cemetery and Memorial. The cemetery site
covers 27 acres between the Mediterranean and the Bay of Tunis.
Resting at the cemetery are 2,841 of U.S. Military Dead, a high
proportion of whom gave their lives in the landings in, and
occupation of, Morocco and Algeria and in subsequent fighting
which culminated in the liberation of Tunisia during the Second
World War. After the end of World War II, a survey made jointly
by representatives of the Secretary of War and the American
Battle Monuments Commission revealed that the sites of the
temporary cemeteries established in North Africa during the war
had major disadvantages. As a result, the North Africa American
Cemetery and Memorial was established in 1948 and construction
was completed in 1960. After a briefing, the delegation
participated in a wreath laying ceremony to honor the American
men and women who had served their nation.
Meeting with Tunisia Minister of Foreign Affairs Habib Ben Yahia
Foreign Minister Ben Yahia opened the meeting by noting
that Tunisia is a country of good Muslims, who believe in
reform. The abolition of polygamy was the most difficult reform
undertaken. Although, Tunisia fears violence and terrorism, he
believes that the violence is contained. He emphasized that the
separation of mosque and state must continue to be the guiding
force of policy. He noted that 80 percent of Tunisians are
middle class and that the poverty rate is only 4.2 percent.
Chairman Thomas stated that the United States cherished the
longstanding positive relationship between the two countries.
He noted that the reforms in Tunisia seem to run counter to the
direction taken in other Islamic countries. He said that the
delegation's primary mission was to explore trade issues.
Morocco, he pointed out, has recently completed a free trade
agreement with the United States, and the delegation is eager
to assist Tunisia in moving to a stronger trade relationship
with the United States. He noted that Tunisia seems to have
some colonial holdovers in its economic system, particularly on
the case-by-case determinations regarding franchising.
Congresswoman Johnson stated that Tunisia's economic
progress and system of universal education is impressive and
will lead to political progress. She asked whether other
countries in the region are interested in learning about
Tunisia's secular model. Minister Ben Yahia said that he
believed other north African countries have been ``positively
contaminated'' by Tunisia; Libya is coming along, and so is
Lebanon. He also noted that in Tunisia women can become pilots,
whereas they are not allowed to drive in other countries. This
treatment of women makes Tunisia more competitive, he
concluded.
Congressman English thanked the Foreign Minister for the
warm and friendly relationship between the United States and
Tunisia. He commented that as the co-chair of the Congressional
Morocco Caucus, he found that it is difficult for countries to
make great strides in a short time, particularly when it is a
question of changing values. Tunisia has demonstrated
moderation not just in its diplomacy but in its domestic
policies, he said.
Chairman Thomas warned that he understood the message of
patience that Tunisia is sending in terms of its ability to
make further economic reforms, but that the world is not
waiting. The Multi-Fiber Agreement is expiring and Tunisia is
overextended. He is anxious to move from the current
relationship to a more comprehensive relationship in just a few
years.
Foreign Minister Ben Yahia said that Tunisia's trade
agreement with the European Union has helped improve the
business climate. Tunisia also has free trade agreements with
Turkey, Egypt, Morocco, Algeria, and Jordan and is seeking to
create a free trade zone in the Mahgreb. An FTA with the United
States would be important to Tunisia, he said. Only U.S. oil
companies are currently operating in Tunisia. Chinese
competition on textiles will be terrible for Tunisia, which
currently exports $3-4 million annually in textiles to the
European Union. Tunisia wants to reform its textile industry to
become competitive, but it is difficult to do in two months.
Chairman Thomas noted that economic cooperation needs to go
two ways and that he believed we may be making progress on
franchising. He also said that Congress will continue to take
an active role on trade issues with the renewal of Trade
Promotion Authority next year. The Foreign Minister said that
Tunisia wants to form a Tunisia Caucus on Capitol Hill and
hoped that the delegation could help.
Congresswoman Johnson asked how the imminent death of
Chairman Yasser Arafat would affect the region. Foreign
Minister Ben Yahia said the Palestinian Liberation Organization
established its headquarters in Tunis in 1982. The peace
process started with the support of the Tunisians, he said, but
unfortunately, an escalation occurred. Tunisia has been
appealing to the Palestinians to ``get their acts together.''
He hopes that Prime Minister Abu Mazen can keep authority in
the Palestinian Authority to move forward the peace process. He
believes that there is a golden opportunity for Tunisia to work
on the Palestinians and the United States to work on the
Israelis and that it is important to put the issue on the front
burner. Congresswoman Johnson also asked whether Tunisia could
support the elections in Iraq. Foreign Minister Ben Yahia noted
that a delegation from Iraq has come to Tunisia to study the
Tunisian Constitution.
Meeting with Tunisian Prime Minister Mohamed Ghannouchi and Minister of
Development and International Cooperation Mohamed Nouri Jouini
Chairman Thomas opened the meeting by noting that the
United States has been remiss in the economic and cultural area
of its relationship with Tunisia. He said that the United
States should form a closer tie. Under President Bush, the
United States is looking more and more toward this region and
creating better economic relations. He noted that he
understands the historic ties between Tunisia and the European
Union but said that the United States is a great fan of
competition and would like to be another option to the European
Union. The United States has already negotiated a free trade
agreement with Morocco. An FTA with the United States would be
a great opportunity for Tunisia. With the end of the Multi-
Fiber Agreement, the United States is looking for ways to
provide Tunisia with short term relief before forging a more
permanent relationship, he said.
Prime Minister Ghannouchi noted that Tunisia has an
association agreement with the European Union and that it wants
to diversify and integrate more into the world economy. He
hopes to have a meeting with the United States under the Trade
and Investment Framework Agreement by the end of the year, and
one of the issues for discussion will be a free trade
agreement.
Minister of Development and International Cooperation
Jouini said that the United States government needs to better
understand the Tunisian economy, which is one of the most
developed in the region. The Tunisians are asking their friends
in the U.S. Trade Representative's office to give them some
time, he stated. Chairman Thomas replied that it is not a
mystery how the United States operates with regard to free
trade agreements. He pointed to the free trade agreement with
Singapore as a good model in the financial services area and to
the free trade agreement with Morocco as a good model on
transparency, rule of law, and intellectual property rights.
The European Union model is not a good one, he said. The United
States is anxious to have better economic relations with
Tunisia, and a free trade agreement can be negotiated quickly,
which would allow Tunisia to elevate itself and move on the
same plane as Morocco, the Chairman concluded.
Prime Minister Ghannouchi said that Tunisia, unlike other
countries takes a more gradual approach that takes into
consideration certain concerns. Today trade with the United
States is unbalanced, and he hopes to work through the Trade
and Investment Framework Agreement to correct the imbalance.
The best way to accomplish that is by encouraging investment.
Reforms in Tunisia are constantly ongoing, he said, with
changes to laws to attract investors, more guarantees, and more
transparency. Chairman Thomas emphasized that the United States
uses an objective ruler, not a relative one, in determining
eligibility for a free trade agreement. He expressed
understanding that internal investment and growth is important
and said that some of the issues the United States has concerns
about should not be a roadblock to deeper economic relations.
