Peace and Prosperity: Israel’s Qualifying Industrial Zone Agreements with Jordan and Egypt

Abstract

After Israel and the US entered their free trade agreement in 1985, the parties realized that this FTA could be leveraged to support regional peace by fostering economic cooperation between Israel and its neighbours. The idea was to allow goods produced in certain industrial zones, which resulted in substantial economic cooperation between Israel and the other parties, as qualifying for preferential treatment under the Israel-US FTA. Ultimately, two Qualifying Industrial Zone (QIZ) agreements were signed: one between Israel, the US, and Jordan, and the second between Israel, the US, and Egypt. This article outlines the background and rules of these QIZ agreements within the larger framework of the Israel-US FTA. Israel-US FTA, ‘Qualifying Industrial Zone’ agreements, QIZ, preferential treatment, joint supply chains, substantially transformed, direct processing costs, rules of origin of textiles and apparel, domestic content standards.