Statement of the U.S. Business Delegation to Egypt Cairo, September 11, 2012 Investing in a New Egypt

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1 Statement of the U.S. Business Delegation to Egypt Cairo, September 11, 2012 Investing in a New Egypt The United States Chamber of Commerce, the U.S.-Egypt Business Council, and the American Chamber of Commerce in Egypt just concluded a highly successful business mission. Fifty leading American companies, represented by over 100 senior executives came to Cairo to deliver a simple message: even as Egypt's transition to democracy continues to unfold, the country remains open for business, and the international community has a major stake in helping to stabilize and to grow Egypt's economy for the benefit of all of its citizens. This is this largest business delegation to the region ever organized by the U.S. Chamber, and the second largest in the 100-year history of the institution. Moreover, this is the third business delegation that we have fielded since the 2011 Revolution because we believe in the critical importance and mutual benefit of investing in Egypt now particularly in its talented young men and women. We are committed to forging a new relationship with a new Egypt and to building a future of more widely shared prosperity, growth and development. With a newly democratically elected Egyptian government now in place, we believe that it is critical to take concrete steps to broaden and to deepen the Egyptian-American economic relationship. Above all else, we believe that our relationship needs to be focused on helping Egypt create high-quality jobs so that a greater number of Egyptians have the opportunity to productively participate in their economy and society. In this effort, we are particularly focused on increasing opportunities for Egyptian small and medium sized enterprises, including through participation in our member companies global supply chains. For nearly 40 years, the United States and Egypt have had a strategic alliance that has yielded significant mutual benefits, including strong commercial ties. Yet despite considerable progress, many of Egypt s development objectives have yet to be fully realized: too many Egyptians have been left behind and unemployment and under-employment remain unacceptably high. We believe that an expanded Egyptian-American commercial relationship can play a positive role in helping Egyptians to address their most pressing development challenges, to establish new businesses, and to create new private sector jobs during this critical period in their history. Our mission was reflected in our extensive itinerary. In three days in Cairo, we held productive meetings with leaders from across the Egyptian government, including His Excellency President Morsi, Prime Minister Kandil, and senior members of the cabinet. We also engaged senior political leaders, regional governors, leaders of the business community, young entrepreneurs, academics, and civil society leaders. We appreciate the strong support of our mission by the government of the United

2 States. This is a tangible demonstration of our public-private partnership to advance sustained development in Egypt. Throughout our discussions, we were deeply impressed by the vision that our Egyptian friends and partners outlined for their future. As representatives of companies that have invested in Egypt for decades, we share their perspective that given its strategic location and large and attractive domestic market, Egypt can successfully position itself as a regional and global manufacturing and services hub. We, likewise, share the belief that given the talents of the Egyptian people, Egypt has the ability to transform itself into a 21 st Century knowledge economy. For our part, we placed special emphasis on expanding American investment across all sectors of the Egyptian economy, increasing opportunities for small and medium-sized Egyptian businesses, and reviving Egypt s critical tourism industry. We also stressed the importance of creating shared value through knowledge exchange and increased opportunities for Egyptians by promoting social entrepreneurship, expanding our corporate social responsibility efforts, and promoting Egyptian-American university and research collaboration. Ultimately, we believe that despite the considerable challenges that loom large today, the right enabling policies coupled with strong partnership with its many friends will allow Egypt to overcome its difficulties as few countries could. More simply stated, wise political, economic, and social policies will reveal that Egypt s future is boundless. Policy Recommendations to the Egyptian and U.S. Governments To realize the full promise of Egypt s transformation, we believe that the Egyptian and U.S. governments should act boldly to strengthen their economic cooperation. Accordingly, we urge both sides to take the following concrete steps to help Egypt address its current economic crisis, to improve the lives of all Egyptians, and to restore Egypt s rightful place as a model of prosperity and innovation not only for this critical region but for the entire global community. Recommendations to the Egyptian Government: We were enormously impressed by President s Morsi s pledge to restore internal security and to preserve Egypt s positive role in regional stability, to strengthen good governance and the rule of law, to preserve the secular nature of the Egyptian state, and to invest in education and research and development. We are also pleased to hear his personal commitment to work constructively both with the Egyptian private sector and the international business community. We also share his belief that these commitments form the essential bedrock of Egypt s economic modernization. From the perspective of the business community, we are also looking for steps to ensure progress on the following key reforms that will enable Egypt to better attract sufficient investment in this increasingly competitive global environment:

