Select Committee on European Scrutiny First Report


COM(01) 184

Draft Council Decision on the signature of a Euro-Mediterranean Association Agreement between the European Communities and their Member States and the Arab Republic of Egypt on behalf of the European Community.

Draft Council Decision on the conclusion of a Euro-Mediterranean Association Agreement between the European Communities and their Member States, of the one part, and the Arab Republic of Egypt, of the other part — Volume I/II.

Legal base: Article 310 EC; unanimity
Documents originated: 9 April 2001
Forwarded to the Council: 9 April 2001
Deposited in Parliament: 20 June 2001
Department: Foreign and Commonwealth Office
Basis of consideration: Minister's letter of 26 April and EM of 9 July 2001
Previous Committee Report: None
Discussed in Council: 25 June 2001
Committee's assessment: Politically important
Committee's decision: Cleared


39.1  On 19 December 1994 the Council approved a mandate for the Commission to negotiate a new Euro-Mediterranean Association Agreement with Egypt. The Agreement will widen the scope of the Co-operation Agreement signed in 1977, which it will replace. The two proposals considered here constitute the legal instruments for the signature and conclusion of this Agreement. The Commission proposes that the Council both signs the Agreement and then, after the assent of the European Parliament has been obtained, takes a decision authorising conclusion of the Agreement by the EC. The Commission should conclude the Agreement on behalf of the European Coal and Steel Community (ECSC).

39.2  Introducing the instruments, the Commission recalls that the Council adopted negotiating directives in 1994. The progress of negotiations was "extremely slow", with ten revisions of the draft texts over the four and a half years. Following what it describes as "considerable pressure" from the EC and the Presidency on the Egyptian side to make progress, a final package was agreed in June 1999 and endorsed by the General Affairs Council (GAC) the same month.

39.3  The EC at that point considered the negotiations to be closed and expressed itself ready to initial the final draft. The Egyptian side also considered negotiations to be closed but delayed initialling for 18 months because of problems in finding a consensus in cabinet. On 26 January 2001 the final draft was initialled by both sides in Brussels. It was signed by the Member States in the margins of the GAC on 25 June.

39.4  The Commission suggests that the proposed Agreement will open a new era in bilateral relations and will consolidate the Euro-Mediterranean partnership launched by the 1995 Barcelona Declaration. It expects the Agreement to contribute to peace and security in the region and to stimulate trade and economic relations between Egypt and the EU, and between Egypt and its Mediterranean partners.

The proposed Agreement

39.5  The Agreement, which is for an unlimited period, is the fifth Euro- Mediterranean Association Agreement to be concluded under the EU's Mediterranean policy since it was launched at Essen in 1994. The Commission's explanatory memorandum sets out the main elements, but in his Explanatory Memorandum of 9 July 2001, the Minister of State at the Foreign and Commonwealth Office (Mr Peter Hain) gives a fuller account. He says that, inter alia, it will provide for:

    "(a)  a regular political dialogue, in particular at Ministerial and senior official level. Respect for democratic principles and human rights will be an essential element of the agreement;

    "(b)  the progressive establishment over 12 years of a Free Trade Area, in accordance with WTO rules, including liberalisation of trade in industrial products, and further liberalisation of trade in agricultural products;

    "(c)  a safeguard clause and an anti-dumping/countervailing clause confirming the Parties' right to take action in accordance with the GATT;

    "(d)  Provision for the extension of the Agreement to cover establishment of companies and trade in service, taking account of obligations arising out of the General Agreement of Trade in Services (GATS);

    "(e)  Further removal of restrictions on the movement of capital between the Community and Egypt;

    "(f)  The introduction of rules within five years of the entry into force of the agreement in relation to competition within the Free Trade Area;

    "(g)  Protection of intellectual, industrial and commercial property;

    "(h)  Economic co-operation in a wide range of areas, including education and training, science and technology, environment, industry, investment, financial services, agriculture, transport, telecommunications and information technology, energy, tourism, customs, statistics, money laundering and drugs;

    "(i)  A dialogue on social and cultural matters;

    "(j)  Financial co-operation, aimed at modernising the Egyptian economy and promoting private investment;

    "(k)  The establishment of an Association Council, which will meet when both sides consider it necessary, at Ministerial level to examine any issues arising within the framework of the Agreement. An Association Committee of senior officials will assist it, and

    "(l)  Appropriate measures by either Party, including, implicitly, suspension of the Agreement if it considers that the other Party has failed to fulfil its obligations under the Agreement.

The Government's view

39.6  The Minister comments:

    "The Agreement recognises the European Union's desire to deepen its partnership with Egypt. It provides a comprehensive framework for political dialogue at all levels, and for the development of trade between the EU and Egypt. The Government favours closer links between the EU and Egypt. The Agreement does not impose any new burdens on business. On the contrary, it will bring new opportunities to UK exporters."

39.7  In a letter dated 26 April, the Minister says that Egypt already has preferential access to the EU market and the Association Agreement will establish reciprocal free trade over a period of 12 years from its entry into force.

39.8  On the financial implications of the Agreement, the Minister notes, firstly, that the Agreement does not cover EC aid to Egypt. At present, Egypt is eligible for EIB loans, and EC funding under the MEDA regulation. One of the objectives of MEDA is to support Egypt in its implementation of the Association Agreement. He then comments:

    "Depending on the extent of the increase in imports to the EU and the sectors concerned, there may be additional costs to the EC budget if internal production of agricultural products is diverted to subsidised exports, intervention storage or other means of disposal. Any such costs will have to [be] contained within the agriculture guidelines, in accordance with the agreement of the Edinburgh Council in December 1992 on future financing of the Community and the provisions of the Budget Discipline Decision agreed following the Edinburgh Council."


39.9  The Minister does not suggest that the slow progress made with this Agreement was due in any way to a failure by Egypt to agree with the EU negotiators on any specific issue, such as trade preferences. The fact that the final draft was substantially the same as the 1999 one which the Egyptians left on the table supports his analysis that the delay was indeed due to differences of approach within the Egyptian cabinet.

39.10  We now clear this document.

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Prepared 30 July 2001