Congresswoman Johnson commented that trade is a big
political issue in the United States. China is absorbing steel
and pushing up the world price. Intellectual property rights
are a key issue, and she hopes that the issues surrounding
intellectual property rights protection in Tunisia are
resolved. Minister Jouini replied that concerns about
intellectual property rights in Tunisia were based on a
misunderstanding and a lack of information. He said that there
is no comparison between Tunisia and other countries on
intellectual property rights and that Tunisia's laws are up to
the EU standard. Chairman Thomas commented that the European
Union is not in full compliance with international norms on
intellectual property rights. He observed that Tunisia is on
the edge between being a developed and a developing country,
and ``Tunisia cannot have it both ways.'' If Tunisia is moving
towards being a developed country, it should not fall back on
developing country flexibilities, such as those on
pharmaceuticals. He noted that Tunisia is moving towards a
convertible currency, which is a positive step.
Prime Minister Ghannouchi said that the week before,
President Ben Ali had issued a new rule to make capital markets
more transparent. He said that Tunisia is revising itself for
competition. Chairman Thomas noted that the French model does
not allow the flexibility and growth necessary to create jobs.
Chairman Thomas asked whether tourism is returning to
Tunisia, and Minister Jouini noted that tourism is currently 8
percent of Tunisia's gross domestic product and 18 percent of
its exports.
Congressmen Lewis and McNulty thanked the Prime Minister
and expressed his appreciation for the strong relationship
between Tunisia and the United States. Minister Jouini said
that American companies do not have information on what is
happening in Tunisia and that the Trade and Investment
Framework Agreement and free trade agreement will send a signal
to investors.
Congresswoman Johnson commended the Prime Minister for the
impressive growth of the middle class in Tunisia and its policy
of universal education.
Chairman Thomas asked about potential openings in the
telecommunications sector. Prime Minister Ghannouchi replied
that the sector is opening very fast. The Chairman concluded
the agreement by emphasizing that the United States and Tunisia
should be long term trading partners, and he will encourage
USTR to more ahead with the TIFA process.
JORDAN
Country Briefing with Charge d'Affaires David Hale, USAID Mission
Director Anne Aarnes, and Embassy staff
The Charge d'Affaires David Hale and his team provided the
delegation with a briefing on the political, economic, and
health issues in Jordan with special attention paid to trade
and the economic situation in Jordan. The Charge opened by
saying that the U.S.-Jordan relationship has never been better.
Jordan is a friend on both the war in Iraq and on terrorism. On
Iraq in particular, the Charge noted that if Iraq is not
stabilized it would be catastrophic for Jordan and the region.
The Charge explained that Jordan has undergone a socio-
economic transformation in recent years. The country has
undertaken reforms in education, judiciary, and women's rights,
as well as modest political reform. In 1999, Jordan had a very
high debt level--115 percent of GDP. But since that time,
Jordan has joined the WTO and signed the U.S.-Jordan Free Trade
Agreement as well as an Association Agreement with the European
Union. Today Jordan's debt is 89 percent of GDP. Jordan
graduated from an International Monetary Fund reform program
this summer after 15 years.
USAID Mission Director Anne Aarnes explained that Jordan is
home to one of the largest U.S. Agency for International
Development (USAID) programs, and there are three main areas of
focus: water, social sector (health and education), and
economic growth. Regarding water, Jordan is one of the ten most
water poor countries in the world, and access to water is
vital. USAID is trying to improve water treatment and handling
facilities in Jordan. On health, Ms. Aarnes said that USAID is
trying to lower infant mortality rates; Jordan's population
growth rate is about 2-2.5 percent per year, which means that
the population doubles every 25 years. On education, literacy
and school enrollment in Jordan is high, but there is still a
lack of usable skills for jobs, particularly for women who are
often channeled into fields with little employment prospects.
One focus of education programs is to teach entrepreneurial
skills so that Jordan's youth can create their own jobs.
Regarding economic growth, one successful USAID project is the
Jordan-U.S. Business Partnership (JUSBP), which is an economic
development program established in 1999. JUSBP provides
financial and technical assistance to private businesses in
Jordan to help promote trade development, quality standards
programs, industrial training, and employment initiatives.
JUSBP also helps companies improve their management, marketing,
technology, production methods, quality assurance, financial
management, and human resources capabilities.
One perception in Jordan had been that USAID projects such
as the JUSBP help only a small, elite group and not the average
Jordanian citizen. The public affairs office at the Embassy has
been seeking to change that perception by highlighting projects
such as the water treatment facilities, health clinics, and a
micro-enterprise project. The marketing strategy has helped to
change public opinion, and USAID has recently received
excellent press coverage.
The Charge explained that Jordan has good labor laws, and
employees have many rights in Jordan. Jordan adheres to all its
commitments in international agreements regarding labor and
environment. Many audits of labor conditions in Jordanian
factories are conducted by the government, U.S. apparel
purchasers, and by international organizations. The biggest
source of enforcement of good labor practices comes from
apparel purchasing companies (i.e., retailers) who send
enforcement teams into factories two or three times a year.
Visit to Al-Tajamouat Qualifying Industrial Zone
Background on QIZs: The QIZ program was created by an
amendment in 1996 to the United States-Israel Free Trade Area
Implementation Act of 1985 (P.L. 104-234), which granted the
President additional proclamation authority to extend the
United States-Israel free trade area to cover products produced
cooperatively between Israel and Jordan or between Israel and
Egypt. In 1997, Jordan and Israel established a Joint Committee
to identify businesses that involve substantial economic
cooperation between Jordan and Israel, thereby qualifying their
products for duty-free entry into the United States. The Joint
Committee identifies businesses that involve ``substantial
economic cooperation'' in one of two ways: (1) the manufacturer
on the Jordanian side of the QIZ and the Israeli manufacturer
each contribute and maintain at least one-third (11.7 percent)
of the minimum 35 percent content required, or (2) the
manufacturer on the Jordanian side of the QIZ and the Israeli
manufacturer each contribute and maintain at least 20 percent
of the total cost (including originating materials, wages and
salaries, design, research and development, depreciation of
capital investment, and overhead) of production of goods
eligible for duty-free treatment.
Visit to Al-Tajamouat QIZ: The delegation toured the Al-
Tajamouat Qualifying Industrial Zone (QIZ), met with the
principal in charge of operating the zone, Mr. Halim Salfiti,
and toured the Jordan Dragon Garment Factory within the QIZ.
Mr. Salfiti explained that the investment company that created
Al-Tajamouat is Specialized Investment Compounds, a privately
held Jordanian company that employs 350 full time staff. In
addition to direct employment in QIZ factories, QIZs also
create jobs indirectly via security, secretarial, food
preparation, banking, medical, transportation, and water
management needs of the QIZ.
Mr. Salfiti said that most investment capital in QIZs is
from Asia, but over time Jordanians have taken the skills
they've learned working for a foreign company in a QIZ to start
new Jordanian-owned businesses in the QIZ. Since the QIZ
program became operational in Jordan in 1998, the benefits of
the program have been cumulative. Initially there wasn't
significant Jordanian investment capital or knowledge, but
after Jordanian workers, managers, and investors started
operating in foreign-owned QIZ factories, they gained the
expertise necessary to later open Jordanian owned and operated
factories.
Mr. Salfiti said that factories in Jordanian QIZs employ
approximately 36,000 people, 55 percent of which are Jordanian;
the rest predominantly come from Asia. One factory manager at
the Jordan Dragon Garment Factory noted that while factory
owners would like to hire only Jordanian workers, foreign
workers are necessary in QIZs because Jordanian workers don't
have experience in producing apparel and it can be difficult at
times to recruit and retain Jordanian workers to fill
positions. Mr. Salfiti said the number of Jordanian employees
is increasing over time, and Jordanian law requires that
foreign workers be replaced with Jordanian workers after two
years. A significant number of QIZ employees are Jordanian
women who come from rural villages, and QIZ employment has been
an empowering force for women, he noted.
