Irbid Qualifying Industrial Zone

In recognition of the requirements in Section 9 of the United States-Israel Free Trade Area Implementation Act of 1985, as amended (the "legislation"), and Proclamation No. 6955 of the President of the United States of America (the "Proclamation"), the Government of the State of Israel and the Government of the Hashemite Kingdom of Jordan (the "Parties") hereby agree to the creation of the "Irbid Qualifying Industrial Zone" (the "QIZ"), and request that the Government of the United States designate it as a "Qualifying Industrial Zone" under the legislation and proclamation.

Article I
Geographic Boundaries

The Government of the State of Israel and the Government of the Hashemite Kingdom of Jordan hereby designate the following territory of their respective countries as enclaves where merchandise may enter without payment of duty or excise taxes, no matter what the country of origin of the merchandise.

1. For the Government of the State of Israel: An area under Israeli customs control within the boundaries of the land crossing border at Sheikh Hussein-Nahar Hayarden Bridge, shown on the map attached as Exhibit A.

2. For the Government of the Hashemite Kingdom of Jordan: the Irbid duty-free area, shown on the map attached as Exhibit B.

On the basis of the respective national legislation of the parties, the customs authorities of Israel and Jordan shall establish special customs procedures for the purpose of assuring the speedy flow of goods into and out of the zone. The purpose of these procedures is to ensure the strict enforcement of the principles of duty and taxation pursuant to this Agreement. In the case of the State of Israel, where factories lying outside the zone will contribute part of the 35 percent minimum content required by the Legislation and Proclamation, the Israeli customs authority will ensure that inputs imported from abroad incorporated into goods shipped into the zone will be exempt from duty.

Article II
Economic Cooperation

1. Recognizing that one of the primary purposes of the legislation and proclamation is to encourage economic cooperation in the region, the Government of the State of Israel and the Government of the Hashemite Kingdom of Jordan hereby agree to the establishment of a Joint Committee which will have the responsibility outlined below of identifying those businesses located within the Irbid Qualifying Industrial Zone which involve substantial economic cooperation between Israel and Jordan. Goods processed in the zone by businesses identified by the Committee will be eligible for duty-free entry into the United States if the goods meet the requirements of the Legislation and Proclamation.

2. A representative of the United States shall have the right to participate in meetings of the Committee as an observer.

3. The Committee may determine that a business involves substantial economic cooperation between Israel and Jordan.

   1. If the manufacturer on the Jordanian side of the QIZ and the Israeli manufacturer each contribute and maintain at least one third of the minimum 35 percent content required under the legislation and proclamation for duty-free treatment in the United States.

   Or:

   2. If the manufacturer on the Jordanian size of the QIZ and the Israeli manufacturer each contribute and maintain at least 20 percent of the total cost of production of goods eligible for duty-free treatment, excluding profits, even if the costs cannot be considered as part of the 35 percent minimum content requirement. For this purpose, costs may include originating materials, wages and salaries, design, research and development, depreciation of capital investment, overhead including marketing expenses, etc.

4. The Joint Committee shall have the authority to approve those businesses whose products will be eligible for duty free entry into the United States based on the requirements of paragraph C and to cancel this eligibility of these requirements are no longer met. Approval of eligibility for duty-free privileges will be reconfirmed by the Joint Committee on an annual basis.

5. The Joint Committee will promptly transmit to U.S. Customs (Trade Compliance Office, Office of Field Operations) the names of those businesses whose products are eligible for duty-free treatment and identify the products produced or processed in the QIZ by those businesses which comply with the rule of origin requirements set out in the "outline for designations of qualifying industrial zone under Proclamation No. 6955" attached to the July 28, 1997 letter from the U.S. Trade Representative to the Israeli and Jordanian Ministers of Industry and Trade.

Article III
Rules of Origin

The Government of the State of Israel and the Government of the Hashemite Kingdom of Jordan agree that origin of any textile or apparel product that is processed in the Irbid Qualifying Industrial Zone, regardless of the origin or place of processing of any of its inputs or materials prior to entry into, or subsequent to withdrawal from, the zone, will be determined solely pursuant to the rules of origin for textile and apparel products set out in Section 334 of Uruguay Round Agreement Act, 12 U.S.C. 3592.

Article IV
Customs Cooperation

The Government of the State of Israel and the Government of the Hashemite Kingdom of Jordan will assist United States authorities in obtaining information, including by means of verification, for the purpose of reviewing transactions for which duty-free access into the U.S. is claimed in order to verify compliance with applicable conditions, and to prevent unlawful transshipment of articles not qualifying for duty-free access into the U.S.

Article V
Entry into Force

This Agreement shall enter into force upon the completion of the necessary legal procedures by the Parties.

Done in Doha, Qatar on the 16th day of the month of November, 1997, in three original copies in the English language.

Source: Israeli Foreign Ministry