Post Conflict Normalization through Trade Preferential Agreements: Egypt, Israel and the Qualified Industrial Zones

Trade and economic cooperation are often promoted through policy to facilitate post-conflict normalization. The Qualified Industrial Zone (QIZ) model of duty and quota-free industrial regions is a policy tool initiated by the United States as a brokerage in promoting peace between Israel and its Arab neighbors. Indeed, a vast literature aims to evaluate the economic and political potential of trade liberalization. Yet the mechanisms of trade policy implementation in a post-conflict environment, its timing and underlying political motives, are critical but rather neglected factors, which design the prospects of trade incentives. We therefore question the effectiveness of the QIZ as a tool addressing post-conflict dynamics and ask whether its impact on Israel–Egyptian relations reflects the value of this policy or the circumstances of its implementation. Using mixed methods, this study presents and evaluates the implementation of the QIZ in Egypt since 2004 and its results, both economic and political, fine tuning the broader debate to focus on circumstances of implementation. This case study demonstrates the results of trade opportunity implementation as a reaction to threat rather than mobilization to realize post-conflict rapprochement or even to reap economic opportunity. Notwithstanding the forces of globalization, Egypt’s pre and post-revolutionary internal political economy and delicate relations with Israel serve as the context for understanding the QIZ. This context facilitates contradicting political interpretations, with the QIZ simultaneously celebrated as an economic success, criticized as an Egyptian escape route from structural reforms, and accused as embodying a U.S.–Egyptian elite conspiracy, to coerce Egyptian economic normalization with Israel.

Complementary or Functional Rival? Labour Regulation of Garment Industry Workers in Cambodia by Better Factories Cambodia

Chapter 7 explores the formalisation of the Cambodian garment industry and the factors that have shaped and constrained the effectiveness of the combination of the US–Cambodia Bilateral Textile Agreement and the International Labour Organization’s Better Factories Project. Unlike the Mathadi Boards examined in Chapter 4, a great deal has been written about efforts to improve working standards in the Cambodian garment industry. The Chapter makes two important interventions in the already abundant literature on Better Factories Cambodia. Firstly, it focuses on the role of the trade agreement that led to the establishment of Better Factories Cambodia, as preferential treatment in trade played a critical part in encouraging investment in formal enterprises. It argues that trade incentives were just as important as the BFC in improving the labour standards of participating enterprises. Secondly, it examines the initiative in the context of Cambodia’s political economy showing how the Hun Sen government has used the initiative to its advantage and avoided investing in its own labour inspectorate. For this reason, the chapter asks whether Better Factories Cambodia has become a functional rival to the state labour inspectorate.

Ethics and Incentives: A Political Approach

Understood within an economic framework as a form of trade, incentives appear inherently ethical; understood as a form of power, incentives seem ethically suspect. Incentives, along with coercion and persuasion, are among the ways in which some people get others to do what they want them to do. This paper analyzes incentives as a form of power in order to develop criteria for distinguishing legitimate from illegitimate uses of them. Whereas an economic approach focuses on voluntariness as the sole criterion in judging incentives, this political approach yields three standards: purpose, voluntariness, and effect on the character of the parties involved. The paper explores issues that arise in applying these standards. Framing the problem of incentives as a problem of power reveals the ethical issues with greater depth and complexity than placing incentives in an economic frame of reference.