Implementation is underway for the QIZ agreement, which might be the best hope left for Egypt textiles to remain competitive, Mona El-Fiqi and Sherine El-Madany report On Monday the Ministry of Trade and Industry initiated the registration procedures for factories which will enjoy the advantages of the Qualified Industrial Zones (QIZ) agreement. Owners must file an application with full details about their factories and export business to the US. In the first day of registration the QIZ department at the Ministry of Trade and Industry received more than 300 applications from factories across seven qualified industrial zones. Minister of Trade and Industry Rasheed Mohamed Rasheed announced that applications had been already approved for some 100 factories to join the QIZ agreement from the seven applicable zones -- 10th of Ramadan City, 15th of May City, Al-Amriya, Port Said, Shubra El- Kheima, Nasr City and South Giza. Port Said was leading the other six zones, with 30 factories already approved. Exporters are showing a strong interest in joining the QIZ agreement in order to gain duty-free access to the US market -- provided their products have 11.7 per cent Israeli content and 35 per cent value added in the QIZ factories. The Israeli content in these goods makes them eligible for the same treatment as Israeli products, which according to the US- Israel Free Trade Agreement allows them duty-free entry to the US. In a press conference held last week, Rasheed announced that the application of the QIZ agreement will help boost exports to the US. Rasheed added that the government is considering a compensation plan for those exporters who have a previous export record to the US and are not included in the seven chosen zones. The compensation plan will be financed by the Export Development Fund, whose budget was recently increased from LE650 million to LE1.1 billion by the Cabinet. "Under the QIZ agreement, Egypt can export duty-free to the US, as long as products contain 11.7 per cent Israeli content. Thus, the QIZ gives Egyptian textile products a competitive edge in the market," said Adel El-Ezabi, board member of the Chamber of Textile Industries. The German-Arab Chamber of Industry and Commerce (GACIC) organised a recent seminar as a part of a series of interlinked activities aimed at tackling the challenges facing the textile and ready-made garments industry in Egypt. "A large number of members of the Chamber work in the textile industry either as producers, manufacturers, importers, or exporters. Therefore, we intend to give professional and practical support to enhance the business of our members and customers," said Peter Göpfrich, CEO of GACIC. Speakers also highlighted the benefits to the Egyptian textile industry and trade from the QIZ agreement with Israel and the US, which was signed on 14 December. "In the past, Egypt's exports to the US dramatically decreased because other products entered the US markets without any customs duties, while Egyptian ones had very high tariff quotas. Consequently, countries such as China could push smaller textile producers like Egypt out of the market," explained Mohamed Kassem, chairman of World Trading Company. "That is why Egypt had to sign the QIZ agreement." Kassem also emphasised the advantages of the US markets over the European ones. "US markets are consolidated, which means that only one company such as Sears deals with as large a number as 280 million customers," he said. "However, that is not the case in the fragmented European markets, where there is not a single company that can import products for the whole of Europe," he added. He went to say that Egyptian industry has failed to make use of the European duty-free markets which are more accessible due to insufficient investment in making Egyptian products meet European standards. With this point, other speakers listed various steps that Egypt should undertake to further enhance its textile industry and trade. Alberto Cortezon, a trade expert with the EU Commission, said that Egypt needed to exploit its resources such as excellent cotton and cheap labour. He recommended that Egypt seek to become more responsive to changing tastes and technology advances, while improving the competitiveness of its products in terms of price and quality. Barbara Stacher, trade counsellor, EU Commission, added that Egypt should seize opportunities through special trade agreements such as the QIZ to encourage investors from the US and elsewhere to open new factories in Egypt.
