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Egypt’s Social Capital and Arab Economic IntegrationThe group ofcountries forming theArab Free Trade Arearepresents animportantconsumption market.growth of Egyptian exports to Arabcountries was much lower (5.1 per cent)than that of Egyptian imports (19.3 percent). Saudi Arabia has kept the position offirst trade partner for Egypt during the1990s. However, since 1994, the Egyptianbalance of payments has been deterioratingin favor of Saudi Arabia. Severe competitionwas felt mostly in the case of constructionmaterial and petrochemical products. Insecond place comes Libya where theinternational economic boycott pushed it totrade more with it neighbors, especiallyEgypt and Tunisia. Starting in 1994, Egypt’sbalance of payments with Libya turned alsoin favor of the latter due to the increase inEgypt’s import of iron and petrochemicals,in which Libya enjoys a comparativeadvantage. However, the balance ofpayments with the third major Arab tradepartner, namely Syria, has remained in favorof Egypt throughout the whole period. Infourth position, come the United ArabEmirates, which have benefited, with Egypt,from the geographic location of Dubai andits role as a re-exporting port. Sudan’sposition as a trade partner with Egypt hasdeteriorated due to the boycott imposed onit by the international powers.The Arab Free Trade AreaThe agreement signed in 1981 forfacilitating and developing trade betweenthe Arab countries, is considered the pointof departure for building up an Arab freetrade area that would eventually lead to theestablishment of an Arab common market.The Economic and Social Council of theArab League decided in February 1997 toimplement this agreement through an actionplan, which included the following steps:● Gradual liberalization of trade betweenthe member countries by annuallyreducing 10 per cent of tariffs in effect on1 January 1997.● Elimination of non-tariff barriers.● Applying Arabic rules of origin.● Exchanging data and information.● Establishing a committee for settlingdisputes.● According preferential treatment to theless developed Arab countries.● Exchanging views concerning traderelatedactivities, such as scientific andapplied research, legislation, and theprotection of intellectual property rights.The group of countries forming the ArabFree Trade Area represents an importantconsumption market with a population of174 million, an average per capita incomeof US$3000 and a total gross domesticproduct of US$515 billion (according to1997 data). Among the twenty-two Arabcountries, fourteen have already announcedtheir commitment to the implementation ofthis agreement, while the remaining eightwill join the Area after receiving specialtreatment as least developed Arab countries.It is noteworthy that the fourteen committedcountries contribute 90 per cent and 96 percent respectively of total Arab foreign tradeand intra-Arab trade.Bilateral Free Trade AreasIn addition to the multilateral Arab FreeTrade Area, some Arab countries havesigned free trade agreements on a bilateralbasis. Egypt has been keen to sign bilateralagreements, especially with those Arabcountries that have implemented economicreform and structural adjustment. 1998witnessed the signature of four free tradeagreements between Egypt and Tunisia,Morocco, Lebanon, and Jordan. Theseagreements aim at bilateral liberalization oftrade via eliminating tariff and non-tariffbarriers.Egypt considers expanding intra-Arab tradeas a main component in its exportdevelopment program. Although only about15 per cent of Egyptian exports go to Arabcountries, there is considerable potential forincreasing this figure. Egypt has onlyrecently started to benefit from the naturaladvantage of its geographical location amongthe Arab countries, and the cultural andsocial ties between the Arab peoples.Labor MobilityThe number of Egyptians working abroadhas never been agreed upon, and significantdifferences exist among the availableestimates. For example, the 1996 censusestimated the number at 3.5 million, whileother estimates suggest the figure of 1.7million, at most. The boom accompanyingthe considerable increase in oil revenues,114 -Egypt Human Development Report 2000/2001