The United States-Israel Free Trade Agreement (FTA) entered into force in 1985 and represents the United States’ first FTA. It continues to serve as the foundation for expanding trade and investment between the United States and Israel by reducing barriers and promoting regulatory transparency. In 2019, U.S. goods exports to Israel increased 5.1 percent to $14.4 billion from 2018. Since 1985, when the United States-Israel FTA came into force, U.S. exports to Israel have risen by 538 percent, although in 2019, the United States ran a $5.1 billion bilateral deficit in goods.
Joint Committee Meeting
The United States-Israel Joint Committee (JC) is the central oversight body for the FTA. At its last meeting in February 2016, the JC explored potential new collaborative efforts to increase bilateral trade and investment. During the meeting, the United States and Israel noted progress in addressing a number of specific standards-related and customs impediments to bilateral trade and agreed to continue to support existing dialogues that address these issues.
Israel continues to revise its standards regime aiming to expand significantly the recognition of standards of internationally respected standards bodies, including those of the United States. The 2014 Israeli standards law has facilitated the enhanced importation into Israel of a broad range of U.S. products, adopting over 30 international standards developed by U.S. standards developing organizations. In 2020, the United States and Israel agreed to adopt new procedures making it easier for exporters to gain approvals when claiming duty-free status under the FTA for individual products.
Agreement on Trade in Agricultural Products (ATAP)
At a February 2016 JC meeting, Israel had proposed resuming negotiations on a permanent successor agreement to the current United States-Israel Agreement on Trade in Agricultural Products (ATAP). The current ATAP is the second of two temporary ATAPs that the United States and Israel have negotiated due to a disagreement over interpretation of the FTA that arose after the Uruguay Round was concluded. The first ATAP, negotiated in 1996, allowed for limited preferential tariff treatment. The 2004 successor ATAP achieved modest additional market access for U.S. agricultural products. That ATAP was originally set to remain in effect until the end of 2008, but it has been continued each year since then through a series of one-year extensions. Under the 2004 ATAP, Israel provides the United States less advantageous tariff treatment than the United States provides Israel: the United States provides Israel with duty-free access to 90 percent of agricultural tariff lines, while Israel provides the United States with duty-free access to only 72 percent of agricultural tariff lines. Because of the existing disparities, the United States remains committed to negotiating a balanced permanent successor agreement.
U.S.-Israel Trade Facts
FTA Entered into force September 1, 1985
In 2019, Israel GDP was an estimated $387.7 billion (current market exchange rates); real GDP was up by an estimated 3.5%; and the population was 9 million. (Source: IMF)
U.S. goods and services trade with Israel totaled an estimated $47.0 billion in 2019. Exports were $20.2 billion; imports were $26.9 billion. The U.S. goods and services trade deficit with Israel was $6.7 billion in 2019.
Israel is currently our 23th largest goods trading partner with $33.9 billion in total (two way) goods trade during 2019. Goods exports totaled $14.4 billion; goods imports totaled $19.5 billion. The U.S. goods trade deficit with Israel was $5.1 billion in 2019.
Trade in services with Israel (exports and imports) totaled an estimated $13.1 billion in 2019. Services exports were $5.8 billion; services imports were $7.4 billion. The U.S. services trade deficit with Israel was $1.6 billion in 2019.
According to the Department of Commerce, U.S. exports of goods and services to Israel supported an estimated 73 thousand jobs in 2015 (latest data available) (43 thousand supported by goods exports and 30 thousand supported by services exports).
- Israel was the United States' 24th largest goods export market in 2019.
- U.S. goods exports to Israel in 2019 were $14.4 billion, up 5.1% ($695 million) from 2018 and up 50.7% from 2009. U.S. exports to Israel are up 538% from 1985 (pre-FTA).
- The top export categories (2-digit HS) in 2019 were: precious metal and stone (diamonds) ($4.2 billion), machinery ($2.1 billion), aircraft ($2.0 billion), electrical machinery ($1.1 billion), and optical and medical instruments ($686 million).
- U.S. total exports of agricultural products to Israel totaled $626 million in 2019. Leading domestic export categories include: tree nuts ($146 million), soybean meal ($49 million), soybeans ($49 million), feeds & fodders not elsewhere specified or indicated ($48 million), and distillers grains ($47 million).
- U.S. exports of services to Israel were an estimated $5.8 billion in 2019, 7.8% ($488 million) less than 2018, but 58.7% greater than 2009 levels. Leading services exports from the U.S. to Israel were in the travel, transport, and intellectual property (industrial processes) sectors.
- Israel was the United States' 23th largest supplier of goods imports in 2019.
- U.S. goods imports from Israel totaled $19.5 billion in 2019, down 10.4% ($2.3 billion) from 2018, but up 4.1% from 2009. U.S. imports from Israel are up 861% from 1985 (pre-FTA).
- The top import categories (2-digit HS) in 2019 were: precious metal and stone (diamonds) ($6.9 billion), pharmaceuticals ($2.2 billion), optical and medical instruments ($2.1 billion), electrical machinery ($1.5 billion), and machinery ($1.4 billion).
- U.S. total imports of agricultural products from Israel totaled $396 million in 2019. Leading categories include: snack foods ($79 million), tree nuts ($35 million), other vegetable oils ($34 million), processed fruit & vegetables ($34 million), and wine and beer ($31 million).
- U.S. imports of services from Israel were an estimated $7.4 billion in 2019, 0.4% ($31 million) less than 2018, but 69.9% greater than 2009 levels. Leading services imports from Israel to the U.S. were in the research and development, travel, and transport sectors.
- The U.S. goods trade deficit with Israel was $5.1 billion in 2019, a 36.7% decrease ($3.0 billion) over 2018.
- The United States has a services trade deficit of an estimated $1.6 billion with Israel in 2019, up 39.2% from 2018.
- U.S. foreign direct investment (FDI) in Israel (stock) was $28.5 billion in 2019, a 3.0% increase from 2018. U.S. direct investment in Israel is led by manufacturing, professional, scientific, and technical services, and information services.
- Israel's FDI in the United States (stock) was $14.6 billion in 2019, up 4.2% from 2018. Israel's direct investment in the U.S. is led by manufacturing, depository institutions, and wholesale trade.
Sales of services in Israel by majority U.S.-owned affiliates were $4.5 billion in 2017 (latest data available), while sales of services in the United States by majority Israel-owned firms were $2.9 billion.