Egypt-U.S. Business Data

Egypt-U.S. Trade & Investment Relations Profile


Egypt-U.S. Trade

Trade History

Egypt's trade and investment relationship with the United States deepened over the forty years since Egypt signed a peace agreement with Israel in 1979. Since that time, the two countries have sought ways to increase their economic and trade ties, notably through various partnership and agreements. At the beginning of the 1990's, negotiations for a free trade agreement were a topic of discussion, and Egypt and the U.S. finalized a Trade and Investment Framework Agreement (TIFA) in 1999. After the failure to reach a FTA bilaterally, the U.S. shifted to giving regional trade agreements priority, such as the 2003 Middle East Free Trade Area initiative (MEFTA). It did, however, conclude free trade agreements with Israel, Jordan, Morocco, Bahrain, and Oman. Further FTA negotiations with the UAE and Egypt were put on hold in 2005 and 2007, respectively.

Nevertheless, in the pursuit of a free trade framework, Egypt has made strides to open its economy through various reforms and, in essence, has laid the ground work for a free trade agreement in the future by focusing on each part of modernizing its economy. Furthermore, Egypt-U.S. trade operates within two initiatives designed to increase Egypt's exports to the U.S. The first is the U.S. Generalized System of Preferences (GSP), a preferential trade treatment program where certain products are eligible for duty-free entry to the U.S. under specific qualifications. The second is the Qualifying Industrial Zones (QIZs), a one-way free trade agreement that combines Egyptian and Israeli components in manufactured goods from designated industrial zones that enter the U.S. duty-free.

Since August 2015, Egypt and the U.S. have been engaged in discussions on further strengthening ties to overcome obstacles hindering the increased flow of foreign direct investment in the Egyptian market. There have also been talks of making amendments to the TIFA and the QIZ protocol.

Regional Trade

In the absence of greater trade liberalization measures between Egypt and the U.S., other trading partners have been sought. Egypt entered the Greater Arab Free Trade Area (GAFTA) trading bloc, also referred to as the Pan Arab Free Trade Area (PAFTA), in 1998.; it became a member of the Common Market for East and Southern Africa (COMESA) in 2001; it finalized the EU-Egypt Partnership Agreement, signed in 2002; it joined the Agadir Agreement, a FTA between Mediterranean countries (Egypt, Jordan, Morocco, and Tunisia), signed in 2004; and it negotiated the Egypt-Turkey Free Trade Agreement in 2005. In 2010, Egypt signed a preferential FTA with Mercosur, the South American trade bloc consisting of Argentina, Brazil, Paraguay and Uruguay. Following Argentina’s ratification in July 2017, the FTA went into effect in September 2017. Egypt also became a member of the African Continental Free trade Area (AfCFTA) in March 2018. As of February 2019, 19 countries had ratified the agreement. AfCFTA will enter into force after 22 signatures. Egypt received parliamentary approval in February 2019 to put the AfCFTA into force during its current presidency of the African Union.

In addition, Egypt has concluded numerous bilateral trade and preferential treatment agreements with additional Arab countries. Trade ties with the EU and the MENA region have grown in the last ten years relative to Asia and the United States. Nevertheless, the U.S. remains a vital trade partner, sharing a robust trade relationship with Egypt.

Trade Values

The U.S. is one of Egypt’s largest trade partners with a trade volume of USD 6.9 billion in 2018, ranking second in trade volume after China. Up 23% from 2017, this accounted for nearly 3% of Egypt’s GDP in FY 2017/18 (July to June) and 4% of MENA-U.S. merchandise trade in 2018. The Egypt-U.S. trade volume registered double-digit growth in 2018 on the back of a 52% increase in Egyptian exports to the U.S. as well as a 27% growth in imports from the U.S. to Egypt. Egypt was the U.S’ fifth largest trade partner in the Middle East and the largest in Africa in 2018; Egypt’s exports represented 3% of Middle East and North Africa (MENA) region exports to the U.S. in 2018, while its imports made up 7% of the region’s imports from the U.S.

Source: U.S. Census Bureau

Egypt’s trade deficit with the U.S. grew 12% in 2018 to reach USD 2.62 billion. Imports from the U.S. grew 28% from USD 4 billion to USD 5.1 billion, while exports grew substantially, rising 52% from USD 1.6 billion in 2017 to USD 2.5 billion. The surge was due to a more than four-fold increase in petroleum exports, which accounted for a third of Egypt’s total exports to the U.S. in 2018. This is a massive year-on-year improvement, as oil exports accounted for less than 15% of Egypt’s exports to the U.S in 2017. Oil exports in 2018 were 40% less than the decade-high record in 2012, where petroleum exports totaled USD 1.4 billion and represented nearly 50% of total exports to the U.S. Egypt’s non-oil exports also registered notable growth, rising 21% from USD 1.4 billion in 2017 to USD 1.7 billion in 2018.

