Egypt and the EU: A lifetime partnership

Niveen Wahish , Tuesday 30 Jan 2024

Experts have been evaluating Egypt’s Association Agreement with the EU two decades after it was signed, writes Niveen Wahish

Shoukri and Borrell

 

Last week, Egypt and the EU marked the 20th anniversary of their Association Agreement entering into force in 2004. Officials from both sides reviewed progress on the agreement during the 10th meeting of the joint Association Council that took place in Brussels on 23 January.

“Our cooperation has gained intensity and quality,” EU High Representative for Foreign Affairs and Security Policy Josep Borrell said after the meeting. It was co-chaired by Egypt’s Foreign Minister Sameh Shoukri.

Ambassador Gamal Bayoumi, lead negotiator on the Association Agreement with the EU and later a core member of many of the committees formed to oversee its implementation, believes both sides have benefited immensely from the agreement.

Egypt has been able to boost its exports to the EU, he pointed out. The agreement also reflects positively on EU investments in Egypt, and Egypt is the greatest recipient of EU financial assistance.

The removal of tariffs on industrial products and the facilitation of trade in agricultural and fisheries goods, complemented by subsequent agreements, have significantly influenced bilateral trade, said Haya Hobeldeen, at NGage Consulting.

Since the agreement’s entry into force, bilateral trade in goods has quadrupled, reaching $37 billion in 2022, she pointed out. Egypt has seen substantial growth in exports to the EU, which have increased to $17.7 billion in 2022 compared to $7.8 billion in 2012.

The EU’s role as Egypt’s most significant trade partner, representing more than 30 per cent of the country’s total trade, underscores the success and importance of the agreement in fostering economic ties, she said.

The removal of trade barriers and tariffs has created a conducive environment for different Egyptian products, such as electrical machinery, chemicals, clothes and textiles, iron and steel, and plastics, and agricultural goods, to find a more prominent place in EU markets, Hobeldeen said.

The agreement has also facilitated a notable increase in EU investments in Egypt, making the EU the leading investor in the country with an accumulated investment stock of approximately 38.8 billion euros in 2020 and representing around 39 per cent of Egypt’s total foreign direct investment (FDI).

Egypt remains the second-biggest recipient of EU FDI in the Middle East and North Africa (MENA) region. “This significant investment inflow attests to the confidence the EU places in the Egyptian market and the positive impact of the agreement in fostering long-term economic cooperation and growth,” she said.

The technical assistance programmes provided by the EU to Egypt in several fields are also among the benefits of the agreement. Among the biggest programmes is the Industrial Modernisation Programme, with single programme funding of 250 million euros.

Egypt has also received financial assistance to support the capacity of the government, and it has been labelled as the most efficient country in receiving financial assistance, Bayoumi said.

Agricultural exports have seen many successes following the agreement. According to Bayoumi, Egypt is the largest exporter of potatoes, citrus fruit, dates, and olive oil to the EU thanks to exceptional quotas for duty free exports.

Agricultural trade relations between the EU and Egypt are governed by the EU-Egypt Association Agreement and another agreement establishing the further liberalisation of trade in agricultural products, processed agricultural products, and fish and fishery products, which entered into force in 2010, Hobeldeen said.

Despite the benefits, challenges remain, however. Bayoumi believes Egyptian producers should improve quality standards to see greater penetration into EU markets, as well as work on increasing local content.

Egyptian exporters have not taken advantage of the cumulation of origin of products with the EU in order to enhance industrial integration and exportation, Hobeldeen said. In addition, Egyptian exporters face challenges in complying with the technical requirements and standards applied by the EU.

Two years ago, Egypt and the EU endorsed new Partnership Priorities under the agreement, signifying a commitment to addressing common challenges and promoting joint interests, Hobeldeen said.

They add a focus on sustainable development, good governance, human rights, and cooperation in various sectors, indicating an evolving and multifaceted partnership beyond conventional trade, she said.

During the Egypt-EU Association Council meeting last week, the two sides signed a Framework Agreement allowing Egypt to negotiate its participation in EU programmes open to third countries.

This agreement opens avenues for Egypt to engage actively in a variety of EU initiatives spanning diverse sectors. The anticipated benefits include access to crucial EU programmes that can contribute substantially to Egypt’s socio-economic development. By fostering collaboration in areas such as research, innovation, and various socio-economic projects, the agreement aligns with the shared objectives outlined in the Egypt-EU Partnership Priorities for 2021-2027, Hobeldeen said.

Borrell announced following last week’s meeting that there are ongoing discussions about a Strategic and Comprehensive Partnership between the EU and Egypt. “This signifies the two parties’ commitment to enhancing their partnership,” Bayoumi said.

The agenda, as highlighted at the EU-Egypt Association Council meeting, includes not only economic and social cooperation, but also addresses critical issues such as human rights, security, counterterrorism, and migration, noted Hobeldeen.

“The strategic nature of this partnership emphasises a shared commitment to long-term stability, sustainable development, and addressing common challenges in the Euro-Mediterranean region,” she concluded.


* A version of this article appears in print in the 1 February, 2024 edition of Al-Ahram Weekly

Search Keywords:
Short link: