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What
is an
Egyptian QIZ?
Under U.S. law, Egypt and Israel can
establish
Qualified Industrial Zones or “QIZs” and export
products
manufactured in these QIZs to the United
States
duty-free. In
order for a QIZ article to gain duty-free entry, QIZ factories must add
at least 35% to the value of the article. This 35% minimum
content figure can include costs incurred in Israel, Egypt, or
the United
States.
By agreement
between Egypt and Israel, Egypt and Israel must
each contribute
at least one-third (11.7%) of the 35% minimum content requirement.
QIZs
must encompass portions of Egypt and Israel,
though the areas do
not have to be contiguous. The United
States has
approved the
request of Egypt and Israel to
designate three
QIZs -- the Greater Cairo QIZ; the Alexandria QIZ; and the Suez
Canal Zone
QIZ that includes
an industrial area of Port
Said.
The
President has given the United States Trade Representative (USTR) the
authority to approve QIZs, and USTR has announced its approval of the
Egypt-Israel QIZ plan. Until 2004, QIZs have been established
only in Jordan.
On December 10, 2004,
the Bush Administration announced
the formation
of Qualified Industrial Zones (QIZs) in Egypt, setting in motion an
historic partnership between Egypt and Israel that will foster economic
cooperation between the two countries and provide opportunities for US
companies to import products--including apparel, footwear and other
items that normally carry high duty rates--from Egypt duty-free.
Under the Egyptian QIZ program, which is a byproduct of the US-Israel
Free Trade Agreement (USIFTA), goods manufactured in designated
industrial areas in Egypt utilizing Israeli inputs will receive
duty-free treatment when imported into the United States.
Along
with
affording US importers a break on duty, the program will help Egyptian
textile and apparel producers remain competitive and protect or reclaim
their US market share as quotas are eliminated in 2005.
On December 14,
Israel, Egypt and the United States have
signed the
agreement leading to the establishment of Qualified Industrial Zones in
Cairo, Egypt. The areas to be recognized
as Qualified Industrial Zones are located around Cairo, Alexandria and
the Suez Canal.
Goods will be
exported duty free from these areas to the United States.
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Assures
Duty and Tariff free access
to the US market.
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No
Quotas on export to U.S. market
for products manufactured in the QIZ.
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Total
Income and Social Tax
exemption.
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Imported
materials are not subject
to Custom Duties.
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No
restriction on Project ownership.
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No
restriction on Foreign Currency
transactions.
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No time
limits or renewal
requirements for QIZ's.
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Full
repatriation of capital and
profits and salaries.
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U.S. customs tariff on
certain goods
entering the USA
that
will be saved by the Investor in the QIZ for certain items are as
follows:
1.
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From
25% up to 48% on
Footwear:Waterproof , with metal Toe-cap, covering
the knee, Sports Footwear, designed for use without closure, Work
Footwear,
Footwear with open toes or open heels, Footwear of the slip-on type,
and
parts of Footwear.
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2.
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From
20% up to 33.6%
on Woven
Fabrics, Textiles, Garments, Swimwear, Body
suits, Shirts, Trousers, Suits, Jackets, Raincoat, Underwear, Blouses,
Skirts,
Blazers, Ski-suits, Anoraks, for both women & men.
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3.
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From
18% up to 34% on
Tableware,
Kitchenware, other Household and Toilet
articles of Porcelain or China, Hotel or Restaurant ware, Glassware
,Ceramic
tableware, Glass ceramics, Drinking glasses, other Glassware of Lead
crystal.
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4.
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From
6% to 20% on
Trunks, Suitcases,
Attaché Cases, Wallets, Handbags.
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5.
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From
10% to 20% on
Cheeses.
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Qualifying
your product:
To qualify a product in the QIZ it must comply with the requirements:
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The
product must be a
new and
different article of commerce that has
been grown, produced or manufactured in the QIZ. With respect to
apparel products, this requirement can generally be met if fabric
components are assembled together or the product is knit to shape in
the QIZ. |
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The
article must be
imported
directly from the QIZ, Israel, the West Bank or Gaza Strip (the USIFTA
region). |
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At
least
35% of the appraised
value of a product at the time it enters
the US must be attributable to materials produced, and direct costs of
processing operations performed, in the USIFTA region. Also, US
materials may account for up to 15% of the appraised value of the
finished goods. |
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The
agreement between
Egypt and
Israel provides that at least 11.7% of the value of the covered
products must be Israeli. |
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Important
Note:
In apparel manufacturing, imported fabric can be considered as local
(made
in QIZ) raw material if double substantial transformation occurs
locally.
Double substantial transformation in the case of fabric can be cutting
and
sewing. It is important to note that the cost of the fabric that is cut
and
sewn locally will be admissible when calculating the 35% minimum value
added
content requirement (the primary requirement). It will not. However, be
taken
into consideration when calculating the respective share of each
country
under the first method.
How
can we help?
There
are basically four different services that we
provide.
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Sourcing
for USA Companies
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Partnerships
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Turn-Key
Operations
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Sourcing for
Egyptian Companies
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Service
given
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Our
clients provide us with the
product
specifications they want to produce in the QIZ and we deliver these
products
to the client
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Our
clients define the nature of the
partner factory they seek in the QIZ and we will find the partner
production facility
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Our
clients define the kind of
factory they need and we will furnish them with a fully operational
production facility
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Our
clients provide us with the
product
specifications they want to buy in Israel so as to satisfy QIZ
requirements and we deliver these
products
to the client |
Who
needs this service?
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U.S.A.
medium sized importers
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Producers
of fabric in Asia who want
to by-pass the quota system and high U.S. custom tarifs
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Entrepreneurs
who want to take
advantage of the low production costs and QIZ benefits
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Egyptian
large and medium sized producers who are in the qualified areas.
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Benefits
of QIZs
Since
1999, thirteen QIZs have been designated in Jordan.
During that
period exports from Jordan to
the United
States grew
from $31 million
in 1999 to $674 million in 2003.
QIZs
are Jordan’s
strongest job
creator. Jordan
estimates that more
than 35,000 jobs have been created in the QIZs. Investment in Jordan’s
QIZs is
currently at between $85-100 million and is expected to grow to $180 to
$200 million. Similar benefits are expected to flow from the
QIZs
in Egypt.
| CONTACT
US |
| Tel: |
+ 972
3 674 16 76 |
| Fax: |
+ 972
3 674 17 76 |
|
qiz@elyon.com |
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