Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
American Chamber of Commerce in Egypt
Washington, D.C.

Shukran. SabaH Ilkheer! (Thank you. Good morning!) Dr. El Rabiey, thanks for that kind introduction. I’d also like to thank Ambassador Fahmy and Dr. Helmy, President of AmCham Egypt, for inviting me here today.

I appreciate the warm welcome you gave Deputy Secretary Sampson earlier this year. He shared with me his impression that leaders in Egypt are committed to economic reform.

Egypt is a vital partner for the U.S. and a leader in regional trade, prosperity and security.

Just last month, in a bid to boost competitiveness and domestic consumption, Egypt cut its average customs duties by 25 percent. The reduction will bring average tariffs down to 6.9 percent.

The decision means that tariffs on 90 percent of imported goods, including agricultural produce, electronics and apparel, will be less than 10 percent. It is the second major cut in tariffs since President Mubarak appointed Prime Minister Nazif in 2004. He promised reforms to end years of stagnant growth and he is delivering on those promises. We applaud this progressive change.

Egypt’s new income tax law is also a model of reform. It reduced the tax rate by as much as 50 percent and provided new streamlined procedures for making tax payments.

The response was immediate. Tax revenues actually went up (despite the lower rates) and investment and trade both increased. Egypt is witnessing the advantages of pro-growth policies and engagement in the international economy. In fact, Egypt’s GDP grew at 5.6 percent last year and has been growing steadily.

In Egypt, freer trade and lower tariffs are already paying off. In 2006, bilateral trade between Egypt and the United States totaled $6.5 billion, a 24 percent increase over 2005. U.S. exports were up $1 billion over that same period.

AmCham Egypt has been at the forefront of promoting and implementing the Qualified Industrial Zones, or QIZs, and ensuring rapid growth in U.S-Egypt trade, while creating jobs and opportunity for Egyptians. QIZs are economically and politically significant trading partnerships with Israel, and have proved beneficial for Egypt.

Exports from Egypt’s QIZs grew 141 percent from $266 million in 2005 to $643 million in 2006. The program is expected to preserve and create 100,000 Egyptian jobs.

The numbers here demonstrate the hard work and strides you’ve taken to promote growth and prosperity. Yet there are more opportunities for progress.

The Middle East Free Trade Area (MEFTA) is the future. President Bush is pushing hard to open new markets. His vision is for open trade with the entire region, including North Africa, within seven years. A Middle East Free Trade Area will bring open markets, rule of law, job creation and growth.

Egypt is a large and influential economy, but hasn’t fully benefited from the expanding international economy. With countries in the region like Jordan, Morocco and Bahrain, engaging on a global scale, there is more Egypt can do to expand its economy.

In order to stay on the current track of progress, more needs to be done. We must fight the forces of protectionism around the world; including within the U.S. Protectionism is a failed policy. Let’s invite prosperity in, rather than build walls.

The World Bank found that existing trade barriers are holding up to half a billion people in poverty. We know that trade is the most reliable path towards prosperity for all people. Trade is the best aid for developing nations.

U.S. firms are heavily involved in major infrastructure projects in Egypt. Ports, airports, telecommunications and railroads are all promising investment sectors. However, red tape and burdensome regulations remain an impediment.

We have heard about delays in clearing goods through customs, high market entry costs and a generally unresponsive commercial court system.

Growing global trade in pirated and counterfeit goods threatens innovation in both our countries. We should work together to protect intellectual property, which will invite and nurture the type of innovation that leads to economic growth.

We can’t live in a world where brands and patents don’t mean anything. Piracy threatens innovation and poses dangers to consumers. A recent study showed that 75 percent of the value of publicly traded U.S. companies—some $5 trillion—comes from “intangible” assets such as brands, copyrights, and patents.

Countries that have strengthened their IP laws have experienced results. Jordan has seen advances in innovation since they got tough on IP in 2001. Since the crackdown six years ago, they’ve had 32 new innovative pharmaceutical product launches.

Not only do Jordanians now have access to new and better medicines, but these innovations have sparked new companies and job creation.

Egypt can improve IPR enforcement for copyrights and trademarks, improve the judicial process, and stop granting marketing approvals for patent infringing pharmaceutical products.

President Bush has made IPR protection a priority for his Administration. We have placed a regional IP attaché in Egypt. She has been able to assist businesses, advocate U.S. IP policy and conduct IPR training. In addition, we’ve conducted training at our Global IP academy.

Since 2001, the U.S. government, along with industry, has conducted over 100 IP programs in the Middle East.

The U.S. and Egypt have made good progress on advancing the bilateral economic agenda through the Trade and Investment Framework Agreement (TIFA) Council.

We all need to work toward advancing the Doha round of trade talks. We can expand international markets, help alleviate poverty, and boost development around the globe.

On July 1, the President’s Trade Promotion Authority (TPA) will expire. President Bush has already announced his intention to extend TPA. We’re working with Congress to restore that important “fast track” authority. I believe every President should have this important tool.

When we open our doors to one another, 77 million Egyptians are potential customers of the U.S. while almost 300 million Americans are potential customers for Egypt. Opportunities exist for Americans to consume Egyptian products. American wheat, machinery and equipment present opportunities for the Egyptian consumer. Trade is a two-way street. Let’s make sure we’re both on it.

Foreign investment is another way to promote security and prosperity. In 2005, American companies had $4.8 billion invested in Egypt. We welcome investment from Egyptian companies as well.

That’s why the Commerce Department recently announced an “Invest in America” initiative which will promote the desirability of investment in the U.S. by highlighting the advantages of investing in the United States.

I want to encourage you to continue working closely with the Commercial section at the U.S. Embassy in Cairo. Increased AmCham sponsored trade missions to the U.S. could be a great way to foster closer business ties. I also hope you’ll help us promote the “Made in the USA” trade fair set for January of 2008 in Cairo. Even though that’s almost a year away, it’s never too soon to begin promoting American goods and services.

Together we can strengthen the foundations of the U.S.-Egypt relationship. It’s important that the business community continue to focus on change in Egypt. Your role is important. Economic reforms and greater political liberalization help create a business environment where small and medium sized enterprises succeed.

Egypt can pave the way for a stronger economy that creates jobs, promotes democratic reforms and increases stabilization in the region. Now, I’d like to hear from you and take a few questions. Thank you. Shukran. Assalaamu alaykum. (Thank you. Peace be upon you).