More on Egypt-US FTA

The plot thickens:

CAIRO, Egypt (Reuters) -- Egypt could lose its chance of a trade deal with Washington if it cannot persuade the Bush administration to launch talks within the next few weeks, a congressional staffer told Egyptian businessmen on Wednesday.

The Bush administration has not yet decided to start talks with Egypt and both it and some of the members of Congress who would vote on any agreement have linked expanded trade with Egypt with political changes by President Hosni Mubarak.

A particular concern is the imprisonment of liberal opposition leader Ayman Nour, who is serving a five-year sentence on forgery charges he says are politically motivated.

The senior congressional staffer, who asked not to be named, told a breakfast organized by the American Chamber of Commerce Egypt would not get another chance at a deal for four years.

"If they don't launch the FTA [Free Trade Agreement] within three weeks to a month, you will lose the opportunity until 2010. That's the grim reality ... and the FTA negotiations have been taken off course by events not directly related," he said.

Another congressional staffer told the meeting U.S. lawmakers would also take Egyptian reform into account.

"It's important for you to recognize that for a number of members of Congress, progress on political reform will be very important in deciding how they will vote on the FTA," he said.

The Egyptian government says it has made changes, notably by amending the constitution last year to allow multi-candidate elections for the presidency. But monitors said presidential and parliamentary elections last year were seriously flawed.

Mubarak beat Ayman Nour, his most prominent opponent, by 89 percent of the vote to 8 percent, and his National Democratic Party retained its two-thirds majority in parliament.

Businessmen and congressional staffers at the breakfast said the Egyptian government should also act fast on the Nour case.

Told it could take months for Nour's appeal to come up in court, one businessman said: "That's just not quick enough." [emphasis mine]

Does anyone know why Egypt would not get a chance at a FTA until 2010? Is there a technical reason or is this just politics? Anyway, I'm not sure how seriously to take this, but it certainly puts Egypt's pro-business, pro-FTA and increasingly influential business community (the papers these days are full of headlines about "the businessmen's cabinet") in a quandary. There is simply no way Nour could be released through an appeal within that timespan. Just pardoning him or releasing him would be an intolerable sign of weakness for the regime.

I suspect that, if true, this could also be a convenient excuse to delay a FTA many Congressmen are unsure about. Unlike Bahrain and Oman, Egypt can threaten US industry in certain strategic sectors, such as textiles -- this at a time when the US is under pressure to revise its subsidies regime in the Doha Rounds and in its ongoing fight against the EU. Overall, the FTA delivers few tangible benefits to US companies (and, some have argued, nothing that great to Egypt either.) So even if economically this could have limited impact, politically it's a slap in the face. The Bush administration's behind-the-scenes pressure on Egypt continues...

(This follows a previous post on the same topic.)

Update: I missed this earlier story which confirms that trade talks are on hold.

Update 2: Here is another story with quotes from USTR Robert Portman on why there is a delay:

Trade Representative Rob Portman said the United States still sees "tremendous potential economic opportunities" in pursuing a free trade agreement (FTA) with Egypt.

"We also think that an FTA would help to support and encourage the economic reforms that are already ongoing in Egypt," he told reporters.

"But we still have both commercial and political concerns which may not allow us to launch formal FTA discussions," Portman added.

"It is an ongoing concern on the political side. It is one of the considerations we have to take into account."