On 5 December, Egypt and the UK inked an agreement that aims to strengthen political and trade ties between the two countries.
The agreement, which will come into force by the beginning of January, will allow British businesses and consumers to benefit from continued preferential access to the market after the end of the transition period caused by Brexit, which will help boost vital trade and investment, according to the British Embassy.
In an exclusive interview, Jeffrey Donaldson, the UK’s Prime Minister’s Trade Envoy to Egypt, shared with Ahram Online the details of the agreement and how the UK seeks to deepen economic and commercial cooperation in the phase after Brexit.
Donaldson also said that the UK is one of Egypt’s leading investors with the value of total trade amounting to about £3.5 billion annually, adding that the UK’s priority is to ensure the continuity of the EU-Egyptian Association Agreement and to deepen the bilateral relationship between both governments.
Ahram Online: How has COVID-19 affected economic and trade relations between Egypt and the UK in light of the severe impacts of the pandemic on trade movement and demand and supply chains globally?
Jeffrey Donaldson: The British and the Egyptian governments joined forces during the first wave of the pandemic, and both governments acted quickly and decisively to combat the spread of COVID-19 and offer high-quality healthcare to Egyptians. Our story of cooperation throughout the crisis is very positive, despite all the negatives.
The disruption that the coronavirus created to certain supply chains highlighted the valued role that Egypt plays in key sectors. We are working on deepening this work across more value chains over the coming few years.
We are supporting the Ministry of Planning to build back better from COVID-19 by developing agri-business distribution and logistics; promoting job opportunities, exports, and food security; as well as reducing waste and prices, and promoting energy efficiency.
AO: How can the two countries work together to overcome the current challenges caused by the dual shock of COVID-19 and the decline in global oil prices?
JD: From the beginning of the pandemic, there was great cooperation between our two governments. Egypt provided Britain with PPE to be used in hospitals at a very crucial moment, almost a month after the crisis started, at a time when there was great pressure on British hospitals. In return, the UK provided Egypt with PCR test kits and other assistance in the field of training for doctors and nurses through the World Health Organisation and the World Bank.
The UK is one of the largest foreign investors in Egypt, a telling sign of our strong and consistent commitment to Egypt. On the trade side, I am optimistic about the future, because despite the negative challenges arising from the coronavirus and the difficulty of travel, private sector interest is still there, and British companies have an appetite to invest in Egypt.
I believe that this is due to the performance of the Egyptian economy during the crisis. Egypt is already the UK’s third largest business partner in Africa, as well as the fastest growing market there.
According to the International Monetary Fund, Egypt is one of the very few countries in the world expected to achieve growth in 2020. Most countries, including Britain, have witnessed a decline in growth rates, and investors always look for the regions that have growth for their placements. Egypt is among those countries.
It is worth mentioning that there is a great complementarity between our economies — the UK is a keen consumer of Egyptian agricultural and manufactured products, whilst the UK trades a wide range of goods and services, many of which are used to then support Egyptian exporters.
AO: What are the expected impacts of Brexit on the trade and economic relations between the two countries?
JD: Our relationship with Egypt has always been a bilateral one. The UK has sought to replicate, as far as possible, the effects of the EU-Egypt Association Agreement in a UK-Egypt bilateral agreement. We are doing this to ensure the continuity of trading arrangements for UK and Egyptian businesses once the EU-Egypt Agreement no longer applies to the UK.
Over the medium term, I believe that the refocusing of UK priorities as a result of Brexit will have a real positive impact on our relationship with Egypt. Prime Minister Madbouly also made this point in his address to DIT’s ‘Egypt Week’ last month, reflecting on how more trade opportunities will arise once the UK leaves the European Union.
Through the signing of the trade agreement, our governments will ensure our strong business links and trade terms are unaffected by Brexit, and that they will have a solid foundation to further strengthen. We remain natural partners; Britain is one of Egypt’s leading investors and the value of trade between our countries is close to £3.5 billion annually.
In Egypt, we have established a British Investors Forum to identify ways of supporting new investments in the market. Our priority is to ensure the continuity of the EU-Egyptian Association Agreement and to deepen the bilateral relationship between both governments.
AO: You said that the UK looks at the Suez economic zone as an ideal location for UK trade, and the UK is expected to expand its businesses in such a region. Could you explain that?
JD: The Suez Canal (SC) economic zone is well situated to take advantage of Egypt’s free trade agreements, as it is located on one of the world’s major shipping routes.
There are investment opportunities in the development of the Ain Al-Sokhna Port and the East Port Said Port, as well as their associated terminals and facilities, industrial areas, and solar and wind farm developments.
The SC zone’s authorities are also keen to work with foreign partners on desalination, power, and smart infrastructure projects.
As we look to meet our commitment to become the largest G7 investor in Africa by 2022, this is definitely one of the opportunities that we will be encouraging UK businesses to consider.
There are many interesting opportunities for British companies to consider Egypt as a base in Africa, the Middle East, or elsewhere thanks to the free trade agreements that the country currently has with those regions.
We already see UK businesses across the economy doing this successfully. Unilever manufactures consumer goods in Egypt for export, Vodafone operates a shared services centre in Egypt serving international markets, and UK oil and gas majors like BP and Shell are investing in Egypt’s plans to become a regional energy hub.
AO: Currently the UK’s investments in Egypt exceed £3 billion. What is this amount expected to reach in light of the UK’s plans in Egypt?
JD: The UK views Egypt as one of the most exciting markets in the region and one of the gateways to Africa. This has led to UK companies investing over $48 billion in Egypt.
Egypt’s economic success is a top priority for the UK, and we remain committed to developing our partnership.
Over 1800 British businesses are registered in Egypt across a range of sectors, not just in oil and gas, but also strategic job-creating sectors such as manufacturing, renewable energy, defence & security, infrastructure, pharmaceuticals, finance, professional services, information and communication technology, tourism, and well-known retail brands. Once the new trade agreement is in place, I am optimistic this presence and commitment will increase.
Our trade and investment ties remain solid, with British companies continuing to be one of the largest sources of foreign direct investment into Egypt. We are committed to deepening the UK’s cooperation with the Egyptian people and government, building on our already close links.
AO: Concerning the UK-Egypt trade agreement that will come into effect on 31 December, how can such a deal boost trade relations between the two countries?
JD: Leaving the EU offers us an opportunity to forge a new role for ourselves in the world. Once the new trade agreement comes into force, it will reflect our shared ambition to deepen and strengthen our cooperation. It will provide an opportunity to strengthen trade and investment opportunities and consolidate our economic ties.
The UK remains open for business; we are the same outward-looking, globally minded, big-thinking country we have always been. We are committed to deepening our bilateral cooperation and laying the foundations for a strong UK-Egypt partnership in all fields.
AO: Could you provide us with more details about the agreement?
JD: The UK has sought to replicate, as far as possible, the effects of the EU-Egypt Association Agreement in a UK-Egypt bilateral agreement, both the trade related aspects and the comprehensive political and cooperation provisions.
We worked hand in hand with the Egyptian government to ensure continuity of our trading arrangements for UK and Egyptian businesses once the EU-Egypt Agreement no longer applies to the UK. As I mentioned earlier, bilateral trade between Egypt and the UK is already worth around £3.5 billion.
The new agreement provides a platform from which to deepen the trade and investment relationship between the complementary economies of the UK and Egypt, paving the way for greater partnerships in key sectors, from agriculture to energy, and technology to services.
There are multiple mechanisms contained in the agreement which will help the UK and Egypt to enhance their overall trading relationship. For instance, the Agreement incorporates time bound review provisions on trade in agriculture, fisheries, and processed agricultural products.