VZCZCXYZ0003
PP RUEHWEB

DE RUEHEG #2410 3291416
ZNR UUUUU ZZH
P 241416Z NOV 08
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 0920
INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 1982
RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1802
RUEHJM/AMCONSUL JERUSALEM PRIORITY 1085
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS CAIRO 002410 
 
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: READOUT FROM THE 15TH QIZ JOINT COMMITTEE MEETING 
 
REF: A. 07 CAIRO 3305 
     ¶B. 08 TEL AVIV 1754 
     ¶C. 08 CAIRO 2404 
 
¶1. (SBU) Summary: the Qualifying Industrial Zone (QIZ) Joint 
Committee held its quarterly meeting in Cairo on November 24. 
The Egyptians requested a reduction in Israeli inputs, citing 
insufficient supply, and the Israelis agreed to work with 
companies in both sides to help them meet the existing input 
requirements.  Both sides focused on the need to expand QIZ's 
into Upper Egypt and proposed a more limited pilot project as 
a first step toward expansion throughout Upper Egypt as laid 
out in their 2007 request to the office of the United States 
Trade Representative (USTR). End Summary. 
 
¶2. (U) On November 24, Israeli and Egyptian trade officials 
met in Cairo for the quarterly meeting of the Qualifying 
Industrial Zones (QIZ) Joint Committee. The Israeli 
delegation was headed by Gabby Bar of the Ministry of Trade 
and Labor, and the Egyptian delegation was headed by Sayed 
Elbous of the Ministry of Trade and Industry. 
 
¶3. (SBU) Both the Israeli and Egyptian delegations asked the 
US Observer about progress on the joint request to expand 
QIZ's to Upper Egypt that was sent to the office of the 
United States Trade Representative (USTR) in October 
2007.(ref. A) The Observer noted that the proposal was still 
under consideration and that the Egyptian delegation had a 
discussion on this topic with Nicole Shampaine, Director of 
NEA/ELA, on the topic the week before. (ref. C) 
 
¶4. (SBU) The delegations suggested that the proposed 
expansion could be introduced via a pilot project where two 
zones could be included initially, and the remaining zones 
could be phased in at a later time based on the success of 
the pilot.  Bar and Elbous told the US Observer that they 
would prepare a written proposal for the pilot project and 
would provide it to the Embassy in a few days. Both Bar and 
Elbous said that they were prepared to travel to Washington 
to meet jointly with the USTR and other interested parties. 
Elbous reiterated that the GOE was interested in broadening 
the exports to the US through the proposed Upper Egypt 
expansion, but that Egyptian exports to the US were competing 
with imports from Southeast Asia rather than domestic US 
producers. 
 
¶5. (SBU) The Egyptian officials renewed their request for an 
additional reduction in the percentage of Israeli components 
to 8.5% (from the current level of 10.5%) claiming that there 
is insufficient Israeli supply to meet current demand.  The 
Israeli officials countered that their producers were working 
to increase capacity and they reiterated an offer to 
facilitate meetings between Egyptian and Israeli 
manufacturers to identify additional potential Israeli inputs. 
 
¶6. (SBU) Egyptian QIZ exports for the quarter ending 30 
September 2008 were $206 million, up slightly from the prior 
quarter. This represents an increase of 9.5% over the same 
period a year ago.  (Note: The Egyptians told us privately 
that they expected volumes to drop soon as a result of global 
economic conditions. End note.) 
 
¶7. (U) During the meeting, the Committee found three 
companies to be out of compliance with protocol provisions, 
approved 11 new QIZ companies, and renewed 83 QIZ 
certificates. 
SCOBEY