CAIRO, 14 December 2004 — Egypt and Israel are today to sign their first strategic partnership accord in trade and industry since the peace treaty they sealed 25 years ago.
US Trade Representative Robert Zoellick has said it is the most important economic accord to be signed by the two neighbors, which in 1979 signed the landmark treaty.
He will attend the Cairo signing ceremony of the free-trade zones agreement along with Egyptian Industry and Foreign Trade Minister Rashid Mohammed Rashid and Israeli counterpart Ehud Olmert.
The zones will be set up in Greater Cairo and the Mediterranean cities of Alexandria and Port Said.
The accord allows goods from the three zones to enter the United States without customs tariffs, provided 35 percent of the product results from cooperation between Israel and Egyptian companies.
Also, Israel’s input must be a minimum of 11.2 percent. The Israelis wanted a level of between 15 and 17 percent, while Egypt proposed only eight percent.
The accord will boost the volume of Israeli-Egyptian trade to $70 million a year from the current annual level of $44 million, according to Oded Tirah, president of the Israeli Manufacturers’ Association.
Cairo had resisted the US-backed deal for several years, but its hand was forced by new US textile import regulations which will come into force on Jan. 1 that could have a dealt a knock-out blow to Egypt’s key sector.
The new regulations could have cost $479 million in lost Egyptian exports and the scrapping of 200,000 jobs, according to Egypt’s Finance Minister Yussef Boutros-Ghali.
Egyptian businessmen’s association president Gamal el-Nazer said the free-trade zones were the only means to rescue the textile sector and stimulate direct foreign investment, which reached a low of $400 million in 2003.
