A delegation of 11 Egyptian industrialists will arrive tomorrow to discuss establishing an Egypt-Israel Qualifying Industrial Zone (QIZ) on Egyptian territory. The aim is to establish a QIZ similar to the ones in Jordan, in order to jointly export duty-free goods to the US.
The delegation are guests of Manufacturers Association president Oded Tyrah. Tyrah met Federation of Egyptian Industries executive director Loutfi Mazhar in Tunis last week.
Manufacturers Association foreign trade and international relations division director Moshe Nahum estimates joint exports could reach $70 million in the first few years. Most exports would consist of textiles, food, footwear, leather, and furniture.
This is the first delegation of Egyptian industrialists to visit Israel in nine years. the visit follows the visit by Egyptian Foreign Minister Ahmed Maher last week.
In response to a question about the potential scale of exports to the US from an Egypt-Israeli QIZ, Nahum said that following the signing of the QIZ agreement by the US, Israel, and Jordan five years ago, 11 QIZs had been set up in Jordan, with a total of 45 enterprises providing 35,000 jobs. The QIZs export $400 million worth of goods to the US a year, although direct Israeli input total only $40 million.
Nahum told "Globes" that Minister of Industry Trade and Labor Ehud Olmert fully backed the idea of an Israel-Egypt QIZ.
Nahum said when the QIZ agreement by the US, Israel, and Jordan was signed, the intention was to include Egypt, which was uninterested in participating at the time. Egypt does not have a free trade agreement with the US, but exports of jointly manufactured items with joint added value would enjoy duty-free status.
The QIZ agreement with Jordan stipulated a minimum Israeli added value of 11.7% out of a total added value of 35%. Israel later agreed to amend the agreement, reducing the Israeli added value to 8%. Israel and Jordan are currently negotiating on Israel's request to restore the 11.7% level for at least some goods, especially textiles, while Jordan wants to lower the Israeli proportion to 5%.
Israeli manufacturers claim that at the current value added level, Jordanian manufacturers only need to buy supplementary components from Israel, such as buttons, zippers, and packaging, to achieve eligibility for duty-free exports to the US, without any real joint manufacture of goods.
As for the planned QIZ agreement with Egypt, Nahum said Israeli manufacturers want "an agreement for genuine joint manufacture, not a 'cosmetic' agreement." The US demands 35% joint added value; the argument will be over the Israeli proportion of the added value. Israel will want it set at half, i.e. 17.5%, while Egypt will want it to be less.
Published by Globes [online] - www.globes.co.il - on December 24, 2003