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 (12%) of this value added, while Israel must contribute 11%. While Egypt’s government held talks throughout 2017 to lower the Israeli input requirement to 8% and expand the program’s scope to include tech companies, the protocol has remained unchanged since its inception. In Q4 2019, the QIZ joint committee approved 18 new companies, bringing the total number of registered companies to 1,048. In October 2019, a protocol was signed between the QIZ unit and the Egyptian Customs Authority to allow for the electronic exchange of the qualified companies’ trade information.
Egypt’s 15+ QIZs are located in Greater Cairo, Alexandria, the Suez Canal zone, the central Delta, Beni Suef and Minya. The vast majority of QIZ companies produce textiles and apparel as the U.S. tariffs on these goods are relatively high, making the QIZ’s duty-free status particularly attractive for this industry. Other eligible sectors include processed foods, machinery and equipment, base metals, chemicals, plastics, leather and building materials such as marble and granite.
QIZ products made up 32% of Egypt’s total exports to the U.S. and 51% of non-oil exports. In 2019, QIZ exports hit the USD 1 billion mark, a 15% increase from USD 880.2 million in 2018. Textile and clothing represented 97% of all of Egypt’s QIZ exports in 2019, while chemicals, minerals, fertilizers, glass and agricultural products accounted for the remaining 3%.