3 Macroeconomic Stability: We welcome the fact that the Egyptian government has been in dialogue with the IMF on restoring the country s fiscal health. Completion of an agreement would be a positive signal to investors both at home and abroad. We believe that, in concert with an IMF agreement and support from Egypt s friends abroad, a positive agenda can be developed that diminishes the threat of instability, protects Egypt s most vulnerable citizens, returns the country to fiscal health, and lays the foundation for strong and broad-based growth. Regulatory Transparency and Rule of Law: We encourage the Government of Egypt to establish a transparent regulatory environment and to ensure that the rule of law is maintained by an effective, independent, and expeditious judiciary. Reforms of particular interest to the business community include: maintaining the sanctity of property rights and contracts, integrating the informal economy, promoting fair competition, ensuring consistent enforcement, streamlining business regulations, and encouraging reasonable risk-taking by reforming bankruptcy laws. Facilitating the Movement of Goods and Services: Improving Egypt s infrastructure, including by modernizing ports, streamlining border controls, and investing in both physical and communications infrastructure will be critical to optimizing Egypt s strategic location and developing the country as a regional and global hub. In this, we are pleased to hear of the new government s plans for modernizing and fully developing the Suez Canal Zone to take advantage of the high-levels of traffic through Egyptian waters. Protecting Intellectual Property and Trademark Standards: Without adequate safeguards on intellectual property and trademark standards, Egypt may lose a critical opportunity to become a hub of investment in areas as diverse as pharmaceuticals and consumer goods. We believe that stepping up enforcement against illicit trade in counterfeit goods and smuggling would both benefit the Egyptian consumer, Egyptian security, and the overall economy. Addressing Egypt s Skills Imbalance: Egypt currently has a significant skills imbalance, where the education system produces many graduates whose skills too often do not meet the needs of the economy. We are committed to work with the Government of Egypt to help produce high quality educational outcomes at all levels. We support the Government of Egypt s view of the critical role of research and development collaboration between Egypt and the United States in forming new industries and transitioning to a knowledge economy. We, likewise, are eager to work with the Government of Egypt to help design technical and vocational training that can further develop the Egyptian workforce. Recommendations to the U.S. Government: Launching a U.S.-Egypt Strategic Economic Dialogue: We urge the U.S. administration to form a Strategic Economic Dialogue with the Government of Egypt similar to dialogues that the United States has with other important countries such as India, Brazil, and China. This Dialogue should be focused on concrete steps that the U.S. and Egyptian governments can take to strengthen their cooperation and support the development of a robust private sector. It should also include a comprehensive review of development assistance to Egypt so that it realizes the intended goal of serving as a bridge

4 between the American and Egyptian peoples. This Dialogue would elevate economic cooperation as a central component of U.S.-Egypt relations and serve as a model of the type of broader and deeper relationship that we believe is mutually beneficial. Both the U.S.-Egypt Business Council and AmCham Egypt are eager to work with the U.S. and Egyptian governments to ensure the broadest possible private sector participation. We would also encourage congressional and parliamentary representation, as well as by strong participation by civil society, academia, and youth. Resuming Discussions Leading to the Goal of a U.S.-Egypt Free Trade Agreement: The U.S.-Egypt Business Council and the AmCham Egypt have been strong supporters of a United States-Egypt FTA for many years. We believe that the importance of an FTA between our two countries has never been more critical. An FTA would not only allow mutual market access, it would serve as an anchor of a stronger economic relationship and have tangible, long-term benefits for both economies. We also believe that resuming these discussions would send an immediate and positive signal to both publics and to the international community, and could also be coupled with immediate trade facilitation activities. Debt Relief and Additional Assistance to Egypt: We applaud the U.S. government s pledge to provide Egypt with up to $1 billion in debt relief and budget support. We understand that discussions are ongoing to complete agreement on the exact mechanisms of support and we urge its speedy delivery to Egypt. We applaud U.S. provision of a $250 million loan guarantee facility for small and medium-sized enterprises through the Overseas Private Investment Corporation, as well as its creation of a $60 million Enterprise Fund for Egypt. We also support the position that the U.S. administration has taken to advocate international assistance to Egypt from the international community, including from Egypt s neighbors in Europe and the Middle East and the international financial institutions. However, we note with concern that the total international aid that has materialized to Egypt to date falls far short of its needs. Consequently, we are urging the U.S. Congress to provide additional assistance to Egypt to include relieving Egypt s entire $3.2 billion debt to the United States. Conclusion: A Model Partnership for a Changing Region For millennia, Egypt has been a source of stability, innovation, and advancement for the Middle East and North Africa and for global civilization. Egypt is a leader of the Arab World, and has long been a cornerstone of America s relationship with the region. At a time when the world is carefully watching the political and economic evolution of the Middle East, we believe that a new partnership with a new Egypt can benefit our two countries and serve as a model of cooperation and progress for the entire region. Creating this successful model will not be easy. It will require immediate and sustained action by all involved, including both governments and private sectors, as well as by Egypt s neighbors and friends from around the world. But it can be done. In recent decades, a number of countries across the globe have emerged as economic powerhouses. Egypt has

5 the necessary talent and potential to similarly witness a meteoric rise in productivity and standards of living. But all sides must not forget what is at stake for Egypt, for the region, for the United States, and for the global community. As the transition in Egypt continues, the Egyptian and American private sectors call upon our governments to form a new partnership that is worthy of the full magnitude of this historic moment. We are deeply committed to doing our part as well.