Even When the Arabs Benefit From Us They Can’t Say So

By Sherwin Pomerantz

It is always amazing to me that the depth of the Arab world’s unhappiness with our presence in this part of the world makes it impossible for them to recognize the benefits that some Arab governments have received as a direct result of our being here.

A case in point is the Qualified Industrial Zones (QIZ) which exist in both Jordan and Israel as a result of the peace agreements we signed with both countries and through the cooperation, as well, of the United States government.

In principle, the QIZ concept developed during the Clinton-Rabin years, allows for products manufactured in both countries to be exported to the US duty free as long as there is a small percentage of the product with “Israeli content.”  So, for example, Standard Textile Inc. of Cincinnati produces hospital linen in their plant in Jordan.  The fabric is cut in their factory in Israel then shipped to Jordan for finishing, where the operational costs are significantly lower than they are here in Israel.  The Jordanians then get to export these garments with a “made in Israel” label so that they can enter the US duty free in accordance with the terms of the Free Trade Agreement between the US and Israel.

This is all a bit less important today than it was when it was implemented as now Jordan also has a free trade agreement with the US.  But statistics a year ago showed that fully a third of Jordan’s exports came from the QIZs located there.

A similar situation exists in Egypt, which does not have a Free Trade Agreement with the US and, thus, needs the QIZ framework to be able to export products to America duty free.  
According to multiple press reports this week, Egypt’s Minister of Industry and Foreign Trade Hatem Saleh said that Egypt wants to lower from 10.5% to 8% the value of Israeli content required in goods made in QIZs that receive duty-free treatment when shipped to the United States. Egypt’s economy is continuing to struggle in the wake of last year’s popular uprising and Saleh said amending the QIZ agreement would provide an economic benefit to Egypt’s raw materials sector. Press sources note that about 700 factories in Egypt are currently operating in 15 designated QIZs, employing some 100,000 workers, mostly in textile and apparel production.

Now isn’t it amazing that one never hears about this at all from the leadership of Egypt (or Jordan for that matter)?  This is the same Muslim Brotherhood leadership that saw fit to go to the UN two weeks ago and suggest, as President Morsey did, that the Egypt-Israel peace treaty should be re-examined because Israel has not kept to its side of the bargain and Egypt has not received any benefit from the peace with Israel.  Really?  No benefit?  700 factories operating there employing 100,000 people and that does not constitute a benefit?  In Jordan a third of the country’s exports come from the QIZs there and they too can say there is no benefit from the peace treaty?

I attended the Global Business Conference at the invitation of US Secretary of State Clinton in Washington in February.  At one meeting I was sitting with the Jordanian representative on my right and the Egyptian representative on my left.  When the subject of QIZs surfaced, neither one of them wanted to acknowledge the Israel connection or the fact that this was a significant benefit of the respective peace treaties.  It was only after four or five attempts by me that the Jordanian rep finally admitted the facts to the surprise of everyone in the room.

It is one thing to be nationalistic and take pride in one’s country but it is something else altogether to totally disregard positive facts simply because they don’t fit in to the government’s anti-Israel rants.  I have no doubt that the 100,000 people working in those 700 factories in Egypt and their compatriots in similar situations in Jordan are very happy with the fact that those countries made peace with Israel as it has put food on their individual tables and guaranteed a better future for their children.  So sad that their leadership cannot acknowledge it as well.

(For those who are reading this in the US, perhaps this should be called to the attention of your congressional delegations as well for use when they consider renewing US benefits to the current Egyptian government.)