Background on Qualifying Industrial Zones (QIZ's)
In 1996, U.S Congress authorized designation of qualifying industrial zones (QIZ's) between Israel andJordan, and Israel and Egypt. The QIZ's allow Egypt and Jordan to export products to the United Statesduty-free if the products contain inputs from Israel (8% in the Israeli-Jordanians QIZ agreement, 11.7% in the Israeli-Egyptian QIZ agreement). The purpose of this trade initiative has been to support the prosperity and stability in the Middle East by encouraging regional economic integration.
In order for a QIZ article to gain duty-free entry, QIZ factories must add at least 35 percent to the value of the article. This 35 percent minimum content figure can include value added in Israel, Egypt/Jordan, or the United States. QIZs must encompass portions of Egypt/Jordan and Israel, though the areas do not have to be contiguous.
The immediate saving for an investor in the QIZ is the amount of the U.S. tariff on any specified good. Generally speaking, U.S. tariffs on clothing and textile goods are relatively high, which makes production of these goods in QIZs especially attractive.
QIZ with Jordan
Since 1998, the United States has designated thirteen QIZs in Jordan; On March 6th, 1998, the United States Trade Representative (USTR) designated Jordan's Al-Hassan Industrial Estate in the northern city of Irbid as the world's first QIZ.
Other industrial parks designated by the U.S. government as QIZs in Jordan include; the Al-Hassan Industrial Estate (Irbid), and Al-Hussein Ibn Abdullah II Industrial Estate (Al Karak), both owned and operated by the Jordan Industrial Estate Corporation. Also, the now privately owned and operated Al-Tajamouat Industrial Estate (Amman), Ad-Dulayl Industrial Park (near Zarka), Jordan Cyber City (Irbid), Al-Qastal Industrial Zone (Amman), and El-Zai Ready-wear Manufacturing Co. sub-zone (Zarqa).
Other QIZs expected to be operational in the near future include the Gateway QIZ (northern Jordan-Israel border), Aqaba Industrial Estate (Aqaba), and the Mushatta International complex (Amman).
Benefits of QIZ with Jordan
- Exports from Jordan to the United States grew from $15 million in 1997 to more than 1 billion Dollars in 2004.
- Jordan’s QIZ's are the country’s strongest engine of job growth. Jordan estimates that more than 40,000 jobs have been created within its QIZs. Investment in Jordan’s QIZs is currently at between $85-100 million and is expected to grow to $180 to $200 million.
- Following the QIZ, The United States and Jordan negotiated a full FTA that the U.S. Congress approved in 2001.