QIZ
About QIZ / Advantages
Duty free access to the US Market: This preferential
treatment entails free access to all Egyptian products manufactured
in QIZ to the US market without tariff or non-tariff barriers,
as long as these products comply with rules of origin requirements.
Simple requirements to benefit from the free access: The required
rules state that 35% of the commodity's value must be manufactured
in an Egyptian QIZ, of which a minimum of 11.7% Israeli inputs.
All products benefits from the free access: The tariff exemption
applies to all products, whether produced by the public or private
sector, by small, medium or large enterprises.
Flexible application of the requirements: The protocol has
established flexible rules such that the Israeli content is
not revised for every single shipment of exports to the USA,
provided that this factory's cumulative exports every quarter
satisfy the agreed upon ratio.
No quotas on exported products: The free access of the products
is not limited by any quotas on quantities nor seasons.
Open ended validity of the protocol: As can be seen from reading
the actual protocol, it is not timed and has no preset end date.
PROTOCOL
BETWEEN
THE GOVERNMENT OF THE ARAB REPUBLIC OF EGYPT
AND
BETWEEN THE GOVERNMENT OF THE STATE OF ISRAEL
ON
QUALIFYING INDUSTRIAL ZONES
_________________
The Government of the Arab Republic of Egypt and the Government
of the State of Israel (hereinafter "the Parties")
noting the 25th Anniversary of the signing of the Peace Agreement
between the Parties and desiring to promote economic and trade
relations for the benefit of the Parties have agreed to conclude
this protocol.
In recognition of the requirements in Section 9 of the United
States-Israel Free Trade Area Implementation Act of 1985, as
amended, and Proclamation No. 6955 of the President of the United
States of America, hereinafter "the legislation and proclamation"
and on the recommendation of the private sector of the Parties
have agreed to the creation of the Qualifying Industrial Zones
(hereinafter the "QIZ"), and request the Government
of the United States to designate them as "Qualifying Industrial
Zones" under the legislation and proclamation.
ARTICLE I
GEOGRAPHIC BOUNDARIES
The Parties hereby designate the following territories of their
respective countries as enclaves where merchandise may enter
for purposes of export, without payment of duty or excise taxes,
no matter what the country of origin of the merchandise.
A. For the Government of Egypt: areas as designated by the
Parties and as approved by the United States Trade Representative
(USTR) and as specified in Annex A to this protocol.
B. For the Government of Israel: An Area under Israeli Customs
control within the boundaries of the land crossing border at
Nitzana Crossing Point.
On the basis of the respective national legislation of the
Parties, the competent authorities of Israel and Egypt shall
establish the necessary procedures for the purpose of assuring
the speedy flow of goods into and out of these areas. The purpose
of these procedures is to ensure the strict enforcement of the
principles of duty and taxation pursuant to this protocol.
In the case of the State of Israel, where factories located
outside the zone shall contribute part of the 35 percent minimum
content required by the legislation and proclamation, the Israeli
customs authority shall ensure that inputs imported from abroad
incorporated into goods shipped into the zone shall be exempt
from duty.
ARTICLE II
QIZ JOINT COMMITTEE
A. The Parties hereby agree to the establishment of a QIZ Joint
Committee which shall have the responsibilities, outlined in
Annex B, of identifying those manufacturers located within the
Qualifying Industrial Zones, which involve substantial economic
cooperation between Israel and Egypt. Goods processed in these
zones by manufacturers whose names appear on a list (hereinafter
"the list") approved by the QIZ Joint Committee shall
be eligible for duty-free entry into the United States if the
goods meet the requirements of this Protocol and its Annexes
as well as of the legislation and proclamation.
B. The QIZ Joint Committee shall meet in Jerusalem and in Cairo,
alternately, every three months or upon request by either Party
whichever comes earlier. During every fourth quarter the QIZ
Joint Committee shall hold a business cooperation event in which
business people and other persons of both Parties who have interest
in the QIZ shall have the opportunity to participate. This event
shall be held in Egypt and Israel alternately.
C. A representative of the United States shall have the right
to participate in meetings of the QIZ Joint Committee as an
observer.
