U.S., Egypt, Israel in new round of talks to review QIZ deal in Nov.

Egypt, Israel, and United States will hold in November their periodic joint committee meeting to adjust the Qualifying Industrial Zones (QIZ) treaty.

Egypt seeks to reduce the required Israeli input in products exported under QIZ to 8 percent, from 10.5 percent as well as to include new industrial zones in Upper Egypt to the treaty.

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.

United States has suggested to include the information technology and communications sector in the QIZ agreement during a previous joint committee meeting in Washington last June, said Ashraf Al Rabie, Head of the QIZ Division at the Egyptian Ministry of Trade, in a statement on Monday.

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

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.

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.

There are around 960 factories, located in Cairo, Alexandria, Suez, Delta, Minya, and Beni Suef, currently export goods to the U.S. duty-free, under the QIZ.

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.