Egyptian public sector textile companies working under the Qualifying Industrial Zones agreement have stopped working with their Israeli part suppliers due to what they call increasing economic difficulties.
The Egyptian exporters said their exports to the US — which under the agreement contain a certain amount of Israeli components — have greatly decreased as the US has reduced customs duties for exporters from Pakistan and China, and indirectly squeezed out the Egyptian firms.
Consequently, garment exports from the Mahalla, Kafr al-Dawar and Amiriya companies to the United States have declined by 80 percent.
“Our exports to the United States this year did not exceed LE3 million, which is only 15 percent of our estimated target,” said Kamel al-Tawash, head of the Amiriya Company, adding that there is a large surplus of Israeli parts in stores due to the US’s decreased demand for Egyptian products.
“We made too many concessions to restore the US market by increasing quantities of components imported from Israel,” he said, calling for an alternative agreement in light of the political tensions between Cairo and Tel Aviv following the cessation of a bilateral natural gas deal.
The Qualifying Industrial Zones agreement between Egypt, Israel and the US was signed in 2004 and took effect early the next year. It stipulates that Egyptian exports to the US are duty-free, provided 11.7 percent of their components were made by Israeli firms.
Last week, Egypt unilaterally terminated the gas deal with Israel, which dates back to 2005 as well. Egypt said commercial reasons were behind the termination, and denied that the decision was politically motivated.
Edited translation from Al-Masry Al-Youm
