Qualifying Industrial Zones (QIZs)
Qualifying Industrial Zones (QIZ) entitle goods jointly produced by Israel and Egypt to enter the United States duty free. The creation of QIZ was authorized by Congress in 1996. It amended the United State-Israel Free Trade Area Implementation Act of 1985 with the goal of promoting peace, development, and trade between Israel and the surrounding countries, namely Egypt, since it signed a peace treaty with Israel in 1979.
The purpose of QIZ is twofold: 1) to build a platform to support the Middle East peace process, and 2) to provide a means to stimulate the economy, develop and expand various sectors, and create jobs. The Qualifying Industrial Zones (QIZs) Protocol between Egypt, Israel, and the United States was signed on December 14, 2004 and implementation began on February 16, 2005.
Qualifying Industrial Zones in Egypt are located in the Greater Cairo Zone, the Alexandria Zone, the Suez Canal Zone, the Central Delta region and Upper Egypt. These five regions cover multiple districts and governorates including:
Greater Cairo: Giza, Shubra Al Kheima, Nasr City, Tenth of Ramadan City , Fifteenth of May City , Badr City , Sixth of October City, Obour City , Kalyoub City and the industrial area in Gesr El Suez.
Alexandria: including Amereya, New Amereya, Borg El Arab and Dekheila.
Suez Canal region: Port Said, Ismailya, Suez.
Central Delta region: Gharbiya, Dakahlya, Monofiya, and Damietta governorates.
Upper Egypt: Minya and Beni Suef
Originally, 11.7% was required to consist of Israeli inputs, but this was negotiated downwards to 10.5%, applicable as of January 2008. Value added may be in the form of labor or material components. Products are eligible for duty-free treatment provided they are directly exported to the United States without passing through any other location before arrival at the U.S. border.
Egypt’s designated QIZs encompass the largest industrial centers and the most important textiles and clothing manufacturers. Out of 605 registered QIZ companies, 88.4% produce textiles and clothing items while those producing processed agricultural products account for 6.4%. Beni Suef and Minya are the most recent additions to QIZ designated zones in Egypt.
QIZ exports comprise around 45% of Egypt’s total exports to the U.S. and about 2% of Egypt’s total exports. In 2015, QIZ spurred USD 895.1 million in Egyptian exports to the U.S., up 1% from 2014’s USD 886.8 million. The QIZ Protocol has resulted in a 49.5% increase in Egypt’s textiles and clothing (TC) exports to the U.S. from USD 582.6 million in 2004 to USD 871.1 million in 2015. Nine of the top 10 export categories are textile and clothing, accounting for 94% of QIZ exports. The tenth is frozen fruits and vegetable exports, accounting for 1% of QIZ exports.
(Updated May 2016)