In 1996, U.S Congress authorized designation of qualifying industrial zones (QIZ's) between Israel and Jordan, and Israel and Egypt. The QIZ's allow Egypt and Jordan to export products to the United States duty-free if the products contain inputs from Israel (8% in the Israeli-Jordanians QIZ agreement, 11.7% in the Israeli-Egyptian QIZ agreement). The purpose of this trade initiative has been to support the prosperity and stability in the Middle East by encouraging regional economic integration.

In order for a QIZ article to gain duty-free entry, QIZ factories must add at least 35 percent to the value of the article. This 35 percent minimum content figure can include value added in Israel, Egypt/Jordan, or the United States. QIZs must encompass portions of Egypt/Jordan and Israel, though the areas do not have to be contiguous.

The immediate saving for an investor in the QIZ is the amount of the U.S. tariff on any specified good. Generally speaking, U.S. tariffs on clothing and textile goods are relatively high, which makes production of these goods in QIZs especially attractive.

Since 1998, the United States has designated thirteen QIZs in Jordan; On March 6th, 1998, the United States Trade Representative (USTR) designated Jordan's Al-Hassan Industrial Estate in the northern city of Irbid as the world's first QIZ.

Other industrial parks designated by the U.S. government as QIZs in Jordan include; the Al-Hassan Industrial Estate (Irbid), and Al-Hussein Ibn Abdullah II Industrial Estate (Al Karak), both owned and operated by the Jordan Industrial Estate Corporation. Also, the now privately owned and operated Al-Tajamouat Industrial Estate (Amman), Ad-Dulayl Industrial Park (near Zarka), Jordan Cyber City (Irbid), Al-Qastal Industrial Zone (Amman), and El-Zai Ready-wear Manufacturing Co. sub-zone (Zarqa).

Other QIZs expected to be operational in the near future include the Gateway QIZ (northern Jordan-Israel border), Aqaba Industrial Estate (Aqaba), and the Mushatta International complex (Amman).

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Benefits of QIZ with Jordan

• Exports from Jordan to the United States grew from $15 million in 1997 to more than 1 billion Dollars in 2004.
• Jordan’s QIZ's are the country’s strongest engine of job growth. Jordan estimates that more than 40,000 jobs have been created within its QIZs. Investment in Jordan’s QIZs is currently at between $85-100 million and is expected to grow to $180 to $200 million.
• Following the QIZ, The United States and Jordan negotiated a full FTA that the U.S. Congress approved in 2001.

Having observed the positive economic results of the QIZ agreement between Israel and Jordan and bracing for the phasing out of the quantitative quotas on textile (The WTO Agreement on Textile and Closing, ATC) that posed a great threat to the international competitiveness of the Egyptian textile and ready-made garment industry, the Egyptian Government decided to accommodate the concerns of the Egyptian producers and employees of the industry through negotiating a QIZ protocol.

The agreement was signed in Cairo on December 24th 2004, and entered into force in February 2005.

The positive immediate results were dramatic: if the total Israeli export to Egypt in 2004 were 29$ million, in 2005 it climbed to 93.2$ million, some 300% jump-off. During 2006 the total Israeli exports to Egypt continued to climb and exceeded 125$ million.

The total Egyptian exports to the U.S. that was 1,283$ million in 2004 acceded 2$ billion in 2005 and continued to climb during 2006.

Until now, ten industrial zones have been identified.

As QIZ-related activities increase and new geographical areas grow more dedicated to and competitive at exporting to the U.S. market, more QIZ zones may be added to the already-existing ten QIZ zones upon the approval of the government of the United States .

For more information on business activity in the framework of the QIZ agreement, please contact the Middle East Department at the Ministry of Industry, Trade and Labor:

Mr. Gabby Bar: +972-2-666-2647

Email: gavriel.barbachar@moital.gov.il

Fax: +972-2-666-2950

Additional information, including the text of the QIZ agreements and associated documents, can be found on these links: Jordan, Egypt