Mr. Salfiti said that over 90 percent of QIZ production is
apparel and is limited to cut and sew operations which rely on
Asian fabric. Now that the tariff benefits of the U.S.-Jordan
Free Trade Agreement (FTA) are being phased in for apparel
products, factories located in QIZs are beginning to shift
their operating models to take advantage of the FTA instead of
the QIZ. The QIZ program requires a minimum 8 percent of
Israeli content, and often that percentage is made up with
buttons, zippers and packaging. One factory manager noted that
the FTA will make the factories more competitive as the 8
percent Israeli content requirement under the QIZ is burdensome
because Israeli inputs cost 2-3 times more than those available
in the world market. Another way QIZ factories are trying to
become more competitive in the apparel industry is by focusing
on higher value garments such as tailor-made suits.
Mr. Salfiti said that QIZs are also trying to diversify
their production away from apparel. Some other sectors with
increased production in QIZs are paper, ceramics, jewelry, and
electronics. The FTA will be fully implemented in 2010, and
QIZs are expected to be gone by then. The industrial parks
created by the QIZs will remain but the factories will be
operating under the benefits provided by the FTA rather than
the QIZ program.
Mr. Salfiti and several managers at the Jordan Dragon
Garment Factory expressed concern about Egypt's recent push for
QIZs. They believe Egyptian QIZs would threaten Jordan's
comparative advantage because Egypt has low labor costs and a
more vertically integrated textile and apparel industry. They
said that if QIZ investment shifts from Jordan to Egypt, it
will create instability and uncertainty in Jordan. Even today
with speculation that Egypt will start using the QIZ program,
investors are reluctant to make new investments in Jordan QIZs,
particularly in the apparel sector, they noted. Mr. Salfiti and
a manager at the Jordan Dragon Garment Factory both saw the
potential for Egyptian QIZs as more threatening to their
competitiveness than the end of quotas on apparel with the
expiration of the WTO Multifiber Agreement on January 1, 2005.
Visit to Jordan Marble Company
The delegation toured the Jordan Marble Company and met
with Mr. Hani Zammar, Executive Director of Jordan Marble, and
Mr. Salim Zammar, General Manager of Zammar and Sons. During
the tour, the delegation learned how the Jordan Marble Company
used the business development programs offered by JUSBP to
adapt its business model, gain technical and marketing capacity
building, and improve product quality to more effectively
export to the U.S. and European markets. In 2003, Jordan Marble
exported roughly 20 percent of its products to the United
States. Jordan Marble is one of the fastest growing medium-
sized companies in the industry, and it views exports to the
United States and Europe as its greatest area of expansion. Mr.
Zammar noted that his company produces high quality yellow
travertine tile, and this stone is available only in Jordan and
Italy. Italian supplies have declined in recent years, and now
Jordan is the leading source of this stone. Jordan Marble
Company hopes to continue to expand its sales to the United
States and Europe, particularly for its yellow travertine
stone.
Meeting with Minister of Trade and Industry Ahmed Hindawi
Minister Hindawi started the meeting by saying the QIZ
program has benefited the Jordanian economy significantly.
Exports, investment, and employment have increased. Minister
Hindawi estimated that the QIZs have created 40,000 new jobs in
Jordan. The overall Jordanian manufacturing sector employs
approximately 160,000 workers, so QIZ employment is a
substantial percentage of manufacturing employment. The QIZs
also help with rural development as some QIZs are located in
rural areas. Congresswoman Johnson said she was impressed with
the economic progress that has resulted from the QIZ program,
and she would like to see more outreach from Jordanian business
leaders to attract more Jordanian workers.
The U.S.-Jordan Free Trade Agreement has also benefited
Jordan, and the Minister said that Jordan would like to
accelerate the tariff reductions in the FTA. All products are
currently scheduled to be duty free under the FTA by 2010, and
Jordan would like to move that date up to 2005 or 2006. The
Minister also said that Jordan would welcome the potential
expansion of the FTA to include other countries in the region.
Congressman English asked for the reaction of Jordan and
its neighbors in the region to President Bush's call for a
Middle East Free Trade Area (MEFTA). The Minister responded
that the Jordanian government supports the MEFTA. He emphasized
that in order for the MEFTA to be beneficial, the countries of
the region need to be able to cumulate their production.
The delegation expressed its desire that Jordan act as a
role model for other countries in the region to adopt rule of
law and transparency in its legal system. Also, it is helpful
for Jordan's neighbors to see Jordan experiencing the positive
benefits of the FTA.
Chairman Thomas expressed an interest in seeing Jordan
improve its port and transportation infrastructure,
particularly at the port of Aqaba. The Minister said that the
port of Aqaba had been publicly run but it has been privatized
in the past year. As a result, Aqaba has seen significant
improvement in its port operations. (One USAID officer
estimated that Aqaba now operates at 90 percent of the standard
of the port in Jaifa, and in another 3-4 months Aqaba will be
equal with Jaifa in terms of services and facilities.)
Congressman McNulty thanked Jordan for its response to the
September 11 terrorist attacks on the United States.
Chairman Thomas also expressed an interest in creating a
stopgap measure to help countries deal with the end of the WTO
Multifiber Agreement. Such a measure would be temporary and
create incentives to keep apparel production in the region.
Meeting with His Majesty King Abdullah II
Chairman Thomas opened the meeting by stating that the
delegation has come to Jordan to observe the results and
effectiveness of the FTA between the United States and Jordan.
The King noted that the port of Aqaba ``has its limits,'' and
Jordan is working with Kuwait and Iraq to improve highways. The
Chairman stated that he would investigate whether U.S. funding
would be available.
With respect to geopolitical issues, the King observed that
the region is at a crossroads concerning Iraq and the
Palestinians. He emphasized the need to move the region forward
through trade.
Chairman Thomas stated that he intends to move the Bahrain
agreement through Congress early next year, noting that the
only reason it was not done this year was because of timing and
the Congressional schedule. He also said that Tunisia might be
a good candidate for an FTA if it becomes less Eurocentric. The
King also mentioned the prospects of an FTA with Egypt and
warned that an agreement will ``take a while'' because Egypt is
so large.
Congressman McNulty expressed his gratitude for the King's
leadership and for forging a peaceful relationship with Egypt.
The King responded that he hopes to move the process further.
Congresswoman Johnson commended the King's father and Queen
Rania for their leadership and praised what the King has
accomplished economically ``from bottom to top.'' In response
to her comment about the work of the U.S. Agency for
International Development, the King noted that USAID has been
at the center of reform in Jordan and has created many
successes.
Congressman Lewis said that he looks forward to
opportunities with Jordan in the future. Congressman English
told the King that he looks to him for cues as to what the U.S.
role should be in the region. He said that the United States
often ``makes mistakes of the heart'' because it does not know
how to act, and he ``looks to our Arab friends for
leadership.'' He also asked for the King's views on the causes
of terrorism.
The King responded that the Israeli-Palestinian conflict
has led to terrorism, noting that economic prosperity helps to
reduce terrorism. He said that he is working with the United
States to change the picture. He said that a conference will
shortly be announced for the purpose of identifying what is
moderate Islam, noting that those who kill innocents ``are not
Muslim'' and that there is no such thing as ``extreme
Muslims.''
