EGYPT/ISRAEL: READOUT OF 16TH QUARTERLY MEETING OF

UNCLAS TEL AVIV 000509

SIPDIS

NEA/ELA FOR KALLEN
CAIRO FOR SPEAKS,HERNDON-HILL

E.O. 12958: N/A
TAGS: ECON ETRD PREL EG IS
SUBJECT: EGYPT/ISRAEL: READOUT OF 16TH QUARTERLY MEETING OF
THE QUALIFIED INDUSTRIAL ZONES (QIZ)


1. Egypt and Israel met on two separate occasions for the
16th quarterly Joint Committee meeting of the Qualified
Industrial Zones (QIZ) - February 19 and 26 in Jerusalem.
The first meeting on February 19 was suspended by the
Egyptians, who indicated at the time that their action was in
response to the breakdown in negotiations on a ceasefire in
Gaza. Later, press reports would quote the Egyptians as
saying that the suspension was due to "technical issues."
The Joint Committee reconvened on February 26 and found four
Egyptian companies not in compliance with the QIZ protocol.
There was also a brief discussion on the recent addition of
companies located in Upper Egypt. According to the minutes,
"the Committee will consider the application of the approved
companies in these areas for issuing the required QIZ
certificate." Finally, the Committee renewed certificates
for 496 companies working under the QIZ and approved the
addition of seven new companies.

THE EGYPTIANS LEAVE...


2. The Committee had met for about an hour when the
Egyptians announced they had to suspend the meeting
immediately. Sayed Elbous, the Egyptian Co-Chairman, stated
that this was likely a political decision, taken by the
Egyptian Ministry of Foreign Affairs to express displeasure
over the Israeli position during ongoing negotiations for a
ceasefire in the Gaza Strip. Later press reports would quote
the Egyptians as stating the suspension was due to a
"technical issue."


3. During the brief meeting, there was a discussion on the
recent addition of Upper Egyptian companies from the regions
of Beni Suief and Al-Minya to the QIZ program. The Egyptian
delegation stated that the list of companies they had
proposed for the Upper Egypt expansion was a hypothetical
list mostly consisting of subsidiaries of well-known Egyptian
textile companies. These companies still had to undergo an
approval process by the joint committee. Israeli Co-Chairman
Gabi Bar indicated that he wants to set up a visit to Upper
Egypt at the time of the next quarterly meeting in May to
view the prospective companies.

...AND THEN THEY CAME BACK


4. According to Gabi Bar, an outcry from Egyptian companies
to the Israeli Embassy in Cairo and the Egyptian Ministry of
Foreign Affairs over the suspension of the meeting resulted
in reconvening again the following week. The Egyptian
companies stood to lose significant amounts of money if
denied duty-free trade access to the United States, since the
certificates for the companies had not been renewed at the
February 19th meeting. In fact, Bar said the Egyptians
wanted to meet on Sunday the 21st of February, only two days
after the meeting had been suspended, but the GOI's prior
commitments made such a meeting impossible.


5. At the February 26 meeting, the annual certificates for
496 companies working under the QIZ were renewed and seven
new companies were added. Four companies were deemed
non-compliant with QIZ regulations. Statistics indicate a
decline of 10 percent of total QIZ exports to the United
States this quarter as compared to the last, which both
delegations attributed to the economic crisis.

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