Agreement of the year

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AGREEMENTS come and go, and very few have raised the controversy surrounding the recently signed protocol establishing Qualified Industrial Zones (QIZ) in Egypt.

The agreement allows products manufactured in the specified zones tariff-free entry into the US provided 11.7 per cent of the components are of Israeli origin. Exporters to the US, particularly in the textile sector, lobbied hard for the agreement to be signed before the expiry of the World Trade Organisation's Agreement on Textiles and Clothing (ATC).

With the end of the ATC on 1 January, all quotas will be lifted, exposing Egyptian exporters to competition from China, India and Bangladesh. The US market accounts for 40 per cent of Egypt's total textile and clothing exports, a figure that would have been drastically reduced in the face of cheaper exports from the Far East.

Opponents to the agreement, which also stands to benefit the furniture manufacturing, leather and food processing sectors, argue that by signing the government has ignored popular sentiments to boycott Israel in favour of a handful of exporters. The government has answered its critics by pointing out that slogans do not put food on the table, and that the QIZ agreement will create jobs and attract much needed foreign investment to Egypt. The agreement is, furthermore, seen as a step towards eventually establishing a free trade area with the US.