USTR - USTR Portman Announces Additional Efforts To Support Trade And Development In The Middle East
Office of the United States Trade Representative

 

USTR Portman Announces Additional Efforts To Support Trade And Development In The Middle East
10/31/2005


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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