Egypt, Israel and U.S. to sign free-trade deal

12/6/2004 1:15:00 PM GMT

Egypt, Israel and the United States are expected to sign a free-trade deal this month, the office of Israeli Prime Minister Ariel Sharon said.

According to the agreement, certain goods from four free-trade zones can enter the U.S. without customs tariffs, provided that 35 percent of the products comes from mutual cooperation between Israeli and Egyptian firms, and that Israel's input isn’t less than eight percent.

The Israeli trade and industry minister, Ehud Olmert, said that the deal would be signed on December 14 in Cairo.

"It is an historic breakthrough since we signed the (1979) peace treaty," he said. "With the agreement we will be able to increase our exports to Egypt, which (at the moment) are worth tens of millions of dollars."

The agreement is expected to increase commercial benefits between Israel and Egypt, which currently amount to 44 million dollars a year.

Oded Tirah, president of the Israeli Manufacturers Association, expects that the free-trade agreement would make trade revenues increase rapidly to reach 70 million dollars a year.

Olmert also said that "This could be the economic breakthrough between Israel and Egypt. Despite the 1979 peace agreement there has not been the dynamics of warmer closer relations,"

"This (agreement) could have a broader effect on our relations with Egypt. It could be conducive for far reaching changes in the Middle East." He added.

Olmert noted that the deal is similar in its form to the one signed with Jordan, the second Arab state that signed a peace accord with Israel. He added that the role of the U.S. would increase the potential for Israeli exports in the region.

"With the U.S. partner to the agreement this could extend economic ties between Israel and its neighbors," he said.

"It is not just Egypt and Jordan, but countries in proximity which we have embryonic ties with."