QIZ IN EGYPT Supervise by :Dr. Amir Nasry Prepared by :Mohamed Shehab

Historical background The origins of QIZ dates back to the second half of nineties, by the Congress decision, No of 1996, which authorized the U.S. president the authority to allow Egypt and Jordan to export products to the United States without being subject to customs duties, provided that these products contain components from Israel, in order to support the process of Peace in the Middle East, and to encourage regional economic integration,

The signing of such agreement between zione entity, Jordan and the United States in 1997, and began working out in 1998, Egypt has been refusing to sign the QIZ agreement with Israel until it signed at last. The agreement was signed in Cairo in 14 th December 2004 between Egypt, zione entity and the United States.

Goal of the QIZ Agreement This convention allows the establishment of industrial zones qualified to export its products to the United States where the commodities of these zones will enjoy free duty access to the U.S market. Provided the contribution of each party by 11.7local ingredients.

This figure represents one third of the prescribed percentage (35%)set by the trade agreement between the United States and zione entity granting the zione entity customs exemptions to the U.S market. The convention also allow the zione entity to share this ratio whether with Egypt or with Jordan.

Benefits from the Agreement At the official level, Industries expected to benefit from these arrangements are: weaving, leather and furniture, chemicals, construction materials and manufactured goods, food and any other industries agreed upon.

The officials believe that the Convention will increase the capacity of the Egyptian economy performance and competition and providing new job opportunities. In the case of Egypt, it will give impetus to the Egyptian exports of textiles and garments, and could save more than 700 of the factory closures and provide more than 400 thousand jobs over the next five years. The total of foreign investments to these areas to be more than 5 billion dollars over two years, rising to 10 billion after five years and provides 250 thousand jobs in the spinning and weaving only.

"Without QIZs, Egyptian garment exports to the US would have actually decreased in 2005 under the pressure of Chinese competition," says Wael Samir, Investment Promotion & Matchmaking Manager of the QIZ Unit of the Ministry of Trade & Industry. "And the figures for 2006 indicate that QIZs are indeed a growth engine.”

A Step Towards Peace and Stability Some supporters believe that the protocol is a huge step towards peace and stability in the region. “This is a step for Egypt’s interest, towards peace, and in Palestine’s interest,” Aly Salem, a famous Egyptian playwright, said. For him, creating mutual interests between countries in the region, including Israel, will create stability and will end the threat of war.

QIZ in Egypt The convention provides for establishing of a qualified industrial zones in Egypt through several phases, the first one will include three phases: - Great Cairo - Alexandria, Borg Al-Arab and Al-Amerya - The industrial zone in Port Said The zones are areas of land predetermined and allocated for products to be exported to the united states markets without fees, maximum amounts or quotas besides leaving the door opened to increase these qualified industrial zones.

Egypt exports to the U.S under the QIZ Egyptian exports of textiles and ready-made garments to the US have risen exponentially since 2004, according to the trade figures of the United States International Trade Commission (USITC). Specifically, Egyptian exports in this sector rose from $579 million in 2004 to $626 million in 2005 and $819 million in 2006, reflecting growth rates of 8% as of April 2005, and 31% as of May 2006.

Source: United States Trade Representative (USTR)(2009) available at

Rising interest from US importers There is a definitely rising interest from US buying offices in sourcing apparel from Egypt. Among the many American companies or brands now ordering Egyptian products are Wal-Mart, Liz Claiborne (who returned to Egypt after six years of absence), Target, Fruit of the Loom, Levi’s, Lee, Gap, Banana Republic, Tommy Hilfiger, Gloria Vanderbilt, etc.

Opponents claim it is “A Political Agreement” opponents believe that the out come of the QIZ convention will be close economic cooperation with the zione entity will lead later to reduce and restrict the Egyptian role supporting the Palestinian cause as they believe it is an unjustified legislation to speed up the normalization with the zione entity. As it would open the door for the zione entity to penetrate the Egyptian economy and the Egyptian industry.

The opponents believe that the QIZ convention serve only the zione entity interest. It also serve the zione entity intention to integrate in the middle east area as a political and economical member and to break the economical and political isolation.

People on the streets of Cairo also feel resentment towards the agreement. “We should not contribute to anything that would benefit Israel,” Adel Hosny said. “We have been fighting Israel all our lives. Allowing them to enter our economy reminds me of the beginning of the crisis in Palestine,” said Mohammad Awad. “We will end up like Palestine,” he added.

Thank you