Can Sourcing in Egypt Diffuse Political Turmoil in the Middle East?

Despite ongoing tensions in Gaza, one apparel trade program is encouraging neighboring Middle East nations to collaborate peaceably. Under the U.S.-authorized Qualifying Industrial Zone (QIZ) program, Egypt can export goods to the United States duty free provided the products contain 10.5% Israeli inputs, which has fostered partnership in trade between the two nations. And because U.S. tariffs on textiles and apparel can be as high as 32 percent, skirting these added costs by making goods in QIZs should be an attractive option for American buyers, but many aren’t taking advantage of the peace-making preference program. The QIZ initiative, signed in 2004, came into effect in 2005 and has so far dramatically increased trade—and cooperation—between Egypt and Israel. For QIZ-produced products to be eligible to enter the U.S. duty free, articles must contain 35 percent local input (24.5% Egyptian, 10.5% Israeli), and that 35 percent minimum content can include costs incurred in Israel, Egypt or the U.S. If an Egyptian company exports $1 million worth of goods through a QIZ, for example, it must show that it imported $105,000 worth of inputs from Israel to produce them. Mohamed Samy Ashour, consulate general for the Egyptian Embassy in New York, said beyond… Read full this story

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