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Cablegate: Nea/Ela Director Discusses Qiz Expansion With

VZCZCXYZ0000
PP RUEHWEB

DE RUEHEG #2404 3291259
ZNR UUUUU ZZH
P 241259Z NOV 08
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 0907
INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 1981
RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1798
RUEHJM/AMCONSUL JERUSALEM PRIORITY 1084
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS CAIRO 002404

SENSITIVE
SIPDIS

DEPT FOR NEA/ELA AND NEA/IPA
TEL AVIV FOR APRIL COHEN
TREASURY FOR BRYAN BALIN AND FRANCISCO PARODI
WHITE HOUSE FOR USTR/SONIA FRANCESKI

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EINV PGOV PREL IS EG
SUBJECT: NEA/ELA DIRECTOR DISCUSSES QIZ EXPANSION WITH
MINISTRY OF TRADE

1. (U) Summary: In a meeting with NEA/ELA Director Nicole
Shampaine, officials from the Egyptian Ministry of Trade and
Industry expressed their frustration with what they felt was
excessive delay in United States Trade Representative's
(USTR's) consideration and approval of a 2007 request to
expand Qualifying Industrial Zones (QIZ's) to Upper Egypt.
They emphasized that the expansion was aimed at social and
economic stability in the poorest region of Egypt, and that
the composition and volumes of potential duty-free imports
into the US were not threats to US producers. End Summary.

2. (U) On November 17, NEA/ELA Director Nicole Shampaine and
econoff met with Ali Awny, QIZ Unit Head in the Ministry of
Trade and Industry, and Sayed Elbous, Minister
Plenipotentiary and Sr. Advisor to the Minister of Trade and
Industry to discuss the GOE/GOI proposed QIZ expansion into
Upper Egypt. Both Awny and Elbous expressed concerns that
the US would not act on their proposal in the remaining days
of the current Presidential administration, and that the
Obama administration might not be able to focus on this issue
for a long time.

3. (SBU) Elbous expressed his frustration with what he
considered the United States Trade Representative's (USTR's)
unwillingness to respond to this request, initially made last
year. He said that they have provided all of the information
that they can to USTR and that the USTR is asking for
detailed long-term planning information that doesn't exist
and cannot be collected. Elbous reiterated the GOE position
that the proposal would have several benefits, including
increasing support for normalization of Egypt-Israel
relations in a conservative region of Egypt, and increasing
social and political stability in Upper Egypt.

4. (SBU) Awni and Elbous both emphasized that expansion of
QIZ's was not a threat to US industry. Egyptian producers,
they said, were not competing with US textile companies but
were merely trying to maintain market share in the face of
stiff competition from China and the Far East. They also
suggested that the expansion would enable expansion of
non-textile exports such as dried foods. The proposed
expansion of QIZ's, according to Awny, was also targeting
existing QIZ firms to encourage them to relocate from the
Delta and Greater Cairo to Upper Egypt, in order to take
advantage of labor surpluses in the area, one of the poorest
in Egypt. As a result, they explained, there would be minimal
net increases of exports from those firms. Shampaine said
she would follow up on this issue with USTR.

5. (U) This cable was cleared by NEA/ELA Director Nicole
Shampaine.
SCOBEY

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