Chairman Thomas asked the King for his views on the role of
women. The King responded that while Saudi Arabia has a
``disjointed'' view on women, Jordanian women enjoy a strong
role. He noted that the ``extremist element intimidates the
majority'' and needs to be weeded out of government. Chairman
Thomas noted that the QIZ program is a ``great democratizer''
for women. The King agreed, stating that often women are the
major breadwinners for their families, empowering them and
creating a positive social impact.
The delegation concluded the meeting with an extensive
discussion of the situation in Iraq and the future in the
region after Arafat.
Meeting with Minister of Planning and International Cooperation Bassem
Awadallah
The Minister started off the meeting by saying there are
four primary issues of importance to him with respect to the
U.S.-Jordan bilateral relationship: gratitude for U.S. support
of Jordan, teaching English in Jordanian schools, taking full
advantage of the FTA, and establishing stability in Iraq.
The Minister emphasized that Jordan appreciates the support
of the United States, particularly since 1999. U.S. aid to
Jordan has been generous and has provided many benefits in
water, health, social and economic reform, democracy building,
and education. Jordan has focused on improving its education
system and on teaching English to children at an earlier age.
School curriculums previously started English classes in Grade
5, but now Jordan begins teaching English in either
Kindergarten or Grade 1. Teaching English earlier will help
children use their early ability to pick up languages easier
and provide them with a working knowledge of English to work
and compete in a global economy later in life. Many of these
early English programs are funded by U.S. assistance.
The Minister also emphasized his desire that Jordan take
full advantage of the FTA. He emphasized that the QIZ program
has been a ``fantastic success'' but he wants to see Jordanian
industry diversify away from apparel and also increase the
number of Jordanian workers employed in Jordanian factories.
The Minister also believes that one of the best ways that
Jordan and the region can benefit from the FTA and a future
MEFTA is to allow cumulation to help the countries in the
region better integrate their economies.
On Iraq, the Minister expressed his hope that the United
States will maintain a long-term commitment to stability in the
country, and he hopes that Iraq can one day be a meaningful
partner in the region. To attain that goal, it is important
that the United States and others invest in Iraq now. The
Minister also said that Jordan hopes to serve as a helpful role
model for economic and political reform for Iraq and others to
follow. He noted that the success of reforms in Jordan is
testimony to the success of U.S. policies in the region.
Chairman Thomas stated that the U.S. budget process is not
yet complete for this fiscal year, but he expects that
continued U.S. assistance to Jordan will be delivered. He also
noted that while charity for Jordan is minimally acceptable, he
would like to see Jordan do more to help itself, and on this
note he'd like to see a specific effort to improve the port in
Aqaba. Chairman Thomas also expressed optimism for the MEFTA
and integration in the region that such an agreement could
bring. He noted the problems created by the artificial country
boundaries drawn in the region by the British and said that the
best way to overcome the problem is to ignore the borders by
creating integrated economies.
Congresswoman Johnson emphasized that the QIZs are a means
to an end and not the end goal in itself. The Minister agreed
and said he hopes to see diversification in both the products
manufactured in QIZs and in the destination markets for those
products beyond the United States, notably into the European
market.
At the end of the meeting, Chairman Thomas noted Jordan's
key role as a leader in the region for economic and political
reform. Other Arab countries are more likely to follow Jordan's
lead as a fellow Arab nation than by following U.S. policies.
Business Panel Discussion with Members from the Jordan-U.S. Business
Partnership and the American Chamber of Commerce in Jordan
The delegation participated in a business panel discussion
of ``Economic Opportunities in Jordan'' hosted by the JUSBP and
the American Chamber of Commerce in Jordan. The business panel
consisted of representatives from Jordanian companies who have
utilized the JUSBP program and are benefiting from duty-free
access to the U.S. market through the FTA. A few notable
successes of the FTA have been in Jordan's pharmaceuticals,
information technology, and communications sectors, where the
increased intellectual property protections in the FTA have
prompted new investment in research and business development.
In particular, the delegation heard positive testimony from the
Chairman of Hikma Pharmaceuticals based in Jordan. Other
companies that expressed their support and shared success
stories included Lisan Skincare and Al Bareeq Jewelry
Manufacturing Company.
Visit to Hussein District School--INJAZ Program (Spouse Program)
A USAID-funded program, INJAZ teaches Jordanian students a
variety of entrepreneurial and life skills with the goal of
expanding opportunities for youth after they have completed
their formal education. Modeled after the Junior Achievement
Program in the United States, INJAZ provides young people ages
14-24 the tools to contribute to private sector organizations
by emphasizing critical and creative thinking and the value of
entrepreneurship. INJAZ classes, which are now integrated in
the public school curriculum rather than provided as an
extracurricular activity, are led by private sector volunteers.
Due to its success in Jordan, INJAZ is expanding to the greater
region and will be implemented in 12 Middle East and North
African countries.
At the Hussein District School, the spouse delegation
discussed INJAZ with the program's CEO, Ms. Soraya Salti, and
observed two INJAZ classes offered to 15-16 year old female
students: the Success Skills Course and the Entrepreneur Master
Class. The Success Skills Course is designed to strengthen
communication and teamwork skills and highlight the need to
create a positive impact on others. The Entrepreneur Master
Class, a one-day seminar, introduces students to starting their
own businesses from initial idea generation to production and
marketing. The delegation also heard from recent graduates of
the program who had completed internships at McDonald's and a
local shipping firm.
Visits to Amman Entrepreneurs and Microfinance Program (Spouse Program)
Creating a sustainable microfinance industry in Jordan has
been a focus of USAID's work in the country. The microfinance
program has helped create an industry that provides poor
entrepreneurs opportunities to participate in Jordan's economy.
USAID has provided grants and technical assistance to four
start-up microfinance institutions; in 2005, three of these
four organizations are expected to ``graduate'' from USAID
assistance. In 2003, the microfinance institutions provided
almost 16,000 entrepreneurs with loans ranging from USD$140 to
$22,000.
The spouse delegation discussed the program with
representatives from USAID and the Jordan MicroCredit Company
(one of the microfinance institutions supported by USAID) and
three local entrepreneurs who have received financing: a glass
artist, a producer of traditional embroidery products, and a
wood worker/embroidery artisan. The Jordan MicroCredit Company,
established in 1999, has disbursed more than 13,000 loans with
a collection rate of over 99 percent and has established a
website as a marketing tool. The company's product portfolio
has also grown based on client feedback and market research.
The glass artisan, who began selling his wares from his home a
few years ago, has expanded his business, operating from his
own shop and exporting products to other countries. Working out
of a home-based shop, the embroidery artisan employs 25 other
Jordanian women to produce the handicrafts.
OMAN
Meeting with Omani Minister Responsible for Foreign Affairs Yousef Bin
Alawi Bin Abdullah
The Chairman began the meeting by explaining that the
delegation hopes to move as quickly as possible to establish a
free trade agreement in the Middle East. In particular he noted
that he would like to conclude an agreement with Oman prior to
the termination of Trade Promotion Authority next year. While
acknowledging that this timetable is difficult, the Chairman
noted that using the objective standards already established in
prior agreements will speed congressional approval. The
military relationship between the United States and Oman has
been very positive, he noted, and there is no reason why the
economic relationship should not be the same.
The Minister responded that the timetable proposed by the
Chairman is ambitious, but Oman will speed up and ``if any
areas are gray, we will make them white; we will not create
obstacles.'' Oman does not want to make a linkage between
economic and other issues and is willing to do what it takes to
conclude the agreement because Oman will benefit, he continued.
Oman, he said, is encouraging other Gulf Cooperation Council
members to act in a positive manner. The Chairman responded
that he is excited that the Omanis have made significant
changes in a short time.
