THE GOVERNMENT OF THE ARAB REPUBLIC OF EGYPT
BETWEEN THE GOVERNMENT OF THE STATE OF ISRAEL
QUALIFYING INDUSTRIAL ZONES
The Government of the Arab Republic of Egypt and
the Government of the State of Israel (hereinafter
"the Parties") noting the 25th Anniversary
of the signing of the Peace Agreement between the
Parties and desiring to promote economic and trade
relations for the benefit of the Parties have agreed
to conclude this protocol.
In recognition of the requirements in Section 9 of
the United States-Israel Free Trade Area Implementation
Act of 1985, as amended, and Proclamation No. 6955
of the President of the United States of America,
hereinafter "the legislation and proclamation"
and on the recommendation of the private sector of
the Parties have agreed to the creation of the Qualifying
Industrial Zones (hereinafter the "QIZ"),
and request the Government of the United States to
designate them as "Qualifying Industrial Zones"
under the legislation and proclamation.
The Parties hereby designate the following territories
of their respective countries as enclaves where merchandise
may enter for purposes of export, without payment
of duty or excise taxes, no matter what the country
of origin of the merchandise.
A. For the Government of Egypt: areas as designated
by the Parties and as approved by the United States
Trade Representative (USTR) and as specified in Annex
A to this protocol.
B. For the Government of Israel: An Area under Israeli
Customs control within the boundaries of the land
crossing border at Nitzana Crossing Point.
On the basis of the respective national legislation
of the Parties, the competent authorities of Israel
and Egypt shall establish the necessary procedures
for the purpose of assuring the speedy flow of goods
into and out of these areas. The purpose of these
procedures is to ensure the strict enforcement of
the principles of duty and taxation pursuant to this
In the case of the State of Israel, where factories
located outside the zone shall contribute part of
the 35 percent minimum content required by the legislation
and proclamation, the Israeli customs authority shall
ensure that inputs imported from abroad incorporated
into goods shipped into the zone shall be exempt from
QIZ JOINT COMMITTEE
A. The Parties hereby agree to the establishment
of a QIZ Joint Committee which shall have the responsibilities,
outlined in Annex B, of identifying those manufacturers
located within the Qualifying Industrial Zones, which
involve substantial economic cooperation between Israel
and Egypt. Goods processed in these zones by manufacturers
whose names appear on a list (hereinafter "the
list") approved by the QIZ Joint Committee shall
be eligible for duty-free entry into the United States
if the goods meet the requirements of this Protocol
and its Annexes as well as of the legislation and
B. The QIZ Joint Committee shall meet in Jerusalem
and in Cairo, alternately, every three months or upon
request by either Party whichever comes earlier. During
every fourth quarter the QIZ Joint Committee shall
hold a business cooperation event in which business
people and other persons of both Parties who have
interest in the QIZ shall have the opportunity to
participate. This event shall be held in Egypt and
C. A representative of the United States shall have
the right to participate in meetings of the QIZ Joint
Committee as an observer.
D. The QIZ Joint Committee may determine that a business
qualifies for QIZ treatment if:
1.a. The company of the Egyptian side of the QIZ
and the company of the Israeli side each contribute
and maintain at least one third (10.5%) of the minimum
35% of local content required under the legislation
and the proclamation for duty-free treatment in the
United States and according to the procedures as detailed
in Annex B to this Protocol; or
1.b. The manufacturer on the Egyptian side of the
QIZ and the manufacturer on the Israeli side each
contributes and maintains at least 20 percent of the
total cost of production of goods eligible for duty-free
treatment, excluding profits, even if the costs cannot
be considered as part of the 35 percent minimum content
requirement. For this purpose, costs may include originating
materials, wages and salaries, design, research and
development, depreciation of capital investment, overhead
including marketing expenses, etc.
2. Only Israeli companies operating in areas under
Israel's customs' control shall be recognized for
the purposes of applying the Israeli contribution
as mentioned in subsections 1.a. and 1.b. above.
E. The QIZ Joint Committee shall issue a certificate,
valid for a period of one year, recognizing that a
company is located within the QIZ.
1.Only companies located in areas specified in Article
I may be eligible to request such a certificate.
2. This certificate will be valid for the purpose
of eligibility for duty free treatment under the provisions
of this Protocol, only when the company's name appears
on the list, described in Paragraph F below.
3.The QIZ Joint Committee shall have the authority
to cancel this certificate only if the requirements
of this Protocol and its Annexes are not met.
F.The QIZ Joint Committee shall promptly provide
quarterly the U.S. Customs Authority (Trade Compliance
Office, Office of Field Operations) and the Egyptian
Customs Authority with a list of Companies entitled
to duty free treatment for the next quarter only,
according to the provisions of this Protocol.
Only companies which have fulfilled all the requirements
of this Protocol and its Annexes for the previous
quarter shall be eligible to be included in the list
for the next quarter.
RULES OF ORIGIN
The Parties agree that the origin of any textile
or apparel product that is processed in the Qualifying
Industrial Zones, regardless of the origin of place
or processing of any of its inputs or materials prior
to entry into, or subsequent to withdrawal from, these
zones, shall be determined solely pursuant to the
rules of origin for textile and apparel products set
out in Section 334 of Uruguay Round Agreement Act,
19 U.S.C. 3592.
The Parties shall assist United States authorities
in obtaining information, including means of verification,
for the purpose of reviewing transactions for which
duty-free access into the U.S. is claimed, in order
to verify compliance with applicable conditions, and
to prevent unlawful transshipment of articles not
qualified for duty-free access into the U.S.
Annexes to this Protocol shall be amended by the
QIZ Joint Committee and upon approval by the United
ENTRY INTO FORCE
This Protocol shall enter into force upon the notification
of both Parties on the completion of the necessary
legal procedures required by them for the entry into
force of this Protocol.
Done at Cairo, Egypt on December 14, 2004 , in two
original copies in the English language.