Egypt-EU Association Agreement

The Egyptian Government pays special attention to the economic tools in the framework of activating the implementation of foreign policy and employing them in attaining strategic benefits at the political, economic and social levels.

The Agreement includes provisions on the liberalization of services, the free movement of capital, competition rules, strengthening economic cooperation on the widest possible basis, cooperation on social matters, as well as cultural cooperation.

In addition, the Agreement confirms the existence of free trade in manufactured goods and reinforces arrangements for free trade in industrial products. The Agreement has come in the context of the Egyptian implementation of an economic reform program.

The Agreement has governed relations between Egypt and the EU and contributed to defining economic cooperation between the two parties. In accordance with this Agreement, Egyptian imports enjoyed free access to EU as for the EU industrial exports to Egypt had obtained the special treatment of the most-favored-nation.

After signing the Protocol in 1987, Egyptian agricultural products gained a preferential treatment in their access to EU markets this special treatment is represented in customs tariffs and export schedules.

Objectives

The Agreement stipulates the following objectives:

1. Providing appropriate atmosphere to open a political dialogue that allows for developing g relations between the two parties.

2. Preparing the conditions for liberalization of goods, services and capital trade.

3. Providing support for promoting balanced economic and social relations between the two parties through maintaining dialogue and cooperation.

4. Contributing to economic and social development in Egypt.

5. Encouraging regional cooperation for establishing peaceful coexistence as well as economic and political stability.

6. Developing cooperation in the fields of common interest.

Trade

– Egypt is a major trade partner for the EU in the Southern Mediterranean region.

– The entry into force of the Association Agreement in 2004 improved conditions for trade between the EU and Egypt. Since 2004, EU-Egypt bilateral trade has more than doubled and reached its highest level ever in 2011 (from euro11.5 billion in 2004 to euro23.3 billion in 2011).

– The EU is traditionally Egypt’s main trade partner, covering more than 30% of Egypt’s trade volume and ranking first both as Egypt’s import and export partner.

– EU imports of goods from Egypt are dominated by energy, followed by chemicals and textiles and clothes. EU exports to Egypt consist mainly of machinery and chemicals.

– EU exports of services to Egypt are dominated by business services, while the EU imports from Egypt consist mainly of travel services and transport.

Co-operation Programs 2007-2013

European Neighborhood and Partnership Instrument

Since 2007, the Commission’s priorities in terms of financial cooperation with Egypt have fallen under the European Neighborhood and Partnership Instrument (ENPI). The strategic framework for EU cooperation with Egypt is established in the Country Strategy Paper, which currently covers the period 2007-2013.

In this context, two National Indicative Programs (NIPs) define the priorities for financial cooperation for the periods 2007-2010 and 2011-2013 respectively. The priorities under the NIPs are threefold:

– Priority area 1 – Support for political reform, human rights and the judiciary

– Priority area 2 – Support for economic reform

– Priority area 3 – Support for sustainable development

Bilateral ENPI budget allocation for Egypt for the three-year period 2011-2013 is euro449 million, an average of broadly euro150 million per annum, which represents an increase of over 5% compared to the previous programming period 2007-2010 which totaled euro558 million over four years.

Priority areas and financing in the NIPs:

euro millions

2007-2010

2011-2013

Reforms in the areas of democracy, human rights and justice

40

50

Competitiveness and productivity of the economy

220

199

Sustainability of development and better management of human and natural resources

298

200

Total

558

449

Areas foreseen for 2012 and 2013 include further support for Political development, Governance, modernization of Justice, improving the institutional and legislative framework as well as continuing support for reforms in the education, vocational training and transport sectors.

Egypt is also eligible for cooperation activities financed under the ENPI multi-country and regional programs and the ENPI Cross Border cooperation component.

Twinning

A budget of euro62 million is available for Egypt under the Twinning instrument which promotes institution and capacity building through support provided by experts from Member States’ to partner country

Ministries

Areas covered by the Twinning Instrument include Tourism, Maritime Safety, Postal Services, Investments and Free zones and Railways safety. Future projects will cover other areas of the Association Agreement and the EU-Egypt Action Plan such as: Statistics, Occupational Health, Water Quality, Waste Management, Telecommunications, Animal Disease, Norms and Standards and Road Safety.

Thematic Programs

Beyond bilateral geographic instrument, Egypt is also eligible for additional funds under the European Instrument for Democracy and Human Rights (EIDHR) and thematic programs established under the Development Cooperation Instrument (DCI) which covers among others the Non-State Actors and Local Authorities in Development (NSA amp LA), Investing in People and Migration.

In 2010, a budget of euro1.9 million was made available to civil society organizations (euro0.9 million under EIDHR euro1 million under NSA amp LA). In 2011 Egypt benefited from EIDHR (euro2.0 million), NSA amp LA (euro1.0 million) and from global calls under the DCI thematic programs.

Cooperation up to 2006

Under the MEDA I program (1996-1999), a total of euro686 million was made available to support Egypt’s transition towards a market economy and its integration into the Euro-Mediterranean economic area. Financial Support was also provided to tackle socio-economic issues and developing the country’s private sector.

Between 2000 and 2006, Egypt received about euro600 million in funding from the MEDA II program. The EU’s main objectives and priorities for cooperation can be found in the Country Strategy Paper for Egypt (2002-2006).

During this period, the Commission’s assistance portfolio allowed it to engage in a dialogue with the Egyptian authorities that centered on making key reforms in several sectors, such as finance, customs, trade enhancement, social development, health, education and training.

In 2006, priority was given to improving the Egyptian health sector, especially the ongoing reform of the national health system. To this end, euro88 million was committed during 2006. In addition, euro20 million was committed in support of social development, euro11 million in support of research, development and innovation, and euro10 million for an interest-rate subsidy relating to a project on environmental pollution abatement.

Source : Egypt State Information Service