Egypt-U.S. Economic Relations
	Partnerships and Agreements Egypt-U.S. Relations Profile 07 (PDF) New Egypt-U.S. Trade Egypt-U.S. Trade Statistics-March 07 (PDF) New Egypt-U.S. Investment USAID Programs in Egypt- March 06 (PDF) Qualified Industrial Zone (QIZ) 06 (PDF) Other documents related to Egypt-U.S. Relations

Partnerships and Agreements

The United States has been Egypt’s leading foreign trade and investment partner since the time of Egypt’s Open Door Policy and the Camp David Accord in the late 1970s. Despite short-term fluctuations, bilateral relations have been marked by an upward trend in trade and investment and supportive partnerships and agreements.

Before September 1994, the two major bilateral trade agreements between Egypt and the United States were the Bilateral Investment Treaty signed in September 1982 and a Market Access Agreement for Textiles & Clothing signed in 1973. The signing of the U.S.–Egyptian Partnership for Economic Growth & Development in September 1994 was an important milestone in the two countries’ relationship.

In July 1999, Egypt and the United States signed the Trade & Investment Framework Agreement (TIFA) as a preliminary step towards a Free Trade Agreement between the two countries. Proceeding in that same direction the Bush Administration announced the formation of Qualified Industrial Zones (QIZs) in Egypt on December 10, 2004

• United States Agency for International Development (1975)
• Double Taxation Treaty (1981)
• Bilateral Investment Treaty (1982)
• Memorandum of Understanding with the US Department of Defense (1988)
• The U.S.-Egypt Partnership for Economic Growth and Development (1994)
• Textile and Apparel Agreement (1995)
• Science and Technology Agreement (1995)
• Trade Related Investment Framework Agreement (1999)
• Investment Incentives Agreement (1999)
• Cooperation in Energy Technology Agreement (1999)
• Egypt-U.S. Electronic Commerce Joint Statement (1999)
• Qualified Industrial Zones Agreement between Egypt , Israel and the U.S. (2004)

Following the Camp David Accords in 1978, and in recognition of Egypt's moderating role in the Middle East, the United States Congress ranked Egypt one of the largest recipients of U.S. economic assistance programs in the world.

Today, USAID is the single largest donor among 38 bilateral and multilateral donors working in Egypt. The agency's overall program for Egypt is the most comprehensive in the country, reflecting many of the priorities set by the U.S.-Egyptian Partnership for Economic Growth & Development.

USAID in Egypt coordinates its policy-reform efforts closely with the IMF and the World Bank to maximize policy impact. During the period FY1975-2006, cumulative U.S. aid to Egypt reached $28.06 billion, with another $455 million budgeted for 2007.

In June 1998, it was decided that U.S. economic aid to Egypt would be lowered by an annual 5 percent to result in a decrease of 50 percent by the end of the year 2008. Total aid Egypt received in FY2006 amounted to $495 million.

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The Double Taxation Treaty between the government of the United States and the government of Egypt was brought into force on December 31, 1981. The treaty consists of 32 articles targeting the avoidance of double taxation of income, the prevention of fiscal evasion with respect to taxes on income, and the elimination of obstacles to international trade and investment.

The U.S. taxes covered by the treaty include the federal income taxes imposed by the Internal Revenue Code, but excluding the accumulated earnings tax and the personal holding company tax. As for Egypt, taxes covered include those on income derived from immovable property, movable capital, commercial and industrial profits, wages, salaries, indemnities and pensions, profits from liberal professions and all other non-commercial professions, the general income tax, defense tax, national security tax, war tax, and supplementary taxes imposed as a percentage of taxes mentioned beforehand.

For full text of the Treaty click here [pdf] and for a Technical explanation click here [pdf]

The Bilateral Investment Treaty (BIT) between Egypt and the United States covering the reciprocal encouragement and protection of investments was the first treaty signed under the BIT program initiated by the United States in 1981 to encourage and protect U.S. investment in developing countries. It was signed in Washington on September 29, 1982 with a related exchange of letters signed March 11, 1985 and supplemental protocol, signed March 11, 1986 . Under the described treaty, the parties agreed to international law standards for expropriation and compensation, free financial transfers, and procedures, including international arbitration, for the settlement of investment disputes.

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The Memorandum of Understanding (MOU) between the government of Egypt and the U.S. government concerning basic principles for Scientist and Engineer Exchange and Mutual Cooperation in Research and Development, Procurement and Logistic Support of Defense Equipment was signed in March 1988 and later amended in April 1999. The MOU will remain in effect for a 10-year period, automatically extended for successive five-year periods unless written notification of an intention to terminate is provided by one of the governments.

Under the MOU, Egyptian sources are allowed to offer conventional defense supplies and services and compete for procurement by the U.S. Department of Defense (DoD) according to specific terms.

The DoD offers solicitations and purchase requests for a variety of commodities through any of its agencies, namely the Air Force (AF), the Army, the Defense Information Systems Agency (DISA), the Defense Logistics Agency (DLA), the Marine Corps and the Navy. Commodities requested would typically include items such as office and library furniture, clothing, and iron items such as pipes and wattle. (For locating opportunities with the DoD go to www.dodbusopps.com)

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Under the leadership of Vice President Gore (on behalf of President Clinton) and President Mubarak, Egypt and the United States are building an enhanced economic relationship through a cooperative effort known formally as the U.S.-Egypt Partnership for Economic Growth & Development. Established in 1994, the Partnership operates through the Presidents Council, the Joint Board on Science & Technology and the Joint Committee for Economic Growth & Development, with its four subcommittees. These working groups initiate public-private sector dialogue on policies aimed at expanding economic growth and employment in Egypt, and at building mutually beneficial economic and commercial ties between the two countries.

