A comparative analysis of free trade zones

A Comparative analysis of Free Trade Zones The Case of Nasr City Cairo, Egypt Heidi Essam Hamed Magdalene College Supervisor: Dr. Felipe Hernรกndez Course Directors: Dr. Felipe Hernรกndez and Prof. Koen Steemers

July 29th, 2014

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22,000 Words

“A dissertation submitted in partial fulfilment of the requirements for the MPhil in Architecture & Urban Studies 2014�

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Acknowledgements I wish to thank all who have helped me in the preparation of this study, especially my supervisor Felipe HernĂĄndez, for his guidance, encouragement and comments on the text. I would also like the thank Wendy Pullan for inspiring this topic throughout our discussions. Most of all, I would like to thank all members, workers and staff of the General Authority for Investment and Free Zones (GAFI) in Cairo, Egypt for their extreme cooperation, understanding and support, without it, this work would not have been possible.

Furthermore, I would like to thank my mother, who always supported my work in various ways, and my father, who made all this possible.

Thanks also goes to my sister, for her words of encouragement, her comments on the text, and for all the food deliveries to my house.

Thanks to all my family members and friends who have always been supporting and caring. Most importantly, I would like to thank my partner for helping find the will to carry on.

“This dissertation is the result of my own work and includes nothing which is the outcome of work done in collaboration except where specifically indicated in the text".

Signature

Date

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Abstract During the past few decades, Free Trade Zones (FTZ) have become a growing phenomenon as well as an important element of world trade.

Taking a distinctly urbanisation and developmental perceptive on FTZs, this dissertation will aim to analyse the extent to and mechanism by which Free Trade Zones (FTZ) perform. This research will also assess FTZ's urban character and ability to house and generate new forms of social and economic organizations. To do so, I draw on the a mixture of “enclave theory” and “assemblage theory” to explain the “dualistic nature” of FTZ. In this study, the zones become more than a set of factories, companies and warehouses connected to the global economy. They become an expanding phenomenon of the global informal market (GIM) that are composed of changeable and increasing number of actors (investors, governments, transnational companies, workers, consumers, rural and urban migrants and more).

Using ethnographic research, I examine “Nasr City FTZ” in Cairo, Egypt, as both an experimental tool that allows freedom and an experimental tool that allows control. I show how the dynamic nature of FTZ, their policies and structural organizations can result in changes on different scales (an individual, a company, a city, a network, etc.).

Overall, I argue that the effect that result from the establishment of FTZ reach beyond its boundaries and walls. If FTZs are successful, which is a point that will be explored throughout this study, they should be perceived as developmental tools not only for the economy but also for the society and the city as a whole.

The research concludes with recommendations intended to highlight the importance of understanding FTZs, their potentials and their risks.

In hopes that in the future, the effects and impacts (economic, political and social) of the economic enclave can have a more positive developmental effect on the cities and their inhabitants.

Key words: Free Trade Zone, Economic Urbanism, Enclave, Assemblage, Egypt

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Contents Chapter 1: Introduction................................................................................................................................................9 1.1: Background...............................................................................................................................10 1.2: Scope and Objective...............................................................................................................11 1.3: The Research limitations and implications.................................................................11 1.4: The Significance of this study............................................................................................12 1.5: Disposition.................................................................................................................................12 1.6: Choice of theories...................................................................................................................13 1.6.1: Enclave theory.........................................................................................13 1.6.2: Assemblage theory.................................................................................15 1.7: Prior research on Free Trade Zones...............................................................................18 Chapter 2: FTZs: History, Performance, and Structure................................................................................19 2.1: History.........................................................................................................................................20 2.1.1: Shannon-Style Free Zone, Ireland...................................................20 2.1.2: Developing countries and free zones.............................................22 2.1.3: The geography of free zones..............................................................22 2.2: The Diversity in terminology.............................................................................................24 2.3: Typology overview.................................................................................................................26 2.4: Definition of free trade zones............................................................................................27 2.5: FTZ aims and objectives.......................................................................................................28 2.6: FTZ policy framework...........................................................................................................29 2.7: Key Historical Implementations.......................................................................................31 2.7.1: Chinese Zones..........................................................................................31 Chapter 3: The Egyptian Context...........................................................................................................................33 3.1: FTZs in Egypt............................................................................................................................39 3.2: Zones activities........................................................................................................................41 3.3: The so-called Free Media Zones (FMZ).........................................................................42 Chapter 4: The Nasr City FTZ..................................................................................................................................44 4.1: Overview: Nasr City District..............................................................................................45 4.2: The zone structure.................................................................................................................49 4.3: The process of establishing a project inside the Nasr City FTZ..........................51 4.4: The physical structure of the Nasr City FTZ................................................................55 4.5: Analyses of the Nasr City FTZ............................................................................................64 Chapter 5: Conclusion: Learning from Nasr City FTZ...................................................................................87 Chapter 6: Appendices...............................................................................................................................................91

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List of Figures Figure 1: Free Trade Zone Urbanism: concept for assemblages and temporary autonomous zones/enclaves (Delanda, 2006 and Morton, 2011) Figure 2: Shannon Free Zone, Ireland (Shannon FTZ official website) Figure 3: The Location of Free Economic Zones in the world (Google images, 2014) Figure4: African countries with active FTZs (TheSouthAfrica,com, 2013) Figure 5: Chinese-Africa trade (Chinese Ministry of Commerce, 2006) Figure 6: Table of terms used for FTZs around the world (Legislation and publication government and EPZ authorities) Figure 7: Shanghai FTZ main gate (AFP, China) Figure 8: Location of SEZ under the Shanghai FTZ pilot (AFP, China) Figure 9: Procedures for establishing a project in Shanghai FTZ (AFP, China) Figure 10: New businesses in the Shanghai FTZ (AFP, China) Figure 11: An example of FTA and extent of its power of inclusion and exclusion (Google Images, 2014) Figure 12: Table with data collected about FTZs in Egypt (GAFI, 2010) Figure 13: Location of FTZs in Egypt (Self Produced, 2014) Figure 14: Map and images of free media zone (FMZ) in Egypt (FMZ, Egypt official website) Figure 15: Map of Cairo and its urban expansion in the late 50's Figure 16: Model of Nasr City in 1966, (ETH Studio Basil Contemporary City Institute, 2009) Figure 17: Memorial statue of the lost solider at the gate of the Nasr City District (ETH, 2009) Figure 18: Nasr City Landmark map (ETH, 2009) Figure 19: Ministerial offices relocating to Nasr City in 1962 (ETH, 2009) Figure 20: The development and structure of Nasr City Co. (ETH, 2009) Figure 21: Satellite images of Nasr City FTZ (Google Earth 2014) Figure 22: Simplified Organizational structure diagram of GAFI, 2014 (Self Produced, 2014) Figure 23: Image of the only fast food outlet inside the FTZ (Self Produced, 2014) Figure 24: The natural barriers of hierarchical structures (Performance transformations LLC 2012) Figure 25: Nasr City Initial City planning in the 50's, images of the first residential zone (ETH) 6

Figure 26: Nasr City land use map (Self Produced based on research by ETH) Figure 27: Road hierarchy for Nasr City (Self Produced based on research by ETH) Figure 28: Location of Nasr City FTZ (Google Earth, 2014) Figure 29: Solid and Void study and satellite image of Nasr City FTZ (Self Produced, Google Earth, 2014) Figure 30: The North wall of the Nasr City FTZ (Self Produced, 2014) Figure 31: The south wall of the Nasr City FTZ (Self Produced, 2014) Figure 32: The western wall of the Nasr City FTZ (Self Produced, 2014) Figure 33: Identification card and vehicle stickers for security clearance (Self Produced, 2014) Figure 34: Colour coordinated map found at the entrance of Nasr City FTZ (Self Produced, 2014) Figure 35: Containers occupying the streets of the Nasr City FTZ (Self Produced, 2014) Figure 36: List of companies located inside the FTZ (Self Produced, 2014) Figure 37: Example of a company located inside the FTZ Figure 38: Encoding activities inside the FTZ (Self Produced, 2014) Figure 39: Colour coding for architectural requirements and the internal gate requirements (Self Produced, 2014) Figure 40: Mapping of the main central axis of the FTZ (Self Produced, 2014) Figure 41: Mapping of spatial restrictions inside the FTZ (Self Produced based on Awan, 2011 mapping techniques) Figure 42: Map showing bus routes and the urban fabric of the assembly points (Self Produced, 2014) Figure 43: Mapping overlay of the distance between the villages where the workers live and the bus assembly points (Self Produced, 2014) Figure 44: Om Hussein's informal social and economic organization structure (Self Produced, 2014) Figure 45: Main entrance of Nasr City FTZ and GAFI head-quarters (Self Produced, 2014) Figure 46: Street view opposite the main gate of the Nasr City FTZ (Self Produced, 2014) Figure 47: Close up at the gate, Om Hussein's Social hub and the density of people around them throughout the day (Self Produced, 2014) Figure 48: Study of Om Hussein's social hub (Self Produced, 2014) Figure 49: Informal Network between factories inside the FTZ (Self Produced, 2014)

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List of Acronyms

FTZ

Free Trade Zone

EPZ

Export Processing Zone

SEZ

Special Economic Zone

QIZ

Qualified Industrial Zone

DFZ

Duty Free Zone

GAFI

General Authority of Investment and Free Zones

GAFTA

Greater Arab Free Trade Area

WTO

World Trade Organization

EU

European Union

FTA

Free Trade Agreement

TIFA

Trade and Investment Framework Agreement

ILO

International Labour Organization

GOE

Government of Egypt

GOE

Government of China

UNIDO

The United Nations Industrial Development Organization

AEC

African Economic Community

FMZ

Free Media Zone

FDI

Foreign Direct Investment

UN

United Nations

COMESA Common Market of Eastern and Southern Africa GIM

“Glocal” Informal Market

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1 Introduction

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Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular. ⸺Thomas Babington Macaulay (1824)

1.1 Background Several centuries have passed and this observation made by Macaulay one of the greatest British historians is still true. There is no doubt that world trade has indeed contributed in elevating the standards of living around the world, specifically in developing countries.

However, over the years, free trade has been criticized by many scholars, politicians, governments and economists.

As the global economic competition grew along with the dynamics of globalization, governments began to re-asses out-dated polices, and look for different schemes to help them reinstate their position within the economics of the future. Through creating free zone enclaves, governments believed that they have found the tool and mechanism for gaining access to “the spiral of development” at different scales (locally and globally) (Bost, 2011).

Little did they know that, the same tool that caused short term development and was perceived as an effective solution, will be the subject of many debates and criticisms for many years to come. They have created an extremely complex and comprehensive living organism composed of structures of enclaves that are connected through assemblages throughout the urban world.

The complexity in the concept of free zones and criticisms is mostly the product of the contrasting nature of free zones. They are composed of assemblages that are usually associated with anti-structural concepts, that allow heterogeneity, de-centralism and emergence on one hand. While, on the other, they are created as enclaves that generally support structure and are understood as enclosed, territorial, and detached from the main body of the country. This dual nature of free zones allow for many speculations regarding the function, performance and structure of free zones in cities, whether it is from an economic, political, social or urban view.

Today, governments first response to the debates and criticisms is to try to get rid of those enclaves. In some cases this is possible if the free zone enclaves are small in size but in most cases in the world, free zone enclaves are large not only in size but also in population. To build a clearer image of the size of free zone enclaves throughout the world and their population, the world atlas of free zones published in 2010 has identified more than 1,735 free zones in around 133 countries in 2009 (Bost, 2011). While the latest survey conducted in late 2006 by the ILO estimated the number of employment in free zones around the world to be roughly 63.1 million. Despite the nations' dislike to the concept and all the efforts to stop this phenomenon of free zone enclaves, waves and waves of free zone enclaves are being created throughout the world. The most recent example is China (Shanghai) Pilot Free Trade Zone established in 2013. The newly developed experimental free zone is located in the outskirts of Shanghai, and is around 29 square kilometres and covering four existing “Free Zones” in the eastern Chinese mega-city of Waigaoqiao. The following zones are Waigaoqiao FTZ, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and the Pudong Airport Comprehensive FTZ (Domínguez, 2013).

Accordingly, it is important to understand and examine the concept and theories behind FTZs 10

not only for the sake of economic development, but also for the sake of the dwellers (i.e. workers, companies, etc.) of those areas. More importantly, the relations between the enclave zones and their surroundings, and its standing in international relations (politically, economically, socially and physically). On a larger urban scale free zones might seem insignificant and less interesting to examine. However, if ignored, these relatively small hubs in the context of the urban scale, can become a tool for urban and social decline or a stone in ones shoe. However, if explored and examined they can be a tool for development and vast potential.

1.2 Scope and objective The first section of this dissertation will outline and explain the very phenomenon of free zone enclaves and explore debates and questions regarding the urban character of FTZ. The aim of this section is to identify whether or not free zones have common characteristics so that they can in fact be dealt with as unique spatial objects. Moreover, it explores the emergence and development of free zones and the method in which they have matured to become living entities that are able to create and build their own internal politics and dynamics. In doing so, I will be able to investigate the relationship of the FTZ with the outside world, and this will highlight its relation with the surrounding areas.

In order to do so, the second section of this dissertation will be a case study of FTZ in the Egyptian context which provides a unique opportunity to study the characteristics and developmental effects of FTZs. By embracing the quality of time and space, Nasr City FTZ located in Cairo, Egypt provides a novel basis for comparison as well as, the opportunity for the investigation of an enclave embedded in a densely urban environment, which was—not long ago—considered the outskirts of the city.

This dissertation will seek to investigate the extent to and mechanisms by which the FTZ in the Egyptian context affects the everyday experience of different assemblages within and around the Nasr City FTZ in Cairo. In doing so, different aspects will emerge including the hierarchical organization or structure, policy framework, the different stages and processes within the FTZ as well as, its physical and urban structure within the city. Accordingly, this will highlight some inherent aspects of informality embedded in the urban, economic and social structure of the FTZ. These will be addressed in light of the following questions: 1. “Do FTZ have any architectural or urban character that differs radically from other urban areas?”

2. “Do FTZ have potential to house new forms of social and economic organizations?”

3. “Do FTZ only fall within the two categories of export oriented enclaves or an oriented policy scheme that are isolated economically, socially and physically from the rest of the city, or do they have more to offer?”

1.3 The research limitations and implications The research will limit itself to analysing FTZ from an urban context with the aid of theoretical literature to create a conceptual framework for the understanding and assessment of FTZ. In addition, given this dissertation's logistical constrains it will not be possible to fully analyse in 11

a great accuracy the policy frameworks of FTZs. Moreover, some of the data and sources collected were classified as confidential by officials. Keeping that in mind, the research will aim ─ as much as possible ─ to create a complete and clear image of the Nasr City FTZ, without implicating or jeopardizing any classified information.

Generally, I expect to find that the Nasr City FTZ is more than an enclave that fragments its surroundings and the city, but rather an enclave of assemblages or a space of flows that creates informal and formal connections within itself and its surroundings on different scales (locally and globally). Additionally, I expect to find that the FTZ is creating its own unique urban character that is valuable to investigate as it has the ability and potential to house new forms of social and economic organizations.

1.4 The significance of this study The phenomenon of free zones has generated a plethora of scholarly attention, however, most of the research focuses on its economic and political performance. In addition, most scholars use free zones in Asia, Latin America and Caribbean as their case studies. Models of free zones in Latin America, Asia or Caribbean cannot be the sole source of literature that provides general overviews of free zones, specially in regions such as the Middle East and Africa since they have a very unique context in terms of culture, geography, politics, and economy.

