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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.

Assures Duty and Tariff free access to the US market.

No Quotas on export to U.S. market for products manufactured in the QIZ.

Total Income and Social Tax exemption.

Imported materials are not subject to Custom Duties.

No restriction on Project ownership.

No restriction on Foreign Currency transactions.

No time limits or renewal requirements for QIZ's.

Full repatriation of capital and profits and salaries.

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:

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.
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.
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.
From 6% to 20% on Trunks, Suitcases, Attaché Cases, Wallets, Handbags.
From 10% to 20% on Cheeses.

Qualifying your product:
To qualify a product in the QIZ it must comply with the requirements:

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.

The article must be imported directly from the QIZ, Israel, the West Bank or Gaza Strip (the USIFTA region).

 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.

The agreement between Egypt and Israel provides that at least 11.7% of the value of the covered products must be Israeli.

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.

Sourcing for USA Companies
Turn-Key Operations
Sourcing for Egyptian Companies
Service given
Our clients provide us with the product specifications they want to produce in the QIZ and we deliver these products to the client
Our clients define the nature of the partner factory they seek in the QIZ and we will find the partner production facility
Our clients define the kind of factory they need and we will furnish them with a fully operational production facility
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?
U.S.A. medium sized importers
Producers of fabric in Asia who want to by-pass the quota system and high U.S. custom tarifs
Entrepreneurs who want to take advantage of the low production costs and QIZ benefits
Egyptian large and medium sized producers who are in the qualified areas.

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.


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