The underlying goals of the Partnership are to expand mutual economic cooperation in the areas of trade, investment, and science and technology; work with the Egyptian government initiatives to foster economic reform, promote economic growth and facilitate job creation; and support Egyptian efforts to increase the role of the private sector.

The United States and Egypt have had a bilateral textile agreement in effect since December 1973. This agreement has been renewed periodically, for varying lengths of time, with the most recent renegotiations occurring in 1995.

As part of the WTO Agreement on Textiles & Clothing (ATC) the Bilateral Textile & Apparel Agreement of 1995 will stay in effect until the phase out of quotas for WTO members in 2004. In accordance with the ATC, the United States notified the Textiles Monitoring Body (TMB) of provisions from Egypt ’s agreement that remain in effect during the transition to quota elimination. This notification is administered in the Egypt ATC 2.17 Notification. Textile products subject to this agreement are cotton textiles, man-made fiber textiles, wool textiles, and silk or non-cotton vegetable fiber textiles.
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The Joint Science & Technology (S&T) Board oversees implementation of the U.S.-Egypt S&T Agreement, which took effect for a five-year period on August 25, 1995 as part of the U.S.-Egypt Partnership for Economic Growth & Development. The board agreed that activities under the agreement should focus on biotechnology, standards and environmentally friendly manufacturing techniques, with particular emphasis on private sector participation. Another goal of the board is to maximize benefits of cooperative activities for both countries’ private sectors.

The State Department coordinates the work of the Joint S&T Board with several U.S. technical agencies such as the National Science Foundation. In Egypt , the Ministry of Scientific Research & Higher Education is the principal counterpart.

A bilateral Investment Incentives Agreement was signed on July 1, 1999 by the Overseas Private Investment Corporation (OPIC), on behalf of the United States and Egypt ’s Ministry of Economy & Foreign Trade, now the Ministry of Foreign Trade and Industry, to provide a modern framework for U.S. private sector investments supported by OPIC. The agreement will enable OPIC to be more responsive to U.S. companies looking to invest in Egypt .

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9. Cooperation in Energy Technology Agreement

The Department of Energy of the United States and the Ministry of Electricity & Energy of Egypt signed a contract on July 1, 1999 for cooperation in energy technology. The agreement addresses the mutual interest in exchanging information experience and points of view regarding the development and analysis of energy information, energy regulation and energy planning, and in developing strategies to establish and promote market-based systems in renewable energy and energy-efficiency technologies and fossil-energy technologies.

It also acknowledges the contribution of renewable energy, energy-efficiency technologies and fossil-energy technologies to increasing energy diversity as well as addressing environmental concerns and enhancing energy security; and noting both parties’ interests in identifying and implementing regional cooperative energy projects.

The Trade & Investment Framework Agreement (TIFA) between Egypt and the United States was signed on July 1, 1999 in Washington , D.C. , by the United States trade representative and the Egyptian minister of economy & foreign trade and effective thereof. TIFA marks the first step toward creating freer trade between the United States and Egypt . It enhances the bilateral economic relationship between the two countries and seeks to encourage and facilitate private sector contracts between them. The agreement consists of seven articles. It will remain in force unless terminated by mutual consent of the parties or by either party upon six months written notice to the other party.
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11. Joint Statement on Electronic Commerce

The Joint Statement on Electronic Commerce between Egypt and the United States was signed on October 14, 1999 by the Egyptian minister of economy & foreign trade and the U.S. secretary of commerce committing both countries to promote the use and spread of e-commerce in Egypt . The Joint Statement sets forth the following broad principles that should govern the development and use of electronic commerce: private sector leadership, minimal government regulations and restrictions, government encouragement of self-regulation, duty-free treatment of digital goods of value, and promotion of cooperation among all countries. The Joint Statement also includes language regarding privacy, intellectual-property rights, content and consumer protection.

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12. Qualified Industrial Zones Agreement (2004)

On December 10, 2004, the Bush Administration announced the formation of Qualified Industrial Zones (QIZs) in Egypt, setting in motion an historic partnership between Egypt and Israel that will foster economic cooperation between the two countries and provide opportunities for US companies to import products--including apparel, footwear and other items that normally carry high duty rates--from Egypt duty- free.

Under the Egyptian QIZ program, goods manufactured in designated industrial areas in Egypt utilizing Israeli inputs will receive duty-free treatment when imported into the United States.

Four regions have been have been designated as QIZs in Egypt:

• Greater Cairo: Giza, Shubra Al Kheima, Nasr City, 10th Ramadan City , 15th May City , Badr City ,6th October City, Obour City , Kalyoub City and the industrial area in Gesr El Suez.
• Alexandria: including Amereya, New Amereya, Borg El Arab and Dekheila.
• Suez Canal region: Port Said, Ismailya, Suez.
• Central Delta region: Gharbiya , Dakahlya , Monofiya, and Dammietta governorates.

In order for QIZ products to qualify for duty- free entry:

The product must be a new and different article of commerce that has been grown, produced or manufactured in the QIZ. With respect to apparel products, this requirement can generally be met if fabric components are assembled together or the product is knit to shape in the QIZ.

The article must be imported directly from the QIZ, Israel, the West Bank or Gaza Strip (the USIFTA region).

At least 35% of the appraised value of a product at the time it enters the US must be attributable to materials produced, and direct costs of processing operations performed, in the USIFTA region. Also, US materials may account for up to 15% of the appraised value of the finished goods.

The agreement between Egypt and Israel provides that at least 11.7% of the value of the covered products must be Israeli. As of April 2007, the 11.7% will be reduced to 10.8%.

(Last updated March 8, 2006)

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