(February, 1997)
This paper addresses questions about Egyptian service industries that arise in the context of the proposed Egypt-EU trade agreement. Will Egyptian service industries—particularly financial services—be able to cope with liberalization? What are the potential gains from such liberalization, and to what extent do inefficient services impose a burden on Egyptian firms and put them at a disadvantage in global markets? The paper concludes that the protection of services has significant costs that hinder efficiency, production and competitiveness. The Egypt-EU association agreement, however, is not likely to result in significant liberalization of trade in services. Thus, considerable effort at the domestic level is required to achieve liberalization in the services sector.