This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 CAIRO 001178 
 
SIPDIS 
 
USDOC FOR 
3131/USFCS/OIO/ANESA//MSTAUNTON/DHARRIS/GLITM AN 
USDOC FOR 3131/USFCS/OIO/RKREISSL/USDOC0737 
USDOC FOR 4520/ITA/MAC/OME/MTALAAT 
 
SENSITIVE 
 
E.O.12958:  N/A 
TAGS: ETRD ECON PGOV PREL EG
SUBJECT: SCENESETTER FOR SECRETARY GUTIERREZ VISIT TO EGYPT 
(MARCH 2006) 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT 
ACCORDINGLY. 
 
¶1.  (SBU) Mr. Secretary, you will be the first Secretary of 
Commerce to visit Egypt since 1999.  The business climate 
has changed significantly since then, especially with the 
installation in July 2004 of Ahmed Nazif as Prime Minister 
and a coterie of reform-minded ministers in economic 
ministries.  Egypt has done more in the last two years to 
enact major economic reforms, resolve outstanding bilateral 
trade issues, and liberalize the market than in the 
preceding 10 years.   Nonetheless, Egypt remains a 
challenging market in which to do business.  Red tape and 
bureaucracy are serious concerns of investors (both foreign 
and local) operating in Egypt.  There are many business 
impediments in Egypt, including a multiplicity of 
regulations and regulatory agencies, delays in clearing 
goods through customs, arbitrary decision-making, high 
market entry transaction costs, and a generally unresponsive 
commercial court system. 
 
¶2.  (SBU) One issue your interlocutors are sure to raise is 
the Free Trade Agreement.  Business leaders see USG 
reluctance to enter into FTA negotiations as lack of support 
for the bilateral commercial relationship.  Government 
reformers, like Minister Rachid, see the decision not to 
move forward as a lost opportunity to bolster reformers and 
to advance far-reaching economic reforms.  During your visit 
you should emphasize the Administration's commitment to work 
with Egypt on economic and political reform despite the 
decision not to begin FTA negotiations at this time.  Your 
visit will reassure Egypt of our vital strategic and 
economic partnership. 
 
¶3.  (SBU) Below are some advocacy and market access issues 
sure to be raised during your visit. 
 
-- (SBU) Boeing in Egypt:  Boeing wants to sell six 737 800s 
and five 777 200s to EgyptAir, the government-owned airline. 
These are included as "options" in an existing contract to 
buy new aircraft.  The total value of this procurement is 
approximately $1.3 to 1.4 billion with an estimated U.S. 
export content of $1.0 to 1.1 billion.  Ultimately, 
President Mubarak will make the final decision on this 
procurement.  In your meeting with the President, you should 
stress the importance of expanding our bilateral commercial 
relation to the same level as our security relationship and 
alert him to Boeing's desire to continue to play an 
important role in the modernization of EgyptAir's fleet. 
 
-- (SBU) Intellectual Property Rights (IPR):  Egypt was 
retained on the Special 301 Priority Watch List (PWL) in 
2005 for ongoing concerns related to pharmaceutical patents 
and copyright and trademark enforcement.  The U.S. copyright 
industries report the following problems with Egypt's 
enforcement system: 1) lack of political will by enforcement 
officials to fight piracy; 2) lack of coordination between 
enforcement officials and agencies; 3) structural problems 
in the enforcement system; and 4) non-deterrent penalties in 
civil and criminal cases.  It is imperative that your 
interlocutors understand the importance of Egypt making good 
on its TRIPs commitments. 
 
-- (SBU) Pharmaceutical Issues:  U.S. pharmaceutical 
companies are facing serious difficulties related to price 
controls and lack of data exclusivity.  Pharmaceutical 
prices remain controlled, although Egypt decontrolled prices 
of other industrial products.  The government uses a 
standard cost-plus formula to determine pharmaceutical 
prices for new-to-market products.  These prices have not 
been revised to reflect the 45% devaluation of the Egyptian 
currency that occurred in 2003, which sharply reduced the 
profitability of pharmaceutical companies, most of which 
rely heavily on imported inputs.   Similarly, since mid- 
2004, Egypt's Ministry of Health and Population has 
undermined its data exclusivity obligations by granting 
marketing approval to Egyptian generic pharmaceuticals that 
rely upon undisclosed clinical data.  As a result, in 2004 
and 2005, Egypt was placed on the Priority Watch List under 
Special 301.  In December 2005, the outgoing Minister of 
Health and Population gave approval to an Egyptian company 
to market Olapex, a copy of Eli Lilly's drug Zyprexa. 
Olapex is the first marketing approval for a generic copy of 
a protected U.S. company product in more than a year.  This 
came despite repeated warnings from U.S. Government 
officials.  During your meeting with the Minister of Health 
and Population, you should urge him to withdraw the approval 
for Olapex and all those drugs that infringe on patents of 
U.S. companies. 
 
¶4.  (SBU) Your visit will be the latest in a series of 
visits by high-level USG officials.  Vice President Cheney 
was in Cairo January 16-17, 2006 and Secretary of State Rice 
was here February 21-22.  They both used their visits to 
press the President's vision of promoting democracy in the 
Middle East.  They both recognized the steps that Egypt has 
recently taken to broaden political participation including 
historic multiparty presidential elections.  They also noted 
missteps, such as the flawed parliamentary elections, and 
the imprisonment of the leading opposition figure Ayman 
Nour.  Your government interlocutors will welcome your visit 
as an opportunity to highlight the less contentious 
commercial/economic side of our bilateral relationship. 
 
RICCIARDONE