Egypt's economy is in the process of transition from a state-controlled to a free-market system. This transition will succeed if the large share of state-owned enterprises in key areas such as transport, energy, textiles, banking and insurance is rolled back and simplified procedures for customs, taxes and licensing are introduced for the private sector. Prospects are currently bright for an economic upswing and for expanding bilateral foreign trade. So far, indications are that the Nazif government (in office as of July 2004) will be successful in speeding up economic reform.
Egypt is the third largest trading partner for Germany in the Arab region (after the UAE and Saudi Arabia). There was an encouraging rise again in German imports from Egypt in 2004. This uptrend was due to imports of fuels, machinery, motor vehicle components and garments. The main export goods include machinery, electronic articles, chemical products and motor vehicles. In 2004, Germany exported goods worth a total of EUR 1,423 million and imports came to EUR 508.8 million. German direct investments in Egypt in 2003 amounted to EUR 358 million, according to the most recent Bundesbank figures. In 2004, over 900,000 German tourists visited Egypt, making Germany the second largest outbound tourist nation for Egypt after Italy.
New in German-Egyptian cooperation is the first-time export of German education courses to Egypt via the German University Cairo (GUC) opened at the beginning of October 2003 by Federal Chancellor Schroeder and President Mubarak. GUC is the first German university abroad. Cooperation agreed between GUC and the German-Arab Chamber of Industry and Commerce in Cairo holds out bright prospects in high-tech industries, such as biotechnology.
The following agreements govern trade relations between Egypt and Germany:
- Trade agreement of 21 April 1951
- Goods traffic agreement of 18 February 1956
- Agreement of 5 July 1974 on the promotion and protection of investments
- Agreement on double taxation of 17 November 1959 (new agreement signed on 8 December 1987 , in force since 22 September 1991 )
- Accord on scientific research and technological development dating from 11 April 1979
- Cooperation agreement on the peaceful use of nuclear energy from 26 October 1981
- Bilateral debt rescheduling agreement of 8 December 1987
- Agreement on reducing and restructuring foreign debt owed by the Arab Republic of Egypt (Egypt II) dated 24 May 1992
- Association agreement between the European Union and Egypt , which entered force on 1 June 2004
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