A delegation from Egypt's Ministry of Foreign Trade arrived in Israel this week for the conclusion of talks on an agreement for producing joint tax-free exports for the United States.
Negotiations come nearly a decade after the Qualifying Industrial Zones (QIZ) agreement was approved by the US government led by former President Bill Clinton. The QIZ legislation allows for the establishment of joint industrial areas where Egyptian goods with Israeli content can gain tariff-free access to the US.
Contacts between the two countries began two months ago at the initiative of the Egyptians, reported Haaretz. An agreement would include the establishment of a QIZ on Egyptian territory and the tax-free export of products within the framework of a special tariff reduction given to Israel. As a result, Egyptians would not have to pay the excise tax they normally cover on exports.
Negotiations are now focusing on the percentage of content that will be contributed by the Israeli side. Officials from the Jewish state have proposed a 17.5 percent component share of products produced, while the Egyptians would like this to be reduced to eight percent. Under the US tariff agreement, any product containing at least 35 percent of Israeli components is eligible for tax-free status.
The QIZ initiative, launched in 1996, extends to peace partners of Israel the preferential access to the United States market that Israel gained under the 1985 American-Israeli free trade agreement. It aimed to encourage Arabs and Israelis to create a base of businesses joined by common interests to drive further development. Jordan was the first Arab state to conclude a QIZ agreement in 1997.
For Egypt, dealing with Israel comes at a very high political price. There is a high degree of sensitivity among Egyptians to any form of economic cooperation with Israel. Previous experiences have shown that cooperation between both countries has given material for opposition forces to shift the anger of the masses, initially protesting against the Jewish state, and then toward the government in Cairo. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