Egypt's Exports to the U.S.

Egypt's export basket remains considerably diversified, unlike many other countries in the MENA who export predominantly oil and gas. This factor indicates that the Egyptian economy has great growth potential in a variety of sectors. The bulk of Egypt’s exports to the U.S. continue to be textiles and apparel, which made up over 60% of the total and were valued at USD 1 billion in 2018. Other top exports were base metals (predominantly iron and steel), which declined by 4% from the previous year to USD 96.7 million, and food and kindred products (including vegetables, fruits, meat and poultry) which rose 12% to USD 125.1 million.

Source: U.S. Census Bureau

Egypt's Imports from the U.S.

Egypt ranks first in Africa and fourth in the MENA region for imports originating from the United States. Egypt’s top imports from the U.S. during 2018 were oil seeds, grains and fruits, which grew 210% to USD 1.2 billion; these represented about 20% of the year’s total imports. Other notable growth in non-oil imports included cereals and iron and steel, which saw 435% and 114% year-on-year growth, respectively. Plastics, vehicles (excluding railways and trams), aircrafts and electric machinery were also some of the key imports from the U.S.; however, aircraft and electric machinery imports declined by 72% and 22%, respectively to USD 190.6 million and USD 177 million in 2018.

Source: U.S. Census Bureau

State Trade

In 2018, Louisiana remained the largest exporter to Egypt of all 50 states, exporting USD 1.5 billion and representing 29% of all U.S. exports to Egypt. Texas followed behind, exporting USD 831.5 million, or 16% of all exports. Accounting for close to 50% of all U.S. exports to Egypt, these two states mainly send mineral fuels and oils as well as plastics and industrial machinery. Louisiana is also a major exporter of oilseeds, grains and cereals. Other top exporting states to Egypt included Iowa, California and Maryland. These five states represented just over 60% of total U.S. exports to Egypt in 2018.

The top five importing states received 60% of all U.S. imports from Egypt. Texas topped the list in 2018, with imports totaling USD 449.9 million and representing 18% of U.S. imports from Egypt. New Jersey and New York followed, taking up 15% and 9%, respectively, of imports. Louisiana and Georgia rounded out the top five, representing a combined share of 18%. Texas primarily imported mineral fuels and oils, and iron and steel, while the other top four states imported large volumes of apparel, vegetables, fruits and nuts as well as works of art and collector pieces.

Egypt Exports to the U.S. by State (2018)

Rank

State

Egypt Exports (USD million)

Share of State in Total Exports

1

Texas

449.9

18.1%

2

New Jersey

379.4

15.3%

3

New York

229.6

9.3%

4

Louisiana

214.4

8.6%

5

Georgia

213.1

8.6%

6

Pennsylvania

160.8

6.5%

7

California

159.6

6.4%

8

North Carolina

105.7

4.3%

9

Florida

75.3

3.0%

10

Virginia

52.1

2.1%

11

Maryland

42.4

1.7%

12

Delaware

37.8

1.5%

13

Iowa

34.1

1.4%

14

Kentucky

31.8

1.3%

15

Illinois

27.1

1.1%

-

Others

268.3

10.8%

-

GRAND TOTAL

2,481.5

100%

Source: U.S. Census Bureau

The GSP Program

The Generalized System of Preferences (GSP) program is the largest and oldest U.S. trade preference program, promoting economic development by providing preferential duty-free entry for over 3,500 types of products from 120 beneficiary developing countries (BDCs) and territories. A GSP-eligible import must be the growth, product or manufacture of a BDC, and at least 35% of the appraised value of the article at the time of entry into the United States must come from a BDC. After the GSP program expired on December 31, 2017, the U.S. Congress renewed it effective January 1, 2018 through December 31, 2020.

The majority of Egypt’s exports to the U.S. are not GSP eligible, and GSP exports in 2018 totaled USD 89.3 million, just 4% of total Egyptian exports to the U.S. and 5% of non-oil exports. Egypt’s GSP exports saw minor year-on-growth, increasing 1% from USD 88.4 million in 2017. The top GSP exports, which make up 81% of total GSP exports, include fruit and vegetables (27% of all GSP exports), plastic materials (19%), frozen foods (12%) and resin and synthetic rubbers (8%).

Source: USITC


Egypt-U.S. Investment

According to Egypt’s Ministry of Investment and International Cooperation, the stock of U.S. direct investment in Egypt stood at USD 21.8 billion in 2018. The most recent data from the U.S. Department of Commerce shows that Egypt was the second largest recipient of U.S. direct investment in Africa after Mauritius in 2017, and fourth in the Middle East after Israel, United Arab Emirates and Saudi Arabia.