Moreover, the literature on free zones generally in the fields of architecture, urban studies, urban planning and geography have been severely lacking in many areas including both validity and comprehensiveness. This study therefore aims to highlight some of the important reasons for continued investigation of the FTZs and their potentials in the field.

In addition, FTZs have not been fully assessed in an architecture and urban context as a tool for development, specifically in developing African/Middle East countries. Accordingly, this research will attempt the following:        

Provide an overview of the history of Free Zones Rectify the confusion in terminology related to Free Zones and its typologies Explore in depth the meaning of FTZ s Discuss the nature of the FTZs policy framework Analyse the hierarchical structure of FTZs Explain and reinforce the importance of geographical considerations for such zones Investigate the FTZ's inherently localized set of determinants and effects Highlight the problems of lack of accommodation

1.5 Disposition The structure of this dissertation will be as follows: chapter two will present an overview of the history, performance, and structure of free zones highlighting the development stages of free zones and their effects on employment, as well as, its adoption into the developing world.

Moreover, the chapter will include a brief explanation of terminologies used in literature to refer to free zones. This section will clarify any confusion of terminologies and guide any inherent preconceptions about the meaning of Free Trade Zones (FTZ). The following section will give a general overview of the aim of FTZs and their policy and structural framework. This 12

section will be referred to in the next chapters ( chapter 2 and 3) for comparison with policy framework and aims specific to the FTZ in Nasr City, Cairo, Egypt. Chapter three will use forms of applicable background literature to create a conceptual framework for the understanding of FTZs and their assessment through the case study of Nasr City FTZ in Cairo, Egypt. Chapter four will show the findings of the case study assessment, draw general conclusions, and make recommendations for the process and development of FTZ models in developing African/Middle Eastern countries, as well as provide ideas and recommendations for future investigations.

1.6 Choice of theories The theories of assemblages and enclaves were chosen and employed in this research because they can widely explain and describe different urban spatial structures and their evolution.

The concepts of assemblages and enclaves may be be seen from different observation points, each of which provides a unique lens for viewing the phenomenon of FTZs. Furthermore, through employing these theories, as we shall see, understanding the structural organization, performance and mechanisms of the FTZs yields insight into socio-economic wide growth processes and sheds the light on the relationship between urbanism, globalisation and the economy. In doing so, we offer a view of what urbanism and architecture can say about and learn from the urban spatial structure of FTZs. In addition, we can draw objective conclusions on the zone effectiveness.

We can classify the zone effectiveness into two categories: primary effects and secondary effects. Primary being the economical effects which are the main objective of the establishment of FTZs. While secondary effects are the result of the dynamic, human driven, natural developmental nature of FTZs which will be analysed using assemblage and enclave theories in chapter three. Primary effects have been researched and explored by many since the beginning of FTZs. On the other hand, secondary effects which are equally important and on a larger scale are more important than the primary effects, were ignored. Although, as we will see throughout the study, these secondary effects often end up being the root of the zone's success or failure. These secondary effects will be examined through the lens of the following theories: enclave theory and assemblage theory.

Before the reader ventures into the next section, it is important to note that it will attempt to explore and raise an enclave and assemblage theory or perspectives of FTZs. These two theories are traditionally studied as separate phenomena, or in some cases connected merely at their margins. As will be shown in the following sections they are in fact both connected to FTZs and mutually constitutive as this economic process develops (Robinson, 2009).

Moreover, while it will seem at some point that there is a conflictual state in the argument, it is made so in order to illustrate the dual complex nature of FTZs as being isolated and connected. In addition, it is aimed to clarify that the purpose of this study is not to defend one view over the other, but rather to question and explore all related theories and perspectives.

In doing so, the study will aim to inspire further research on the subject of FTZs within the fields of architecture and urban studies.

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1.6.1 Enclave theory Over the years, FTZs have been strongly criticised for their inability to contribute to areas other than the economical processes. Their image of being export-oriented-enclaves isolated economically and physically from their surroundings and the city hinders their ability to create linkage effects. Over time, FTZs have developed methods that caused them to shift towards a lesser enclave-oriented-policy scheme. In other words, FTZs developed as an isolated enclave initially, but through several changes and developmental effects they shifted to engage more with the domestic economy, society, politics and everyday life. FTZs in some cases can “become a city, alternately appended to, isolated from, or set with boundaries of an existing city” (Bach, 2011), as the case of the Chinese FTZ in Shanghai. In other cases, a FTZ can be the whole city itself, as the case of Port-Said, Egypt. In most cases however, FTZs become a hybrid of both, such as Jabal Ali in Dubai, where the zone turns into an urban form by copying the city through subverting and appropriating its forms, functions and ideologies (O'Donnell, 2011).

Butler (1981), Hall(1982), and Grubel (1983) argued that the enclave nature of the FTZs, or as they named it “economic enterprises”, is a cause of urban decay as well as over regulation by governments. They believed that FTZs are the cause of the loss of jobs in inner cities. To criticize this argument, Massey (1982) strongly claimed that the FTZ enclaves are not the cause of the urban decay but rather they are “part of a wider 'free enterprise' ideological onslaught... in which all restrains on capital by the state is interference with liberty”. Other critics such as Harrison (1982) believed that the problem with the concept of FTZs is that major impediments such as high crime rates, decaying infrastructure, poor public services and social inequality are not addressed.

In my contention, it is plausible that all the above is true. FTZs, on the one hand, can be seen as a cause for urban decay because they provide incentives and advantages for companies. This means that there is a higher chance that firms near a FTZ will close and move into the zone to gain those incentives (Coldsmith, 1982). Accordingly, this will not create more job opportunities which is one of the target goals of FTZ but would rather decrease and lower wages of workers. On the other hand, FTZ can also be seen as havens, saving existing jobs, like the case of the FTZ in Shannon, Ireland. These economic enterprise enclaves in some cases can “act as seedbeds for new small businesses to develop” (Vincent and Rosenberg, 1987).

Finally, from all the above arguments one question arises: can those FTZ economic enclaves be a solution for the problems of depressed inner cities? The answer to this question lies in the analysis of FTZs, their urban character and ability to house new forms of economic and social organizations, which will be the main focus of the study. Accordingly, we will be able to identify whether FTZs cause positive or negative urban transformations: a fundamental issue for the architecture and urbanism disciplines. In order to do so, we must first understand what is meant by enclaves and how can FTZs, specifically the Nasr City FTZ, be viewed as an enclave.

Enclaves are understood as areas that are “part of the territory of the state that is enclosed within the territory of another state” (Vinokurov, 2007). In other words, it is an abnormal region that is detached from the main body of the country as a whole. This concept of enclaves existed in the history of humankind from the earliest times. According to Vinokurov (2007), the first document that contained the term “enclave” was created in 1526 as part of the treaty 14

of Madrid. However, the term “enclave” was not added to the English language until the late 1800's. The origin of the word “enclave” is derived from the late Latin inclavatus which means “shut in, locked up”. Later on, the word spread to other languages, with the exception of a few such as Chinese. In the Chinese language the word “enclave” does not exist, however, an alternative is used “bèi ba –o wéi dì lˇıng tuˇ or bèi ba –o wéi dì lˇıng tu” which translates to “surrounded territory”.

The term “enclave” is used to describe FTZs in this study due to its alien nature of the fragmented enclosure. Also, because FTZs are in fact viewed as regions that are located outside of the country or state, despite their physical existence within it. Usually, the term enclave is used to describe settlements such as, Chinatown or ghettos, or regions with an ethnic or religious affiliation. However, in my belief this is a very restrictive perspective and definition of enclaves which does not account for regions such as FTZs that have a similar political and economic characteristics. That being said, one must keep in mind that there are many types of territories that can be classified as such. Thus, in this study, we would do better by approaching the subject matter with a fine interior gradation.

Moreover, although it is argued that these economic enclaves are isolated from the city and their surroundings, as we will see in the case study of Nasr City FTZ in Cairo, Egypt. Cities are being designed and built around those enclaves. According to Unger and Vieths (1997), the cities can only be built and designed as unified systems. Thus, FTZs are part of the city's complex system regardless to the notion that it is an isolated enclave. The city is a composition of complex structures and fragmentations. It can not be considered as one, uniform system, as some architects such as, Le Corbusier, Mies van der Rohe ad Gropius believed and attempted to prove. Some of their propositions for explaining the city as a uniformly structured element do not take into account that cities are composed not as a unified systems but rather a series of complex unified systems that are dynamic and flux. The argument here is simple: enclavesin this case FTZ economic enclaves- can and do affect the design and development of cities, and an attempt to claim that there is a complete and self-contained system is simply not true.

There are no self-contained systems, all systems of different scales, such as FTZs, cities and countries and of different field such as, economic, political or social are all interlocking and layered with each other, affecting one another and, are of a “depending” nature. Finally, I would like to argue that FTZs cannot exist as a sole entity separate from its surroundings, the city, the country and the globe.

Nasr City FTZ: an urban enclave The Nasr City FTZ, Cairo, Egypt provides an important advantage to this research. It is described as an isolated enclave surrounded by walls and located at the heart of the inner city.

The area where the FTZ is located is densely urbanized. In the past, the land around the FTZ was a desert land on the outskirts of the city. Currently, it is composed of mixed use buildings, residential and business districts with a population of over 500,000 according to a report conducted in 2010 by the GOE. The Nasr City FTZ is connected only on one side of its perimeter to these activities, and because of a large strip of military owned land, Nasr City FTZ feels like a separate part of the city. This experience is not a sole cause owed to geographic factors.

1.6.2 Assemblage theory This section reflects an effort to describe FTZs as a process rather than a series of physical 15

entities. It will be illustrated in chapter three, that some practices can oppose a dominant will that causes changes in spatial meaning as well as uses. In the context of FTZs, these practices become tools that mould and transform space and create new forms of social and economic organizations which tends to produce threshold spaces. Those threshold spaces are “inbetween areas” that relate rather than separate (Franck and Stevens, 2007). The in-between areas are of an urban porous nature that allows different processes and entities to perforate an isolating perimeters such as those of FTZs. Another term to describe such practices is “assemblages”. The aim is to examine relationship between different assemblages, spaces, and social movements within the FTZ. Some might argue that the same can be approached using a network based theory rather than assemblage theory. The reason behind the choice of assemblage theory is because unlike networks, the assemblage theory might be able to present a distinct conceptualisation of space in relation to other aspects such as social movements (McFarlane, 2006). Network theories does not fully grasp or conceptualise spatialities of different scales that are usually found in FTZs. Moreover, according to Sassen (2007) assemblage can be used to illustrate a process of emergence, and stabilisation, and can also be used to prove that relationships can be reassembled through changing forms of authority. In addition, Deleuze and Guattari (1986) also claimed that assemblages can be used to describe multiplicity that exceeds its component parts but which nonetheless retains elements of specificity. In this manner, I believe we might be able to distinguish between the factors that might have emerged as a result of the zone's deregulated status and those that have been more directly affected the FTZ's level of separation. While this may be a far-fetched accomplishment, this ambiguity will provide a fruitful critical framework in the analysis of the case study.

Assemblage aids in viewing FTZs as “global forms” or territorialised assemblages which are described as phenomenons that can be distinguished by their “capacity for decontextualization and recontextualization, abstractability and movement, across diverse social and cultural situations and spheres of life” (Ong and Collier, 2005). In addition, assemblage theory provides a critical ground for analysing whether the social and economic organizations emerging – within and in relation to – the FTZs are new forms of organizations or they forms that were already existing indicating the change was a mere product of shifting in formation.

Finally, FTZs are not entities or structures that emerged in an empty space despite all the research that claim they do. FTZs emerged from the interactions between different layered parts, such as institutional organizations of people, social movements, policy schemes, cities, networks, infrastructural components, buildings and streets, energy flows, and nation-states (Delanda, 2006). These parts or components can work to stabilize the FTZs identity or to force it to change and transform it into a different assemblage. This process could be referred to as “territorialization” and “deterritorialization”. Components that causes destabilization often increase internal heterogeneity causing new forms of social and economic organizations to emerge in the process.

With these theories and perspectives in mind, in the following chapters, I will advance an overview of several examples of FTZ urban enclaves and their assemblages. Following this, in chapter three, Nasr City FTZ in Cairo, Egypt will be the case study for a further in depth analysis.

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1.7 Prior research on free trade zones From the 1970's developing countries have been introducing FTZs into their economies as a tool and mechanism for development. The main reason for the adoption of the FTZ model is to attract foreign investments into the country by suspending the tariffs and other forms of regulations that were restricting foreign firms from investing in the country. Accordingly, this will increase the flow of foreign capital and stimulate both employment and growth (Miyagiwa, 1993). The second reason for the adoption of the model in developing countries is purely political, since FTZs have been proven to be policy instruments. This is because policy makers of the developing countries are more accepting of the partial reforms included in the FTZ model rather than full liberalization.

For all the above reasons and more, FTZs became an ongoing subject of investigation in many fields. Today, in order to cover different aspects of FTZs scholars and researchers developed several models. For instance, the model created by Hamada (1974) which was altered and enhanced several times throughout the years. First, in 1975 by Rodriguez and then in 1982, 1986, and 1991 by Hamilton and Svensson, Wong, and finally Copeland, respectively. These earlier models however, focused on Duty Free Zones (DFZ), which are slightly different than FTZs. DFZs are zones where goods are sold with lower prices due to the tariff exception, an example of DFZ are airports. Other models were created to analyse different aspects of FTZs, such as the elimination of tariffs, government subsidization policies that promote nontraditional export industries (Wall, 1976).

More models and research within literature can be found by simply replacing or using terms such as Free Trade Zones, Duty Free Zones, Export Processing Zones, Special Export Zones, interchangeably. However, one can argue that although there are large sources of literature on free zones, very few focus on its application and its relationship to the urban city and its structure and everyday life. I would like to argue that, FTZs should be perceived as part of the urban structure of the city that develops in time, instead of dealing with it in a form of models separated and detached from its surroundings and from the city as a whole.

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2 FTZs: History, Performance, and Structure

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2.1 History For decades FTZs existed in different forms, under various terms. The earliest known historical zone-like examples (with zone-like policies) are the FTZs in Gibraltar and Singapore established in 1704 and 1819, respectively (FISA, 2008). These zones were built as free ports and manufacturing hubs with strategic location to attract shipping trade during the British empire rule.

2.1.1 Shannon-Style Free Zone, Ireland In 1959, a new modern model of FTZ was established in Shannon, Ireland and although FTZs existed for decades, their modern form is considered an Irish invention. It began in Shannon international airport. The airport was facing serious decline due to advances in aviation technology. The jet airliner that refuelled from the airport on the transatlantic flight no longer needed to refuel in Shannon (Shoesmith, 1986). This threat meant the loss of around 1,500 jobs of people employed at the Shannon airport. Thus, the Irish government transformed the airport into a duty free production zone (i.e. Free Trade Zone) with manufacturing facilities of close proximity offering special tax incentives. The initial objective of the establishment of the FTZ in Shannon was to save jobs and it proved successful not only in employment generation but also in the attraction of foreign business. During its first year of operation (in 1960), it created 440 new industrial jobs resulting in a total employment of 1,250 and by 1975, this number increased to 2,200 (ILO, 1988). Due to the success story of the Shannon free zone, organizations such as the UNIDO began to encourage developing countries to adopt this model. By 1970's the Shannon FTZ or “Shannon-Style� free zone became a model that was replicated in one form or another in many countries.

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Shannon Free Trade Zone, Ireland. The FTZ has developed into two zones (Free Zone West and Free Zone East) connected with road networks.

Source: Google Images (2014).

