The closure of the Ouja border crossing and trading point between Egypt and Israel in Central Sinai has lead to the halt of Israeli imports to Egyptian factories operating within the Qualified Industrial Zones (QIZ) Protocol signed between the two countries.
Egypt signed QIZ in 2004 with the Israeli side, represented by Ehud Olmert, when he was Minister of Tourism and Trade. The protocol was signed by the Egyptian Minister of Trade and Industry Rachid Mohamed Rachid.
Ahmed Antar, head of the QIZ unit in Egypt, said that investors were anxious over the border closure, as it is the main port for Israeli imports used for duty-free exports to the US market under the QIZ agreement. Antar pointed out that prolonged closure of the border crossing could disrupt exports.
Antar told Al-Masry Al-Youm that freezing the protocol was a political issue associated with the current escalation between Egypt and Israel.
Antar went on to say that he received no inquiries from Israel or the US regarding the recent events and their impact on trade with Israel.
Meanwhile, Chamber of Textile Industries member Mohammed Kassem said that freezing QIZ would displace 600, 000 workers and cause over 400 factories that operate within the protocol to shut down.
Kassem said that currently the closing will have limited impact on exports as the factories have a stockpile of Israeli components, however with prolonged closure it may be difficult for factories dealing with the US market. He added that the factories may resort to air imports of Israeli materials, but that this will raise costs significantly.
Meanwhile, Chairman of the Garment Producers Association Yahia Zananiri, said that Egypt needs the QIZ protocol because Egyptian garment exports through this agreement amount to 70 percent of Egyptian garment exports worldwide and 95 percent of garment exports to the US.
Last year, Egypt's exports under QIZ amounted to US$811 million, as the US entitles QIZ signatory companies to duty-free treatment, provided the garments are made with at least 10.5 percent Israeli components.
Translated from the Arabic Edition
