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Qualifying Industrial Zone (QIZ)
In 1996, the U.S. Congress established the Qualifying Industrial Zone (QIZ) initiative to support the peace process in the Middle East. The QIZ initiative allows Egypt and Jordan to export products to the United States duty-free as long as such products contain inputs from Israel. The QIZ legislation authorizes the President to proclaim elimination of duties on articles produced in the West Bank, Gaza Strip, and qualifying industrial zones in Jordan and Egypt. The Office of the United States Trade Representative (USTR), in consultation with other U.S. Government agencies, designates QIZs.
In order for QIZ products to be eligible for duty-free entry into the United States, the article must be a new and different article of commerce that has been grown, produced or manufactured in the zone, and at least 35 percent of the appraised value of a product at the time it enters into the U.S. must consist of the cost or value of materials produced and direct cost of producing operations performed in the QIZ.
JORDAN
Presidential Proclamation 6955 established QIZs in Jordan, the West Bank, and the Gaza Strip on November 21, 1996. For a list of the QIZ locations see Jordanian Investment Commission.
In order for a Jordanian QIZ article to be eligible for duty-free entry into the United States, it must comply with the following rules of origin:
- 35% Jordanian content, of which 11.7% must come from a Jordan QIZ; 8% from Israel (7% for high tech goods); and the remainder fulfilled by content from a Jordan QIZ, Israel, the United States, or the West Bank / Gaza; or
- 20% Jordanian content + 15% U.S. content
Note: the U.S.-Jordan FTA rules of Origin require that Jordanian exports to the United States must have 35 percent Jordanian content in order to receive FTA duty benefits.
The first Jordan QIZ, Irbid Qualifying Industrial Zone, was created in November 1997. Subsequently, the following zones have been designated in Jordan, by agreement between the Government of Israel and the Government of Jordan: the Gateway Projects Industrial Zone, and the expansion of the Irbid QIZ in November 1998; the Al-Kerak Industrial Estate, the Ad-Dulayi Industrial Park, and the Al-Tajamouat Industrial City in September 1999; the Industry and Information Technology Park Development Company (Jordan Cyber City Co.), and the Aqaba Industrial Estate in August 2000; the Mushatta International Complex, and the Al Qastal Industrial Zone in November 2000; the Hillwood-Hashemite University LLC (“Zarqa Industrial Zone”), and the expansion of the Ad-Dulayi Industrial Park in March 2001; the Al Hallabat Industrial Park, and the expansion of the Al Tajamouat Industrial Park in July 2003; and Shoubak, Shouneh Wistah, Madaba/Dalilet, Irbid/Al-Westieyn, and Al-Tafileh in January 2009.
EGYPT
There are six (6) QIZs in Egypt: Greater Cairo, the Alexandria, the Suez Canal, the Central Delta, the Beni Suef, and the Al Minya zones. On March 3, 2013, the Office of the U.S. Trade Representative announced its decision to liberalize the designation of the existing QIZs in Egypt to make all production facilities, present and future, located in these zones potentially eligible to export goods duty-free to the United States. These designations became effective March 12, 2013. For a current list of the QIZ locations, see the Egyptian Ministry of Trade and Industry QIZ website.
The Egyptian Government has reported that the textile and apparel industry, which is the oldest and largest domestic industry, has benefited the most from the QIZ initiative. Ready-made textile and apparel products make up the largest volume of exports to the U.S. under the QIZ initiative. Specific apparel items include jackets, pants, shirts, tops, T-shirts, shorts, jackets, twin-sets and pullovers. Textile products include towels and bed sheets.
In order for an Egypt QIZ article to be eligible for duty-free entry into the United States, QIZ factories must add at least 35% to the value of the article. The 35% minimum content can include costs incurred in Israel, Egypt, or the United States. Egypt and Israel have agreed that each must contribute at least one-third (11.7%) of the 35% minimum content requirement. However, the Israeli content requirement was lowered to 10.5% in October 2007.
For more information on Egypt QIZs:
Egyptian Ministry of Trade and Industry QIZ website
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