Egypt is negotiating with America and Israel to reduce the percentage of the Israeli component in ready-made clothing exports to America to 8.5% from 10.5% currently following the arrival of Egyptian exports of 1.3 billion dollars last year, within the framework of the qiz agreement.
The qiz “Qualified Industrial Zone” agreement is an agreement under which Egyptian products enter the United States without customs and specific quotas, provided that there are Israeli components and inputs in these products.
America’s share of clothing exports
America accounted for about 30% of Egyptian ready-to-wear exports last year, which amounted to about 2.45 billion dollars, while the rest of the markets in Europe and the Arab region accounted for about 70% of the value of exports.
The official said that the negotiations have reached advanced stages, but the recent military tensions in the Palestinian Territories postponed the signing of the reduction of the Israeli component to 8.5%.
Reasons for lowering the ratio
Egyptian clothing exports have the right to drop by the Israeli component to 8.5% after exports exceed one billion dollars, with a reduction of 0.5% for every 100 million dollars after one billion.
The number of Egyptian companies registered under the qiz agreement exceeds 90 companies and there are other companies that want to be registered in the agreement to take advantage of the advantages of exporting ready-made clothing to America without customs, according to the official.
Exports of Egyptian ready-made clothing during the first 9 months of this year to America decreased by 25% to reach 776 million dollars compared to 1.32 billion dollars during the same period last year.
The decline of exports to America
The decline in clothing exports to America is not due to reasons for Egyptian companies, but rather to the decline in demand for clothing purchases in the US markets since the beginning of the year, with inflation indicators rising to record levels.
Sources said: “Egyptian ready-to-wear exports to the US market are still very insignificant considering Bangladesh’s exports exceeding 35 billion dollars or China’s exceeding 50 billion dollars . . Egypt has great advantages to launch in this sector”.
He pointed out that the Egyptian companies restricted by the Kuwait agreement began to suffer from the difficulty of providing the Israeli component, as Israel suffers from the provision of this component and imports large proportions of it from East Asian countries to export to Egyptian companies, “and Egyptian companies overcome the crisis by importing from companies producing this component working in Turkey, so that this percentage will be adhered to later”.