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2.1.2 Developing Countries and Free Zones India was the first developing country that adopted the Shannon-Style free zone in 1965.

According to ILO report (1988), by 1970 the estimated number of free zones in developing countries was around 10, while by 1986 the number reached 46. In other words, more than half of the countries classified as “developing” by the United Nations were active in free zones.

Globally, this had a strong impact on employment. Employment in these zones grew between the year 1975 and 1986 by 9% and by 14% from 1986 to 1990 (ILO, 1988). The latest ILO survey (2007) indicated that the free zones employment has reached 63.1 million in about 2,700 zones worldwide from which 1,940 zone are in developing countries with employment of 62.6 million.

2.1.3 The Geography of Free Zones Although geographically the FTZs originated in Ireland in its modern territorial enclave form, developing countries is where the FTZs reached their full capacity and found their real “market”. The largest number of free zones in the world are located in China, where there are more than 900 zones and around 40 million employment. Out of all African countries, Egypt, Tunisia and Mauritius have the largest employment rate in their free zones. Other countries in Africa such as Kenya, Madagascar and Nigeria employ around a total of 35,000 people in their free zones (Stein, 2007). In many areas around the world FTZs are growing rapidly. In contrast, FTZs in African countries are experiencing very slow expansion. I believe that this slow expansion can be perceived as a chance to enhance and influence future direction at an early stage of the FTZs development.

The location of Free Economic Zones around the world (Source: Google Images)

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African Countries with Active FTZ systems. Source: TheSouthAfrica.com (2013).

Chinese – Africa Trade, Source: China Ministry of Commerce (2006).

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2.2 The Diversity in terminology According to a study on transnational corporations (UNCTC) carried out by the International Labour Office (ILO) and the United Nations Centre in 1986, there are around 19 different terms in use in the English language that refers to these economic enclaves. The following terms can be found in literature and are almost synonymous:                       

Free Trade Zone (FTZ) Custom Zone Customs Free Zone Duty Free Zone (DFZ) Export Processing Zone (EPZ) Export Free Zone Foreign Trade Zone (FTZ) Free Economic Zone Free Export Processing Zone Free Export Zone Free Production Zone Free Zone Industrial Export Processing Zone Industrial Free Zone Investment Promotion Zone Joint Enterprise Zone Maquiladora Privileged Export Zone Special Economic Zone (SEZ) Tax Free Trade Zone Tax Free Zone Zone of Joint Entrepreneurship Free-ports and Zones

The linguistic uncertainty and diversity in terminology indicates that the FTZ in its original form matures and evolves while diffusing into new directions. Yet, it is important to carefully define and differentiate a topology of zones. Most of the terms mentioned above are used simultaneously, and although they all have a similar concept, some terms such as the Export Processing Zone (EPZ), Special Export Zone (SEZ) and Free Trade zone (FTZ) have slight variations (Jayanthakumaran, 2006).

The following table shows examples of terms used synonymously with export processing zones (EPZ): Terms

Countries

Maquiladora

Costa Rica, Salvador, Guatemala, Honduras, Mexico, Panama

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Free Zones

Costa Rica, Honduras, Ireland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay, Venezuela

Special Economic Zones (SEZ)

China

Industrial Free Zones

Cameroon, Colombia, Ghana, Madagascar, Syrian Arab Republic, Jordan

Free Trade Zones (FTZ)

Bulgaria, Chile, Egypt

Export Free Zones

Jamaica

Free trade and industrial zones

Islamic Republic of Iran

Export Processing Free Zones

Togo

Special Export Processing Free Zones

Philippines

Tax Free Factories

Fiji

Bonded Zones

Indonesia

Free Economic Zones

Russian Federation

Industrial Estates

Thailand

Points Francs (special Industrial Free Zones)

Cameroon

Industrial Free zones for goods and services

Colombia

Source: Legislation and publications of governments and EPZ authorities.

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2.3 Typology overview a) Export Processing Zones (EPZ) 

These are industrial estates or parks that focus mostly on export oriented investments



They cover a wide range of manufacturing industries



They provide duty relief to export oriented firms operating in the zone



Imported intermediate goods, raw materials and equipment are exempted from duties



Taxation and industrial regulations are typically more generous than elsewhere



Tax holidays and the return of profit is sometimes provided



Infrastructure is often well developed and subsidized



Workers wages are lower than anywhere else in the country



In most cases, unionisation is not allowed



They are also considered enclaves within a country where both domestic and foreign goods can enter for storing, manufacturing, reassembling or distribution without paying tax



EPZ are viewed as trade policy instruments to promote non-traditional exports



EPZ have a variety of measures more than FTZs, which are aimed at promoting investment in manufacturing capacity exclusively for export



EPZ are the most wide spread examples of free zones

b) Special Export Zones (SEZ)    

    

They have a lot of common features with EPZ and free ports Companies with a SEZ status receive various benefits from firms in EPZ Companies with a SEZ status can be located anywhere within the zone They allow more economic activities than other zones, such as agriculture, manufacturing, construction, communication, trade, catering, housing, public utilities, services for tourism and finance SEZ are usually larger estates than EPZ to the extent that they can be considered to be cities on their own SEZ cover both services and industrial activities unlike EPZ SEZ focus and target both foreign as well as domestic markets Unlike most zones, SEZ permit on-site residence They offer tax and regulatory incentives

C) Free Trade Zones (FTZ)  

These are known as commercial zones They are spatially defined and fenced areas in a wider political unit offering

26

    

warehousing, storage, distribution facilities for trade, trans-shipment, and export operations In most cases, FTZs are located near or around a port for ease of trade around the world Goods or products can be moved in and out of the FTZ free of customs with the appropriate paper work and regulations Goods or products can be stored inside warehouses in the FTZ for varying periods and then repackaged In some cases goods can be imported into the host country after paying tax Interest costs of custom payments are removed completely during delivery (Hewitt et al., 1992)

The previous section is a general overview that highlights some of the main differences between each typology of zones. The following section will undertake a more in depth analysis with the focus on FTZs. The focus of this study will be on FTZs for the following reasons: FTZs are the earliest modern form of free zones in the world. They share many similarities and characteristics with other types of zones. Moreover, FTZs are the most common and widely used term by many, including governments, scholars and more. Thus, it can be conclude that FTZs are the most generic of all free zones, and accordingly is preferable to be used as the focus of this study.

2.4 Definition of Free Trade Zones (FTZs) There are several definitions found in literature for the meaning of “Free Trade Zones”. The first definition presented is from a political and international relations perspective by Muzwardi (2007). Muzwardi defined FTZs as zones of free enterprise. He described them as limited areas that include infrastructures, buildings and services, in addition to administrative organization that aid businesses—foreign and domestic—to reside within the zone. Activities that take place within those zones are usually related to manufacturing and production of goods, services, technology, logistics, health services and other general services. Muzwardi emphasises that the zones can be established anywhere in the country, however, the most commonly preferable location is near or around a port or in a close proximity to an airport, a main road or railway to ensure easy and accessible transportation of goods and materials from and to the zone. Moreover, he classifies FTZs into three types: private FTZs, public FTZs or a mixture of both. On the one hand, public FTZs are fenced in a specific area, and grouped with other activities with the same free zone status, while on the other, private FTZs —in most cases— are located outside the FTZ area. In other words, they can be located anywhere in the country. Both private and public FTZs share the same incentives, policies, and regulations. The only clear cut difference between them is that since the private FTZs are located outside the FTZ designated area, the investor is responsible for purchasing the land on which the free zone activity will take place. In the case of public FTZs, the investor rents the land from the government, which is considerably cheaper, and gives the investor the advantage of avoiding tying up money in costly fixed capital such as building construction and infrastructure.

The second definition of FTZ is based on a geographical perspective by Bost (2011). He defines FTZs as “perimeter of varying sizes, in which authorised businesses are exempted from the normal regime applicable in the host country”. In other words, businesses operating inside the FTZs are not part of the national territory of the country, instead they are 27

considered as outside customs boundaries. Accordingly, FTZs symbolise more freedom on transactions due to their unique free trade status that allows exemption from customs and taxation and provides more flexible policies for export and import procedures.

Third, according to an article published in “Race & Class” in 1980, FTZs are described as “the capitalist dream”. They are perceived as colonies within a neo-colony, where they are enclaves detached and isolated from their surroundings by wires, fences, gates and walls. Those FTZ enclaves have their own governing authority that is composed of different central governing bodies and functions to supply foreign investors with the best conditions for setting up their businesses within the zones. These conditions offered by the governing body vary from providing subsidized power supply (i.e. water, gas, electricity) to buildings, infrastructure and land. In most cases, the same governing body is also responsible for providing cheap local labour and managing the workers. However, as we will see in following chapters, this is not the case. In fact, this particular issue is a cause for many forms of disputes and exploitations of workers in FTZs around the world. Accordingly, with cheap labour, supported and subsidized services and the presence of a governing body that functions only in the best interest of the investors, FTZs are viewed as “a dream, and a paradise for capitalism”.

Forth, according to De Bremond (1993), from a social and developmental perspective, FTZs are the following: First, they are tools for manipulation of local politics. Second, they are developed to pay workers slave wages. Third, they are created to control social programs as well as, destroy the environment that is still not influenced by regulations. Forth, according to Hall (1986), they are “a method of stealing away national sovereignty, repressing labour organizing and political parties, destroying self-sufficiency in food and basic goods, and finally broadening the gap between rich and poor”.

Fifth and final definition by Bach (2011) found in an article published in the magazine entitled “Theory, Culture & society”, he defines FTZs as spatial capital accumulation machines. These machines or enclaves are located in a specific physical space with different set of policies and laws regarding trade that are different from the laws and policies of the host country. These laws and policies apply to corporations, workers, and operating bodies within the zone. In other words, all that lie within the borders of the zone are exempted from taxes, regulations or any ownership limitations that might exist in the rest of the state. Accordingly, this encourages and attracts foreign and domestic investors to the zones. In doing so, these urban enclave shaped areas within the cities become the main hub for assemblages such as investors, officials, workers, organizations, materials and products, manufacturers and more, finding each other and be a part of a greater whole.

2.5 FTZ aims and objectives As FTZs continue to be a growing phenomenon in the world, their objectives and aims change.

Traditionally, FTZs were created for the following four economic and political goals: (Stein, 2007; FIAS, 2008; Zeng, 2010). 

Increased foreign exchange earnings and promoting nontraditional exports



Provide jobs to generate employment and decrease levels of unemployment and under-empolyment in the host country 28



Attraction of foreign direct investment (FDI) to the host country



Encourage technological transfers, knowledge spill over that could act as catalysts for the domestic economy to pursue manufacturing of non-traditional products

Nowadays, FTZs have been achieving more than their set objectives, such as: 

Increasing and utilizing more local input. In other words, some FTZs have started to become less isolated and averted being mere enclaves. They have succeeded in giving incentives for companies to employ more local inputs



Maximizing training and technological spillover. FTZs not only increased and encouraged foreign capital, but it also lead to enhancing local human capital which is usually poorly undeveloped in developing countries



Creating partnerships between local and foreign capital. The local market can benefit not only from transfer in technological knowledge but it can also lead to higher levels of backward linkages. For example, as the Mauritian minister of industry and commerce pointed out in a workshop at the corporate council on Africa (1997) “local capital used joint operations to learn about textile manufacturing”. Learning new ways of manufacturing and introducing the local market or economy to manufacturing of nontraditional products will eventually lead to the increase in percentages of investments in the export processing from local instead of foreign capital



Experimenting with liberal economic policies. This usually leads to the development of new forms of social and economic organizations. FTZs are perfect tools for experimentation, thus they are used to a certain flexibilities in policies. Accordingly, policies and laws are constantly changing having important demonstration effects which allows changes to take place within economic and social organizations. The analysis of this point will be covered further and in depth throughout the next chapters and within the case study of the Egyptian context.

2.6 FTZ Policy Framework Generally speaking, these zones are mostly administered by a single body that offers certain incentives to certain businesses that are located within the FTZ. All components within the zone have to adhere to specific policy platforms. These policies differ from one country to the other, however, more zones have a basic set of policy guidelines.

The policy guidelines for most FTZs are extremely standard in order to accomplish the above set of goals. Although most zones share this common standard set of policies, each zone 29

implements them differently depending on the context. A simple example is the policy regarding importing industrial inputs from abroad. In some cases this can be allowed or forbidden. This causes FTZs to be either fully dependant on cheap international products or on domestic products. More policies with the same toggle or “on/off” nature are found in different areas regarding extra-territoriality, geographic restrictions, taxation avoidance, infrastructure provision, export and import restrictions, ownership restrictions and finally, logistics and administration (Aggarwal, 2010). 

Extra-territoriality: FTZs are located within a country's territory yet are treated as outside of the country's borders. This particular feature is unique to FTZs and is considered a clear distinction between FTZs and other types of business or enterprise zones. In order for FTZs to be located within the country yet be considered outside its borders, the borders have to be tightly monitored in order to control the flow of people and goods in and out of the zone. These borders are similar to borders between countries. The closest similar experience or image of such controlled borders are airports (i.e. border control units). Yet, in some cases, these borders are optical illusions.



Geographic restrictions: For logistical and administrative grounds benefit-eligible activities in FTZ are normally chosen to be located in a one limited area for the ease of shipping and other procedures. However, in some cases, FTZs allow certain businesses to enjoy the same incentives or some despite of their location.



Taxation avoidance: This is the key incentives of FTZs. Generally, in some cases taxes are waived on export and import of certain types of goods or all, but in most cases in FTZs goods are exempted completely from taxation as long as they do not get sold within the local market of the host country.



Infrastructure provision: FTZs usually provide all needed infrastructure for investments within its territory. The process is done through rent basis (dollar-fordollar). Most FTZs tend to be built near existing infrastructural facilities to minimize the costs of new construction that are believed to be extremely expensive (Chen and de'Medici, 2009).



Export and import restrictions: On the one hand, in FTZs most products are only allowed to be sold or exported to the international market. If the products were to be sold in the domestic market it would cause an imbalance in the local market, since those products would have a considerably less manufacturing costs. In some cases, some FTZs allow a certain percentage of the products to be sold domestically. However, taxes and duties will have to be paid in order to overcome this imbalanced problem with the existing local market. On the other hand, for imports, zones try to enforce that resources and products to be consumed by the international market. Yet, like all other policy exceptions, some zones allow domestic goods or resources that have been imported to be consumed locally.



Ownership restrictions: Some zones allow 100% foreign investors ownership while others require a local investor as a partner (Aggarwal et al., 2008).



Logistics and administration: FTZs basis of competition is mainly the effectiveness of its logistics and administration. Which means FTZs aim to have less procedures and 30

regulations for investors by developing methods such as “the one stop shop” and “single-window”. The one stop shop is where all required documentations needed to establish a business are located in one place. Also, all the procedures needed to start the business can be finalized at one location with very minimum bureaucracy or government interference. The other method “single-window” is mostly related to the flow of goods. This process allows all goods to pass through one window in order to be allowed access in or out of the FTZ. Both methods are examples of creating new strategies of formal organizations to make regulations and rules more flexible and less restrictive.

