Transcript QIZ in Egypt

QIZ IN EGYPT
Supervise by :Dr. Amir Nasry
Prepared by :Mohamed Shehab
Historical background
 The origins of QIZ dates back to the second half of nineties,
by the Congress decision, No. 6955 of 1996, which
authorized the U.S. president the authority to allow Egypt and
Jordan to export products to the United States without being
subject to customs duties, provided that these products
contain components from Israel, in order to support the
process of Peace in the Middle East, and to encourage regional
economic integration,
 The signing of such agreement between zione entity , Jordan
and the United States in 1997, and began working out in
1998, Egypt has been refusing to sign the QIZ agreement
with Israel until it signed at last.
 The agreement was signed in Cairo in 14th December 2004
between Egypt, zione entity and the United States.
Goal of the QIZ Agreement
 This convention allows the establishment of industrial zones
qualified to export its products to the United States where
the commodities of these zones will enjoy free duty access to
the U.S market. Provided the contribution of each party by
11.7local ingredients .
 This figure represents one third of the prescribed percentage
(35%)set by the trade agreement between the United States
and zione entity granting the zione entity customs
exemptions to the U.S market. The convention also allow the
zione entity to share this ratio whether with Egypt or with
Jordan .
Benefits from the Agreement
 At the official level, Industries expected to benefit from these
arrangements are: weaving, leather and furniture, chemicals,
construction materials and manufactured goods, food and any
other industries agreed upon.
 The officials believe that the Convention will increase the
capacity of the Egyptian economy performance and
competition and providing new job opportunities .
 In the case of Egypt, it will give impetus to the Egyptian
exports of textiles and garments, and could save more than 700
of the factory closures and provide more than 400 thousand
jobs over the next five years.
 The total of foreign investments to these areas to be more than
5 billion dollars over two years, rising to 10 billion after five
years and provides 250 thousand jobs in the spinning and
weaving only.
 "Without QIZs, Egyptian garment exports to the US would
have actually decreased in 2005 under the pressure of
Chinese competition," says Wael Samir, Investment
Promotion & Matchmaking Manager of the QIZ Unit of the
Ministry of Trade & Industry. "And the figures for 2006
indicate that QIZs are indeed a growth engine.”
A Step Towards Peace and Stability
 Some supporters believe that the protocol is a huge step
towards peace and stability in the region. “This is a step for
Egypt’s interest, towards peace, and in Palestine’s interest,”
Aly Salem, a famous Egyptian playwright, said. For him,
creating mutual interests between countries in the region,
including Israel, will create stability and will end the threat of
war.
QIZ in Egypt
 The convention provides for establishing
of a qualified
industrial zones in Egypt through several phases, the first one
will include three phases:
- Great Cairo
- Alexandria, Borg Al-Arab and Al-Amerya
- The industrial zone in Port Said
 The zones are areas of land predetermined and allocated for
products to be exported to the united states markets without
fees, maximum amounts or quotas besides leaving the door
opened to increase these qualified industrial zones.
Egypt exports to the U.S under the QIZ
 Egyptian exports of textiles and ready-made garments
to the US have risen exponentially since 2004,
according to the trade figures of the United States
International Trade
Commission
(USITC).
Specifically, Egyptian exports in this sector rose from
$579 million in 2004 to $626 million in 2005 and
$819 million in 2006, reflecting growth rates of 8%
as of April 2005, and 31% as of May 2006.
Figure 4: Egyptian Exports of Textiles and Ready Made Garments to the US
(million US $)
1000
900
800
700
600
500
400
300
200
100
0
2000
2001
2002
2003
2004
2005
2006
2007
Source: United States Trade Representative (USTR)(2009) available at www.ustr.gov
2008
Rising interest from US importers
 There is a definitely rising interest from US buying
offices in sourcing apparel from Egypt.
 Among the many American companies or brands now
ordering Egyptian products are Wal-Mart, Liz Claiborne
(who returned to Egypt after six years of absence),
Target, Fruit of the Loom, Levi’s, Lee, Gap, Banana
Republic, Tommy Hilfiger, Gloria Vanderbilt, etc.
Opponents claim it is “A Political Agreement”
 opponents believe that the out come of the QIZ convention
will be close economic cooperation with the zione entity will
lead later to reduce and restrict the Egyptian role supporting
the Palestinian cause as they believe it is an unjustified
legislation to speed up the normalization with the zione
entity.
 As it would open the door for the zione entity to penetrate
the Egyptian economy and the Egyptian industry.
 The opponents believe that the QIZ convention serve only
the zione entity interest. It also serve the zione entity
intention to integrate in the middle east area as a political and
economical member and to break the economical and
political isolation.
 People on the streets of Cairo also feel resentment towards
the agreement. “We should not contribute to anything that
would benefit Israel,” Adel Hosny said. “We have been
fighting Israel all our lives. Allowing them to enter our
economy reminds me of the beginning of the crisis in
Palestine,” said Mohammad Awad. “We will end up like
Palestine,” he added.
Thank you