FTAs for Tunisia and Egypt

The United States should begin now to negotiate free trade agreements with Tunisia and Egypt.

The two cases are quite different in complexity and market size. Egypt has a population of eighty million while Tunisia’s is only ten million and very much oriented toward Europe, with which it already has an FTA. A small economy like Tunisia’s makes for a faster negotiating process, just the kind that the United States Trade Representative’s office likes, and is unlikely to arouse much opposition in Congress. Negotiations with Egypt would be long and difficult.

In 2005 the United States considered an FTA with Egypt and turned away from it for the right political reasons. President Mubarak’s jailing of his sole opponent in the 2005 presidential election, Ayman Nour, made proceeding with an FTA unpalatable. But there was little enthusiasm among trade officials anyway: they not only winced at the technical and political difficulty a negotiation with Egypt would bring, but also thought it would in the end go nowhere. There was a widespread view, one that I shared, that Mubarak did not really want an FTA; instead he wanted only the announcement that negotiations were starting. That would have been a sign of political favor from Washington, and that is what we did not wish to give him.

Mubarak would not have wanted an FTA, it was argued, because an FTA creates real and continuing pressure for a freer economy, the rule of law, more open markets, and less corruption. This is precisely why negotiating FTAs with Tunisia and Egypt should begin now, as they begin their political and economic transitions. There will be many pressures to maintain corrupt, anti-market practices, and those who hold monopolies and other economic advantages will seek to keep them. An FTA will push in the other direction, toward an open market and the economic growth it can bring. There are few things we can do to nudge both countries in a positive direction that would have greater effect than FTAs with each.