2.7 Key historical zone implementation This section will begin with a review of one example of a FTZ from around the world: it aims to answer how they have been implemented historically, their potential economic impact, in addition to their particular geographic manifestations. Following this section, chapter two will focus on the Egyptian context, where it will recount briefly its political economy in relation to the state's FTZ strategy of extra-territoriality. Furthermore, it will examine the economic, social and urban impact of joint ventures and FTA with other countries. The chapter will conclude with an introduction to the analysis of a case study of Nasr City FTZ in the capital city of Cairo, which will be the focus of chapter three drawing on fieldwork, surveys and research. It will explore whether FTZs have any architectural or urban character differing radically from other urban areas, as well as, its potential to house new forms of social and economic organizations. I will highlight forms of legalized informality located within and around the FTZ and address problems and issues found inside the FTZ such as, the lack of accommodation, low wages and poor working conditions. This will be done, using methods such as mapping on different levels, questionnaires, interviews and site visits of the Nasr City FTZ. The final chapter will conclude with a discussion of some theories linking assemblages and enclaves to form a new urban space full of economic, socio-political and urban development possibilities for the future.

2.7.1 Chinese Zones Most of the free zones in China are SEZs. They were established in 1979 and quickly received widespread international attention. Examples of these free zones can be found in Shenzhen, Shantou, Xianmen and Zhuhai. Most of those are located on the south-western coast of China where there is an easy access to world trade (specifically, the power house in Hong Kong) (Zeng, 2010).The reason for the success of the free zone models in China is mainly related to the wide contributions to its long-term industrialization and development (Gupta et al., 2010).

For many years, the Chinese free zones proved to have been a major factor in many improvements in the standard of living and human development as a whole (Zeng, 2010). Yet, a lot of debate emerged around the governing of free zones. Later on the criticisms were mostly focused on the national and regional governing bodies and their heavy involvement in all aspects of the free zones. More criticisms emerged focusing on environmental issues and workers' rights. Yet, despite the criticisms, the Chinese model was still copied and used in other developing countries (Brautigam, 2011). Due to their believed success and popularity, China recently developed a new major FTZ in Shanghai. It is important to note at this point that SEZs in China fall under the umbrella of FTZs. In other words, FTZs are composed of many SEZs. 31

The China (Shanghai) Pilot Free Trade Zone was established in 2013, and is considered the first mainland FTZ in China. It takes in four existing SEZs (Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone) making the total covered area of the newly constructed FTZ 29 square kilometres. Due to the high investments in the Shanghai FTZ, prices for homes and shares in companies located within or near the zone increased dramatically.

Unlike the famous Chinese Shenzen FTZ, which was a small fishing village before its transformation, Shanghai was already a vibrant city with population of almost 23,019,200 inhabitants according to the world population statistics of 2010. More and more high rise buildings are being planned and constructed overnight, the growth of the city is indeed rapid.

After the construction and upgrading of the FTZs, Shanghai is expected to experience an increase in industrial activities, as well as, a rapid population growth, since more people will start moving to seek a better standard of living according to the GOC. This zone will allow a certain amount of freedom that will have significant effects on everyday life. For example, video game consoles will be allowed to be sold within the zone, which were originally banned from China in the year 2000. A much more significant example, is the lifting of restrictions on internet access for websites such as Facebook. In other words, the district of Pudong located in Shanghai, China and where the FTZ is established, will be considered a significant gateway to the world as well as, a place that is characterised by having more freedom and less restrictions allowing new forms of social and economic organizations to emerge creating a new urban character that differs from its surrounding areas.

Finally, the following example of the Chinese FTZ causes debates as to whether these FTZ models are good or bad. In one way, it is clear that these zones play an important role in helping the city grow and boom. But if the question here is whether FTZs have good or bad effects on the quality of everyday life and the environment it creates for its inhabitants the answer would become immediately more difficult to answer with a clear cut response. In this research, chapter three will investigate a FTZ case study which will attempt to address this question and give an analytical answer to it.

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Shanghai FTZ Main Gate, Source: AFP

33

Source : Shanghai Free Trade Zone Media, AFP

Type of Activities in the FTZ, Shanghai, China

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3 The Egyptian context

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For many years, Egypt has proven that it is capable of rapid change. That is due to its ability to have a spontaneous reaction to different types of polarizations and segmentation. Whether they are economic, political or social. These reactions are reflected directly and indirectly on its urban spaces. In many cases, they take the form of informal occupations or reappropriation of different urban spaces. Accordingly, new relationships are constantly being generated between the cities, their components and citizens (Bertagnini and Morbidoni, 2012).

According to the Ministry of Industry and Foreign Trade (2011), Egypt has a territory of 1,001,450 square kilometres. It is located on the north eastern corner of Africa, bordered by the following countries: Libya to the south, Gaza strip and Israel to the north east and Sudan to the south. It is also strategically located on a long coastal line of 2,450 kilometres on the Red Sea and the Mediterranean Sea. Egypt's population is estimated to be around 81.5 million.

This is considered to be the largest population in the Arab world. Out of the 81.5 million inhabitants, 27 million constitute the country's labour force (PWC, 2013). This considerably growing increase in surplus labour is causing pressure on the working population and affecting the level of wages. One of the main problems facing investors in Egypt are labour policies. There are many restrictions regarding hiring and firing of workers in general.

Another restriction of starting a business in Egypt is power infrastructure. It is important to note that all activities in FTZs in Egypt receive subsidized power infrastructure (significantly lower prices for electricity, gas and water), which adds to the problem of shortage of power and affects the rest of the country. According to a recent statement by the National Electricity Control Centre (NECC) the shortage of electricity during the summer seasons reaches 4GW. Economically, Egypt's per capita income seem to be increasing. In 1990, per capita income was about US$ 682, while in 2010, per capita income was US$ 2699. On the other hand, the GDP growth which ranged from 4% and 6% in 1990 declined to 2.3% in 2002. As a result, in 2001, Egypt decided to shift to a flexible exchange rate regime in order to increase GDP growth. This policy was considered a tool for change. During the periods of 2002 and 2010 Egypt experienced an increase in both exports and investments which contributed positively to the GDP growth rate. Other factors that contributed to the increase in the GDP are believed to be the Free Trade Agreements (FTA) between Egypt and other countries. The most influential was the FTA signed between Egypt and the EU in 2004. This can be concluded from a report conducted by PWC, where it stated that international trade in Egypt constituted a sizeable proportion of the domestic GDP, with exports and imports accounting for 21% and 25% of GDP in 2013, respectively.

Generally, foreign investors usually find it hard to invest in Egypt due to the public's reactions against pro-market reforms as well as, their anti-western beliefs. Thus, the state naturally dominates most of Egypt's business environment. However, to facilitate international trade and in order to increase the GDP growth and investments, the government continued to utilize its FTZs and other similar economic zones to enter different trade agreements such as, COMESA, PTA, AEC, Agadir and others. These FTAs are considered one of the properties of FTZs that can make significant effects and changes, locally and globally. In order to understand the importance of the FTAs and their ability to create change, a brief overview of the terms of the agreements and their benefits is given. (Younes, 2011).

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EU- Egypt Association: The agreement between Egypt and the EU is of particular importance.

It represents the EU as Egypt's principle bilateral donor as well as its main source of FDI. The most important characteristic of the agreement however, is not its primary economic effects but the fact that it includes a complete sections that cover certain secondary effects items such as cultural, technological, political and scientific cooperation. In this particular agreement the primary effects and secondary effects of FTZs are highlighted and dealt with separately. Where they are addressed by the Association Committee in a meeting that takes place once a year to insure their implementation.

Agadir Agreement: In the same year of the EU agreement, Egypt signed another important FTA with Jordan, Morocco and Tunisia. The agreement states that all tariffs on trade shall be removed completely between the four countries. Unlike the EU-Egypt agreement this FTA fails to mention any cultural, technological or scientific cooperation. It only focuses on economic cooperation, financial services, property and government procurements (i.e. primary effects).

However, both agreements combined are considered a major step towards creating a EuroMediterranean FTZ in the future which will have numerous benefits and effects.

GAFTA Agreement: GAFTA stands for “The Greater Arab Free-Trade Area� programme. It is one of the earliest signed FTA between countries in the Arab world. The GAFTA agreement was signed in 1997. It is considered the backbone of economic integration within the Arab world. It is aimed to cover all countries that are member of the Arab League such as, Egypt, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates, Yemen, Bahrain, Iraq, Jordan, Lebanon, Libya, Morocco, Oman, Palestinian Authority, and finally Kuwait. Similar to the EUEgypt Agreement a council is assigned to overview all issues related to the agreement and monitor its implementation. However, again, like the Agadir agreement fails to mention cultural, technological or scientific cooperation between the Arab countries.

COMESA Agreement: The Common Market for Eastern and Southern Africa (COMESA) aims to expand the integration process for member countries and to deepen their relations by implementing more general measures to liberalize trade. This agreement is of a unique character. It states not only that all tariff and non-tariff barriers between the member countries are to be removed completely, but also, it clearly states that all member countries shall adopt a common external tariff, allow the free movement of capital, goods and most importantly labour. Moreover, it includes the establishment of a monetary union, which means that there are no more exchange rates between the member countries. This causes significant competition, lower prices and more investments and international trade due to the higher price transparency. On a larger scale, it also means an increase in global status, greater possible political integration, and most importantly influence on international affairs.

However, this is sometimes criticised by scholars, stating that establishing a monetary union will cause the country to lose its culture and identity. In addition, it is also criticized of being no more than trade regulations that respond strictly to the development of emerging markets.

As a result, they offer weak frameworks that are neither applied nor enforced.

On the other hand, the COMESA agreement gives developing countries an important advantage within the WTO. It enables developed members to give differential and more favourable treatment to developing countries. This specific section in the agreement is known as the Enabling Clause according to the WTO. Finally, there are other FTAs between Egypt and Turkey as well as Egypt and the USA (TIFA).

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Other types of agreements that share the same FTZ status can be used as an effective political tool, such as the QIZ which is a protocol signed under the umbrella of the U.S. between Egypt and Israel. This agreement is used as a tension relieving tool to create one common interest between the two countries. The products created in the QIZ will enjoy the same tax and tariff exemption as FTZs and will be exported to the United States provided that 35% of their components are the product of Israeli – Egyptian cooperation.

As seen above, I would like to argue that these FTAs can be effective tools for positive and negative change. They can create new forms of economic organizations such as the QIZ or they can be used as tools to decrease tension and provide a common ground for the resolution of different types of conflicts between countries. Moreover, FTAs can aid developing countries, such as, Egypt to develop its power infrastructure by investing in the FTZs that are located at the heart of cities such as the Nasr City FTZ in Cairo. Accordingly neighbouring areas will benefit as well which will affect the growth and decay of the city. On a national scale, this will relieve some of the pressures on the government. Road infrastructures are another example where FTZs in inner cities can have a significant positive effect. It is essential for governments to recognise the importance of road networks to the national and international economies.

FTZs and FTAs can be a gateway for improving the road transport system to facilitate a more efficient movement of goods. It is my contention that this will gradually reflect on the development and growth of the city as a whole. On the global scale, the FTAs can be also used to strengthen the ties between different governments or exclude them. In other words, these agreements are a two sided tool with the benefits of inclusion on the one hand, and the costs of exclusion on the other.

An example of the scope of FTA and the extent of its power of inclusion and exclusion, (Source: Google Images)

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3.1 Free Trade Zones in Egypt Egypt classifies FTZs into public and private. Public FTZs cover projects that are licensed under the provisions of law 8/1997. While private FTZs are confined to one specialized project or company. The focus of this study will be mainly on public FTZs. Each public FTZ in Egypt is managed by a board of directors. All FTZs are managed by the General Authority for Investment and Free Zones (GAFI). GAFI was established in Egypt in 1997, following a series of political events that shaped the country's economy. The development of the FTZs and GAFI will be covered in the next section of this chapter.

Egypt has nine major FTZs, seven of which are operational and three still not fully operational.

There are also two additional FTZs (Badr FTZ and the Eastern Port-Said FTZ) which are still under development. All FTZs are strategically located in important nodes and gateways with in the country. These FTZs are the following:

Alexandria Nasr City Port-Said Suez Ismailia Damietta Shebin El Kom Keft (or Qeft) Media Production City Total

Area (m²)

Number of companies

Cumulative investment (US$ million)

Employment

5,700,264

315

7,233

21,497

705,700

189

2,803

38,298

886,334

100

1,890

23,005

1,226,586

68

3,666

11,367

951,443

51

116

12,075

798,121

26

1,783

5,266

(1357 Feddans) (168 Feddans) (211 Feddans) (292 Feddans) (226 Feddans) (190 Feddans)

84,012

No data available No data available No data available

907,337

No data available No data available No data available

(20 Feddans) (216 Feddans)

2,999,255

29

1,330

3,239

14,259,052

778

18,821

114,747

(714 Feddans)

(3394 Feddans)

Source: Information provided by the General Authority for Investment (GAFI) for year 2010.

(Feddan is a unit for area, used in Egypt, Sudan and Syria).

As seen from the above table, the FTZs are located in strategically located cities. For the first case, Alexandria, Egypt's second largest city and major port on the Mediterranean Sea. According to the Egyptian ministry of industry, the zone in Alexandria is considered to be the largest FTZ in Egypt and is situated 20km from Nozha international airport, Borg El-Arab airport and Alexandria port. It is also located at the centre of a network of major roads. Due to its significantly large area it is able to house far more greater numbers of activities than any 39

other FTZ in Egypt. However, surprisingly despite its size the number of employment is lower compared to the Nasr City FTZ in Cairo. Alexandria FTZ area is around 5,700,264 while the area of Nasr City is 705,700 and despite the 4 million m² difference the Nasr City FTZ employ around 17,000 more employers than the Alexandria FTZ. I believe that the reason behind this is most probably related to the type of activities inside the FTZ as well as, its location.

The second most important FTZ in Egypt, but could be considered the first important FTZ from an international perceptive, is the Suez FTZ. The Suez FTZ gains its importance from its location. It is placed between Suez Gulf and the entrance of the Suez canal. It covers 3 different sites: El Adabeya, Ataqa and Port Tawfik. The Suez FTZ and Port-Said FTZ share the advantage of being part of or near to the Suez canal. This makes both FTZs the cross roads for trade and the centre of communication.

Alexandria FTZ Nasr City FTZ, Cairo Port-Said FTZ Ismailia FTZ Suez FTZ Dametta FTZ Sheben El-kom FTZ, Monofeya Kaft FTZ, Qena Media City, 6th of October, Cairo

Locations of FTZ in Egypt, Source: Self Produced, 2014

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3.2 Zone Activities Alexandria Public FTZ     

Medical and Pharmaceutical products Plastics and Resins products Furniture and wood products Construction and manufacturing of ships and floating units Auto-mobile manufacturing and transportation industries

Nasr City Public FTZ  Electronic sets  Ready-made Garments, fabrics and weaving  Leather Products  Auto-mobile manufacturing and transportation industries  Packaging and storage  Food processing  Pharmaceutical and medical equipments  Petroleum services Port-Said FTZ       

Ready-made Garments Leather products Cooling, ventilation, air-conditioning and spare parts Maintenance of ships and marine equipments Petroleum services Grading and sieving agricultural crops Cleaning products and food processing and packaging

    

Petrochemicals industry, tints and detergents Glass industry Iron and metal industry Coal manufacturing and carbon industries Administrative management and operation of port maritime services

Suez FTZ

Ismailia Public FTZ, Damietta FTZ and Shibin El-Kom (with the exception of the Media City FTZ and Qeft FTZ) are more specialized in some activities such as lighting and cables, wooden furniture industry and seed treatment, respectively. Qeft (keft) FTZ is the newest established FTZ in Egypt. It is located within an industrial park. The unique feature about this FTZ is its rental laws. In all the above FTZs, the rent for the land varies from $3.5, $7, and $14 to $21 41

depending on the type of activity. In Qeft FTZ the land is available to rent for free. In addition, all types of investment activities are allowed. This exception is made to attract investors to the newly established FTZ. However, as we will see in the case study of Nasr City FTZ, there is a limited duration for each project to remain within the FTZ. Thus, it could be assumed that this duration period is significantly shortened in Qeft FTZ in order to allow for this “rent free” opportunity. The final FTZ example is the Media Public FTZ, this zone is a specialized zone specifically in media investments and artistic fields. It is located on the outskirts of Cairo, in a newly developed town called 6 th of October City. The activities in this zone are mainly installation and operation of satellite relevant systems, distribution of the specialized T.V channels, radio and TV transmission via digital or alternative systems, and advertising and printing centres. The Media City FTZ also has a special rent value, where the lease through infrastructure companies.