D. The QIZ Joint Committee may determine that a business qualifies
for QIZ treatment if:
1.a. The company of the Egyptian side of the QIZ and the company
of the Israeli side each contribute and maintain at least one
third (11.7%) of the minimum 35% of local content required under
the legislation and the proclamation for duty-free treatment
in the United States and according to the procedures as detailed
in Annex B to this Protocol; or
1.b. The manufacturer on the Egyptian side of the QIZ and the
manufacturer on the Israeli side each contributes and maintains
at least 20 percent of the total cost of production of goods
eligible for duty-free treatment, excluding profits, even if
the costs cannot be considered as part of the 35 percent minimum
content requirement. For this purpose, costs may include originating
materials, wages and salaries, design, research and development,
depreciation of capital investment, overhead including marketing
expenses, etc.
2. Only Israeli companies operating in areas under Israel's
customs' control shall be recognized for the purposes of applying
the Israeli contribution as mentioned in subsections 1.a. and
1.b. above.
E. The QIZ Joint Committee shall issue a certificate, valid
for a period of one year, recognizing that a company is located
within the QIZ.
1.Only companies located in areas specified in Article I may
be eligible to request such a certificate.
2. This certificate will be valid for the purpose of eligibility
for duty free treatment under the provisions of this Protocol,
only when the company's name appears on the list, described
in Paragraph F below.
3.The QIZ Joint Committee shall have the authority to cancel
this certificate only if the requirements of this Protocol and
its Annexes are not met.
F.The QIZ Joint Committee shall promptly provide quarterly
the U.S. Customs Authority (Trade Compliance Office, Office
of Field Operations) and the Egyptian Customs Authority with
a list of Companies entitled to duty free treatment for the
next quarter only, according to the provisions of this Protocol.
Only companies which have fulfilled all the requirements of
this Protocol and its Annexes for the previous quarter shall
be eligible to be included in the list for the next quarter.
ARTICLE III
RULES OF ORIGIN
The Parties agree that the origin of any textile or apparel
product that is processed in the Qualifying Industrial Zones,
regardless of the origin of place or processing of any of its
inputs or materials prior to entry into, or subsequent to withdrawal
from, these zones, shall be determined solely pursuant to the
rules of origin for textile and apparel products set out in
Section 334 of Uruguay Round Agreement Act, 19 U.S.C. 3592.
ARTICLE IV
CUSTOMS VERIFICATION
The Parties shall assist United States authorities in obtaining
information, including means of verification, for the purpose
of reviewing transactions for which duty-free access into the
U.S. is claimed, in order to verify compliance with applicable
conditions, and to prevent unlawful transshipment of articles
not qualified for duty-free access into the U.S.
ARTICLE V
AMENDMENTS
Annexes to this Protocol shall be amended by the QIZ Joint
Committee and upon approval by the United States.
ARTICLE VI
ENTRY INTO FORCE
This Protocol shall enter into force upon the notification
of both Parties on the completion of the necessary legal procedures
required by them for the entry into force of this Protocol.
Done at Cairo, Egypt on December 14, 2004 , in two original
copies in the English language.
Annex B - QIZ Joint Committee
1. A QIZ Joint Committee shall be established, in accordance
with Article II of the Protocol, with two co-chairpersons: an
Egyptian appointed by the Egyptian Government, and an Israeli
appointed by the Israeli Government. A representative of the
United States may attend the meetings as an observer
2. The responsibilities of the QIZ Joint Committee shall be
to:
Supervise the implementation of the QIZ Protocol
Verify full compliance with the QIZ requirements
Issue and/or cancel certificates pursuant to Article E of the
Protocol;
Determine the lists of companies pursuant to Article F of the
Protocol;
Prepare an annual report that to be submitted to the relevant
Ministers
3. The QIZ Joint Committee shall carry out its responsibilities
on a quarterly basis as per the following periods:
January 1 - March 31
April 1 - June 30
July 1 - September 30
October 1 - December 31
(hereinafter: "quarters")
4. The certificate issued by the QIZ Joint Committee, pursuant
to Article E of the Protocol, shall include the following information:
name, address, tel. /fax numbers, e-mail address and contact
person.