The Chairman then said that he believes that negotiations
can be initiated within a week. Labor, he said will be the
focal issue. He expressed his concern that objective, common
standards are needed for all agreements. The Minister then
described the labor law being within the province of employers
and employees, not government--Oman does not regulate the
choice of the private sector. He pointed to the new labor law
implemented two years ago, noting that reforms are continuous.
The Chairman emphasized that if Oman does not have the labor
laws of other countries which have entered into FTAs, then an
Oman agreement will be difficult to pass.
Congressman McNulty thanked the Minister for Oman's
outstanding and longstanding friendship. Congresswoman Johnson
said that she appreciated the developing role of women in Omani
society, noting its importance to the long term strength of
Oman. She also pointed to the healthy management of
environmental preservation and tourism. She said that she looks
forward to passing an Oman FTA through the House, emphasizing
the importance of an FTA with the Middle East.
Congressman English stated that he is a pro-trade Member
from a protectionist district, noting that it is hard for him
to sell trade agreements to his district. He would like to be a
``sounding board'' in moving forward with Oman, as he was with
respect to Morocco. An FTA, he said, would be in the mutual
interest of the United States and Oman. Congressman Lewis added
that he is a free trader in a protectionist district as well.
Chairman Thomas emphasized that he supports multilateral
agreements but noted that it is difficult to complete these
agreements because one country can block an outcome. Therefore,
he supports working on a bilateral or regional basis in the
meantime. With respect to the Gulf Cooperation Council, he said
that the three countries that are ready (Oman, the United Arab
Emirates, and Bahrain) for agreements with the United States
should move ahead, and then the other three countries (Kuwait,
Qatar, and Saudi Arabia) can join when they are ready. He
emphasized that the opportunity will be there for the others to
join when they can. The Minister noted several times in
response that the U.S. economy is bigger than the GCC and he
knows it is in Oman's best interest to keep that fact in mind.
He also said that Oman does not want to repeat the mistakes
that it made with the EU. Chairman Thomas then stressed the
need for objective criteria to be applied in establishing free
trade agreements. He said that he is comfortable with Oman's
record on banking, insurance, and WTO accession. He also
offered to provide technical assistance to improve Oman's labor
laws, noting that such improvements are necessary to receiving
Congressional approval for the agreement.
The Chairman and the Minister then discussed Oman's future.
The Chairman said that he is impressed with the Sultan's
understanding of the future and the limitation of petroleum
reserves. The Minister agreed, noting that Oman wants to create
a services industry. The Chairman then noted that the
Omanization policy of hiring Omani workers is understandable
but creates the need for transparent standards in its
application. The Minister responded that Oman needs to assure
that 25 percent of workers in a venture are Omani. He also
noted that it is increasingly difficult to obtain workers from
India. The Chairman then noted that this labor shortage may
provide Omani workers with some leverage with respect to worker
rights and wages. The Minister noted that the minimum wage is
approximately $312 per month. He also said that in accord with
the Omani basic law, workers have the right of association and
can pursue labor disputes in court. The Chairman responded that
it is far clearer to use internationally recognized standards,
noting that Members will examine how Oman measures up with
respect to the eight International Labor Organization core
labor standards.
Congresswoman Johnson asked in particular about enforcement
of ILO standards on child labor, noting that Oman has not
ratified the ILO convention on this subject. She noted that for
many Members whose districts have been devastated by trade with
China, supporting free trade agreements is difficult, and
support from Democrats is therefore essential to achieve a
majority. She pledged her support for an agreement with Oman
but said that it is a political challenge, noting in particular
that the United States must make sure that it can enforce its
trade agreements.
The discussion then moved to how the entire Middle East
region can be integrated. Chairman Thomas noted the particular
problems associated with Saudi Arabia. He said that he is
interested in including Tunisia because he hopes that it might
lead to integration of Algeria and Libya. He noted that Egypt
is a ``pivot'' country.
Congresswoman Johnson inquired about USAID programs in
Jordan, noting that she supports efforts to develop middle
management and entrepreneurship, particularly in countries like
Oman that have such a young population. Chairman Thomas added
that he supports additional technical assistance in this area,
and the Minister suggested a workshop.
Congressman McNulty then asked the Minister for his views
about whether the peace process can be restarted. The Minister
said that once Arafat dies, Palestinians will have to elect a
new President. While he said that he does not know if the
Palestinians can agree on who the candidate should be, he
believes the election will be peaceful. Chairman Thomas added
that elections empower the people. In response to a question
from Congresswoman Johnson, the Minister said that there is a
``readiness'' to have a Palestinian state and to accept Israel.
Congressman English then raised the topic of university
education, noting that several universities in his district are
seeking foreign students. The Minister said that despite having
raised the issue four times with the United States, post 9/11
visa restrictions make it difficult for Omani university
students to travel to the United States, and Australia is
becoming an increasingly attractive destination. U.S.
Ambassador Baltimore responded that people ``think'' it takes a
long time and is difficult to obtain a visa, but he emphasized
that the process is ``not onerous'' and is ``much better'' than
it used to be, taking only one month to obtain the visa.
The delegation and the Minister then discussed how to
attract American tourists to Oman. The Ambassador said that
this summer, Oman will be the first Middle Eastern country to
be featured in the yearly folk festival on the Mall in
Washington, D.C.
Congressman English asked what the United States ``should
do better to put forward our case here.'' The Minister replied
that diplomacy is very much affected by the U.S. media. He said
that the United States ``doesn't always consult with its
friends,'' sometimes ``embarrassing U.S. friends in the
region.'' It is ``difficult or impossible'' for the United
States to do better. Congressman English responded that any
mistakes ``are mistakes of the heart'' because there is a
strong desire by the American people for peace in the region.
He emphasized that he is ``grateful that our friends have
stayed with us in difficult times when we've shouldered
responsibility for our mutual benefit.'' Congresswoman Johnson
agreed, noting that ``we need a richer dialogue because the
United States can't take the lead on everything.'' Some of the
structures that have been relied upon have been unsatisfactory,
she noted.''
The Chairman and the Minister then concluded the meeting.
Chairman Thomas noted that he has set forth an ambitious
schedule for an FTA but said that it should not be an
insurmountable challenge. He said that he is concerned that
delay could spoil chances for such an FTA if the Bahrain
agreement moves forward but there is a delay of several years
for other agreements, or if ``the political winds change.'' The
Minister agreed and pledged to try hard.
Meeting with His Majesty Sultan Qaboos bin Said, Sultan of Oman
The delegation traveled to Sohar, one of the Sultan's
palaces, for an audience with the Sultan. Chairman Thomas began
the meeting by stating that he believes that there is a six-
month window to negotiate an FTA with Oman because of the
expiration of TPA. He said that few countries have shown as
much progress as Oman. The Sultan emphasized that Oman wants to
be a U.S. trading partner.
Congressman McNulty agreed with the Chairman about
expanding the friendship between the two countries, noting the
1833 friendship treaty that began the relationship.
Congresswoman Johnson commended the Sultan for including women
in the right to vote. She also congratulated the Sultan for
moving to a health care system dependent on electronic records.
This ``sound thinking,'' she said, allows for prevention and
management of disease, not just treatment. Congressman English
said that his earliest exposure to Oman was a report that he
wrote in grade school, and he noted how much the country has
transformed since that time. He said that he looks forward to
negotiating a trade agreement if it is mutually beneficial.
Congressman Lewis noted that he hopes to return to Oman.