3.3 The – so called – Free Media Zone This section illustrates how the Egyptian government created new economic organization and structures (i.e. FTZs with all its various types) in order to be able to adjust to globalization trends without losing power or control. As mentioned above the Free Media Zone (FMZ) or the Media City FTZ, is considered one of the FTZs in Egypt. It is governed by GAFI, like all FTZs in Egypt. From the first instance, it would seem that it is a positive aspect to have one of the most important media centres within a FTZ, since this would mean more freedom for the media.

The Media Free Zone with a FTZ status as some might argue should create an “oasis of media freedom” (Krzysiek, 2009). These zones are considered a type of ‘legal loophole’ that attracts Arab and foreign investors with diverse visions for media and business. However, this is not the case, on the contrary, having the media centre located within a FTZ sector meant more restrictions, more limitation, and more government interferences and control. Despite all the technological advantages and incentive in these zones, the fact remains that they are a product of the government to help deal with the rising pressures. They are modern instruments used by the government to express a political and an economic philosophy of the people in control.

An example of this can be found in the FMZ in Egypt more clearly.

It is believed that the free zone status should provide all businesses and projects inside the free zone with incentives, such as no restriction on investors' nationality, choice of project’s legal format, transfer of funds, imports and pricing. However, in reality it provided the government with a method to maintain control. The government had control over the ownership structure of the channels and preformed all different methods of informal pressures on administrative and editorial issues (Sakr, 2006). To illustrate, GAFI has warned one of the channels located within the FMZ (Dream TV) several times. The threats were not only related to the withdrawal of its work permit as a FMZ resident but also on individuals working in the channel, such as Hala Sirhan (TV host) who left the channel due to the sudden and extreme restrictions on the materials and programmes. At this point it was clear that the FMZ was not at all “free”. All businesses and operations inside the zone had to depend on the personal interpretation of people in power. In the case of the Media City in Egypt, contents were rejected to protect the government.

There is no doubt that there are several economic, political and media changes occurring. specially in third world countries such as Egypt. It seems to be moving slowly into democratic practices. A proof of that are the several political protests that are causing a critical change in the Arab world. It is constantly causing shifts in powers on different scales, and making a 42

global economic, political and social effect. In addition, the new waves of FTAs and bilateral programs and campaigns will hopefully create better governments and new partnerships, such as, the EU-Mediterranean Partnership (EU-Egypt and Agadir), and others that will promote a greater political openness.

In summary, the purpose of the previous section was to highlight the effects of the “free zone” status. The reason the FMZ is a good example is because after studying the FMZ it was found that it clearly illustrates how the free zone, although thought of as “free”, does not necessary mean more freedom but can sometimes mean more restrictions and interferences. The next chapter will explore a case study in Nasr City, Cairo to try and analyse whether the same form of freedom is found in the FTZ.

Satellite Map and images of the Media Free Zone, Cairo, Egypt. (Source: Google maps and Media Production City Official website)

The Free Media City Main Gate, Source: Media Production City Official Website

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4 The Nasr City FTZ

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“The district of Nasr City is a symbol of Arab socialism, the ideology of the new regime, and the modern movement in architecture� (ETH Studio Basil Contemporary City Institute, 2009) 4.1 Overview: Nasr City district

Map of Cairo and the Urban Expansion that started in the late 50's. Source: Google Images

Model of Nasr City in 1956

In 1952 Egypt experienced an important political shift. More specifically, on the 23rd of July 1952, a group of offices known as the free officers made a military coup d'etat against king Farouk I, who was believed to represent the British occupation. As a result, Gamal Abdel Nasser (one of the free officers) took the leadership of the revolution and become the first Egyptian president. The new regime promised economic independence and Arab socialism.

Gamal Abdel Nasser had a vision to create an African, Islamic and Arab identity for Egypt, which effects are very readable in the planning of the New Nasr City district (ETH Studio Basil Contemporary City Institute, 2009).

The district of Nasr City was previously a military area owned by the ministry of defence. In 1956-1958 it was slowly transformed into an urbanized district that was planned by the government and for the government. In the first design phase, the district's master plan was based on the grid pattern method which was believed to be able to keep up with the prevailing politics that were mainly directed towards socialism at that time. The main features of the district in the first stage of design were the international garden and the international convention centre. Moreover, the vision for the area was to be developed on the concept of neighbourhoods with central nucleus containing services and activities. Due to several forces this concept was not fully implemented and several land use transformation took place (Rashed, 2007).

45

These trans-formative processes were a result of an evolving socio-political and economic dynamic context bringing about changes in the physical environment of Nasr City. Due to these changes the government created a company or in other words, a general administration named Nasr City Co. in 1959, which was a means of controlling the construction of the Nasr City district. Over the years, the company experienced several changes. In 1959, Nasr Co. was stateowned. This resulted in a regulation that was issued in 1962 stating that all ministerial offices to be relocated to Nasr City.

Two years later, in 1964, the company was turned into a private company for more flexibility. It was named Nasr Society. This caused 70% of Nasr City shares to be sold to the private sector in 1966 and the extension of the Nasr City master plan towards the east (from 2646 ha to 8400 ha) to include new areas in 1971. The Nasr City FTZ was part of the extension plan. The Nasr City FTZ was established in 1973 which coincided with president Sadat's (the second president of Egypt) so called “open door policy�. However, the official FTZ law 43 was established in 1974. This new law, in addition to the end of October war (1973, between Egypt and Israel) and signing the Camp David peace treaty, (1978) made Egypt an attractive location for foreign investment. In 1975 international companies were redirecting their investments towards Egypt. The FTZ in Nasr City was their first destination.

46

Map of Nasr City, showing landmarks

Ministerial offices relocating to Nasr City in 1962

47

The Development and structure of Nasr City Co. Source: ETH Studio Basil Contemporary City Institute, 2009

48

4.2 The Zone Structure The Nasr City FTZ implementation, begun in 1974, follows the pattern outlined previously (in chapter 2, sections 2.4, 2.5 and 2.6). It initially sought to apply the FTZ model as a tool for the generation of exports revenues, as part of a modern oversea relation in development theory which stressed on the value of positive foreign exchange (Gupta, et al., 2010). The Nasr City FTZ was the first Egyptian zone resembling the Chinese zones. It was government-run, geographically bounded export enclaves that offered taxation, logistical and infrastructural incentives to organizations located within. The Nasr City FTZ focused on light manufacturing and shipping, similar to the first Chinese zones. However, due to bureaucratic interferences, constricting domestic policies, infrastructural insufficiency and the failure to engage with local economic structures, the performance of the Nasr City FTZ was believed to be stagnant for many years.

In 1997, seeking to decentralize FTZ's management structures and liberalize export performance, and to respond to criticisms drawn by the administrative inefficiencies, the government of Egypt (GOF) broadened the zone policy and structure by establishing GAFI, which is a governmental organization/sector that manages all FTZs. The diagram in the following page illustrates the organizational structure of GAFI. According to an interview with GAFI's officials, this organizational structure experienced several changes every few years due to changes in policies resulting from the political and economic unrest in Egypt. The positions that are often changeable are the minister of investment, the GAFI president and vice president. These positions that are extremely important. Accordingly, policies, laws and structures are constantly changing due to the change in these influential positions. The same applies on other scales in the government, with every change in position, the newly appointed minister sets in action a series of completely new policies and restructuring, ignoring and eliminating existing ones. This is one of the sources of the dynamic nature of FTZs.

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50

4.3 The Process of establishing a project inside the Nasr City FTZ In order to understand the organizational structure an example of the processes which an investor has to go through in order to set up a business inside the FTZ is given below.

(According to The Egyptian Free Zones Basic Information Guide prepared by GAFI, 2014).

1. The investor submits a request for establishing a new free zone project to the free zone administration submits the following documents:  

Feasibility study of the project Identify the percentage of Egyptian employers and foreign employers in the project  Estimate the value of the fixed capital (infrastructure, building, etc.)

2. The Permanent Technical Committee studies the application form to issue a preliminary approval on establishing the project and deciding on the type of project it follows.

- There are 3 types of investments within the FTZ: industrial, warehousing and services. Each type of project has its own regulations and set of rules. For example, the type of project will affect: 

The rent price of the land that the investor has to pay to GAFI. Industrial projects pay $3.5 yearly/m², while warehousing or storage pay $7 yearly/m² and services pay $25 yearly/m²



The decision on the size of land provided to the investor by GAFI



The duration that the investment is allowed to run for. Industrial projects has far longer allowable period than other types of investments. It is allowed to operate for maximum of 25 years. Warehousing and services are allowed to operate for maximum of 10 years. Some investors found a loophole, where they only change the name of their project. By doing so, they get more allowable period even after the 25 years. GAFI in some cases overlooks these cases



This will also affect one of the clauses that states that industrial projects require the investor to have an account of around 10 million dollars in the bank.

Other types of projects do not require the same amount, for example services and warehousing require an amount of 5 million dollars. However, this requirement is found to be flexible in the Nasr City FTZ. Not all investors for services and warehousing

Image of a fast food outlet inside the FTZ (Considered a Services Type Project),Source: Self Produced, 2014

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abide by that rule. A simple example is the fast food outlet inside the Nasr City FTZ named “Darsh”. It is considered a “service” project, the owner of this food outlet is a previous garbage collector that worked for many years in the Nasr City FTZ. Thus, as seen, there are certain exceptions and flexibility for some individuals in some cases 3. The investor pays 10% from the annual rental value with a minimum value of 1000 USD as a notion of confirmation according to the type of project.

4. Then, the application is submitted to the chosen zone board of directors for issuing the final approval for establishing the project.

5. The assigned land is handed over to the investor from the zone administration after paying the rental value for the first year in advance deducting the 10% paid as a notion of confirmation (after issuing preliminary approval and paying the rental value of the first year, the land can be handed over to the investor).

6. land license issued.

7. After getting the final approval, the investor or his representative submit the incorporation contract to the One Stop Shop (GAFI building at Salah Salem street- Nasr City – Cairo) where all the incorporation, authentications and registration procedures are done and finalized. The investor is required to submit to the zone administration the following:

8.



A letter of Guarantee or a financial guarantee according to GAFI’s rules



Payment of the due fees for GAFI’s services for a whole year



The architectural drawings of the constructions of the project (in triplicate) approved by a certified architect working as a member of the syndicate

The project shall publish the company contract briefing, the decree of license and the company registry in the investment magazine.

9. The decree of practising the activity (license) of the project is issued by the Head of the board of director of the Public Free Zone.

10. The Free Zone Administration shall notify the concerned authorities with the decree of practising the activity (The Project – Tax Authority – Custom Department – Commercial Registry – Social Insurance Authority – Central Administration for Statistics – General Authority for Controlling Export and Import "as for the industrial projects" and GAFI 's Legal Affairs Sector to do the publication in the investment magazine).

11. The project should have the taxation card and sole proprietorship. Branches should be registered in the Commercial Registry.

12. Finally, the project is established. If the project is an industrial project, GAFI requires 1% value added of products produced as well as a high percentage of local employment 52

rates in return for the incentives they provide. On the other hand, warehousing projects do not have any benefits, thus GAFI tries to limit the percentage of land given to such projects. In the case of services, GAFI identifies them as projects that serve other projects within the zone, such as restaurants, cafés and supermarkets. These are always local investors.

It is important to note that it is not always easy to determine the type of project. In some cases it causes a lot of debate. For example, one of the projects within the Nasr City FTZ was claiming that it is an industrial project. However, GAFI denied to license the project as an industrial project because it was lacking one of the basic criteria for industrial projects input of “raw materials” and output “a product that is different than the input”. For example, cotton as input and clothes as an output for textile projects, this will be licensed as an industrial project. In the case of the previously mentioned project, the input was cars and the output was also cars. The only difference was that the cars came into the zone with the steering wheel on the left hand, and went out of the zone with the steering wheel on the right hand side.

Although GAFI recognized that there are several industrial processes that will take place, yet it cannot be given an industrial license since the output and input are still the same (i.e. cars).

In summary, the FTZ does represent to some extent freedom but “it is freedom within powerful constrains, but freedom nonetheless” (Ballantyne and Smith, 2012). GAFI does provide freedom for investors from all nationalities to invest within the FTZ, however, there are many rules and regulations for each investor to abide by. It can be argued that these limitations existing in the Nasr City FTZ are in fact due to hierarchical processes and structures. If an organization of space which has neither centre nor a specific end or in other words, if the FTZ was rather a space that is neither characterized in relation to a central authority, in this case GAFI, nor through programmed identities and strict objectives, trade might flow more smoothly and successfully.

As seen from the diagram that follows, instead of having a hierarchy structure that causes several barriers such as transparency, visibility, engagement, change and inclusion, we should aim to create a network of assemblages that overcomes all those barriers.

53

Source: Performance transformation, LLC, 2012

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4.4 The Physical Structure of the Nasr City FTZ Nasr City FTZ is an enclosed area of 705,700 m² with around 189 projects, employing almost 38,298 workers. It is located in the largest district in Cairo and bounded by the following: Elkhalifah El Mamoun street and El Golf on the North, the Ring Road in the East, vacant land owned by the military in the south, and Abbasia and El-Gafir cemeteries in the west.

As seen from the maps, that will follow, Nasr City's grid pattern has inspired the pattern of the FTZ itself. Both the plan of Nasr City as well as, the FTZ were designed to accommodate change and flexibility. Which, in my belief, is achieved by the lack of clear hierarchical planning of spaces. After analysing the maps of the district and the zone it seems that all spaces are equality important. The FTZ and Nasr City planners intended to have clear boundaries and typologies for each zone. With time this became harder to achieve. To find a way around this lack of structure in planning, in 2005 GAFI established a new law that aims to create an architecture and urban order to the buildings and spaces within the FTZ. In addition, in newly established FTZs there is not only an architectural unity but the zoning has a clear hierarchical order and boundaries that are mostly guided by the type of activities.

Based on statistics provided by the head of the maintenance department (GAFI), the Nasr City FTZ was 30% occupied in 1980s while from 2000 to 2014, the Nasr City FTZ has been 100% occupied. There are no empty plots for further development within the FTZ at the moment.

Thus, the Nasr City FTZ when entered, or viewed from the outside gives the impression that it is a gated city. In many ways the Nasr City FTZ does resemble many of the new gated communities outside of Cairo, such as “New Cairo”. The whole area of the Nasr City FTZ is enclosed by a perimeter wall of 4 meters high topped with a barbed wire for at least another 1 meter. The wall was the first stage of the FTZ's construction. It is considered a powerful statement of the zone's juridical and territorial distinctiveness as an enclave. In the following pages, the series of images provided captures a journey around the exterior perimeter of the FTZ and shows how the FTZ is perceived by pedestrians and drivers. The walls indicate that there is a unique space behind it. The lack of visual access triggers the notion of the “other place” and “the inaccessible” or “a state of exception”. Like the gated communities it gives the feeling that whatever is happening inside is more important and exclusive. Although, the FTZ is located within the Nasr City district, its secure and considerably territorial urban character makes people perceive it as “a country within a country”, with different set of rules governing only the people working inside in relation to two main criteria, their productivity and their potential for growth.

