VZCZCXYZ0000
RR RUEHWEB

DE RUEHTV #0509 0621219
ZNR UUUUU ZZH
R 031219Z MAR 09
FM AMEMBASSY TEL AVIV
TO RUEHEG/AMEMBASSY CAIRO 3628
RUEHC/SECSTATE WASHDC 0792

UNCLAS TEL AVIV 000509 
 
SIPDIS 
 
NEA/ELA FOR KALLEN 
CAIRO FOR SPEAKS,HERNDON-HILL 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL EG IS
SUBJECT: EGYPT/ISRAEL: READOUT OF 16TH QUARTERLY MEETING OF 
THE QUALIFIED INDUSTRIAL ZONES (QIZ) 
 
¶1.  Egypt and Israel met on two separate occasions for the 
16th quarterly Joint Committee meeting of the Qualified 
Industrial Zones (QIZ) - February 19 and 26 in Jerusalem. 
The first meeting on February 19 was suspended by the 
Egyptians, who indicated at the time that their action was in 
response to the breakdown in negotiations on a ceasefire in 
Gaza.  Later, press reports would quote the Egyptians as 
saying that the suspension was due to "technical issues." 
The Joint Committee reconvened on February 26 and found four 
Egyptian companies not in compliance with the QIZ protocol. 
There was also a brief discussion on the recent addition of 
companies located in Upper Egypt.  According to the minutes, 
"the Committee will consider the application of the approved 
companies in these areas for issuing the required QIZ 
certificate."  Finally, the Committee renewed certificates 
for 496 companies working under the QIZ and approved the 
addition of seven new companies. 
 
THE EGYPTIANS LEAVE... 
 
¶2.  The Committee had met for about an hour when the 
Egyptians announced they had to suspend the meeting 
immediately.  Sayed Elbous, the Egyptian Co-Chairman, stated 
that this was likely a political decision, taken by the 
Egyptian Ministry of Foreign Affairs to express displeasure 
over the Israeli position during ongoing negotiations for a 
ceasefire in the Gaza Strip.  Later press reports would quote 
the Egyptians as stating the suspension was due to a 
"technical issue." 
 
¶3.  During the brief meeting, there was a discussion on the 
recent addition of Upper Egyptian companies from the regions 
of Beni Suief and Al-Minya to the QIZ program. The Egyptian 
delegation stated that the list of companies they had 
proposed for the Upper Egypt expansion was a hypothetical 
list mostly consisting of subsidiaries of well-known Egyptian 
textile companies.  These companies still had to undergo an 
approval process by the joint committee.  Israeli Co-Chairman 
Gabi Bar indicated that he wants to set up a visit to Upper 
Egypt at the time of the next quarterly meeting in May to 
view the prospective companies. 
 
...AND THEN THEY CAME BACK 
 
¶4.  According to Gabi Bar, an outcry from Egyptian companies 
to the Israeli Embassy in Cairo and the Egyptian Ministry of 
Foreign Affairs over the suspension of the meeting resulted 
in reconvening again the following week.   The Egyptian 
companies stood to lose significant amounts of money if 
denied duty-free trade access to the United States, since the 
certificates for the companies had not been renewed at the 
February 19th meeting.  In fact, Bar said the Egyptians 
wanted to meet on Sunday the 21st of February, only two days 
after the meeting had been suspended, but the GOI's prior 
commitments made such a meeting impossible. 
 
¶5.  At the February 26 meeting, the annual certificates for 
496 companies working under the QIZ were renewed and seven 
new companies were added.  Four companies were deemed 
non-compliant with QIZ regulations.  Statistics indicate a 
decline of 10 percent of total QIZ exports to the United 
States this quarter as compared to the last, which both 
delegations attributed to the economic crisis. 
 
********************************************* ******************** 
Visit Embassy Tel Aviv's Classified Website: 
http://www.state.sgov.gov/p/nea/telaviv 
********************************************* ******************** 
CUNNINGHAM