5. The QIZ Joint Committee shall convene quarterly, pursuant
to Article II.B of the Protocol, in order to determine the list
of companies, in accordance with Article F of the Protocol.
The hosting Party shall issue an invitation to the other Party
for a date after which both Parties have received the documents
mentioned in paragraphs 6A and 6B below, but no later than 45
days after the end of the previous quarter. The meeting of the
QIZ Joint Committee shall take place on a mutually agreed upon
date, within 10 days from the proposed date.
6. In order for the QIZ Joint Committee to determine the lists
of companies to appear on the lists pursuant to Article F of
the Protocol the following procedures must be followed:
A. The company shall provide its Authorities evidence of full
compliance with all the requirements of the QIZ Protocol for
the previous quarter, no later than 15 days from the end of
each quarter. This evidence shall include the following:
a. Name of company, address, tel./fax numbers, e-mail addresses,
contact person,
b. Type of products exported,
c. Type of input purchased, documented by copies of invoices
from Egyptian/Israeli suppliers and list of Egyptian/Israeli
suppliers in the last quarter, including contact persons,
d. Total export of the company to the United States under the
QIZ duty free treatment for the previous quarter, supported
by relevant documents.
B. The authorities of the Party receiving the documents and
evidence shall submit to the authorities of the other Party,
no later than 30 days from the end of each quarter all quarterly
data as specified in paragraph 6.A. above.
C. The QIZ Joint Committee shall verify the data specified
in paragraph 6.A. in order to determine whether the requirements
of the Protocol, particularly Article II.D., and the Annexes,
particularly paragraphs 9, 10 and 11 of Annex B, have been fulfilled.
7. The Joint Committee shall issue the quarterly lists according
to the following:
A. A company that fulfills the requirements of the Protocol
and its Annexes shall appear on the list for the first two quarters
following the entry into force of the Protocol.
B. For the periods that follow the first two quarters after
the entry into force of the Protocol :
i. The QIZ Joint Committee shall determine the list for the
following quarter, based on the company's fulfillment of the
requirements of the Protocol and its Annexes for the previous
quarter.
ii. Companies that have not previously exported under the QIZ
Protocol, and that request to be included in the list determined
by the QIZ Joint Committee after a quarter has already begun,
will not be required to report until the end of the next full
quarter.
8. If any Party fails to attend the quarterly QIZ Joint Committee
meeting as required in Article II.B. of the Protocol, the Party
that has attended the meeting may carry out the responsibilities
of the QIZ Joint Committee. If the hosting Party fails to issue
the invitation to the other Party to attend the meeting, the
other Party may carry out the responsibilities of the QIZ Joint
Committee.
9. The Israeli inputs that shall be recognized for the purpose
of the QIZ must be direct relevant inputs.
10. The QIZ Joint Committee shall not recognize inputs purchased
from Israeli enterprises as fulfilling the minimum content required
from Israeli manufacturers unless those inputs fully comply
with the rules of origin as stipulated in the US-Israel Free
Trade Area Agreement.
11. Compliance with criteria set forth in Article II.D. of
the Protocol will be calculated on the basis of total duty free
export to the United States under the QIZ on a quarterly basis
per company and in accordance with the conditions set forth
in paragraphs 9 and 10 above.
12. In the event the QIZ Joint Committee finds that a company
fails to comply, for any reason, with the requirements of the
QIZ Protocol and its Annexes, the following steps shall be taken:
a. for a first-time failure - the company will not be eligible
for QIZ approval for the following quarter.
b. for a second-time failure - the company will not be eligible
for QIZ approval for the following two quarters.
c. for every failure beyond the second time - the company will
not be eligible for QIZ approval for the following four quarters.
13. In case there is a need for additional data in order to
verify QIZ compliance, the QIZ Joint Committee may request the
US Customs Authorities to provide the necessary data.
14. In case the QIZ Joint Committee finds during the implementation
of the above mentioned procedures a need to amend these procedures,
it will submit a proposal to the Minister of Foreign Trade and
Industry of Egypt and the Minister of Industry , Trade and Labor
of Israel, for their approval.
|