Chairman Thomas then returned to the timing and content of
an FTA. He said that if the United States and Oman are going to
move together in a timeframe that has never been done before,
the two countries will need to use means that have been
successful before. He pointed to Morocco labor laws and Bahrain
standards as examples, noting that Oman's considerable reforms
in the insurance and banking sectors demonstrate that Oman
knows how to use and apply standards. He said that the United
States has used a ``ruler'' in all of its agreements, and this
ruler must be applied in an Oman agreement to have rapid,
successful Congressional consideration. The most difficult
political issue for the United States, he emphasized, is labor.
The Administration is likely to send a letter to Congress
shortly notifying it of its intent to negotiate an FTA with
Oman. The negotiations can move rapidly, he said, but if any
issue slows them down, it will become difficult.
The Sultan asked if there are specific areas of concern.
The Chairman replied that Democrats examine whether a country
complies with the standards of the International Labor
Organization, the most fundamental being collective bargaining,
the right to strike, and whether the court structure is
independent of political influence. If the Omani model moves
away from this structure, he said, it is less familiar to
Congress. The Chairman also pointed to the need for approval by
the Omani government of investments with over 70 percent
foreign investment, noting that the United States prefers
transparent standards. With regard to Omanization, he said that
he understands that Oman is trying to employ Omanis, but
because decision-making is not transparent, opponents can argue
that there is an opportunity for discrimination. The Chairman
said that on other issues, Oman has worked ``very
professionally'' to accede to the WTO.
The Sultan then assured the Chairman that Oman will work on
these issues. He told the Members that Oman wants to make
everything transparent because it has ``nothing to hide'' and
wants to be ``just across the board.'' He mentioned Oman's
close relationship with India and Pakistan and then noted that
his biggest concern is employment for Omanis. Each person is
responsible for himself, he said, but the government is blamed
for not creating employment opportunities and cannot employ
everyone.
Chairman Thomas expressed his amazement at the
transformation in Oman in providing educational opportunities
so that people can be employed. An FTA, he added, brings long
term changes. Unlike the EU, the United States opens its market
to countries that are ``shining examples.'' If other countries
in the region want this relationship too, they will have to
earn it because they will not be rewarded merely for having a
strategic relationship. The way this relationship is earned is
by meeting standards so that U.S. companies are comfortable in
investing, the Chairman said.
The Sultan replied that he has made the hard decision not
to expand the government sector. Oman is providing special
retirement opportunities for people to move to the private
sector. Future employment in the public sector will be only as
needed. He emphasized that access to a job should not be based
merely on holding an education certificate but on demonstrated
ability to carry out the job requirements. He is spending money
on the private sector to make it strong so it can develop for
the future. He is working hard to educate Omanis to give them
the tools to find jobs because Omani workers have to compete
with immigrants to show that they can do the job. Education is
not a guarantee of a salary, he said, which must instead be
earned.
Chairman Thomas agreed with this philosophy, noting the
``multiplier effect'' of private sector job creation, while the
public sector creates only an ``arithmetic'' effect. ``We want
to promote the private sector with you,'' he emphasized.
The Sultan added that he is placing special emphasis on
self employment through small business loans, youth funding,
and management skills training. The opportunity for young
girls, he said, is quite substantial, and family members try to
find jobs for the women in the family because their employment
improves the family. Oman must ``open doors but leave things
for the people to decide'' through indirect help and by keeping
the government away.
Congresswoman Johnson commended the appointment of women to
visible positions of power. She noted that the fastest-growing
group of small businesses in the United States is female-owned,
and she encouraged Oman to emphasize such businesses. The
Sultan agreed and replied that he is working on this quietly.
Chairman Thomas said that he wants to promote the Sultan's
image with his people by creating additional opportunities for
them through trade with the United States. He promised to do
everything he can to make sure that Oman will have an FTA by
the middle of next year, but he emphasized that Oman will have
to do its part.
Congresswoman Johnson then inquired about the situation in
Iraq. The Sultan replied that Iraq is ready for elections,
noting that the United States ``has given Iraq an opportunity
to help itself'' that should not be thrown away. It is ``very
important for Iraq to hold these elections,'' he emphasized.
Whether the elections should be for the whole country, he said,
may be ``rather difficult,'' but that difficulty should not
result in missed opportunities for the rest of the country.
``We must help Iraq to help itself and to achieve its own
destiny,'' he said. Chairman Thomas agreed that at some point,
Iraq has to control its own destiny, just as Oman has.
With regard to Arafat's imminent death, the Sultan said
that Palestinians will have a new opportunity if they take it
and if they avoid rivalries. He emphasized that the
Palestinians need a leader who will lead on the basis of
institutions, not for himself. Palestinians need someone who is
respected and will allow the government to function. Chairman
Thomas agreed that a leader who will lead is crucial, and
Congresswoman Johnson pointed to the need to build an economic
base.
Meeting with Omani Minister of Commerce and Industry Maqbool bin Ali
Sultan
Minister Maqbool opened the meeting by stating that two
meetings have been held with Ambassador Zoellick and one with
Cathy Novelli of the U.S. Trade Representative's Office
regarding a free trade agreement between the United States and
Oman. He expressed that Oman is eager to move forward with an
agreement. He noted that Ambassador Zoellick has explained the
stages required by trade promotion authority. Minister Maqbool
asked the delegation to discuss areas in which Oman's policies
need reform. He noted that Oman has had a free market economy
for a long time, since 1835, and wants more American
investment.
Chairman Thomas said that moving forward with a free trade
agreement should not be too difficult. The United States has an
objective ruler to determine eligibility for a free trade
agreement. It is not country-specific. Countries cannot pick
and choose the parts of the free trade agreements that they
would like, he said, although it is acceptable to go above the
baseline commitments established in the free trade agreement,
such as Singapore's commitments on financial services. He noted
that Morocco made significant changes to its labor laws and
that Morocco's constitution provided the right to strike. He
commented that some Democrats in Congress will not be
interested in the cultural, political, and economic differences
that cause Oman to maintain certain labor laws but instead will
apply an International Labor Organization checklist. He said
that Oman's rule which requires approval of any investments
with greater than 70 percent foreign ownership is not
transparent. If Oman wants to conclude an agreement by next
July, it must work with the U.S. Trade Representative's office
on these issues. He emphasized that he wants Oman to go through
the process quickly, and he recommended that Oman examine the
criteria and determine whether it could meet these tests.
The Commerce Minister replied that he believed that Oman
has resolved the issues regarding the 70 percent foreign
ownership limit. Oman is not interested in limiting U.S.
investment, he said; the rule is designed to limit smaller
investments like barbershops. Chairman Thomas noted that it
could still be a problem because Members of Congress will be
concerned about possible discrimination against any investors.
Minister Maqbool replied that the agreement would be between
Oman and the United States, not any others, and Oman has no
problem with any American company.
The Commerce Minister said that he believes that Oman would
have no trouble making commitments comparable to those of
Bahrain on labor issues and he acknowledged that Oman benefits
from the free trade agreement more than the United States.
Chairman Thomas said that Oman is an important trading partner
for the United States because of its strategic location and the
example it could set for the region. The Commerce Minister
commented that not all free trade agreements are the same.
Chairman Thomas agreed but said that there is a baseline that
must be met, especially on labor issues and the need to meet
International Labor Organization standards. The Commerce
Minister assured the delegation that he does not believe that
it will be a problem to meet this baseline. Chairman Thomas
said that he expects a letter from the President to the
Congress announcing the intention to initiate free trade
negotiations with Oman would be coming very soon.
