Cold peace, meager trade

Israel's exports to Egypt totaled $147 million in 2010, less than exports to Jordan.

Israeli-Egyptian trade figures show an increase in the past two years, partly because of the qualified industrial zone (QIZ) agreement with the US. Israel's imports from Egypt exceed Israel's exports to it. The Israel Export and International Cooperation Institute says that bilateral trade totaled $500 million in 2010, 24% more than in 2009.

Israel's imports from Egypt totaled $355 million in 2010, and exports totaled $147 million, 10% more than in 2009. "In the past three years, the rate of growth of exports to Egypt slowed, even as imports continued to increase because of the natural gas purchasing agreements," says the Export Institute.

Export Institute director Avi Hefetz said, "Israel's economic relations with Egypt are based on interests of businesses, and as things stand now, there is no reason for these relations to change because of the troubles in Egypt."

Despite the size of the Egyptian market, a country of 81 million residents, Israel's exports to it are meager. They are less than Israel's $184 million in exports to Jordan, a country of 6.5 million people.

The Export Institute's figures nonetheless show an improvement in Israeli-Egyptian business relation. In 1980, a year after the peace treaty, Israeli exports to Egypt totaled $2.7 million. Exports gradually rose to $58 million by 2004. Imports were about the same.

The Export Institute says that 2004 was the turning point, following the QIZ agreement between Israel, Egypt, and the US. The agreement gave free-trade status for exports to the US of certain Egyptian goods that contain Israeli inputs. The Export Institute believes that the agreement created a strong incentive for the tightening of relations between Israeli and Egyptian companies.

Industry sources say that most Israeli exports to Egypt are textiles and textile products for QIZ enterprises, as well as chemicals for agriculture.

Hefetz told "Globes" that Israel never marked Egypt as an export target, and that analysis of the data was based on market surveys. Feasibility studies found that there was no worthwhile potential for Israeli exports to Egypt, and that it was better to maintain the status quo.

Egypt is Israel's 38th largest export market, behind Latin American and Asian countries. "We see a strong agricultural sector in Egypt, and we direct most of our exports of inputs and raw materials to that sector," said Hefetz.

Published by Globes [online], Israel business news - - on January 30, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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