Egypt-U.S. Economic Relations
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Qualifying Industrial Zones (QIZs)

The Qualifying Industrial Zones (QIZs) protocol between Egypt, Israel and the U.S. was signed on December 14, 2004, providing quota and duty-free access to U.S. markets for products manufactured in specific industrial zones, provided 35% of the commodity’s value is manufactured in an Egyptian QIZ, of which 11.7% consists of Israeli inputs. The share of Israeli inputs has recently been negotiated downwards to 10.5%, applicable as of January 2008. Products are eligible for duty-free treatment provided they are directly exported to the U.S. without passing through any other location before arrival at the U.S. border. Value added may be in the form of labor or material components.

Designated QIZs in Egypt are located in four geographic regions. They encompass Egypt's largest industrial centers, including eight public free zones. Greater Cairo and Alexandria include Egypt's most important textile and clothing manufacturers. Recently, Egypt submitted a document to the United States requesting that QIZ benefits be extended to Upper Egypt.

Investment in the QIZ is particularly attractive to industries subject to high tariffs in the U.S. market, particularly textiles and clothing. Consequently, 79.6% of QIZ companies produce textiles and clothing articles while those producing prepared foodstuff are only 4%. However more processed food, base metals and furniture producers are beginning to get involved. Several Turkish and Asian investors have begun to locate in Egypt QIZs.

The QIZ protocol has encouraged Egyptian companies without any previous export experience to enter the U.S. market. The protocol, which started with a total of 397 companies, currently includes 705 companies.

Implementation of the QIZ protocol began upon ratification by the Egyptian and Israeli sides on February 16, 2005. Since its ratification, the QIZ protocol helped increase Egypt’s total exports of textiles and clothing (TC) to the U.S. to $875.8 million in 2007, from $582.6 million in 2004. Textile and clothing exports under QIZ increased by more than two-fold since 2005 and they now comprise 79% of Egypt’s total TC exports to the U.S. Top U.S buyers from QIZ exporters include The Gab Inc, Levi Strauss, Wal-mart, Gloria, Van Hausen, V.F Jeanswear, & JC Penny.

(Last Updated May 7, 2008)

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