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Viewing cable 07CAIRO1722, EGYPT'S EXPECTED CHANGES IN EXPORT SUPPORT

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Reference ID Created Released Classification Origin
07CAIRO1722 2007-06-07 11:49 2011-08-24 16:30 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Cairo 
VZCZCXYZ0005
PP RUEHWEB

DE RUEHEG #1722 1581149
ZNR UUUUU ZZH
P 071149Z JUN 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 5565
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 0174
RUEHRL/AMEMBASSY BERLIN PRIORITY 0224
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0378
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
 
UNCLAS CAIRO 001722 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR NEA/ELA 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EG
SUBJECT: EGYPT'S EXPECTED CHANGES IN EXPORT SUPPORT 
QUESTIONABLE UNDER WTO RULES 
 
1.  (U) During a meeting on May 23 with key economic advisors 
and export industry leaders, Minister of Trade and Industry 
Rachid Rachid announced he will consider reorganizing the 
Export Support Fund, according to press accounts. The Export 
Support Fund is designed to increase the quantity and quality 
of Egyptian exports by providing production subsidies and 
other benefits to certain industries that are not in 
Qualified Industrial Zones (QIZ).  The Fund focuses on 
Egyptian textiles and automobile parts. Many factories 
located within non-QIZ industrial zones are receiving this 
support to encourage investment from German, Russian, and 
Chinese companies. 
 
2.  (SBU) A USAID contractor working for the Ministry said 
that the program has been dormant in recent years and that it 
is unclear how Rachid's reforms will take shape.  In early 
2007, the Ministry announced that Export Support Fund 
production subsidies and reduced rents on land would be 
scaled down over the course of five years, contingent upon 
selected industries achieving export targets.  Subsidies 
begin at 10 percent on the value of the exports and will be 
gradually reduced to 6 percent in the fifth year before they 
are ultimately eliminated. 
 
----------------------- 
Dubious WTO Compliance? 
----------------------- 
 
3.  (SBU) In response to our concerns about the program, the 
contractor was unsure whether the changes would be consistent 
with the GOE's WTO obligations, although Ministry officials 
claim their export support is technically compliant.  We will 
continue to monitor this program and any changes to evaluate 
their compliance with Egypt's WTO obligations. 
RICCIARDONE