Egypt-U.S. Business Data

Qualifying Industrial Zones (QIZs)

The Qualifying Industrial Zones (QIZ) Protocol was established by the U.S. Congress in 1996 to build economic ties between Israel and its neighbors. Since the agreement took effect in February 2005, it has allowed products jointly manufactured by Egypt and Israel duty-free entry into the United States. Eligible products must have at least 35% of their value added by QIZ factories. Egypt must contribute at least one-third (12%) of this value added, while Israel must contribute 11%. While Egypt’s government held talks throughout 2017 to lower the Israeli input requirement to 8% and expand the program’s scope to include tech companies, the protocol has remained unchanged since its inception. Products under the protocol are manufactured and exported from Egypt’s 15+ QIZs located in Greater Cairo, Alexandria, the Suez Canal zone, the central Delta, Beni Suef and Minya.

As of February 2022, the total number of registered companies under the QIZ protocol stood at 1,124, the vast majority of which produce textiles (80%) as the U.S. tariffs on these goods are relatively high, making the QIZ’s duty-free status particularly attractive for this industry. The remaining 20% of QIZ companies largely export processed agricultural products (7%), chemicals (3%), base metals (2%) as well as plastics, leather products, and building materials such as marble, granite and glass manufacturing.

In 2021, QIZ products made up 37% of Egypt’s total exports to the U.S. and 48% of non-oil exports. After hitting the USD 1 billion mark in 2019, QIZ exports dropped 22% YoY during 2020 due to the impact of COVID-19 on manufacturing and trade activity. They recovered in 2021, growing 47% YoY to a record-high USD 1.2 billion. Textile and clothing represented 94% of all of Egypt’s QIZ exports in 2021, while chemicals, minerals, fertilizers, glass and agricultural products accounted for the remaining 6%.

Source: USITC