If all goes according to plan, by the end of 2022, Israel will have free trade agreements with several more countries. This will mean no customs tariffs on most goods, and dramatic reductions in tariffs on others, among them fresh produce, and dairy and other food products. Thus even if the reform abolishing duties on these items does not succeed, through the free trade agreements, imports of them from the countries concerned will in any case be subject to reduced customs tariffs.
The list of countries is long, but some of them stand out. China and India, with which talks on free trade agreements have been going on for two years, together represent a quarter of the world’s population. These two countries are huge exporters of food products, and their food companies can shortly be expected to be selling in Israel. The pace of negotiations with India has been stepped up recently. Israel is also negotiating a free trade agreement with the Eurasian Union. This group of countries is led by Russia, and the negotiations will be delayed because of the war in Ukraine. Other members of the group are Belarus, Kyrgyzstan, and Armenia.
Negotiations are at a very advanced stage with the United Arab Emirates (UAE), and will probably result in an agreement in the summer. The Abraham Accords quickly brought about economic cooperation between the UAE and Israel, and within eighteen months trade was flourishing. The free trade agreement should make economic and business relations even smoother. An Israeli delegation headed by Ministry of Economy and Industry director general Dr. Ron Malka and Foreign Trade Administration chief Ohad Cohen has already completed a second round of talks, and they are proceeding well.
Cohen told “Globes” that the great importance of the UAE did not lie in direct trade with it, as its population is about the same size as that of Israel, but rather in the fact that it is a regional trading centers. Warehousing, marketing and trading centers of some of the largest companies in the world, such as Amazon, are in the UAE. The UAE is a commercial hub connecting East Asia, the Middle East, Africa, and the American continent. Through the UAE, Israel will be able to reach countries with which it has no diplomatic relations, among other things under the free trade agreements that the UAE has with the other Gulf states.
The UAE has free trade agreements only with the Gulf states and the European countries that are not part of the European Union. The agreement with Israel will be the third such agreement that it signs, indicating the high importance that it attributes to business ties with Israel.
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Israel currently has free trade agreements with the European Union, the US, and the UK, its main trading partners, and also with Brazil, Argentina, Uruguay, Paraguay, Mexico, Turkey, Ukraine, and other countries in Europe. The agreement with Turkey is especially successful, and the volume of trade between the two countries has continued to rise despite the long hiatus in diplomatic relations.
Israel will become much more attractive
What will the new free trade agreements bring? First of all, automatic cancellation of import duties on a range of goods, and a substantial reduction in duties on food products. Secondly, Israel will become much more attractive to large producers and retail chains, which will be able to supply competing products at low prices. “Globes” has reported that during a visit to the UAE, Malka and Cohen met representatives and huge supermarket chains to examine the possibility that they might come to Israel. A free trade agreement will encourage such moves.
Cohen points to the change in Israel’s foreign trade that began in 2016 when it was decided to expand trade with Asia and Latin America. This decision, by the Netanyahu government, derived from a desire to diversify Israel’s export markets and place more weight on developing countries in need of Israeli technology. The number of economic attachés in China was raised from one to six, and in India from one to three. In Latin America there are now twelve economic attachés, which compares with just two in the middle of the previous decade. During 2021, the attachés arranged thousands of meetings between Israeli companies and companies in the countries in which they serve. According to Cohen, at a conservative estimate, the deals that resulted from these meetings were worth some NIS 1.5 billion.
Published by Globes, Israel business news – en.globes.co.il – on March 22, 2022.
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