USTR Designates Three QIZs in Egypt Under the U.S.-Israel Free Trade Area Implementation Act
The Office of the U.S. Trade Representative (USTR) has issued a notice that designates three areas in Egypt as qualifying industrial zones (QIZs) under Section 9 of the U.S.-Israel Free Trade Area Implementation Act (IFTA).
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(On December 10, 2004, the USTR issued a press release announcing that a trade partnership would be signed between the U.S., Egypt, and Israel in order to create QIZs in Egypt. Previously, QIZs have only been in Jordan. See ITT's Online Archives or 12/14/04 news, 04121499 2, for BP summary.)
Specifically, the USTR is designating as QIZs areas comprising a: (1) Greater Cairo zone; (2) Alexandria zone; and (3) Suez Canal zone. The USTR states that the names and locations of the factories comprising these three zones are specified on maps and materials that are on file at USTR.
According to the USTR, the above designations are effective on December 29, 2004, and are applicable to goods shipped from these QIZs after December 29, 2004.
Background
The USTR states that Presidential Proclamation 6955 proclaimed certain tariff treatment for articles of the West Bank, the Gaza Strip, and QIZs. In particular, Proclamation 6955 modified General Notes 3 and 8 of the Harmonized Tariff Schedule (HTS) to provide:
duty-free treatment to qualifying articles that are the product of the West Bank, the Gaza Strip or a QIZ, and are entered in accordance with the provisions of Section 9 of the IFTA;
that articles of Israel may be treated as though they were articles directly shipped from Israel for the purposes of the U.S.-Israel Free Trade Area Agreement (Agreement) even if shipped to the U.S. from the West Bank, the Gaza Strip, or a QIZ, if the articles otherwise meet the requirements of the Agreement; and
that the cost or value of materials produced in the West Bank, the Gaza Strip, or a QIZ may be included in the cost or value of materials produced in Israel under Section 1(c)(i) of Annex 3 of the Agreement and that the direct costs of processing operations performed in the West Bank, the Gaza Strip, or a QIZ may be included in the direct costs of processing operations performed in Israel under Section 1(c)(ii) of Annex 3 of the Agreement.
According to the USTR, Section 9(e) of the IFTA defines a "qualifying industrial zone'" as an area that "(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been specified by the President as a qualifying industrial zone." The USTR notes that Proclamation 6955 delegated to the USTR the authority to designate QIZs
(See ITT's Online Archives or 01/29/04 news, 04012925, for BP summary of the January 2004 designation of two QIZs. See ITT's Online Archives or 06/03/03 news, 03060340 2, for BP summary of U.S. Customs and Border Protection's (CBP's) notice listing all the industrial parks identified as QIZs as of January 2003.)
USTR Contact - Edmund Saums (202) 395-4987
USTR Notice (FR Pub 12/29/04) available at http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-28445.pdf
USTR Press Release announcing trade partnership to create QIZs in Egypt (dated 12/10/04) available at http://www.ustr.gov/Document_Library/Press_Releases/2004/December/United_States,_Egypt_Israel_to_Launch_Historic_Trade_Partnership_USTR_Zoellick_to_Participate_in_Signing_in_Cairo.html