Prime minister eyes free-trade pact talks with U.S.

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Egypt could open negotiations on a free-trade agreement with the United States as early as the end of this year, Prime Minister Ahmed Nazif said yesterday.

In talks on Capitol Hill, Mr. Nazif said House and Senate members indicated that any qualms they had on Egypt's qualifications had been resolved.

"It was very encouraging," Mr. Nazif told editors and reporters of The Washington Times in a downtown breakfast meeting yesterday. "The response we got was a positive one, not a commitment, but a positive response from the administration [and] Congress."

The economic-reform-minded prime minister said lawmakers had asked that Egypt first wait until the Central American Free Trade Agreement (CAFTA) was concluded.

"If that is successful, then I don't see why we shouldn't have started our negotiations before the end of this year," Mr. Nazif said.

The Bush administration has been pushing for congressional approval of CAFTA, a deal to lower tariffs with the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. But the agreement faces stiff congressional opposition, making the timing and outcome of a final vote uncertain.

Congress has been more amenable to agreements in the Middle East. The United States already has pacts with Israel and Jordan, and in July 2004 Congress easily approved a free-trade agreement with Morocco.

Negotiations also have been concluded with Bahrain and started with the United Arab Emirates and Oman.

Washington had considered starting free-trade talks with Egypt until relations soured in mid-2003, when the country backed out of an international effort to press Europe to open its markets to genetically modified crops. Talks on trade and investment issues resumed in February.

The Egyptian prime minister was in town for talks with President Bush, Secretary of State Condoleezza Rice and congressional leaders. On the agenda was Egypt's economic and political progress, as well as political developments throughout the Middle East, including Iraq.

Egypt is a key U.S. ally in the region, and is one of the largest recipients of U.S. aid in the world. The country has advanced a series of pro-free-market economic changes, and says it is moving toward a more democratic political system.

Signing an FTA with Cairo would give Egypt an important economic boost and help anchor reform in that country, according to Robert Lawrence, senior fellow at the Institute for International Economics.

It would also serve as an additional step on a 10-year plan Mr. Bush outlined in 2003 to create a U.S.-Middle East Free Trade Area.

"We need to focus on rebuilding as much as we focus on security. They go hand in hand," Mr. Nazif said. "Poverty will bring people who lose hope, people who lose hope are more susceptible to falling into the hands of terrorism."

He added that Iraq and the Palestinian territories -- both walking a security and political tightrope -- would need hefty economic help to soak up the high numbers of unemployed and drain the insurgent pool.