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 free trade agreement (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 FTA 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 FTA that combines Egyptian and Israeli components in manufactured goods from designated industrial zones that enter the U.S. duty-free.

The U.S. remains committed to assisting the ongoing economic reforms in Egypt and working with the Egyptian government to help overcome the economic challenges facing the country. In December 2017, a bilateral Trade and Investment Council was convened to discuss ways to further expand economic activity between the two countries.

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, which entered into force in May 2019. With 30 ratifications to date, the AfCFTA effectively created a single continental market for goods and services for 54 of the 55 member states of the African Union, excluding Nigeria. Egypt ratified the agreement in April 2019 during its presidency of the African Union. The AfCFTA covers a market of 1.3 billion consumers with an aggregate GDP of USD 2.5 trillion and will mostly benefit countries with large manufacturing bases such as Egypt, Kenya and South Africa.

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 also grown in the last ten years relative to the United States. In 2018, Egypt began FTA negotiations with the Eurasian Economic Union (EAEU), which includes Russia, Armenia, Belarus, Kazakhstan and the Kyrgyzstan. The agreement is expected to raise the trade volume between both sides to USD 15.7 billion (from USD 6.8 billion in 2017) and boost Egypt’s exports to EAEU countries to USD 1.9 billion (from USD 550 million). Bilateral talks have been ongoing, with ministerial-level negotiations expected in Q4 2020. Egypt is also in the final stages of negotiations with the United Kingdom for a post-Brexit trade agreement; negotiations began in 2018 and should be finalized by 2020’s end. 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 8.7 billion in 2019, ranking second in trade volume after China. Up 6% from 2018, this accounted for nearly 3% of Egypt’s GDP in FY 2018/19 (July to June) and 6% of MENA-U.S. merchandise trade in 2019. The Egypt-U.S. trade volume registered growth in 2019 on the back of a 27% increase in Egyptian exports to the U.S. as well as a 9% 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 2019. Egypt’s exports represented 5% of all MENA exports to the U.S. in 2019, climbing 27% while total MENA exports fell by 20%; Egyptian imports made up 7% of the region’s imports from the U.S.

Egypt’s trade deficit with the U.S. narrowed 12% in 2019 to USD 2.3 billion (from USD 2.6 billion in 2018). Imports from the U.S. grew 9% year-on-year from USD 5.1 billion in 2018 to USD 5.5 billion, while exports grew considerably, rising 27% from USD 2.5 billion to USD 3.2 billion in 2019. The surge was due to a 46% increase in petroleum exports, which accounted for nearly 40% of Egypt’s total exports to the U.S. in 2019. Oil exports, which reached USD 1.2 billion in 2019, were just shy of 2012’s decade-high record of USD 1.4 billion (which represented nearly 50% of that year’s total exports to the U.S.). Egypt’s non-oil exports also registered notable growth, rising 18% from USD 1.7 billion in 2018 to USD 2 billion in 2019.

Egypt's Exports to the U.S.

The bulk of Egypt’s exports to the U.S. continue to be textiles and apparel, which made up 58% of the total and were valued at USD 1.1 billion in 2019. Other top exports were food and kindred products, which rose 29% from the previous year to USD 161.9 million with fresh meats and fish driving the most growth. Plastics, rubber and ceramics notably grew 216% to USD 140.9 million in 2019. While base metals overall declined by 19% year-on-year to USD 123.6 million due to decreases in iron and steel (on the back of trade tariffs imposed by the Trump administration), exports of aluminum, copper and other metals grew by about 30% in 2019. Though still miniscule part of Egypt’s export basket, pharmaceuticals and machinery grew 479% and 59%, respectively, in 2019.


Source: U.S. Census Bureau

Egypt's Imports from the U.S.

Egypt’s top imports from the U.S. during 2019 were aircraft (increasing five-fold from 2018), seeds and grains, and electrical equipment. These three categories combined represented 56% of the year’s total imports. The remainder of the import basket showed year-on-year decreases in U.S.-sourced products. Food and kindred products declined by 25% to USD 380.4 million mainly due to a 46% decrease in imports of cereals (which accounts for 50% of the category), despite growth in imported dairy products (46%), fruits (38%) and edible meats (16%). Imports of base metals also fell 47% to USD 193.7 million in 2019 on the back of a sharp fall in iron and steel imports.

State Trade

In 2019, Louisiana remained the largest exporter to Egypt of all 50 states, exporting USD 1.2 billion and representing 22% of all U.S. exports to Egypt. Washington followed behind (due to sizable aircraft purchases), exporting USD 932.2 million, or 17% of all exports. Accounting for close to 40% of all U.S. exports to Egypt, these two states mainly send oil seeds, mineral fuels, aircraft as well as plastics and cereals. Other top exporting states to Egypt included Texas, Ohio and Maryland. These five states represented just over 60% of total U.S. exports to Egypt in 2019. 

The top five importing states received 60% of all U.S. imports from Egypt. Texas topped the list in 2019, with imports totaling USD 734.5 million and representing 23% of U.S. imports from Egypt. New Jersey and Georgia followed, taking up 14% and 8% of imports, respectively. New York and Louisiana rounded out the top five, representing a combined share of 15%. Texas primarily imported mineral fuels and oils, textiles and apparel, and iron and steel. The other top four states imported large volumes of vegetables, fruits, nuts and other food products as well as glass and ceramics, and 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

734.5

23%

2

New Jersey

455.9

14%

3

Georgia

253.4

8%

4

New York

245.4

8%

5

Louisiana

208.6

7%

6

California

155.8

5%

7

North Carolina

115.1

4%

8

Florida

89.1

3%

9

Virginia

61.7

2%

10

Pennsylvania

59.1

2%

11

Maryland

43.6

1%

12

South Carolina

43.1

1%

13

Nevada

39.0

1%

14

Illinois

34.6

1%

15

Tennessee

30.2

1%

 

Others

584.4

19%

GRAND TOTAL

3,153.5

100%

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 article’s appraised value at the time of entry into the United States must come from a BDC. Periodically renewed by the U.S. Congress, the current program is effective through December 31, 2020.

