Designates New and Expanded Zones that
Facilitate US-Egypt-Israel Cooperation
Washington, DC – U.S. Trade Representative Rob Portman
today designated a new Qualifying Industrial Zone (QIZ) in
Egypt and approved the expansion of two existing
zones. Today's actions by USTR
Portman build on the December 2004 announcement of the first three QIZs in
Egypt by the
United State following the historic agreement between
Egypt and
Israel to cooperate in the establishment of these
zones. QIZs allow for duty-free
export to the United
States of certain Egyptian goods that contain
Israeli inputs.
“Egypt's and Israel's desire to expand their
QIZs underscores the success of this program in fostering closer ties between
the people, businesses and governments of these two key Middle East countries,”
said Portman. “These zones have
helped to dramatically increase trade between
Egypt and
Israel, showing countries throughout the region the
practical benefits of peace, cooperation and economic integration.
“Today's designation follows consultations
with Congress and demonstrates President Bush's continuing commitment to
strengthening U.S. trade relations with the
Middle
East and to
encouraging growing ties between Israel and its neighbors. As with QIZs in
Jordan, we expect the zones in
Egypt to be a robust catalyst for promoting trade,
economic growth and a positive and peaceful vision of the
future."
Today’s announcement will create a new zone
-- the Central Delta QIZ -- and expand the existing Greater Cairo QIZ and Suez
Canal Zone QIZ.
Background
Qualified Industrial Zones
(QIZs)
In 1996, Congress authorized the designation
of QIZs between Israel and
Egypt, and
Israel and
Jordan.
The QIZs allow Egypt and
Jordan to export products to the
United
States duty-free if the products contain inputs
from Israel.
The purpose of this trade initiative has been to support prosperity and
stability in the Middle East by encouraging regional economic
integration.
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.
QIZs must encompass portions of
Egypt and
Israel, though the areas do not have to be
contiguous.
Since 1999, the
United
States has designated thirteen 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.
Jordan estimates that more than 35,000 jobs have
been created within its QIZs.
Investment in Jordan’s QIZs is currently at between $85-100
million and is expected to grow to $180 to $200 million. Similar benefits are expected to flow
from the QIZs in Egypt.
The establishment and expansion of QIZs in
Egypt builds on other steps recently taken by the
United
States to promote economic freedom in the
region. President Bush has proposed
the creation of a Middle East Free Trade Area (MEFTA) by 2013 to increase trade
and investment with the United
States and others in the world economy. The
United
States currently has Free Trade Agreements (FTAs)
with Israel, Jordan, and
Morocco; FTA negotiations with
Bahrain and
Oman have been concluded; and FTA negotiations
with the United Arab
Emirates are underway. The
United
States is working with
Egypt’s economic reform team to deepen our
reciprocal trade relationship. In
September, Ambassador Portman informed Congress that Egypt is one the four
countries which the United States is currently considering as candidates for
free trade agreements.
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