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Brussels, 3 April 2008

European Neighbourhood Policy – EGYPT

EU–Egypt relations: basic facts

The EU-Egypt Association Agreement entered into force in June 2004, replacing an earlier 1977 Cooperation Agreement. It provides a framework for the political, economic and social dimensions of the EU-Egypt partnership, having as its main goals to create a free trade area over a period of twelve years and to help to increase economic growth.

The ENP Action Plan, adopted in March 2007, identifies reform priorities (and their sequencing) within Egypt’s own agenda of reforms.

Major developments in 2007

In spite of the short period since the launch of the EU-Egypt Action Plan in June 2007, Egypt has shown considerable commitment to putting in place the necessary institutional framework to facilitate its implementation.

Important progress was made towards the goals for economic reform set out in the Action Plan, including significant steps towards streamlining the business environment, cutting red tape, making it easier to start up new businesses and reforming the customs and tariff regime, paving the way for increased trade and investment.

Egypt's economic growth accelerated to 7.1% GDP in 2007. Egyptian exports to the EU have risen consistently since the entry into force of the Association Agreement (2004), reaching €7.5 billion in 2006. The EU is Egypt’s largest trading partner, representing over 40% of Egypt’s total trade.

Negotiations on the further liberalization of trade in agricultural, processed agricultural and fishery products are proceeding. Major tariff reform was undertaken in early 2007, bringing down the weighted average import tariff to only 7%.

Bilateral negotiations on the liberalization of services and establishment started in early 2008.

Egypt is an important energy partner of the EU as an oil and gas producer and, due to its strategic position, for transit of energy resources from the Persian Gulf to markets through the Suez Canal and the Sumed (Suez-Mediterranean) oil pipeline. A Memorandum of Understanding on strengthened energy cooperation was negotiated with Egypt in 2007 and will be signed in near future.

Egypt actively pursued a regional policy of disarmament and non-proliferation of weapon of mass destruction.

How is the EU supporting reforms in Egypt

€120 million were allocated in 2007 for the Education Sector Policy Support Programme (ESPSP) in support of the Government’s education reform agenda. This programme aims at strengthening access, quality and gender equality in the education sector, and builds on important reforms already introduced under the €100 million Education Enhancement Programme funded by the Commission which ran until 2006.

Institutional capacity building remains a priority. In 2007 €17 million were allocated to the Support for the Implementation of the Action Plan programme. This aims at upgrading the overall administrative capacity of the Egyptian government for implementing the ENP Action Plan, among others through the Twinning instrument.

Support was given to the health sector reform through a programme of €110 million, which ended in 2007 implemented in five pilot Governorates. A total of 125 Family Health Units in primarily rural areas were constructed/rehabilitated and equipped with medical and non-medical equipment. Medical and paramedical staff has been given specialised training and a Family Health Fund (FHF) was established to provide a high quality primary health services. A further €120 million to support health sector reform is planned in 2009.

Assistance to Egypt

In 2007, €137 million in Community assistance was allocated for Egypt to focus on the political, social and economic reforms in line with the ENP Action Plan.

The overall allocation for 2007-2010 is €558 million, under the European Neighbourhood Policy Instrument.

The Communication from the Commission to the Parliament and the Council Implementation of the European Neighbourhood Policy in 2007 (3 April 2008) and a country report on Egypt are available at

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