The majority of Egypt’s exports to the U.S. are not GSP eligible. Egypt’s GSP export basket in 2019 totaled USD 189.9 million, more than doubling from USD 89.6 million in 2018 but accounting for only 6% of total exports and 9.5% of non-oil exports to the U.S. Four product categories accounted for 76% of the 2019 GSP export basket: resin and synthetic rubber (44%, posting more than tenfold growth year on year), fruits and vegetables (21%), plastic materials (7%) and glass products (4%). Electrical equipment exports (0.4%) increased exponentially year-on-year. Several products were added to GSP export basket for the first time in 2019: iron and steel (0.03%), canned and packaged seafood (0.02%) and aerospace products (0.01%).


Egypt-U.S. Investment

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 2018 and fifth in the Middle East after Israel, United Arab Emirates, Saudi Arabia and Qatar. According to the Central Bank of Egypt, the U.S. was the third largest source of foreign direct investment (FDI) in Egypt during FY 2018/19 behind the United Kingdom and Belgium. The U.S invested USD 1.6 billion, accounting for 19% of total FDI in the country and marking a 8% decrease from the previous fiscal year. During H1 2019/20 (July-December), investment inflows from the U.S. totaled USD 862.9 million. 

Apache Corporation, a global oil and gas exploration and production (E&P) 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 732 million. 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 2019 and is among the country’s top gas producers. Apache aims to increase its investments to USD 792 million in the next fiscal year. Other American petroleum companies operating in Egypt include Chevron Corporation, ExxonMobil, Halliburton and IPR Energy Group. Notably, in 2020, ExxonMobil is expanding its upstream presence in Egypt through two E&P agreements worth USD 332 million.  

The stock of U.S. capital excluding petroleum E&P totaled USD 2.5 billion as of the end of 2019, accounting for 15% of total foreign capital stock. Distributed among 1,426 companies, this represents a 7% decrease year-on-year in capital despite 66 new companies with U.S. capital contribution entering the Egyptian market in 2019. Global economic tightening and ongoing trade disputes are contributing factors. 

American firms are active in most economic sectors in Egypt with financial services companies holding the largest share in value terms (45.4%) of the U.S. non-petroleum capital stock in Egypt. AIG, American Express, BNY Mellon, Mastercard, MetLife and Visa are all active in the financial services.  

Manufacturing is the second largest, accounting for 28% of U.S. non petroleum capital and 22% of all U.S. companies. Large U.S. investors include 3M, Abbott, AbbVie, American Automotive, Bristol Myers Squibb, Cargill, Coca-Cola, Colgate-Palmolive, Dow Chemical, Edison International, Energizer, General Electric, General Motors, Heinz, Honeywell, Hundz Soil, Ideal Standard International, Johnson & Johnson, Kellogg’s, Mars, Merck, PepsiCo, Pfizer, Proctor & Gamble and Xerox.  

American companies operating within service sectors – including commercial services, consultancies, healthcare and education – contributed 18% of capital and accounted for nearly 41% of all U.S. companies. Cisco Systems, Hewlett-Packard Enterprise, IBM and Microsoft all operate in the telecommunications and IT sector, which accounts for nearly 2% of U.S. capital in Egypt. 

The Egyptian fast food market is dominated by U.S.-based franchises including Baskin-Robbins, Burger King, Chili’s, Cinnabon, Cold Stone Creamery, Dunkin’ Donuts, Hardee’s, Hard Rock Café, KFC, McDonald’s, Pizza Hut, Starbucks and TGI Friday’s. 

Leading Sectors for U.S. Exports and Investments in Egypt (2019)

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

Source: U.S. Commercial Service


U.S. Contribution of Companies’ Capital (Stock end of 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

15

25.8

Total Finance

32

1,120.2

Engineering

55

91.8

Food and Beverage

49

176.3

Textiles and Clothing

59

133.8

Pharmaceuticals

19

118.7

Chemicals

72

76.8

Building Materials

11

56.2

Metallurgical

36

37.9

Mining

6

3.6

Wood Manufacturing

11

0.8

Total Industry

318

695.9

Petroleum Services

51

321.5

Commercial Services

176

50.8

Health Services

26

37.6

Transportation and Maintenance

27

16.5

Consultancies

124

7.3

Public Services

84

4.2

Journalism and Media Production

41

2.6

Educational Services

40

6.8

Storage

3

0.4

Human Resources

3

0.02

Total Services

575

447.7

Real Estate Development

49

61.9

Contracting

56

34.0

Infrastructure

22

6.2

Housing

2

1.0

Total Construction

129

103.1

Information Technology

169

33.3

Communication

24

6.1

Systems Technology Services

45

2.9

Total Communication and Information Technology

238

42.3

Tourism

83

36.9

Total Tourism

83

 36.9

Land Reclamation and Cultivation

42

11.3

Agro-industry

1

7.1

Livestock Production and Fisheries

7

2.6

Other Agriculture

1

0.5

Total Agriculture

51

21.5

Grand Total

 1,426

2,467.5

Source: General Authority for Investment and Free Zones (GAFI)