Israel and Egypt agreed last Wednesday to double duty-free textile exports to the United States to $2 billion within the next three years, according to Israeli Haaretz newspaper.
Gabi Bar, the head of the Middle East desk at Israel’s Economy Ministry told the Israeli newspaper; “In addition we agreed to explore adding other industrial sectors [to the QEZ framework] in which Israeli-Egyptian collaboration would have a competitive advantage, such as food and plastics, so that the agreement would contribute more to the Egyptian economy, to Israeli industry and peaceful relations between Israel and Egypt.”
Ohad Cohen of the Economy Ministry’s Foreign Trade Administration said that “there’s a growing recognition in Egypt that the QEZs can serve as a growth engine,” and that “the agreement helps employment in factories in [Israel’s] periphery.”
The U.S. Qualifying Economic Zone agreement, which allows Egyptian textile makers to sell their goods duty-free in the United States as long as Israel contributes 10.5% of the value, was signed in February 2005 aiming to encourage economic ties between Israel and Egypt.
Israel contributed an estimated $105 million worth of goods to QEZ plants in Egypt in 2014, which make up three quarters of Israeli exports to Egypt. The doubling in QEZ exports would therefore significantly increase trade between Israel and Egypt.
QEZ plants in Egypt directly employs an estimated 280,000 workers in 14 industrial zones recognized by the United States as QEZs, while thousands of others are employed through sub-contractors and other providers.