However, this is an exterior view and perception of the FTZ. From an exterior perspective as mentioned previously, the FTZ seems like a unique territorial, legal and discursive space (Ong, 2006). From an interior perspective the FTZ, I contend, looks like a normal business. In other words, on the one hand, applying “a top to bottom” approach will make FTZs seem like places of exception. On the other hand, if FTZs are examined from “the bottom up” they will seem as unexceptional spaces that aim to legalize and legitimize the conditions of informality. It cannot be denied that initially the FTZs were the product of globalization/modernity and neo-liberal imaginaries (Stivens, 2007) but these notions were never fully realized during execution (Castree, 2007) and the political and economic organizations they create are neither “particularly new or novel” for most people that they employ (Kingfisher and Maskovsky, 2008). This is caused by the ability of different activities and assemblages to proliferate the walls of the FTZs in many ways. Also, due to the fact that FTZs are created by governments to 55

legalize their informal activities. Naturally. More informal activities will stem out and beyond the government's control.

Nasr City initial planning (in the 50's), and images of the first residential buildings, Source: ETH Basil Contemporary City Institute, 2009.

The first residential buildings in the district of Nasr City during the 50's. Source: ETH Basil Contemporary City Institute, 2009.

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57

Location of Nasr City FTZ within the Nasr City District, Source: Google Earth, 2014

58

59

60

61

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4.5 Analyses of the Nasr City FTZ This section will outline streams of scholarly discussion relevant to the analyses at hand. My analysis and argument is structured in two parts. In the first part, I draw on a mixture of scholarly work concerned with “legalizing informality” and “global cities” to show how these spaces (i.e. FTZs) reproduce what are already existing dynamics of work for a majority of people. In other words, spaces such as FTZs, with the unique characteristics mentioned in previous discussions, create new forms of social and economic organizations while attempting to legalize informality. These organizations might exist outside the FTZs in many forms. Yet, what is novel is the way in which these organizations rise from different assemblages that attempt to enter into a formal market that legalizes informality in many ways. This results in a legalized global formal market with informal characteristics and dynamics. I would like to describe this as “The Global Market Informality” or (GMI), where FTZs are the main agencies.

In the second part, I consider the permeability of the zone’s formal and physical boundaries, which I discussed previously by highlighting the importance of thinking about the fixed solid four meter wall as a perforated surface instead of a surface that creates distinctions between work inside the formal economy and the economic and social activities outside of it. I will aim to shed light on what makes the FTZs unique urban character. FTZs from an exterior perspective might seem as territorial, experimental and offshore spaces, yet as I suggested before, from an interior perspective they are normal businesses. This dual characteristic can further be explained by exploring the overlap between different entities, activities and assemblages inside and outside the FTZ. This will show how the FTZs should be understood in terms of their structural continuities and dynamic interrelations with the informal and the formal within different scales (Hart, 1992).

Both parts of the argument are going to be presented in the form of an analytical description of my journey and the process inside the FTZ during the research phase of my dissertation.

Accessing the FTZ The first step needed in order to enter the FTZ is to meet with officials at GAFI. GAFI has two head-quarters, one next to the Nasr City FTZ and the other is located on Saleh Salim Road (around 30 minutes by car from the Nasr City FTZ). Having the appropriate identification (such as passport or ID) as well as a letter that confirms the purpose of the visit, clearance to enter the FTZ was smoothly granted. “The clearance” was all verbal through phone calls to security and other officials inside the FTZ. The Main Gate To enter the FTZ, one has to go through the main gate. The gate is composed of a separate entrance and exit openings for both cars and pedestrians. It is also attached to a small building that house a few offices for the Port security (police hired by the ministry of interior), GAFI representatives, and Tax/Tariff Security (checking everything that goes in and out of the FTZ).

Whether entering with a car or on foot, when approaching the gate there are four men each representing the different positions mentioned previously. Security seemed to be not too strict. According to an interview with one of the security personnel at the gate, 63

strict security checks occur in cases where there is previous information or a report of suspicious behaviour. Otherwise, security checks are conducted by asking the following four questions: - What is the purpose of the visit?

- Who are you meeting inside?

- Can you show any identification?

- Do you have anything to declare?

These are standard questions that are asked at both the entrance and exit of the FTZ. For employees and workers of the FTZ the procedure is different. Each company sends a list of names and basic information about their employees and workers to the gate. The gate send this list to the police station located inside the FTZ to check for criminal records. After the check up, a report is sent back to the gate with clearance in the case of a clean criminal record.

Following this, the employees and workers will be issued unique clearance identification cards. There are two types of identification cards: workers or employees cards and cars or buses sticker cards. In the following page an example of both types of identification cards is shown. For the first type, each worker is given a card with a unique serial number, and a recent picture of the worker that states the name, nationality, occupation and address. On the other hand, buses and cars (private and public) are all required to put the identification card sticker on an easily visible location on their vehicle. The sticker has a unique serial number for each vehicle and is renewed with a different colour code each year. Vehicles carrying materials going in or out of the FTZ are weighed using a level located in front of the gate to insure that there is nothing to declare. In the case of any undeclared items, proper paper work needs to be carefully reviewed before the vehicle is allowed access or exit. In some cases, according to security personnel at the gate, most problems arise from vehicles being brought into the FTZ with the proper paper work, but the failure to provide paper work for their exit. As a result, they end up being left inside the FTZ for a long period before they get claimed, if at all.

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The zone planning

Colour Coordinated map at the entrance of the zone, Source: Self Produced (2014)

Containers left on the side of the street, Source: self produced, 2014

After entering the main gate, the visitors to the zone would pass a colour coordinated map of the zone. The map did not identify buildings according to activities, but it stated the names of each project on its assigned plot. Everything beyond the perimeter wall of the zone was completely left blank. It is my contention that this indicates that the FTZ has been conceived and perceived in legal terms and to urban planners as an isolated territory, disconnected from its surroundings and separated from the larger regulatory environment (Cross, 2011). when looking at the map, then looking at the main road leading deeper inside the FTZ, the 705,700 m² complex that houses high profile manufacturing companies represented in the map in an orderly world can be hardly recognized.

Although 100% fully occupied, the zone seems to be in a state of continuous reconstruction. Some roads were cracked, unfinished while others were paved and in a better condition. containers and metal scraps were occupying most of the street area as well as other vacant lands.

My analysis as a visitor of the zone is that it does not seem like there is an extreme or sudden break in landscape of labour and activities between the FTZ and the surrounding areas. On the contrary, activities inside the FTZ follow the same everyday casual, unstable and insecure work pattern found outside the zone. On both sides of the wall, there are migrant rural workers who work on the construction and maintenance of buildings and infrastructures.

According to an interview with a construction worker, who at the time was working on the reconstruction of the GAFI building, most of the workers are self-employed builders, electricians and handymen who migrated from rural areas to the city looking for jobs. The workers are brought to assist with the construction in the FTZ and GAFI's new buildings because they get paid significantly low wages for their services. I would like to argue that this example shows that the FTZs dynamics and experiences are not only limited to the factory workers inside the FTZ, but it goes beyond that to include those who maintain and construct it, as well as those who are directly or indirectly involved in its everyday operations.

Such dynamics, experiences and everyday operations might not be part of the FTZ capitalist persona or its market-oriented scheme and policies. They are no doubt part of its more informal dynamics, experiences and operations, that may come in the form of relationships of class, gender or kinship which emphasizes the structural continuities of activities inside the zone with those outside. A more in depth example of such informal dynamic experience and operations will be explored in the next sections.

From a previous interview with a personnel from GAFI engineering department, the FTZ has 66

specific architectural requirements. However, to a visitor very little architecture identity can be recognized. The zone is divided into fragmented plots that give the internal layout a certain flexibility. This feature is unique to the Nasr City FTZ. In other FTZs that were established later on, the zoning was strictly related to different types of activities. In one way this is more effective since it will save time in transportation and will make certain operations more time efficient. Yet, in another way, this unique fragmentation found in the Nasr City FTZ might create a pattern of growth and transformation which can be perceived as a strategy for accommodating the uncertainties of long term planning. The colour coded map in the next pages shows the different activities inside the FTZ. As seen from the map a pattern of grouping of activities hardly existent. Projects are located within the zone according to land availability and not according to the type of project or its relation to other projects. This is due to the lack of clear planning during the construction phase. This irregularity in planning has some inherent informality and could be seen as the threshold of excluded inclusion within the structural boundaries of the space of capitalism (Ballantyne and Smith, 2012). In other words, life within the FTZ can be perceived as simultaneously inside and outside of the juridical order. Accordingly, I would like to argue that informality is an inherent feature in the Nasr City FTZ and it exists as early as the construction phase whether in its policies or design and planning.

The following are the companies and projects located within the Nasr City FTZ: 1. Mintra (for manufacturing and trade)

2. Citi-nationals

3. Himalayas international

4. Misr (for consultancy on printing and preparation)

5. AfroAsian

6. Anglo Textile (1)

7. Misr Camp (for Medical unit supplies)

8. Sahrawy for Printing

9. Euro textile

10. Sita-Textile (for Clothing)

11. Mainty Egypt

12. Golden triangle

13. The International company for trading and services

14. Rob

15. Total for Information technology and services

16. El-wataneya for maintainance and services

17. Abtex Group

18. Electro-safe

19. Farah lora for clothing

20. Fartex

21. Misr Felx

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22. Spectrum

23. TechnoEgypt

24. Gama international

25. European for crystals and chandeliers

26. Al Kekha for manufacturing and trading

27. Leoni (1)

28. International information systems company

29. Sahrawy Tex

30. Mabedco Arab

31. Heidelberg East Africa

32. Leoni Wiring Systems (2)

33. International for rubber manufacturing

34. Lafken

35. Arab destination group

36. Orascom for advanced electronics manufacturing

37. Total for clothing

38. Bolly wood

39. Cleo for leather works

40. Nora trading

41. sasko Sahrawey for petroleum services

42. CIT Information technology

43. Fuji

44. Leoni (2)

45. Stenfani Textile

46. Sky blast

47. IT Works (1)

48. Badr for services

49. Misr for Car trading

50. Healthy across the sea

51. Shahen for readymade garments

52. Tin tick

53. Egyptalex Italian for texitles

54. Refa Pharma

55. Gama International

56. Hamdi Fayek Co.

57. Arab ABB

58. Oriental

59. IT works (2)

60. Al Ahram

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61. Euromed for medical supplies

62. Delta (1)

63. Activia for clothing

64. Transcad

65. International Printing House (1)

66. Zeina for minerals

67. Islamic Heritage works

68. Amedco Arab for medical services

69. Delta textile (2)

70. Gekko for petroleum services

71. Hendawi (1)

72. Hendawi (2)

73. CGG Geophysica

74. Al-Kakhya

75. Al Masrya for chandeliers

76. PPI Technology

77. Anglo textile (2)

78. Cairo for Printing

79. Tie (1)

80. Al Shaymaa for clothing

81. Pepper and pepper

82. International Printing House (2)

83. Khatab Group

84. Soft Egypt

85. Jedco

86. Anglo Textile (3)

87. Atlantic Coca-Cola

88. Alliance

89. BD Texas

90. Amico

91. Tansour PGS

92. Life Care

93. Reda for Clothing

94. Advanced Technological industries

95. PetroGafex

96. Cairo Free Zones

97. Shimmer and Glitters

98. East Traders

99. SAS

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100.

Quality Standards

101.

103.

104.

Shorouk for leather works

105.

Mist international for office supplies

106.

Universal industries

107.

Delta Textile (4)

108.

Al shorouk

109.

Leoni (3)

110.

Bertex

111.

Delta Textile (5)

112.

Ultra Print

113.

Nora for Leather works

114.

Alex for printing

115.

Art line international

116.

Denis

117.

Asted Egypt Group

118.

119.

Legos Pack

120.

Al Arafa consultancy

Delta Textile (3)

Solitech

121.

Reda pumping services 124.

Zara

122.

Leoni wiring systems (4)

102.

123.

Tie (2)

Fashion

United nations

Source: self-produced (2014) based on on-site documentation and mapping According to the list there are around 124 visible projects within the FTZ, however, according to security records and GAFI officials there are around 189 projects within the zone. The difference between the actual visible number of projects and the recorded number was investigated and the most commonly found explanation according to a number of interviews was caused by what was described as “the informal renting�. This is legally not allowed within the zone, yet it exists. Some projects allow other smaller projects or complementary projects to be established under their name. Investors rent to other investors a section of their building to set up their projects. GAFI is usually aware of this informal arrangement and unofficially allows it in most cases. Thus, when the FTZ is entered, although some projects might seem from the outside as one project, from the interior it is fragmented into complementary projects. These projects can be industrial projects, as waste management, or service projects in a form of a cafeteria for the workers and employees, or warehousing projects.

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In addition to the previous, there are other signs of flexibility or exceptions in the laws and regulations. According to design requirements for the Nasr City FTZ, the main parameter wall has to be surrounded by a ring road from the interior not interrupted and not less than 12 meter wide including pavement for better visibility and security of the wall. There are a number of projects within the FTZ that locate their storage facilities next to the wall parameter without any offsets. This is usually given a fine and an order for removal, however, it has not been implemented so far. Due to the lack of space inside the zone GAFI has informally loosened the regulations concerning occupying spaces around the projects. Most projects use the street and other in between spaces to store materials during loading and unloading, which are perhaps common features with informal markets. Moreover, buildings within the FTZ are required to abide by a colour coding method and some architecture features. In the following pages a diagram shows the different colours required for each type of project and a detailed description of the interior fence surrounding each project. It is important to note that, these requirements are only created recently and are not at all visible within the zone. To a visitor it is almost impossible to identify the type of activity taking place inside the buildings. Also, most projects do not abide by the set requirements for the interior fence design. Although this is an over simplification of the complexity of the situation inside the FTZ, these were brief examples that were employed to illustrate the clear differences between the image of the FTZ created by government officials, law makers, and urban planners and the actual state of FTZ. The key point with such examples is that even at this relatively small scale the organization and regulations of time and space are being resisted, and instead alternative and informal laws and regulations stem out of the formal to accommodate change. In many ways this applies to other forms of everyday activities within the FTZ. This form of concealed control wrapped up in a form of legalized informality, allows for the emergence of an architecture of events brought by the dynamic everyday forces, movements and bodies inside the real spaces of the FTZ. Accordingly, it created different forms of organizations of events within “the spaces of flows, where functions, activities and programmes are merged� (Ballantyne and Smith, 2012).

Example of one of the project not abiding by the Architectural Requirements (façade completely covered in glass and the project is not surrounded by the required interior fencing), Source: self Produced (2014)

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Within the Companies and Factories The zone is divided and sub-divided and further subdivided to house different activities. Generally, from an external perspective there is no hierarchical order to different elements within the FTZ, however, once entering different projects inside the FTZ the visitor soon realises “the box within a box” design which is representative of the hierarchy of spaces and power. Each space inside an individual project has its proper function, sign-age and building materials. Spaces are symmetrically divided horizontally and vertically into left and right, mirroring the organization of the governing authority.

An example of a four floors ready-made garments factory inside the FTZ divided its spaces according to nationality, gender and type of activity. According to an interview with the manager, the building is divided as follows: first floor (right) administration and offices, first floor (left) female factory workers working on semi-automated machines producing clothing for women. On the second floor male factory workers working on similar tasks producing clothing for men. The third floor was used as a storage unit, and the fourth floor as a cafeteria. An extension to the building was added later to include factory workers from Bangladesh. This section is completely separated from the Egyptian nationals (females and males) in the other building. Although each group has its own work space, the Egyptian female factory workers, male factory workers and the Bangladesh male workers share the cafeteria on the fourth floor.

