Cablegate: Readout of 14th Quarterly Meeting of Israel/Egypt

VZCZCXYZ0000
RR RUEHWEB

DE RUEHTV #1754 2241140
ZNR UUUUU ZZH
R 111140Z AUG 08
FM AMEMBASSY TEL AVIV
TO RHMFUU/WHITE HOUSE WASHDC
RUEHC/SECSTATE WASHDC 7938
INFO RUEHAM/AMEMBASSY AMMAN 4583
RUEHEG/AMEMBASSY CAIRO 2582

UNCLAS TEL AVIV 001754

SENSITIVE
SIPDIS

NEA/IPA FOR ASACHAR
WHITE HOUSE PLS PASS USTR FOR SFRANCESKI
CAIRO FOR BUZBEE

E.O. 12958: N/A
TAGS: ETRD ECON IS EG
SUBJECT: READOUT OF 14TH QUARTERLY MEETING OF ISRAEL/EGYPT
QIZ

SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET DISTRIBUTION

1. (U) SUMMARY: Israeli and Egyptian trade officials met on
Sunday, August 10 in Jerusalem for the quarterly meeting of
the Qualified Industrial Zones (QIZ). Egypt requested
Israeli assistance (and a possible joint delegation visit to
Washington) to promote Upper Egypt's inclusion in the QIZ
areas to the United States Trade Representative (USTR).
Egyptian exports to the United States under the QIZ remain at
about 18 million USD, which the Egyptians attribute to a the
slowdown in the United States. The GOI requested that the
Egyptian delegation encourage a visit by the head of the
Egyptian Manufacturers Association. A case of possible fraud
was discussed extensively and GOI officials will further
investigate before any decision is reached. Three new QIZ
companies were approved and 59 QIZ certificates were renewed.
End Summary.

2. (U) Expansion into Upper Egypt remains very much a
priority for the Egyptians. Egypt is encouraging Israel to
approach USTR jointly in Washington to lobby for the
expansion, particularly after learning that the head of the
Israeli delegation, Gabi Barr, of the Ministry of Industry
Trade and Labor, accompanied the Jordanians on a similar
visit for QIZ expansion. Israel, for its part, is willing to
assist the Egyptians. Egypt is concerned that once the
current administration leaves it will be more difficult to
receive approval for the expansion.

3 (U) Egyptian exports to the United States under the QIZ
remain at the same level as the first quarter, 18 million
USD. Both Israel and Egypt attribute this decrease from last
year to the economic slowdown in the United States. Barr
told econoff that Israeli manufacturers were also interested
in exporting to the European market to fill in the gap left
by a lack of orders from the United States.

4. (U) Barr also mentioned that during the last quarterly
meeting in Cairo, the head of the Egyptian Manufacturer's
Association, El-Zorba, indicated his interest in increasing
ties with the Israeli manufacturing community. The GOI
followed up by inviting El-Zorba to visit several Israeli
factories and meet the head of the Israeli Manufacturers
Association Shraga Brosh. El-Zorba has yet to respond to the
invitation, and the Israeli delegation requested that the GOE
follow up with him. El-Bous, head of the Egyptian
delegation, confirmed that El Zorba had received the
invitation, but remained noncommittal as to whether he would
make the visit to Israel or not.

5 (U) A case in which an Israeli company sent fabric
imported from China to be manufactured in Egypt and then sent
back to Israel for resale was discussed extensively. It was
agreed that too little was known about the business practices
of the company and further investigation was required.
Although Israel and Egypt encourage this type of trade, both
parties agreed that sending products back into Israel for
resale was not in compliance with the QIZ.

6 (U) Three new QIZ companies were approved for the program
and 59 QIZ certificates were renewed.

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