Commercial Diplomacy in the Middle East

How It Helps Egypt, Israel, and the United States

A container ship in the New Suez Canal, July 2015. STRINGER / REUTERS

During his recent campaign, U.S. President-elect Donald Trump revealed little fondness for free trade agreements. But in the Middle East, there is at least one that deserves a second look: the Qualifying Industrial Zones (QIZs) protocol between Egypt and Israel, which, guided by U.S. commercial diplomacy, enhanced cooperation between the two countries beyond traditional security matters and into economic ties. It also helped save the Egyptian textile industry, benefited thousands of companies, and created hundreds of thousands of jobs.

The QIZs were meant as extension of the U.S.-Israeli free trade agreement of 1985. The first round of talks began in July 2003, and the negotiations aimed to extend preferential treatment in U.S. markets to exports from designated areas in Egypt. For their part, the Egyptians wanted to avoid future setbacks from the changes in the WTO textile quota regimes. They were also trying to mimic Jordan’s own QIZs and to secure a free trade agreement with the United States. As for the Israelis, they were keen on giving legitimacy to the business relations that had existed between the two partners for years without public recognition.

Both sides continued to rally behind the QIZs until, in December 2004, Rashid Mohamed Rashid, then Egyptian minister of commerce and external industry, and Ehud Olmert, then a cabinet minister, finally signed the deal under the observance of the American representative, Robert Zoellick. At the time, Washington was pursuing a broader long-term strategy in the Middle East that aimed to promote political and economic stability by increasing regional countries’ trade and investment with the United States. Washington thus viewed the QIZ protocol as an effective tool for encouraging Egypt to liberalize its economy and engage its neighbors and the world.

Today, QIZ locations include Alexandria, the greater Cairo area, the central Delta region, the Suez Canal area, and upper Egypt. Israeli and Egyptian authorities both have to agree to a location becoming a QIZ, and the decision is supposed to be based on

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