Haaretz (Israel) 01/11/2005

U.S. designates new Qualifying Industrial Zone in Egypt

By Shmuel Rosner, Haaretz Correspondent

(Washington) - United States trade representative Rob Portman designated on Monday a new Qualifying Industrial Zone (QIZ) in Egypt and approved the
expansion of two existing zones.

QIZs, which Congress first designated in 1996 between Jordan and Israel and Egypt and Israel, give the two Arab nations the right to export products to the United States duty-free if the products contain inputs from Israel.

Following Monday’s announcement, Israel and Egypt will create a new zone -the Central Delta QIZ - and expand the existing Greater Cairo QIZ and Suez Canal Zone QIZ.

Portman’s announcement Monday builds on the United States’ December 2004 designation of three zones in Egypt following an agreement between Egypt and Israel to cooperate in the establishment of the zones.

In order for a QIZ article to gain duty-free entry, QIZ factories must
add at least 35 percent to the value of the article. This 35 percent
minimum content figure can include value added in Israel, Egypt, or the
United States. The zone must be built in parts of both Israel and its neighboring nation, though the areas do not have to be contiguous.

"Egypt’s and Israel’s desire to expand their QIZs underscores the
success of this program in fostering closer ties between these two key Middle East countries," said Portman.

Monday’s decision follows consultations with Congress. According to Portman, the U.S. expects the zones in Egypt to be a "robust catalyst for promoting trade," as the existing QIZs in Jordan have been.

Since 1999, the United States has designated 13 QIZs in Jordan. The United States and Jordan negotiated a full FTA that Congress approved in 2001. Exports from Jordan to the United States grew from $31 million in 1999 to $1.1 billion in 2004. Jordan’s QIZs are the country’s strongest engine of job growth.