This example can be found in other factories throughout the FTZ. After analysing the workers interactions during their breaks in the cafeteria I believe that there is a strong sense of territoriality in these situations. It seems that workers started to restructure groups and redefined each other by distinguishing between “outsider” and “insider”. It can be argued that on the one hand, according to Carmona (2003) this form of exclusion reinforces connotations of “security”, and in essence, it is a manifestation of power through the control of space and access to it”. In other words, this form of territorialization will sharpen the spatial boundaries and increase internal homogeneity of assemblages (Delanda, 2006). On the other hand, the power of exclusion through space divisions based on a segregation through nationality, gender or class results in an emergent form of social and economic organizations that helps mould and create new spatial articulations that relate rather than separate (Franck and Stevens, 2007). In continuation of the previous example, the female and male Egyptian national factory workers started a money lending organizations. The existence of a third category (i.e.

Bangladeshi workers) resulted in the shifting of ideologies and structures of other organizations and categories (i.e. female and male Egyptian workers) causing them to merge and overlap to create a new form of social and economic organizations. When asked about the reasons for the establishment of such organizations (i.e. money lending), most workers replied with the following: “We enjoy very little control over our rate of work, and our income wages are very unstable and insecure. It is as if we are working in an informal market or factory. We are forced to complete more than our usual 8 hours (three work shifts). We have to stay overtime which is 12 hours (two shifts). This is not optional if we object or refuse, we will lose our jobs”. (Interview with a factory worker inside the FTZ, 2014)

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And when asked why the organization only includes Egyptian nationals (men and women) the workers replied: “We do not really talk to them [Bangladeshi workers], most of them do not understand Arabic. Also, there is a bus that takes them from the door of the factory to the door of the rented flat that the company provides them, so there is no chance to interact much.

And women are usually good with money. We know those women, my fiancÊ and my mother work with them�. (Interviews with male factory workers, 2014) These workers have been able to perforate the borders of their seclusion and invent spaces of negotiation. These rich assemblages of practices was able to transform walls, spaces and activities into expressive encounters and porous boundaries that socially loosens the spaces and functions. Such activities and practices provide workers with access to credit, not only through money lending, but through other opportunities that exist within the zone. The zone created an alternative market. Workers encounter people or customers that they would have never met while living in their villages or towns. People that provide entrepreneurial opportunities on different levels. An example of such opportunities can found in the Nasr City FTZ. Where a garbage collector who worked in the zone for more than 15 years, through having the opportunity to meet the right people and understand the market dynamics in addition to creating different assemblages and connections within the zone, he established a project inside the zone. His project is the only fast food outlet serving the entire area of the FTZ. Such invisible economic practices that exist within the zone that provide workers with opportunities, and other advantages could be seen as a characteristic of the informal economy.

Yet inside the FTZ they are incorporated into its capitalist production processes. These are the new forms of social and economic practices and organizations that enable thousands of families living on the peripheries of the city to survive. Thus, the wall parameter surrounding the FTZ that is believed to be its juridical boundary between economies is in fact an optical illusion. In fact it is nothing but a symbol for legalizing informal activities, actions and behaviours that could be perceived as illegal otherwise. The success and growth of the FTZ's economy and the global units within the FTZ is dependant on factors that go beyond its physical boundary. It draws its success from the wide display of family, household exchanges and non-factory livelihoods. It also depends on the formation of new forms of governmentality that are predicted upon new formal and informal institutional configuration operating on different scales (Swyngedouw, 2005).

As suggested in previous discussions, practices inside the FTZ are not all authorized, nor are they all preformed by authorized actors, despite the false appearance that there are codified rules and regulations shaping the zone and identifying different domains of power. These practices could be described as non-transparent or context dependent that results in new configuration of governance articulated by a proliferating organizational arrangements that are overseen and ignored by GAFI. As a visitor to the zone, my mobility within the zone was restricted by the gateways of the projects within. The following diagrams show the main street of the FTZ and the activities and mobility of people within. They also illustrates the territory and spaces that I was able to access.

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The Workers During the research, a number of surveys were distributed among female and male factory workers. A sample of 100 workers were randomly selected. The result of the analysis of the survey showed that out of the 100 workers surveyed, 55 were males and 45 were females both ranging from 20 to 29 years old. All workers were required to state the duration of their employment within the FTZ (how long they have been working in the FTZ?). From the sample surveys conducted within the ready made garments factory all workers had an average duration of employment of one year. I believe this implies that work inside the FTZ is extremely unstable and unpredictable.

Accordingly, different forms of economic and social organizations arise in order to aid in creating some form of security and stability, such as the money lending activity.

Moreover, while investigating other companies within the FTZ, I found a number of people who have an alternative source of income besides their factory wage. Usually, their secondary job was related to the informal economy, where they create new forms of entrepreneurial self employment. Sometimes these jobs are related to their jobs inside the FTZ. For example through interviewing several female factory workers in a textile factory, it was estimated that 1 out of 5 had a secondary job related to home based tailoring and stitching. These female workers learn the skills needed for their secondary job from their FTZ jobs, and through the FTZ they meet potential clients everyday. On the other hand, interviewing male workers in a car assembly factory, 3 out of 5 seek small temporary jobs such as, scrap metal merchants, unloading and loading of materials for trucking industry, and welding or electrical work. They use their connections and networks inside the FTZ to help them connect to the informal economy.

From the statistical analysis of the surveyed group, the following observations were concluded:  Most of the male workers are born in a rural town and moved to the city looking for better work opportunities  Most of the female workers are still living in rural towns and they transport to the zone everyday  The estimated average number of family members in both female and male factory workers range from 4 to 6 members On of the main issues that was the main subject of debate among many of the female workers within the FTZ was the lack of accommodation. The FTZ does not have any accommodation facilities for workers. Thus, workers have to use different means of transportation to the FTZ everyday, or rent rooms that are close to the FTZ. During the late 50's, a zone for workers accommodation was located near the FTZ. Today this has been sold to private businesses and turned into a residential and commercial area. For many of the young female workers, transportation and accommodation are major issues. Most of the female workers live in rural areas on the peripheries of the city. In most rural areas, it is culturally less acceptable for a female, especially if unmarried, to leave the house and work in the city. However, due to poverty and other limitations, more and more female family members in rural areas are left with no choice but to seek employment in urban cities in order to help support their families.

Accordingly, I would like to argue that the line between the rural cultural informal labour and 78

urban industrial formal labour, like the physical walls of the FTZ, are also an optical illusion (Holmstrom, 1999).

The Zone as permeable While interviewing a group of 20 female workers in one of the ready made garments factories inside the FTZ, a theme started to emerge. When asked how they acquired their jobs all of them answered with almost the same answer: I heard about the position from family and friends. A friend of mine, who also lives in my village, told me about this woman [Om Hussein] that got her the job, and her parents allowed her to go to the city because the woman made a deal with her parents to pick her up and bring her back after work everyday and keep an eye on her. Of course she takes money from them, but not too much. (Interviews with female workers, 2014).

I have learned earlier in my visit to the main gate of the FTZ, that each factory appoints private buses to pick up their workers. Accordingly, I interviewed six bus drivers working for the same factory. The bus drivers carefully explain the route they took from and to the FTZ everyday.

They stated that each bus has a specific route that leads to an assembly point where all workers are picked up and driven to the FTZ and then the same takes place at the end of the working day.

Each bus has three different assembly points. The assembly points are usually located inbetween spaces that some might describe as informal settlements. The assembly points are found along three different routes, found to be: route (1) stops at Dar Al Salam, Masr Al Adema, and Masaken ESCO, route (2) stops at Helwan, Tera'et Alkher, and El Ma'sara, and route (3) stops at Boulaq, Imbaba and Ahmed Helmi.

The map in the following page shows the routes and assembly points of 3 buses interviewed at the garments factory. If we overlay the first map with the location of villages where most of the female workers live, we can observe that the distance that female workers have to travel twice a day in order to reach the Nasr City FTZ is divided into two sections. First the workers have to travel from their villages to the assembly points, then they have to be transported to the FTZ using the factory's private buses. The total journey could take from 4 to 6 hours, which means that in order for the workers to reach the FTZ at 8:00am they have to be on the road starting 4:00/5:00am. Moreover, it can be also observed that almost all the assembly points are located within informal settlements, where most of the male factory workers reside or migrate to. The distance, routes of the buses and the location of the assembly points make it considerably easier for male workers but extremely harder for female workers. Accordingly, I argue that the presence of accommodation close to or within the FTZ is important. May of the female workers raised this issue several times to GAFI officials, yet all their efforts were in vein.

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After the drivers explained the process of transporting the workers, I was left thinking of one question: How do female workers reach the assembly points if they are coming from villages that are significantly far. When I asked the drivers they pointed to a small informal structure set on a sidewalk overlooking the FTZ main gate and I got one answer “Om Hussein”.

Map overlay of distance from the villages where the workers live and the assembly points of factory buses. (source: Google Earth, Self Produced, 2014)

I approached the tent like structure, and interviewed Om Hussein in order to understand how is she able to help the female workers inside the FTZ. She explained a complex process that I will try to simplify in a self produced graph in the following page. Om Hussein has a relative employed inside the FTZ, who has connections with several departments inside the garments factory.

The process was described by Om Hussein as follows: 1. Om Hussein's relative informs her of any posts available inside the factory. According to Om Hussein, “Companies post advertisements on the perimeter wall and sometimes newspapers, but before they post any advertisements she already knows about all available posts” 2. Om Hussein lives in a village called Al Monfeya, and has relatives in other neighbouring villages such as Al Sharaaya and Qalyoubeya. Her network in different villages helped her reach many families and create a reputation. Accordingly, she was able to make deals with different families in her village as well as neighbouring villages in exchange for a small fee to transport their daughters, wives and female family members from and to the FTZ and keeping an eye on them.

The following diagram illustrates the process of the deal that took place between Om Hussein, the parents, the female workers, the bus drivers and the FTZ:

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Om Hussein reassures the family that their daughters and wives will be safe and taken care of.

She owns a small bus that she uses to take the female factory workers from the villages. She drives to one of the assembly points where she meets the factory bus driver who transports all the female workers and Om Hussein to the FTZ. Om Hussein has constructed a structure in front of the FTZ in order to “keep an eye on her girls� as she stated. While she waits for them to finish their work, she sits under her informal shed preparing and selling food and drinks to the drivers as well as other factory workers.

Her informal shed has become the social hub for the area. This newly built informal structure created a new environment for social and economic organizations. It manufactures actively, new political, socio-cultural, and economic realities.

The following pages illustrate the area around the social hub located in front of the FTZ. As well as the mapping of the movement of people around it throughout the day. The location of this social hub eventually attracted other informal activities. Every morning from 7 to 10am a food cart locates itself next to Om Hussein's tent like structure. The cart serves breakfast to workers every morning.

Worker's unions are prohibited within the FTZ. However, several workers have mentioned that they have developed an informal union that meets once a week at Om Hussein's social hub. This social hub and Om Hussein are proof that no matter how high their walls are, or how tight the security is, they will never be isolated or disconnected. Linear spaces such as FTZs will always allow interaction with networked spaces generating a new particular depiction of space. In the process they expand the actors involved, the scope of social transformations, and the scale of complex interactions, just like Om Hussein's social hub which is thought of as an extension of the FTZ. From the snapshots presented describing the everyday activities inside and outside of the Nasr City FTZ, we can observe the interaction between different forms of assemblages and enclaves that resulted in a new urban character and transformations of the FTZ space. The same sort of dynamics and assemblages of networks exists inside the FTZ between companies and factories as they do between the outside and inside of the FTZ. Each factory produces a significant amount of waste. Any waste that is discarded, has to be transported out of the FTZ which means that each company has to pay significant amount of taxes on their waste products. As such, factories have created an informal system that helps them reduce the amount of waste that they need to transport out of the zone. The waste of one factory is recycled and reused by other factories as a material within their manufacturing process. For example Leoni Wiring Systems produces a large amount of plastic waste which is used by another factory inside the FTZ that works with plastic materials. This process of supply and demand saves both factories money and time. Money from the waste taxes they have to pay on waste materials and time from the procedures and paper work they need to go through getting materials in and out of the FTZ. Policies inside the FTZ do not directly mention any laws regarding exchange of materials, goods or waste between entities within the FTZ. Finally, the main argument that I have been attempting to highlight through the chapter is the fact that, FTZ are spaces were different forms of informality is found throughout. It is created by the government as a means of legalizing informality in order to benefit from the incentives that informality allows. As a result, new forms of formal and informal social and economic organizations emerges.

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5 Conclusion: Learning From Nasr City FTZ

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This study set out to explore the concept of FTZs and analyse their performance, characteristics and structure. It has also sought to present a perception of FTZs as a space that combines a concept of assemblages and a theory of enclaves. The general theoretical literature on this subject, specifically in the context of Egypt (i.e. Africa and the Middle East), is limited to the FTZs economic and political performance rather than its social and urban performance.

Accordingly, this study set out to answer the following questions: 1. Do FTZs have any architectural or urban character that differs radically from other urban areas?

2. Do FTZ have potential to house new forms of social and economic organizations?

3. Do FTZs only fall within the two categories of export oriented enclaves or an oriented policy scheme that are isolated economically, socially and physically from the rest of the city, or do they have more to offer?

To answer the above questions, it was necessary to explore concepts of enclaves and assemblages, where FTZs were found to be spaces of duality. They are overflowing with many conflicts between public and private, state, citizenship, territory and more. However, despite their unpopularity they are still spreading throughout the world. They are represented in most literature as spaces of inequalities, filled with discriminatory practices, inequitable allocation of resources and hegemonic systems (Sutton and Kemp, 2011). While in other cases, they are represented as forms of experimental practices and policy making strategies that aid in shaping our social, economic and political environments. Overlaying both views highlights the tensions that lie in the gap between the realities and possibilities of FTZs. Tensions that if explored and analysed will serve as a bridge to ground breaking change in the context of the rapidly growing phenomena of FTZs. Moreover, in this study, FTZs were understood as a layering of different spatialities of assemblages and practices of architecture and urbanism that facilitated the negotiation of space between different actors and the playing out of power relations within. This has been illustrated with different examples. First, the workers creating informal social and economic organizations to extend their territoriality. Second, through external forces and existing informal organizations proliferating the FTZ and linking the local economy, and labour to the global. Third, through the factories within the FTZ and their informal arrangements that find ways around the laws and policies set by GAFI. The fourth and the final point, the government creating a new political and economic organizations to manage and legalize informality through containing it and benefiting from its incentives. This can also explain the lack of accommodation within the zone. The government believes that through allowing accommodation they will no longer be able to contain the FTZ. This understanding brought an insight to different strands of sociology, geography, economy and politics amongst others to architecture and urbanism, transforming them into a spatial discipline used to address the topic of FTZs. The spatial discipline that I would like to refer to as “Glocal Informal Market (GIM)� is employed to analyse complex structures that can no longer be fitted into a single uniform pure model. Indeed scholars will continue to produce models of FTZs to try to put some order and control into this complex phenomena. However, we must understand that it would be foolish to set standards and models for FTZs. FTZs can not be generalized. Situations and values differ from one place to another. If scholars aim to put order and control to these complex 88

phenomena the way to approach it is to explore and define their dimensions (Lynch, 1981).

