Notwithstanding the strong political ties between Egypt and the U.S., the economic relationship between the two countries is not sustainable. The stubborn trade deficit in favor of the U.S., the limited U.S. foreign direct investment (FDI) in Egypt and the dwindling economic aid all suggest that the time has come for both parties to reformulate this dimension of their relationship. Based on the premise that the two countries value their political alliance for peace and stability in the Middle East, the secure supply of oil, and the role of Egypt as a reform model for other countries in the region, this Policy Viewpoint is intended to contribute to the debate on the future of Egypt-U.S. economic relations.
After evaluating the current economic relationship between Egypt and the U.S, the Viewpoint evaluates alternative options for the future. Based on the analysis, it argues in favor of the creation of an Egypt-US Free Trade Agreement (FTA). It concludes by discussing the nature of a desirable agreement and the steps that should follow.