An overview of the U.S..-Israel Free Trade Agreement
Last Published: 10/25/2016
General Information
The U.S.-Israel FTA was the first U.S. FTA to enter into force, and it eliminated duties on manufactured goods as of January 1, 1995.

Non-tariff barriers to trade remain in the areas of intellectual property rights, standards and technical regulations, and a lack of transparency in government tendering process. Also, tariff and nontariff barriers continue to affect a certain portion of U.S. agricultural exports. As a result, in 1996 the United States and Israel signed an Agreement on Trade in Agricultural Products (ATAP), establishing gradual and steady market access liberalization for food and agricultural products effective through December 31, 2001. Negotiation and implementation of a successor ATAP was completed in 2004. It was effective through December 31, 2008 and was extended through December 31, 2010 and again through December 31, 2011.

The FTA includes a non-binding statement of intent to eliminate barriers to trade in services such as tourism, communications, banking, insurance, management consulting, accounting, law, computer services, and advertising. It also includes an agreement to eliminate all restrictions on government procurement, and calls on Israel to relax its offsets requirements for government agencies other than the Israeli Ministry of Defense.

By Sector
U.S. exports to Israel grew from $2.5 billion in 1985 to $11.3 billion in 2010. The main U.S. export sectors to Israel are precious metals, electrical machinery, machinery, aircraft, medical instruments and vehicles.

Reports and Statistics
Commentary: The U.S. – Israel FTA took effect on September 1, 1985, and was the first free trade agreement signed by the United States with another country.  The FTA eliminated duties on manufactured goods as of January 1, 1995.  It also allowed the United States and Israel to protect sensitive agricultural sub-sectors with non-tariff barriers, including import bans, quotas, and fees.

The U.S. – Israel FTA is outdated by today’s standards because it has detailed obligations only on merchandise trade while the more recent FTAs include detailed obligations on agriculture, services, investment, intellectual property protection, standards, transparency, and rule of law.

Before and After the U.S.-Israel FTA:
  • Overall Trade in Goods between the United States and Israel grew from $3.5 billion in 1985 to $26.5 billion in 2005, an increase of 657%.
  • U.S. exports to Israel grew from $2.58 billion in 1985 to $9.7 billion in 2005, an increase of 288%.
  • U.S. imports from Israel grew from $2.20 billion in 1985 to $16.8 billion in 2005, an increase of 663%.
  • In 1985, Israel was our 30th largest trading partner (exports and imports combined) and now ranks 18th. 
Benefits of the FTA:
Investment: U.S. investment in Israel in 2004 data reached $6.7 billion, representing 49% of all foreign direct investment in Israel.  U.S. companies have invested primarily in the Israeli communications, software, and life sciences sectors.

Services: The FTA includes a non-binding statement of intent to eliminate barriers to trade in services such as tourism, communications, banking, insurance, management consulting, accounting, law, computer services, and advertising.  

Government Procurement: The FTA includes an agreement to eliminate all restrictions on government procurement, and calls on Israel to relax its offsets requirements for government agencies other than the Israeli Ministry of Defense.  However, American companies are concerned about government procurement process, including the lack of transparency in the evaluation of tenders, lengthy tender procedures stemming from a lack of preparation, and the use of negotiated agreements or directed contracts rather than public tenders.

IPR: The FTA reaffirms obligations under bilateral and multilateral agreements relating to intellectual property rights.  However, Israel was elevated to the Priority Watch List (PWL) in the USTR’s 2005 Special 301 due to continuing concerns regarding its policies on data protection for proprietary test data.
Additional Information

Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



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