Tuesday, March 08, 2011

763 Million Reasons Why Egypt Might Want To Maintain Relations With Israel

David Makovsky, writing for the Washington Institute for Near East Policy, has written an article Reviewing Egypt's Gains from Its Peace Treaty with Israel. While Makovsky gives 7 examples of ways that Egypt has profited from being at peace with Israel, one stands out:

Trade boost.

According to a Congressional Research Service report issued this month, one-third of Egyptian exports to the United States come from Qualifying Industrial Zones (QIZ). Mandated by Congress in 1996, the first QIZs enabled Jordan to have free-trade access to U.S. markets so long as a percentage of the exported goods consisted of both Jordanian and Israeli inputs. Egypt -- Israel's only other treaty partner in the region -- joined the system in December 2004. Today, its QIZs employ more than 120,000 Egyptians and export approximately $763 million worth of goods to U.S. shores per year, or a third of all Egyptian exports to the United States.
A Congressional Research Service report from July 2006 indicates that the value of Egyptian goods exported to the US has tripled from what it was in 2005, the year Egypt first entered the QIZ:
Among the 20 MENA entities, Egypt is the United States’ 7th largest trading partner,
with U.S. imports for 2005 at an estimated $2.1 billion and exports at an estimated $3.1
billion for the first 11 months of 2005. For 2005, Egypt’s first full year of QIZ
participation, Egypt exported $230 million dollars worth of goods to the United States
through the QIZ program. This represents 12% of Egypt’s total exports to the United
States. As with the Israel-Jordan QIZ program, textiles and apparel exports dominated
Egypt’s QIZ exports to the United States: 89% of those exports were apparel and 5% were
textiles.
Even granted that Saudi Arabia would likely be willing to step in to make up any shortfall should Egypt become belligerent towards Israel, $763 million is a sizable amount.

Then again, what are the chances that the Obama administration would place any kind of restriction on Egypt should it drop Israeli inputs?

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