The trade agreement has entered the phase of negotiations with the US and Israel
Hatem Saleh, Egyptian Minister of Industry and Foreign Trade, reaffirmedlast week that Egypt has entered negotiations with the United States and Israel to amend the Qualified Industrial Zones (QIZ) trade agreement.
Saleh has called on the Israeli side to reduce the Israeli component in the QIZ agreement from 10.5% to 8.5%.
The three nations entered into the QIZ agreement in December 14th2004. The deal exempts Egyptian exports to the United States from the quota system that the US applies to all other countries, provided the Egyptian exports contained an Israeli component of 11.7%, an amount that was reduced to 10.5% in 2007.
Egypt’s economy is continuing to struggle in the wake of last year’s popular uprising. Saleh said amending the QIZ agreement would provide an economic benefit to Egypt’s raw materials sector. Press sources note that about 700 factories in Egypt are currently operating in 15 designated QIZs, employing some 100,000 workers, mostly in textile and apparel production.
In 2004, the United States, in support of joint industrial activities with Israel, granted Egypt with the so-called Qualifying Industrial Zones (QIZ); special zones whose products can enter the American market duty-free as long as they respect the relevant rules of origins. In the Egyptian case, this implies a minimum of 35% local content, of which at least 11.7% should be Egyptian content, and 10.5% Israeli content. The QIZ have been a remarkable success.
However, the QIZ—while supporting an Egyptian textile industry, have not played any role in deepening the economic reforms that would have been supported by a free trade agreement.