Creating a complete standard model of FTZs is far fetched, but identifying common characteristics and dimensions of the performance of FTZs due to their spatial qualities on the other hand can be achieved through exploring its local and global relations with the informal economy.

By doing so we are able to bridge different scales from the individual to larger social and economic entities (such as territorial enclaves) that are constantly being modified, changed and influenced. Examples of social and economic organizations, such as Om Hussein's, are a product of embedded assemblages into the micro and macro scales of the FTZs. These help in acquiring a threshold awareness. In other words, it highlights the fact that places which separate or are aimed to separate can also be used to connect. In the case of Om Hussein's informal social hub, this was achieved by converting a small space in front of the FTZ gate to an area of encounter spatially and temporally by extending the FTZ space to provide common memories and experiences for workers and inhabitants. Om Hussein's system managed to perforate the separating spatial and temporal membranes of this so called “isolated” and “secure” urban enclave. Om Hussein is one of the very few to realize the importance of including and not separating (Franck and Stevens, 2007). A realisation that governments, planners and investors need to come to understand in these modern times. Succinctly, instead of establishing FTZs as isolated enclaves they should be established as frameworks consisting of solid elements that give freedom and flexibility between certain boundaries.

As observed from the Nasr City FTZ case study, FTZs are urban entities no matter how secure and contained they are. They will never be closed or bounded systems. On the contrary all the characteristics of the FTZ such as uncertainty of work, the porousness of its boundary and the politics of citizenship inside the zone are evidence that the environment of FTZs recreates the character of the working life outside. This means that no matter how isolated it may seem, the FTZ will always be connected. FTZs are spatial structures or intimate zones that depend on diverse interest groups (local or global, formal or informal). It has to be stated that the success of FTZs depend on their domestic socio-political economies, which can be grouped in the following two points. First, the insecure labour relationships which includes people in construction, maintenance and manufacturing. Second, global companies that are inside the FTZ depending on the structural continuities and connections to multiple sites of sources and labour of income that perforate the FTZ walls. One point includes components of the informal market while the other has components of the formal. This overlap between the formal and informal within the FTZs suggests that they contribute positively to the socio-political and economic development of their host country.

Taking these points together, I argue that FTZs are dynamic entities that can be used as an effective tool for development. They are a process of becoming as much as a state of being, or they are systems that produces systems, markets that unleash markets or riots that trigger other riots which cause an emergence of an assemblage of informality on a global scale where different actors and organizations overlap locally resulting in a conflictual space and time.

Within this space there is a potential for redrawing social, economic and political order.

The proliferations of the FTZ walls and gates have given rise to its distinguished spatial qualities. The FTZs are considered bounded and secure areas, yet from this study we can observe the informal and exceptional nature of the zone. This highlights the closeness and relation between the performance of FTZs and informal markets. Informal markets according 89

to many scholarly studies produce many new forms of social and economic organizations and according to this study, so do FTZs. The main difference between both types of markets, which is also the source of the FTZs unique urban character, is its physical form as a bounded secure zone that is created by the government. Informal markets give rise to informal social and economic organizations that have to maintain hidden in order to succeed. The informal performances in FTZs are visible to the government more so than to the general public, unlike informal markets. They are visible globally, nationally and locally, which means that all forms of economic and social organizations inside the FTZ, whether informal or formal, are visible.

Thus, if FTZs are to be described in one statement it would that they are tools for legalizing the informal. In doing so, FTZs will be established not only as a mechanism by which the economy can be stimulated, but also as a mechanism by which the FTZ can affect the everyday experiences of different assemblages within and around it.

Finally, FTZs around the world are slowly shifting into more open inclusive spaces, such as the Shanghai Free Trade Zone Pilot mentioned in chapter one. The Shanghai FTZ scheme includes four SEZs. This allows the decentralization of the city into several cores and creates connections between its different parts. In the context of Egypt, this connection is not as clear because of the nature of the culture. FTZs perform differently depending on the context.

However according to this study the common characteristics that we can conclude from studying FTZs as a phenomena are the following: 1- FTZs have a unique architecture and urban character 2- FTZs can house or generate different forms of social and economic organizations (formal and informal) 3- FTZs potential is not restricted to its political and economic benefits. It has significant social and physical potentials In the light of this study, we can see that cities are strongly shaped by agglomeration economies (Anas, Arnott and Small, 1998). Putting this in mind, I believe that further research should explore the use of FTZs as zones of transition that can affect the borders of cities, especially cities in conflict since FTZs have the ability to blur the borders that exist spatially and temporally. This may provide researchers with a physical environment that can be used as an experimental ground for their theoretical research.

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6 Appendices

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Appendix I

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Appendix II Transcript of interviews Interview I With a government official at GAFI, Inside GAFI head-quarters next to the Nasr City FTZ. (Translated from Arabic to English by Author)

I first wanted to know what are the type of projects in Egyptian FTZs and when were the FTZs established?

In the 70's, there are three types of projects in Egyptian FTZ: Services, Industrial and warehousing. By industrial I mean when an investor comes, I give him a piece of land with an area that accommodates his project. Then either he builds or I build for him depending on our deal. Then if its an industrial project like I said before, then it will be a factory.

What do you mean by factory?

The word “factory� in FTZs means there is an input (raw materials) and then manufacturing happens to this material producing an output. This output has to be different from the input completely. So for example, if the input is cotton the output will be textile in maybe in the form of clothing. This point has a lot of problems usually. We had problems like this with an investor who wanted his project to be industrial but his input were cars and outputs were cars as well.

The changes were in the interior of the car, switching the driving wheel and other things from left to right side. But we do not believe that this is an industrial project.

Is there a zoning planning in the Nasr City FTZ? No, this zone is very old so did not have planning. But we have new areas now that are divided according to activities.

What are the rent estimates for each project?

We think we are fair. We rent to industrial projects for $3.5/m2 per year for a period of maximum 25 years, and for services $25/m2, and warehousing is $7.5/m2.

What makes the FTZs different than other industrial zones?

Mainly, that materials come from abroad with zero taxes and tariffs. And the product produced will be exported outside of the country completely. But in some cases a percentage can be sold locally but then they will have to pay taxes.

The idea here is that GAFI takes 1% of the added value of the product.

What is the first thing that was built when the Nasr City FTZ was established?

The walls and gates and watch towers at each corner. We had to recently add barbed wire because trucks were parked by the side of the wall and products were smuggled from one side to the other where there is another truck parked on the other side of the wall. We also created an interior ring round, to keep the wall visible.

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Who is your biggest client in the Nasr City FTZ? Leoni, it makes car wiring systems. All the products are made by Egyptian workers, girls and boys. This factory sends its products to jaguar, Mercedes Benz and more. This factory employs many people, if you look outside at around 5pm you will see this. Also, now there are factories that appeared that work very close to it. But we also have Delta, it has four companies inside. It is a textile factory.

Where do workers come from?

Most of workers come from far areas, but there are buses for transportation, and it is paid for.

I see.

I want to go back and comment on the companies that started appearing based on other factories in the FTZ. Like I mentioned before there is a factory that produces car wiring systems, slowly other factories that depend on it appeared.

Such as insulation coating for these systems, in addition, waste from the wiring systems if thrown away taxes will have to be paid on it. So they are recycled to plastic factories that will use it in their products.

This is one sample out of a series of interview and causal conversations with GAFI officials.

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Casual conversation I With a maintenance worker, inside the Nasr City FTZ. (Translated from Arabic to English by Author).

What type of maintenance do you do?

I am responsible for maintenance of infrastructure, such as water and such for the entire FTZ. I've been working here for a long time, almost 35 years now. My son used to work here too, but he doesn’t any more.

Why, if you do not mind me asking?

He worked at one of the big factories, and he was treated really badly, so he quit.

For example, when there is no work, he was forced to stay at home by the manager and they do not pay him. Also the overtime is not optional, if he did not do overtime he will be fired and he gets paid very little. You know some factories work 24/7 and not all companies have break time. GAFI does not really do anything about it, even though there were a number of protests within the FTZ and workers were not letting anyone in or out at all for days.

How about your work?

I only have one thing to comment about in my work, the welfare and insurance, it is around 200 Egyptian Pounds only. How will I live on 200 L.E. I am lucky that I am still working here, usually when you get old they let you go. “Health gone, He leaves” that is the way it works.

200 Egyptian pounds (L.E) is equivalent to 16.384 British Pounds

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Interview II With The Port security personnel, the gate of the Nasr City FTZ (Translated from Arabic to English by Author) Are you always present at the gate?

Yes, Except for Fridays, which is the weekend.

Do you check everything that is going in and out of the FTZ? Safety is relative. We usually only check people and cars that we are suspicious off and usually this happens by someone reporting something about it, and then we keep an eye open for it. But other than that it is not very strict. It was strict the past days because of the revolution, we had many strikes and workers too control over the gate for several days.

How many gates are there?

There are only two gates, one for trucks and vans and the other for private personal cars. But at the moment we only have one main gate open for all cars, it is easier to control the ins and outs that way.

What are the procedures for security in general?

Well, for vehicles we have a level in front of the gate to check the cars going in and out in case they are smuggling goods or materials. And we also have an Xray machine and lights, and the watch towers theoretically should be guarded 24/7. the types of smuggling we usually see are workers wearing products and trying to go out of the FTZ with them, or other cases of people hiding products in the buses that transport workers. These are the most common cases.

But we do a background check on all workers and personnels inside the FTZ through the police. We have a police station inside the FTZ. Most of the workers here are Egyptians but we have several factories with Bangladesh workers so we have to make identification cards like these [taking out a sample] this shows the nationality and where you work and live. Cars have something similar but in a sticker form that they have to renew each year.

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Interview III With the sector manager at Delta Co. Inside the Nasr City FTZ. (Translated from Arabic to English by the Author).

Are all the workers in this factory Egyptian?

No, we have 4 factories. One factory is completely Bangladesh workers only, and another female Egyptian workers, while the other male Egyptian workers, and the last one is a different because it is a serves all the other 3 factories. It give them textile to produce the clothing. We house the Bangladesh workers in an apartment building with three flats, outside the FTZ. It is located not far away, in Mokattam.

How is this building divide?

This factory is the one for female workers. It is composed of 4 floors. The first floor is divided into right and left with workers operating a semi-automated machine. While the second floor is warehousing and storage and the third is identical to the first. The fourth floor has a cafeteria that serve all other workers, even the ones in the other three factories.

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Casual conversation II With the Om Hussein, In front of the Nasr City FTZ. (Translated from Arabic to English by the Author).

How long have you been stationed here?

I have been doing this for a long time, I think it has been almost 15 years now. I think what I do is important because without me many families will not be able to find a proper job.

What exactly do you do?

As I said before I take the girls from their homes, and I make a deal with their parents that I will take care of them. I drive them to their work here at the FTZ and I bring them back. They are all like my children really. They are good girls. I know most of them because they live in the same village.

I thought the girls use the factory buses?

Yes, they do. But I drive them to the factory buses. The buses only reach certain points but they can not pick up one by one from their homes. I do that and then we all go together to the location where the factory buses stop. That is why I know all the bus drivers.

I can trust them I think, I have this shed here to sit and wait for the girls. Most of the bus drivers sit here with me and talk with me and with other workers. So we get to know each other very well. I make them food and drinks, and they pay me most of the times, so I make money from driving the girls and from providing food and drinks in this shed.

Interesting...

I also know a lot of people and I have connections inside the Nasr City FTZ. I can find any one a job in there without even moving from my place. I think this place owes me a lot because I bring them workers from everywhere. Look at this building [Pointing at GAFI Head Quarters], the government might be managing some things inside the zone from there, but I am doing the same from here [her little shed].

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More interviews were conducted with other departments, factory managers and GAFI officials, below is a sample of the questions: (Self Prepared).

1. How do companies give each other materials inside the FTZ? Is there tariff on them? Any examples? What are the requirements in this case?

2. What about waste management? Can you give an example about that?

3. Can you give me a list of companies located here?

4. What are the labour laws? What is provided for workers and their families?

5. What are the working condition of the workers?

6. What is the organizational structure of the FTZ?

7. What are the key positions in the FTZ? How do you get these positions? And what are the requirements and qualifications?

8. What are the procedures of the goods going in and out? And the people? (security) 9. How about transportations, how are goods secure and where are they transported from and to? What are the main route for transporting goods?

10. What is the FTZ's relationship to other areas around it? Other factories outside? Or airports/other FTZ?

11. Who are the top trading countries? And what are their nationality?

12. How are workers hired? Do you do a check up on them? what are the requirements?

13. Are there any violations in the past? How are they handled? What are they?

14. Are there plans for expansion?

15. Who pays the workers wages?

16. Do workers have insurance, medical care and benefits? Who pays that? Are they sufficient?

17. How are the wages/salaries like?

18. Do workers have the right to form a trade union? Or to go on strike?

19. Has there been strikes before? How were they handled? What were they about? And when/how long they lasted? What were their effects on the FTZ? 20. How do you relocate each company or investor a piece of land? What are the bases of selection?

21. What are the laws inside the FTZ? Is there a specific constitution?

22. How strict are the laws? What are the punishments?

23. What are the design specifications of the Free trade zone?

24. How often do the laws change?

25. What obligations are put on personnels and workers outside the FTZ?

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26. What kind of problems/challenges do you face or see?

27. What are the working hours/holidays for workers?

28. How do you insure the quality of products/ Materials? Who inspects them? Are there any

exceptions (for example certain products or materials from or to certain countries are treated differently? )

Sample questions of interviews and surveys conducted with workers and employees of the Nasr City FTZ: (Self Prepared).

Interview form Time of interview: Date of interview: Location of interview: Name: Age: Gender: Martial Status:

F/M Single/Married/Divorced/Widowed

Nationality: Place of birth: Educational level: number of dependants: Languages: Job title/Position:

Interview questions/ Casual conversations 1- What do you do? What are the duties/functions/responsibilities of your job?

2- Why did this type of work interest you and how did you get started?

3- How did you get your job and what jobs and experiences have led you to your present position?

4- How long have you been working here? Can you tell me more about your experience?

5- Why did you decide to work for this specific company?

6- How does your company differ from its competitors?

7- What is the best way to enter this occupation?

8- What are the advantages of working here? Is there adequate medical care?

9- What are the major rewards/benefits (travel, money..etc..)?

10- What is the educational requirements for this job?

11- What are the salary ranges for various levels in this field? Is there a salary ceiling?

12- Are there any organizations you are expected to join?

13- Who is the departmental head/supervisor for this job? Where do you and your supervisor fit into the

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organizational structure?

14- What obligations does your employer place on you outside the ordinary work week? What social obligations go along with you job?

15- What are the types of changes are occurring in your occupation or company?

16- What kind of problems do you deal with?

17- Do you take any breaks? What time and what do you usually do during breaks?

18- How do you feel about the space you work in? The layout and the building/services?

19- How do you feel about the security and the gates and walls around the FTZ? 20- what sort of security procedures do you have to go through in order to work in the FTZ? 21- What are the security procedures that you have to go through everyday?

22- Has there been any violations or incidents?

23- Where do you come from/live? How long does it take you to come to work and go home?

24- What means of transportation do you take to come here and go home? Is it provided by the company? Do you pay for it? What time do you arrive and leave?

25- When are your holidays/weekends off work?

26- Do you have a second job? Or a side business or activity?

27- Do you feel any changes happening in the FTZ? 28- Are you in any union?

29- what are the labour laws inside the FTZ? 30- Are there any events/classes/workshops, etc. that are available for you or your family to attend (supported by the FTZ or employer)?

30- Are you allowed to go on strikes or be part of a demonstration?

31-Is there a certain target (work Quota) per day? What happens if you do not reach it?

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