Association of Early Intervention for Children with Special Needs
(Spouse Program)
The Association has developed a number of programs to
comprehensively serve children with special needs aged 0-6.
Programs include a specialized day care center, an assessment
unit, a home-visiting educational service, and support groups
for parents. The Association's programs focus on developing the
social skills, independence, and self-esteem of the children
with the goal of integrating them into regular schools or
minimizing their disabilities for an improved quality of life.
The Director, Ms. Masooma al-Saleh, noted that the Association
also strives to educate the community and increase public
awareness and understanding of people with special needs.
The Association is supported solely by private donations
and is staffed by trained professionals. During an
observational visit, the spouse delegation learned that the
primary obstacle facing the Association at this time is the
lack of trained personnel including physical, occupational,
speech, and psychological therapists. The Director acknowledged
that it has been a challenge getting students to study in these
fields. Although the Center has a capacity of 60 children, only
50 spaces have been filled due to the lack of trained staff. As
part of its program, the Association provides continuous
training for staff and volunteers to develop professional
skills in different areas related to disability.
The National Association for Cancer Awareness (NACA) (Spouse Program)
Initiated in 2002, NACA has become the leading advocacy
group in Oman for cancer awareness. The spouse delegation met
with the President of NACA, Yuthar Al-Rawahy, and discussed the
goals and achievements of the organization.
NACA primarily focuses on educating both the public and
health care providers about cancer, particularly the need for
repeated regular examinations for early diagnosis and
prevention. The organization achieves these objectives by
conducting seminars, visiting schools, distributing educational
materials at a variety of sites, and organizing various
fundraising activities. Some achievements include moving NACA's
operations from in-home to donated office space, increasing
participation in the annual walkathon from 600 to 1000, and
hosting a representative from the U.S. National Cancer
Institute at NACA's annual conference. Ms. Rawahy expressed
NACA's appreciation of the grant from the U.S. State Department
that funded the purchase of vital office equipment and some
consultant services. In the near future, NACA hopes to operate
a toll-free number and establish a mobile one-stop diagnostic
clinic that can reach remote areas.
EGYPT
Country Briefing with Ambassador David Welch
Ambassador Welch provided the delegation with a briefing on
the U.S.-Egypt bilateral relationship as well as on political
and economic changes taking place in the country. The
Ambassador started the briefing by noting that the U.S.-Egypt
bilateral relationship is strong but the Egyptian Government
was ``shocked'' that the Lantos Amendment, which would have
shifted $325 million from U.S. military aid to Egypt to U.S.
economic aid, received some support. He also noted that
Egyptian elections will be held in 2005 and while a leadership
change is expected, there is no obvious successor.
Chairman Thomas said that the focus of the delegation is
trade and that he plans to discuss the potential for
establishing Qualifying Industrial Zones (QIZs) in Egypt and
for launching negotiations for a U.S.-Egypt Free Trade
Agreement. On QIZs, the Chairman noted that it is unfortunate
that Egypt waited so long to utilize the QIZ process, as the
expiration of the WTO Multifiber Agreement on January 1, 2005,
means that any QIZ benefits might easily be overtaken by the
predominance of Asia. Chairman Thomas also noted that Egypt's
best chance to receive Administration approval for the QIZs is
to diversify as much as possible beyond textiles.
On a potential FTA, the Chairman said he plans to make it
clear that the U.S. Congress has an objective ruler by which it
measures a country's readiness for an FTA, and Egypt will be
measured by that ruler just like all other potential FTA
partners. In response, the Ambassador noted Egypt has
undertaken serious reforms in recent months, and the new
Egyptian cabinet includes reformers from the private sector who
are pushing ahead with meaningful economic reform in the
country. Such changes include reductions and simplifications
for personal and corporate tax rates, as well as reforms in the
financial sector, customs administration, and intellectual
property rights. At the same time, the Ambassador noted that
particular problems continue, including Egypt's authorization
of copycat versions of U.S. pharmaceuticals, Egypt's suspension
of U.S. beef imports without scientific basis due to BSE
concerns, and Egypt's restrictions on imports of poultry for
failure to meet Halal (Islamac dietary) requirements.
The Ambassador also briefed the delegation on his
assessment of a post-Arafat Middle East, stating that it is
important to work with existing Palestinian leadership to
ensure a stable transition. He said that once new Palestinian
leadership is in place, the goal is to quickly start to work on
a disengagement plan and move forward with the Road Map.
On Iraq, the Ambassador said that Egypt is hosting a major
international conference to build international support for
Iraq on November 22-23, 2004. The conference will include
representatives from the G-8 nations, the European Union,
United Nations, Arab League, Gulf Cooperation Council, the
Islamic Conference, and Iraq's neighboring states (including
Syria and Iran). This is the first significant international
event to discuss Iraq and build international support.
Meeting with President Hosni Mubarak
Chairman Thomas began the meeting by introducing the
delegation and describing the role of the Ways and Means
Committee in trade policy. He described the purpose of the trip
as visiting friends in the region, with a focus on economic
progress in the region. He is trying, he said, to grow a trade
relationship with Egypt.
President Mubarak described his views on a post-Arafat
world, noting that the governing authority will form a
committee, and he hopes that it will come up with one decision
and will give hope to the people. Chairman Thomas agreed that
he hopes the Palestinians will come to agreement and if joint
leadership is named, the leaders can work together, and if a
single leader is named, he can truly lead. The President said
that he is ``confident'' that the Palestinians can reach
agreement.
Congressman McNulty praised the President as a ``great
visionary leader,'' commending him for ``risking his life for
peace.'' He said that he is confident that they will make
progress on political and trade issues.
Congresswoman Johnson mentioned that after her visit to
Egypt in 1999, she introduced a resolution to encourage the
Administration to negotiate an FTA with Egypt because Egypt was
negotiating with Europe. She said that she is discouraged that
more progress has not been made and that she is looking forward
to working with the President. She emphasized that she needs to
tell her constituents that any agreement would represent
``fair'' trade, so she will be looking at intellectual property
enforcement and an end to the BSE beef ban. She added that
peace and stability need to be bolstered by an economic
relationship between the United States and Egypt. The President
noted the economic reforms that he has already undertaken on
banking, customs, and taxation, acknowledging that there is
work still to do. ``It is moving,'' he said, ``but it will take
time.'' Chairman Thomas said that the President's commitment to
continue reforms is important. The President agreed, stating
that the government cannot be afraid to move forward because
some say that there should be another way. Congressman Lewis
thanked the President for his leadership and associated himself
with the remarks of Congresswoman Johnson.
President Mubarak mentioned that earlier in the year, the
business community said that it was ready to stand for free
trade. The QIZ program, he said, is a good step forward.
Chairman Thomas responded that his ``heart is heavy'' on the
QIZ issue because the greatest opportunity for movement in the
QIZs is textiles, but the window is narrow because of the
expiration of the WTO Multifiber Agreement in January 2005. He
said that it would have been better had the QIZs been
considered a few years ago. President Mubarak said that at
least the request now is a step. Chairman Thomas agreed.
Congressman English stated that the strategic relationship
with Egypt is central to progress in the Middle East. He would
like to see a more strategic partnership between the United
States and Egypt in the WTO, he added, because the WTO
represents an opportunity to help the developing world. He
welcomed the opportunity to act together to move the European
Union in the negotiations and achieve success.
