May 27, 2009 / 7:13 PM / 10 years ago

U.S., Egypt boosting trade ties ahead of Obama trip

WASHINGTON (Reuters) - The United States and Egypt will step up cooperation on trade, the two countries announced

President Barack Obama speaks about new energy at the Thunderbirds Hangar at Nellis Air Force Base in Las Vegas, Nevada May 27, 2009. REUTERS/Jason Reed

on Wednesday, a week before President Obama’s planned trip to Egypt and a much-anticipated speech to Muslims.

Deepening trade ties should mesh well with the strong cooperation between Washington and Cairo on political and security matters, said the joint statement issued by U.S. Trade Representative Ron Kirk and Egyptian Minister of Trade and Industry Rachid Mohammed Rachid after a meeting in Washington.

The two men signed a “United States-Egypt Plan for a Strategic Partnership” under which senior U.S. and Egyptian officials will develop a framework over the next three months for trade and investment cooperation, the statement said.

“In the months ahead, we have dedicated ourselves to pursuing a program of intensified U.S.-Egyptian cooperation on economic, trade, and investment issues,” it said.

The strengthened cooperation will “help to sustain Egypt’s important recent economic reform efforts,” the statement added.

Egypt, which signed a peace treaty with Israel in 1979, has been a key partner for Washington in decades of efforts to secure Middle East peace, and is one of the biggest recipients of U.S. military and economic aid.

But the trading relationship lags in comparison. Obama’s predecessor, former President George Bush, negotiated free trade deals with some other Muslim countries but decided against doing so with Egypt, in part because of concerns over that country’s commitment to democratic reform.

Wednesday’s statement did not mention the specific issue of a free trade agreement.

However, it said that a program would be expanded under which Egyptian goods made with Israeli components in certain zones of Egypt, enter the U.S. duty free.

That program, known as the Qualified Industrial Zones (QIZ) agreement between Egypt, Israel and the United States, will now be expanded to two new zones in Egypt, the statement said. Egypt began implementing the program in 2005.

Obama’s Egypt trip next week fulfills a promise he made during his presidential campaign to give a major address to Muslims during the first few months in office. The White House said he chose Egypt, the most populous Arab country, because it in many ways represents the “heart” of the Arab world.

The Egyptian trade minister Rachid said the two countries were starting a new phase in ties.

“We are opening a new page in the relationship between Egypt and the United States with a new administration that is clearly trying to engage at a higher level and clearly trying to play a positive role in our part of the world,” Rachid said during a visit to the U.S. Council on Competitiveness.

Egypt’s textile and clothing exports to the United States have risen since the QIZ deal. But overall U.S. imports from Egypt were down 0.3 percent last year, to $2.4 billion.

U.S. goods exports to Egypt the same year were $6.0 billion, and Egypt is currently the 36th largest export market for U.S. goods.

Editing by Cynthia Osterman

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