São Paulo – Last month Egypt ratified a free trade treaty with the Mercosur, taking one more step in the direction of enactment of the document signed in August 2010. The ambassador of Egypt to Brasília, Hossameldin Mohamed Ibrahim Zaki, recalled that his country was the first Arab and African nation to sign an agreement with the South American bloc. “This grants us privileges and an advantage over other countries [in relations with the Mercosur]”, pointed out the diplomat in an interview to ANBA on Wednesday (6).
Ratification of the agreement was by the Presidency of Egypt, as the country has no elected parliament since the Judiciary dissolved the Popular Assembly in June last year, amidst a complicated transition process that began after the fall of Hosni Mubarak, president for three decades. The ambassador said that the text will be sent to the Legislative when new representatives have been elected, at a date not yet defined, and it will be approved.
“The agreement should benefit Egypt and that does not depend on political orientation [of the government],” said Zaki. He pointed out that his country is a great importer of foods from the Mercosur, especially from Brazil, and that the reduction in tariffs forecasted in the treaty should reduce the cost of products imported into the Egyptian market, and should benefit South American exporters. “[The agreement] will be good for food safety [in Egypt] in the long run, as Egypt is a net importer of food,” he said. "We are engaged in strengthening trade with the Mercosur and also with other Latin American nations,” he said.
The diplomat also said that the treaty favours Mercosur company investment in his country, as this institutional connection should provide greater confidence to investors. The ambassador explained, for example, that a Brazilian group operating in the cement area has been negotiating with the Arab country “a way to have greater involvement in the [local] economy”. “They want to increase investment in the country,” he said.
Brazilian company Camargo Corrêa controls one of the largest cement factories in Egypt though Portuguese subsidiary Cimpor, which is the main shareholder in the Egyptian units. Another Brazilian company operating in Egypt is Randon, of highway products, which has a factory in partnership with an Egyptian vehicle producer.
He recognized, however, that political instability in his country is reflected in the economy. “We are not [at the moment] growing as much as we would like,” he said.
Zaki pointed out, however, that companies in the Mercosur may use Egypt as a gateway into other markets with which the country has trade agreements, as is the case with the Common Market for Eastern and Southern Africa (Comesa) and other Arab nations.
On the other direction, the ambassador said that Egyptian exports to the Mercosur, mainly Brazil, are small and there is much space for growth. In this respect, he said that the agreement will be good to stimulate sales by companies in the country to the bloc. “It will be easier to enter the markets,” he said.
According to the Ministry of Development, Industry and Foreign Trade, Brazilian exports to Egypt generated over US$ 2.7 billion last year, growth of 3.3% over 2011. Egyptian sales to Brazil, in turn, totalled US$ 251 million, a drop of 27% in the same comparison.
To the ambassador, it is necessary to work with companies from his country to show the opportunities in the Brazilian market and in the Mercosur in general.
A copy of the instrument for ratification of the agreement in Egypt was delivered by the ambassador of the country in Uruguay, Sami Salem, to the secretary general of the Mercosur, in Montevideo. The document still awaits ratification by the members of the Mercosur: Argentina, Brazil, Paraguay, Uruguay and now Venezuela.
In the Brazilian case, the Itamaraty informed that proceedings for ratification have been started. The text, however, has not been sent to the National Congress.
*Translated by Mark Ament