Qualifying Industrial Zones (QIZs)
The Qualifying Industrial Zones (QIZ) Protocol was established by the U.S. Congress in 1996 to build economic ties between Israel and its neighbors. Since the agreement took effect in February 2005, it has allowed products jointly manufactured by Egypt and Israel duty-free entry into the U.S. Eligible products must have at least 35% of their value added by QIZ factories. Egypt must contribute at least one-third (11.7%) of this value added, while Israel must contribute 10.5%. While Egypt's government held talks throughout 2017 to lower the Israeli input requirement to 8% and to expand the program’s scope to include tech companies, the protocol has remained unchanged since its inception.
Egypt’s 17 QIZs are located in Greater Cairo, Alexandria, the Suez Canal Zone, the central Delta, Beni Suef and Minya. These five regions cover multiple districts and governorates including:
- Greater Cairo Zone: Giza, Shoubra El Kheima, Nasr City, Tenth of Ramadan City, Fifteenth of May City, Badr City , Sixth of October City, El Obour City , Kalioub City and the industrial area in Gesr El Suez.
- Alexandria Zone: Borg El Arab and Dakahleyya governorate.
- Suez Canal Zone: Port Said, Ismailia and Suez.
- Central Delta region: Gharbeyya, Monofeya, and Damietta governorates.
- Upper Egypt: Minya and Beni Suef governorates.
There are over 1,000 registered QIZ companies, of which the vast majority produce textiles and clothing items. Because U.S. tariffs on textile and apparel goods are relatively high, production of these goods in QIZs is particularly attractive. Other eligible sectors include processed agricultural foods, machinery and equipment, base metals, chemicals, plastics, leather and raw materials such as glassware, marble and granite.
QIZ exports made up 35% of Egypt’s total exports to the U.S. and 53% of non-oil exports. In 2018, QIZ exports totaled USD 877.9 million, a 17% year-on-year increase from USD 751.7 million in 2017. Textile and clothing exports represented 96% of all of Egypt’s QIZ exports in 2018, while chemical, minerals and fertilizers accounted for 2%. Processed agricultural foods, iron and steel, and glass products took up the remaining 3% in 2018. Egypt is aiming to increase QIZ exports by nearly 15% to USD 1 billion in 2019.