U.S., Egypt, Israel to hold QIZ tripartite meeting in Cairo by year-end

Egyptian and Israeli officials held last week their joint commission meeting in Cairo to discuss ways to expand the reach of the Qualified Industrial Zones (QIZ) protocol.

The two countries agreed to have a tripartite meeting in Cairo with U.S. officials to boost cooperation under the QIZ protocol by the end of the current year, senior sources near from the talks told Amwal Al Ghad on Tuesday.

The Israeli delegation included Gabby Bar, co-chairman of the QIZ for Israel’s Ministry of Economy and Industry, Amira Oron, a Ministry of Foreign Affairs official for Middle East economic relations, along with other high-profile officials in the Israeli customs authority and private sector.

The delegation met with senior officials in the Egyptian Ministry of Trade and Industry, members in the U.S. embassy in Cairo, and some Egyptian businessmen including Hani Cassis, chief executive of paper products maker Mintra and former chairman of the Egyptian U.S. Business Council.

Signed in late 2004, the QIZ agreement granted Egyptian clothing manufacturers zero-tariff access to the US market as long as their products contained at least 10.5 percent Israeli input.

QIZ agreement was established by the U.S. Congress in 1996 to build economic ties between Israel and its neighbours.

Qualifying Industrial Zones in Egypt are currently located in six regions; Cairo, Alexandria, Suez, Central Delta, Minya, and Beni Suef, Al Rabie said.

Since the agreement took effect in February 2005, it has allowed products jointly manufactured by Egypt and Israel duty-free entry into the U.S. Eligible products must have at least 35 percent of their value added by QIZ factories. Egypt must contribute at least one-third (11.7 percent) of this value add, while Israel must contribute 10.5 percent.

At the beginning of April 2017, Egypt’s government held talks to lower the Israeli input requirement to 8 percent and to expand the reach of the QIZ agreement to include leather and some food products to export.

As of February 2017, there were 961 registered QIZ companies, out of which the vast majority—765 companies, or 79.6 percent —produce textiles and clothing items. Of these, 196 produce ready-made garments. Because U.S. tariffs on textile and apparel goods are relatively high, production of these goods in QIZs is particularly attractive.

In addition, 70 companies (7.3 percent) operate in the processed agricultural products sector. Alexandria has the highest concentration of companies, hosting 235 companies (24.5 percent), while 10th of Ramadan has the next highest concentration with 166 companies.

Egypt’s QIZ exports to the U.S. grew 24 percent y-o-y in the first five years of the current year to $370 million.

Ashraf Al Rabie, head of Egypt’s Qualified Industrial Zones, meets with Gabby Bar, co-chairman of Israel’s QIZ and members of the Israeli delegation visiting Cairo.