Israel, Egypt, and the United States signed a trade agreement that a senior U.S. official called the most significant trade pact between Egypt and Israel in the past 20 years.
Israel hailed the agreement as a potential economic boon that could bring $150 million to Israel in its first year.
Egypt says the deal could create 250,000 jobs in 2005, especially in the clothing and textile industry, which is the country's number-one export arena.
U.S. Trade Representative Robert Zoellick called it, "The most significant agreement between Israel and Egypt in 20 years."
The agreement signed in Cairo allows Egypt to export goods to the United States duty-free, as long as a minimum percentage of the product is made in cooperation with Israeli companies. It establishes so-called Qualified Industrial Zones in parts of Cairo, Alexandria, and Port Said where the goods are to be made.
The treaty was signed by Mr. Zoellick, Israel's Deputy Prime Minister Ehud Olmert, and Egypt's Foreign Trade Minister Rachid Mohammed Rachid.
Egypt and Israel signed a peace agreement in 1979, but ties are anything but close. Egypt recalled its ambassador to Israel four-years ago when the Palestinian uprising began and no one is expecting a new envoy to be sent any time soon.
Israel's ambassador to Egypt, Eli Shaked, told Israel Radio the trade pact is a good sign, but cautioned about raising expectations too high about what it will mean to ties between the countries.
"We have to wait for awhile in order to see there are no obstacles and that bilateral relations are supported by a regional good atmosphere," he said.
The agreement does have its detractors, especially by those in Egypt who oppose any sort of relations with Israel, as well as, those who fear it gives too much economic control to Israel. They dismiss projected benefits as far fetched.
Supporters point out that similar zones set up in Jordan have seen their exports to the United States rise to $800 million a year in just five years. The Jordanian deal also created 40,000 jobs in an economy that is much smaller than Egypt's.