Identifier
Created
Classification
Origin
07CAIRO1722
2007-06-07 11:49:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Cairo
Cable title:
EGYPT'S EXPECTED CHANGES IN EXPORT SUPPORT
how-toVZCZCXYZ0005 PP RUEHWEB DE RUEHEG #1722 1581149 ZNR UUUUU ZZH P 071149Z JUN 07 FM AMEMBASSY CAIRO TO RUEHC/SECSTATE WASHDC PRIORITY 5565 INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 0174 RUEHRL/AMEMBASSY BERLIN PRIORITY 0224 RUEHMO/AMEMBASSY MOSCOW PRIORITY 0378 RUEATRS/DEPT OF TREASURY WASHDC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
UNCLAS CAIRO 001722
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR NEA/ELA
E.O. 12958: N/A
TAGS: ETRD ECON EG
SUBJECT: EGYPT'S EXPECTED CHANGES IN EXPORT SUPPORT
QUESTIONABLE UNDER WTO RULES
UNCLAS CAIRO 001722
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR NEA/ELA
E.O. 12958: N/A
TAGS: ETRD ECON EG
SUBJECT: EGYPT'S EXPECTED CHANGES IN EXPORT SUPPORT
QUESTIONABLE UNDER WTO RULES
1. (U) During a meeting on May 23 with key economic advisors
and export industry leaders, Minister of Trade and Industry
Rachid Rachid announced he will consider reorganizing the
Export Support Fund, according to press accounts. The Export
Support Fund is designed to increase the quantity and quality
of Egyptian exports by providing production subsidies and
other benefits to certain industries that are not in
Qualified Industrial Zones (QIZ). The Fund focuses on
Egyptian textiles and automobile parts. Many factories
located within non-QIZ industrial zones are receiving this
support to encourage investment from German, Russian, and
Chinese companies.
2. (SBU) A USAID contractor working for the Ministry said
that the program has been dormant in recent years and that it
is unclear how Rachid's reforms will take shape. In early
2007, the Ministry announced that Export Support Fund
production subsidies and reduced rents on land would be
scaled down over the course of five years, contingent upon
selected industries achieving export targets. Subsidies
begin at 10 percent on the value of the exports and will be
gradually reduced to 6 percent in the fifth year before they
are ultimately eliminated.
--------------
Dubious WTO Compliance?
--------------
3. (SBU) In response to our concerns about the program, the
contractor was unsure whether the changes would be consistent
with the GOE's WTO obligations, although Ministry officials
claim their export support is technically compliant. We will
continue to monitor this program and any changes to evaluate
their compliance with Egypt's WTO obligations.
RICCIARDONE
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR NEA/ELA
E.O. 12958: N/A
TAGS: ETRD ECON EG
SUBJECT: EGYPT'S EXPECTED CHANGES IN EXPORT SUPPORT
QUESTIONABLE UNDER WTO RULES
1. (U) During a meeting on May 23 with key economic advisors
and export industry leaders, Minister of Trade and Industry
Rachid Rachid announced he will consider reorganizing the
Export Support Fund, according to press accounts. The Export
Support Fund is designed to increase the quantity and quality
of Egyptian exports by providing production subsidies and
other benefits to certain industries that are not in
Qualified Industrial Zones (QIZ). The Fund focuses on
Egyptian textiles and automobile parts. Many factories
located within non-QIZ industrial zones are receiving this
support to encourage investment from German, Russian, and
Chinese companies.
2. (SBU) A USAID contractor working for the Ministry said
that the program has been dormant in recent years and that it
is unclear how Rachid's reforms will take shape. In early
2007, the Ministry announced that Export Support Fund
production subsidies and reduced rents on land would be
scaled down over the course of five years, contingent upon
selected industries achieving export targets. Subsidies
begin at 10 percent on the value of the exports and will be
gradually reduced to 6 percent in the fifth year before they
are ultimately eliminated.
--------------
Dubious WTO Compliance?
--------------
3. (SBU) In response to our concerns about the program, the
contractor was unsure whether the changes would be consistent
with the GOE's WTO obligations, although Ministry officials
claim their export support is technically compliant. We will
continue to monitor this program and any changes to evaluate
their compliance with Egypt's WTO obligations.
RICCIARDONE