Egypt is currently engaged in negotiations with the United States and Israel to “adjust” the Qualifying Industrial Zones (QIZ) treaty between the three countries, Egyptian Trade and Industry Minister Hatem Saleh said on Monday.
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 per cent Israeli input.
The Egyptian government seeks to reduce the stipulated Israeli content requirement to 8 per cent, Saleh told reporters at a Monday investment conference organised by Beltone Financial in Cairo.
A reduction in Israeli component requirements, say Egyptian observers, would benefit Egypt’s raw-materials sector.
Around 700 factories in Egypt are currently operating under the QIZ agreement, employing some 100,000 workers, most of them Egyptians. Total Egyptian exports from QIZ-based factories – most of which goes to the US market – amounted to some $1 billion in 2011.
Following the ouster of president Hosni Mubarak early last year, many observers expected the QIZ arrangement to be cancelled – not unlike what happened to a natural gas export deal with Israel, which was scrapped by Egypt in April.
A year and a half after Egypt’s Tarhir Square uprising, however, the QIZ deal – deemed controversial by some due to the Israeli involvement – remains intact.
Saleh’s recent comments, meanwhile, appeared to put paid to such speculation about the QIZ deal’s fate.
According to BDI Coface, Israel’s largest business information group, the abrogation of the QIZ treaty could cost Egypt up to 70,000 jobs at QIZ-associated factories.
In its first four years of operation, Egypt’s QIZ arrangement with the Tel Aviv regime resulted in a more than tenfold increase in US-bound Egyptian textiles and ready-made garments exports.