Reference ID: 05CAIRO2482    

Created: 2005-03-29 16:14    

Released: 2011-08-30 01:44    

Classification: CONFIDENTIAL    

Origin: Embassy Cairo


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

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 002482




E.O. 12958: DECL: 03/29/2015





Classified by Acting DCM Michael Corbin for reasons 1.4 (b)

and (d).






¶1. (C) During a March 23 meeting, Senator Gordon Smith and

Egyptian Minister of Foreign Trade and Industry Rachid

discussed the recent QIZ agreement and prospects for an

eventual FTA with the U.S.  Smith underlined the importance

of further Egyptian progress in particular areas, including

IPR.  Smith also emphasized the important role issues like

political reform, religious freedom, and anti-Semitism play

in shaping the overall bilateral relationship.  On Iraq,

Smith noted progress and continuing challenges.  Rachid

advised Smith that the GOE was providing assistance to the

new Iraqi government in various areas, including technical

training in his own ministry for Iraqi trade officials.

Smith welcomed this engagement.  End summary.


¶2.  (C) In his March 23 meeting with Minister of Foreign

Trade and Industry Rachid Mohamed Rachid, Senator Smith

opened the conversation by asking about the Minister's recent

visit to Washington.  Rachid said that the visit had gone

very well.  He said there was a good understanding in

Washington about what is going on in Egypt in terms of

economic reform and trade issues.  He said that there was

particular interest in the recently concluded Qualifying

Industrial Zone (QIZ) agreement between Egypt and Israel.

Noting that Free Trade Agreements (FTAs) often become tied to

political issues, Senator Smith said that the QIZ agreement

and President Mubarak's work on Egypt's relationship with

Israel was resonating well in Congress.  The Senator said

that he also personally appreciated the Minister's help with

the issues that affect his district, like resolving the

single-sourcing problem for Nike and Egypt's continuing

purchases of wheat from the U.S., a portion of which was

supplied by Oregon farmers.


¶3. (C) Minister Rachid spoke about how trade was helping to

change the political environment in Egypt.  He said that with

the QIZ, the government had expected strong reactions to the

broadening of trade relations with Israel.  To its surprise,

the only demonstrations that occurred were by workers whose

jobs might be threatened because their factories were not

included in the first set of designated zones.  Rachid said

that QIZ was the first time the average Egyptian could see a

direct link between the peace process and his own personal



¶4.  (C) Rachid stated that although Egyptians had high

expectations about the reforms, there would be a long and

difficult transition period to restructure the economy.

During this period, trade would be "one of the best things we

can do" to improve people's welfare.  For this reason an FTA

with the U.S. was a priority for Egypt, he said.  He said

that Egypt's interest in an FTA was not because it sought

greater access to the U.S. market; Egypt's access was already

substantial thanks to the QIZ.  Rather, the government wanted

an FTA because it would elevate Egypt's relationship with the

U.S. to a new level, would be a catalyst for further reform,

and would attract foreign direct investment.


¶5.  (C) Senator Smith said that some of the strongest

resistance to expanded trade has been from U.S. firms that

believe intellectual property rights (IPR) are not being

sufficiently protected in the countries seeking FTAs with the

U.S.  He said that whatever Egypt could do to respond to U.S.

firms' IPR concerns would make it easier for Congress to

support an FTA with Egypt.  Rachid said that Egypt's legal

structure for IPR protection was in place and generally

working well.  The main issue was with pharmaceuticals, which

was really a combination IPR protection and

affordability/access to medicine.  As for IPR protection, one

of the main issues was the lack of transparency for

government approvals of generics.  Rachid said that after the

recent discussions with U.S. firms and the USG, the Minister

of Health and Population was now taking steps to address that

problem.  The real challenge, he said, was how to make

medicines affordable and accessible.  He believed that a

solution could be found through discussions between the

concerned parties rather than confrontation, as had sometimes

been the case in the past.  In general, however, he agreed

that IPR was an area that the government needed to work on.


¶6.  (C) Rachid asked the Senator if he had particular

concerns with respect to Egypt.  Senator Smith said that

political reform had been a concern in Congress and the

Senator himself was concerned about whether Egypt was going

in the right direction.  President Mubarak's announced

intention to open up the political process was welcome in the

U.S., and many Congressional concerns about Egypt would go

away if the steps taken by the GOE were indeed real and not

symbolic.  Moreover, Egypt could enhance its position by

continuing to play a constructive role in the peace process,

which was a priority for President Bush.  Finally he noted

that anti-Semitism was a political concern, one that Egypt

appeared to be addressing.


¶7.  (C) Senator Smith added that an issue of personal concern

was the situation of Mormons in Egypt.  He had heard from his

co-religionists in Egypt that there were half a dozen cases a

year in which Egyptians who had converted freely to Mormonism

while living outside of Egypt had been prevented from

attending services in Egypt.  He said that his concerns were

not just for the Mormons, but for adherents of other minority

faiths who faced similar problems.  The Minister affirmed

that he would look into the situation.






¶8.  (C) The Minister then asked the Senator for his

impression of the situation in Iraq.  Senator Smith noted

that the U.S. military was doing an excellent job, but faced

a difficult task dealing with insurgents, who offered only

death and destruction and no plan for the future.  He hoped

the new government would be established soon and that Iraqis

could begin to take over more security operations so that the

U.S. could start to bring the troops home.  The Minister said

that Egypt was offering various forms of assistance to Iraq.

In fact, after the meeting with the Senator, Rachid was due

to officiate over a graduation ceremony of 60 Iraqis who had

received technical training from his ministry.  A second

group of Iraqis was due to arrive shortly to receive

specialized training on trade matters.  Smith welcomed the

GOE's assistance to Iraq.


¶9. (U) CODEL Smith did not have an opportunity to clear this

message before departing Egypt.



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