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Remarks by Ambassador Michael Froman to the U.S.-Israel Business Initiative

Remarks by Ambassador Michael Froman to the U.S.-Israel Business Initiative

Washington, D.C.
December 4, 2015

*As Delivered*

“Thank you, Khush [Choksy, Vice President of Turkey & Middle East Affairs at the U.S. Chamber of Commerce]. 

“Thirty years ago, when President Reagan signed the legislation implementing the U.S.-Israel Free Trade Agreement, he highlighted three reasons why it was of great significance. 

“The first reason was bipartisanship. At the time, Congress was divided, with Republicans controlling the Senate and Democrats controlling the House. And yet the U.S. House of Representatives, led by Speaker Tip O’Neil, passed the bill unanimously, 422-0, and the U.S. Senate, led by Senator Bob Dole, passed it by voice vote. 

“The second reason was economics. The agreement lowered tariffs, as previous agreements had done, but it also broke new ground. It was our first trade agreement to recognize the importance of trade in services, which President Reagan correctly identified as an area of growing importance to the U.S. economy and an area that America was primed to excel in globally. 

“And the third reason was strategic. It was no mistake that the United States, which was the first nation to recognize Israel, also established its first free trade agreement with Israel. This agreement was intended to strengthen our economies and the ties that growing commerce creates. And it was also intended to show the world that the bond between our nations runs even deeper than security matters.

“Now, there’s no question that our FTA has succeeded in all three of its dimensions.  

“Politically, Washington still sees a fair amount of partisanship, but trade remains one of our strongest areas of bipartisan cooperation. Earlier this year, for example, Congress passed Trade Promotion Authority, the renewal of AGOA and GSP, and the reauthorization of TAA by bipartisan majorities.  We hope they will move the custom bill soon, and we are now working with Democrats and Republicans in Congress to build support for TPP as well.

“Economically, the U.S.-Israel relationship has flourished. Our bilateral trade in goods has grown more than eightfold over the last three decades, rising from $4.7 billion to $38.0 billion. Our trade in services has grown more than six-fold since 1992, rising to $10.7 billion in 2014. 

“Strategically, the agreement has paved the way for stronger ties between our countries. As President Obama said during his visit to Israel in 2013, ‘innovation is just as important to the relationship between the United States and Israel as our security cooperation.’ And thanks to the deeper economic partnership our FTA helped create, our citizens are working closer together than ever, creating growth that benefits not only our societies but also the world. 

“In that context, we have viewed with growing concern a global movement to boycott, divest from, and sanction Israel, which runs at cross-purposes with our FTA. I know many in this room have also been alarmed by these developments. So let me be absolutely clear: the United States government is firmly against efforts to boycott, divest from, or sanction Israel. 

“Today, Israel is home to the operations of over 2,500 U.S. firms employing over 72,000 Israeli citizens and contributing to their economy. And the U.S. is a vital market for Israeli firms and innovators. Last year alone, Israelis were granted nearly 3,500 U.S. patents – that’s more than all the other countries in the Middle East and all the countries in South Asia combined.  

“And we’ve built on this foundation in recent years. For example, we’ve worked collaboratively on raising IPR standards. We’ve also made progress toward a plurilateral Trade in Services Agreement.

“But there’s more we can do, including through trade, to make our relationship even stronger. After all, anniversaries like the one we’re here to recognize are opportunities not simply to celebrate our past achievements, but also to look forward and aspire to accomplish even more.

“Let me start by acknowledging that, in some respects, our FTA has been bypassed by time. Thirty years ago, it was a very forward-looking document. But the world has changed dramatically since then.

“Whether it is advances in technology or the changing patterns of trade, the global landscape of trade has changed. There is no reason for us to be stuck in a vision of our economic relationship frozen in time.

“Rather, it is clear we can and should go further.

“There’s been an enormous amount of innovation in the trade space, including through TPP and T-TIP, as we raise standards and take on new issues facing the global economy.

“Let me mention just a few issues – but I see there’s a whole report on this. I only wish we’d seen the report before we wrote the speech (laughter).

“Today, American companies continue to face challenges in their efforts to do business in Israel, often at a disadvantage to firms from Israel and other trading partners.  

“In agriculture, for example, Israel provides much greater market access to European firms than U.S. firms. For wine, Europe’s quota is three times larger than our own. Similarly, in frozen vegetables, Europe’s quota is more than six times larger than our own. Why does that make sense?

“We would both benefit from an agreement that eliminates all tariffs and certain non-tariff barriers in agriculture. The U.S.-Israel FTA is unique among our FTAs in not achieving meaningful market access for agricultural products, and getting that done would cement closer economic ties and increase our two-way trade. 

“The same is true when it comes to standards. We’ve been discouraged by the practice of setting standards in technical committees that are not open to non-Israeli stakeholders and by the tendency to adopt standards that effectively exclude U.S. products.

“The costs of regulatory barriers are borne by everyone in the supply chain, from factory workers and truck drivers, to retail workers and consumers.

“In that regard, we were encouraged two years ago by the Government of Israel’s decision to remove regulatory barriers by recognizing international standards for goods imported into Israel. We would like to see the Israeli Ministry of Economy move quickly to implement such recognition of international standards, offering the Israeli consumer greater choice at lower prices.  

“Another area where we could go further is customs. We would like to eliminate a customs documentation burden that our exporters and Israeli companies face under our FTA. According to one estimate, the elimination of one particular form would save an estimated $5,000 in fees and 25 man-hours for every $100,000 shipped. 

“We believe it is time to modernize our approach, which will allow our exporters to enjoy the cost-savings and other benefits of electronic communication. We’ve been talking about doing this for some time. Let’s get it done.  

“In conclusion, I’d like to underscore again the strong partnership the United States and Israel share, and the importance of our first FTA in building a foundation for future success. As President Obama said, ‘every step of the way, Israel has built unbreakable bonds of friendship’ with the United States. Today, we have the opportunity to make that friendship even stronger. Thank you.”