Chairman Thomas stated that trade brings countries
together. He said that he hoped that Egypt would have the
political courage to ``say no to protectionism,'' noting that
the United States has such protectionist forces too. The QIZ,
he said, is a first step, and he hopes that after that point
there will be consistent progress together, noting that such
progress has been a concern in the past.
The Chairman praised the President for ``an impossible job
that you've done well,'' stating that he wants to take this
leadership focus and move it to trade. The President said that
customs and tax reform have never been made before, and the
Chairman responded that the United States is anxious to move
forward and see these changes realized.
The Chairman concluded by saying that he needs to convince
his Congressional colleagues about the trade relationship with
Egypt and will continue to work to do so; ``treading water''
can be difficult. What has been done is remarkable, he said,
and he hopes to see continued progress.
Meeting with Egyptian Prime Minister Ahmed Nazif, Minister of Trade and
Industry Rachid Mohamed Rachid, Minister of Finance Dr. Youssef
Boutros Ghali, Minister of State for International Cooperation
Fayza Abul Naga, and Minister of Investment Development Dr.
Mahmoud Mohamed Safwat Mohei-Eddin
Chairman Thomas started the meeting by introducing the
delegation, describing the role of Congress, and in particular
the role of the Ways and Means Committee, in setting U.S. trade
policy, and emphasizing that the delegation's primary focus is
trade. The Chairman emphasized that he would like to see an
expanding trade relationship with Egypt.
The Prime Minister said it is important that the United
States and Egypt always have a good relationship, and he
emphasized the recent reforms that have taken place in Egypt.
He said the new Egyptian Cabinet has a specific mandate to
accelerate economic, social, and political reforms, and the new
Ministers are pushing forward with major structural changes.
The Prime Minister said that these reforms are ``seen
positively'' by both the Egyptian ``man on the street'' and
internationally. He said he recognizes that it is important
that the new Cabinet establish credibility, and he noted that
the reforms have introduced more confidence between the
Egyptian government and society. The Prime Minister also said
that the Egyptian Parliament was to convene that week, and he
expected new legislation to be introduced to reduce and reform
personal and corporate tax rates, which will encourage
increased trade and investment in Egypt.
The Prime Minister noted the importance of the United
States as a trading partner to Egypt; the United States is
Egypt's number one export market, and second largest source of
imports into Egypt. He said Egypt wants to conclude a Free
Trade Agreement (FTA) with the United States and also establish
QIZs. He said that Egypt is a strong ally of the United States
and the country ``needs reassurance'' that the United States is
backing Egypt's reform program.
Chairman Thomas discussed U.S. trade policy toward the
region and stated his support for a Middle East Free Trade
Area. He noted that the United States already has FTAs with
Morocco and Jordan, and a U.S.-Bahrain FTA is ready for
Congress to implement. The Chairman said he would like to see
these FTAs expanded and linked to include all countries along
the Mediterranean. The Chairman also mentioned the positive
prospects for FTA talks to be launched with Oman and the United
Arab Emirates.
The Chairman also emphasized that the United States remains
committed to multinational trade liberalization through the
World Trade Organization, but because each WTO member country
is entitled to a veto, the process is slow, so the United
States is also seeking bilateral and regional trade agreements
in the meantime with countries that are ready. He emphasized
that an important element in such agreements is that they be
uniform, particularly in areas such as financial services,
transparency, and agriculture non-tariff barriers to trade,
because exceptions in these areas make it difficult to conclude
an agreement. Also, unequal FTAs would make it difficult to
integrate various FTAs in the region in the future to create
larger regional and ultimately multinational agreements. The
Chairman emphasized that all U.S. FTAs and FTA partners need to
meet objective standards and this is why it is so important
that Egypt undertake much needed economic reforms without
delay. The Chairman said that Egypt's recent steps are a
positive signal, but Egypt will need to show a positive and
sustained record of concrete economic reforms before it will be
ready for an FTA. The Prime Minister responded that U.S.
skepticism regarding Egypt's reforms are ``rightfully in
place'' but the recent reforms are not just promises, they are
concrete actions and time will prove it.
The Prime Minister then said that Egypt does not have the
luxury of time to wait, and Egypt is trying to show that it is
``two steps ahead.'' He said that Egypt is serious about
reform, and President Mubarak has issued a mandate for both
short term and long term reform goals. Minister Boutros Ghali
interjected his opinion that nothing will happen on the MEFTA
until there is an FTA with Egypt because Egypt ``is the center
of gravity.'' He said the countries with which the United
States has been negotiating FTAs are too small to be
significant. Instead, Minister Boutros Ghali believes the only
way to attract other large countries in the region such as
Saudi Arabia is to conclude an FTA with Egypt. Chairman Thomas
reiterated that when Egypt meets the objective criteria by
which all potential FTA partners are judged, FTA negotiations
with Egypt can begin.
On QIZs, Chairman Thomas noted that the QIZ program has
been available to Egypt for a long time, and unfortunately the
opportunity to maximize the benefits of QIZs for apparel is
diminished with the impending end of the WTO Multifiber
Agreement in January 2005. Nevertheless, the U.S.
Administration and Congress are consulting on QIZs for Egypt.
Chairman Thomas noted that one positive aspect of Egyptian QIZs
compared to Jordanian QIZs is that it appears likely that
Egyptian investment capital and Egyptian inputs would be used
in Egyptian QIZs. Conversely, Jordanian QIZs have historically
relied on both foreign investment capital as well as foreign
fabric in apparel production.
Delegation Panel Discussion with Members of the American Chamber of
Commerce in Egypt
The delegation participated in panel discussion with
members of the American Chamber of Commerce in Egypt on the
topic ``U.S.-Egypt Partners for Growth.'' The business
community was particularly interested in the prospects for
establishing QIZs in Egypt and negotiations for a potential
U.S.-Egypt Free Trade Agreement.
Chairman Thomas started the panel by explaining that the
delegation is traveling through the region to focus on trade
and investment and to encourage economic development. He said
that the inclusion of private sector leaders such as Minister
Rachid in the new Egyptian Cabinet is a positive sign of reform
in Egypt and can bode well for a potential U.S.-Egypt FTA in
the future. The Chairman said he views Egypt as having
tremendous potential for economic progress, and he cited
several reform measures by the new government that will help
improve economic conditions. He said that Egypt is pivotal to
long term Middle East policy, but at the same time the United
States uses an objective yardstick to measure whether a country
is ready to negotiate an FTA with the United States.
Members of the business community asked questions on timing
for the establishment of QIZs. Chairman Thomas responded by
saying that unfortunately Egypt has a sad history of lost
opportunities, noting that only now is Egypt expressing an
interest in participating in the QIZ program, which was
established in 1996. Congressman McNulty noted that the failure
to obtain an agreement on QIZs resulted from Egypt's reluctance
to engage economically with Israel.
The delegation was asked what came to mind when people in
the United States, and Washington, D.C. in particular, thought
of Egypt. The response from the delegation overwhelmingly
pointed to Egypt's strong and steady leadership from the late
President Sadat, who pioneered peace in the region, to
President Mubarak, who continues to work for a larger regional
peace.
Congresswoman Johnson addressed some economic and trade
issues associated with U.S.-Egypt bilateral relations and the
Middle East region. On the question of reform and a Middle East
Free Trade Area (MEFTA), Congresswoman Johnson observed that
Egypt is the country by which all others in the region are
judged and judge themselves.
At the end of the event, the President of the American
Chamber of Commerce in Egypt, Dr. Taher Helmy, thanked the
delegation and presented them with honorary memberships to
AmCham Egypt.