According to the Central Bank of Egypt, the U.S. remained the third largest foreign direct investor (FDI) in Egypt during FY 2017/18 behind the United Kingdom and Belgium. The U.S. invested USD 2.2 billion, 29% of all FDI in the country and a 22% increase over the previous fiscal year. During Q1 2018/19 (July-September), investment inflows from the U.S. totaled USD 613.9 million (21% of the quarter’s total FDI).

Apache Corporation, a global oil and gas exploration and production company based in Houston, Texas, entered Egypt in 1993 and is now the largest American investor in the country, with current investments totaling over USD 18 billion. Apache—which holds over 6.7 million gross acres in more than 20 concessions, much of it in the Western Desert—remained Egypt’s top oil producer during 2018 and is among the country’s top gas producers. Apache investments in 2019 are expected to reach USD 1.2 billion. Other American petroleum companies with operations in Egypt include ExxonMobil, Halliburton, IPR Energy Group and Merlon International. In 2019, ExxonMobil was awarded a natural gas concession during the latest bid rounds held by Egyptian General Petroleum Corporation, marking the U.S. company’s entry into Egypt’s natural gas market.

The stock of U.S. capital excluding petroleum exploration and production totaled USD 2.6 billion as of 2018’s end, accounting for 26% of the year’s total foreign capital stock. Distributed among 1,360 companies, this represents a minor 2% year-on-year increase in capital and 91 new American companies that entered the Egyptian market in 2018. American firms are active in most economic sectors in Egypt, with financial service companies holding the largest share in value terms (42%) of the U.S. non-petroleum capital stock in Egypt. AIG, American Express, BNY Mellon, Coldwell Banker, Mastercard, MetLife and Visa are all active in the financial services sector. Manufacturing is the second largest sector, accounting for 33% of the U.S. non-petroleum capital in Egypt and nearly a quarter of all U.S. companies in Egypt. Large U.S. investors in this sector include 3M, Abbott, AbbVie, American Automotive, American Standard, Bristol-Myers Squibb, Cargill, Coca-Cola, Colgate-Palmolive, Dow Chemicals, Edison International, Energizer, General Electric, General Motors, Gillette, Heinz, Honeywell, Hundz Soil, Johnson & Johnson, Kellogg’s, Mars, Merck, PepsiCo, Pfizer, Procter & Gamble and Xerox.

American companies operating within service sectors—including commercial services, consultancies, healthcare and education—contributed 17% of capital and accounted for nearly 40% of all U.S. companies in Egypt. Companies in the field of construction contributed 4% to total U.S. capital in Egypt. Cisco, Hewlett-Packard, IBM and Microsoft all operate in the telecommunication and information technology sector, which accounted for just over 1% of U.S. capital in Egypt, while the Egyptian fast-food market is dominated by U.S.-based franchises including Baskin-Robbins, Burger King, Chili’s, Cinnabon, Cold Stone Creamery, Dairy Queen, T.G.I. Friday’s, Hardee’s, Hard Rock Café, KFC, Little Caesars, McDonald’s, Pizza Hut, Ruby Tuesday and Starbucks.

Leading Sectors for U.S. Exports and Investments in Egypt in 2018

  • Agriculture
  • Education and training
  • Electrical power systems
  • Franchising
  • Medical equipment and supplies
  • Oil, gas and renewable energy
  • Safety and security

(Stock end of January 2019)


Sector

Number of Companies
with U.S. Capital

U.S. Contribution to Capital
(USD million)

Banks

4

1,015.3

Financial Services

13

79.0

Investment Funds

16

25.9

Total Finance

33

1,120.2

Engineering

54

294.7

Food and Beverage

49

167.3

Textiles and Clothing

58

133.8

Pharmaceuticals

19

113.3

Chemicals

71

76.8

Building Materials

11

56.2

Metallurgical

33

37.4

Mining

5

3.6

Wood Manufacturing

11

0.8

Total Industry

311

883.9

Petroleum Services

50

321.5

Commercial Services

154

45.9

Health Services

25

37.6

Transportation and Maintenance

27

 21.5

Consultancies

114

7.1

Public Services

78

4.1

Journalism and Media Production

46

2.3

Educational Services

34

1.5

Storage

3

0.4

Human Resources

3

0.02

Total Services

534

441.8

Real Estate Development

46

61.1

Contracting

55

34.0

Infrastructure

21

6.1

Housing

2

1.0

Total Construction

124

102.2

Information Technology

162

33.0

Communication

23

 6.1

Systems Technology Services

42

2.0

Total Communication and Information Technology

227

41.0

Tourism

81

36.7

Total Tourism

81

36.7

Land Reclamation and Cultivation

41

11.3

Agro-industry

1

7.1

Livestock Production and Fisheries

7

2.6

Other Agriculture

1

0.5

Total Agriculture

50

21.5

Grand Total

1,360

2,647.2

Source: General Authority for Free Zones and Investment