Search

 

Cablegate: Egyptian Qiz Exports Level Off in First Quarter

VZCZCXRO0983
PP RUEHROV
DE RUEHEG #1048 1431417
ZNR UUUUU ZZH
P 221417Z MAY 08
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 9321
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS CAIRO 001048

SENSITIVE
SIPDIS

STATE FOR NEA/ELA, NEA/RA
USTR FOR MOWREY AND FRANCESKI
COMMERCE FOR 4520/ITA/ANESA/OBERG

E.O. 12958: N/A
TAGS: ECON ETRD IS EG
SUBJECT: EGYPTIAN QIZ EXPORTS LEVEL OFF IN FIRST QUARTER
2008

REF: CAIRO 364

Sensitive but unclassified, not for Internet distribution.

1. (U) SUMMARY: Egyptian exports to the United States under
the Qualified Industrial Zone (QIZ) agreement leveled off in
the first quarter of 2008 to $169 million USD. GOE and
Government of Israel trade officials continued to push for
QIZ expansion into Upper Egypt at the quarterly QIZ meeting
in Cairo on May 19. Two non-textile companies were among
those newly certified for QIZ export. Despite criticism of
the program by opposition parliamentarians, the GOE continued
to publicly seek foreign investment for QIZ factories. END
SUMMARY.

2. (U) After QIZ exports dropped sharply in the last quarter
of 2007 because of seasonal factors and sluggish US demand,
QIZ exports rose in the first quarter of 2008 to a level
2-percent higher than the same period a year earlier,
suggesting that exports under the three-year-old program are
leveling off under current conditions. Israeli exports to
Egypt under the agreement fell 8 percent to $18 million,
consistent with the GOE-GOI agreement in October 2007 to
reduce the required level of Israeli content in Egyptian QIZ
exports to 10.5 percent.

3. (U) At the quarterly meeting of the joint GOE-GOI QIZ
committee May 19, GOE co-chair Sayed el-Bous and GOI co-chair
Gabby Bar continued to argue in favor of QIZ expansion into
Upper Egypt and asked about the status of the GOE-GOI request
to USTR to approve expansion. We noted that USTR Susan
Schwab and GOE Minister of Trade Rachid Rachid had discussed
the issue in Sharm al-Sheikh on May 18 and that the request
remained under active consideration.

4. (U) The GOE reported at the meeting that seven new
companies had qualified for QIZ export: five textile
producers, one food processor, and one tableware producer.
The food company, Deyhdrofoods, told us after the meeting
that they expect to begin exporting dried vegetables within
several months and quadruple their current production by the
end of 2009, thanks to the QIZ program. The company expects
to purchase Israeli packaging material to meet the content
requirement.

5. (U) El-Bous argued at the meeting that further reductions
in the Israeli content requirement are necessary to encourage
more non-textile companies to participate in the program
because they cannot make economical use of the current
required levels of Israeli inputs. Bar responded that the
GOI will help any Egyptian industrialist having trouble
finding enough Israeli content to locate appropriate Israeli
suppliers.

6. (U) Regardless, the economics of the QIZ program continue
to heavily favor textile producers, who account for more than
99 percent of QIZ exports. While more than 500 US companies
have purchased QIZ products during the three years of the
agreement, the top three companies -- Gap, Walmart, and Levi
Strauss -- imported a third of all QIZ production, primarily
jeans and other pants.

7. (U) The same day of the meeting, local press reported
demands by 35 independent, Muslim Brotherhood, and opposition
party parliamentarians for the GOE to freeze the QIZ
agreement and other trade with Israel. Such demands have
been routine throughout the life of the program, however.
The next day, local press carried a statement by Ali Awni,
head of the GOE QIZ unit, that the GOE is starting a campaign
to encourage Eastern European investment in QIZ factories.

8. (SBU) Comment: The latest export results are consistent
with our view that the QIZ agreement is maturing; the
dramatic export growth rates of the first two years have come
to an end (reftel). We believe that QIZ expansion into Upper
Egypt is necessary to further expand the benefits of the
agreement -- cooperation between Egypt and Israeli and
creation of Egyptian jobs in a needy and restive region.
SCOBEY

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO: