Minister: Canceling industrial zone agreement would harm Egypt

Canceling an agreement that allows companies to export products with Israeli components duty-free to the US would harm Egypt, Trade and Industry Minister Mahmoud Issa said Monday.

The Qualifying Industrial Zones agreement, signed between the Egypt, the US and Israel, allows hundreds of Egyptian companies to export the products.

“If we canceled the QIZ agreement, from an economic prospect, we will be the losers,” Issa said on the sidelines the African Union summit in Addis Ababa.

The agreement is chiefly an economic trade agreement, not a political one, Issa said.

“Under this agreement, Egypt exports products estimated at US$1.3 billion annually,” he said. He said Israeli exports are estimated only at US$130 million. “So Egypt benefits economically from the agreement.”

He said it would be better for Egypt to continue with the agreement because of the peace treaty with Israel, which is more comprehensive.

“Even if we canceled the agreement, Israel will be able to export to companies located in free zones in Egypt,” Issa said. “We cannot prevent it, as both Egypt and Israel are members of the World Trade Organization. We can’t stop importing products, but we can impose restrictions on it.”

During talks that started three years ago, Egypt requested the inclusion of Upper Egyptian factories in the agreement, Issa said, and received a positive response due to a high percentage of unemployment.

The number of Israeli components in Egyptian products lowered from 10.5 to 8 percent, which means Egypt benefited from the agreement, Issa said. But he said his ministry would respect decisions that could affect this aspect “from a political, not economic, prospect.”

The Muslim Brotherhood and its political arm, the Freedom and Justice Party, have on many occasions demanded that Egypt cancel the agreement, which was signed in December 2004.

But Ashraf Badr Eddin, the head of the Brotherhood’s economic policy committee, told Reuters on 12 January that his group will not seek to end the agreement.

Existing agreements with Israel should be maintained as long as Israel sticks to the terms, Badr Eddin said.

Translated from Al-Masry Al-Youm

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