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Israel Free Trade Agreement

The United States-Israel Free Trade Agreement was the first FTA entered into by the United States. 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. U.S. goods and services trade with Israel totaled $46 billion in 2013.

The central oversight body for the FTA is the United States-Israel Joint Committee. In December 2009, the Joint Committee met to exchange views on issues and concerns related to agricultural market access and telecommunications and government procurement, among other topics. Both governments acknowledged the progress and collaborative work that has taken place since the last meeting of the Joint Committee in Washington, DC which was in October 2007. At the 2009 meeting, the United States and Israel agreed that the two sides would explore discussions of a mutual recognition agreement on telecommunications and explore concerns voiced by U.S. exporters in meeting Israeli customs requirements. They also made progress on a number of market access issues related to standards, customs classification, and technical regulations. Both sides agreed to continue the dialogue through the U.S.- Israel Working Group on Standards and Technical Regulations, which last met in March 2009.

Recognizing in the 1990s that the FTA had not served to liberalize some aspects of bilateral agriculture trade, the United States and Israel concluded an Agreement Concerning Certain Aspects of Trade in Agricultural Products (ATAP), which provided for duty-free or other preferential treatment of certain agricultural products. The 1996 agreement was extended through 2003, and a new agreement was concluded in 2004. In December 2009, the two sides agreed to extend that agreement for a second time, extending through December 31, 2010. The Working Group on Agriculture agreed to meet in early 2010 to continue negotiations of a successor to the 2004 ATAP.

Despite the impasse over agricultural free trade, during 2009, technical experts from the United States and Israel worked together to resolve some existing agricultural trade concerns. The Israelis removed a longstanding obstacle to U.S. pistachio exports to Israel, and the United States opened the U.S. market to Israeli eggplant and resolved customs questions on the transshipment of fresh herbs and flowers. However, many technical barriers still remain for U.S. agricultural products’ entry into the Israeli market.

In connection with the 2009 Special 301 out-of-cycle review (OCR), the United States and Israel are continuing negotiations to resolve longstanding issues with Israel’s intellectual property rights (IPR) regime for pharmaceutical products.
 

U.S. - Israel Bilateral Trade and Investment

Israel is currently our 24th largest goods trading partner with $38 billion in total (two ways) goods trade during 2014.  Goods exports totaled $15 billion; Goods imports totaled $23 billion.  The U.S. goods trade deficit with Israel was $8 billion in 2014.

Trade in services with Israel (exports and imports) totaled $9.8 billion in 2013 (latest data available).  Services exports were $4.7 billion; Services imports were $5.1 billion.  The U.S. services trade deficit with Israel was $466 million in 2013.

According to the Department of Commerce, U.S. Goods exports to Israel supported an estimated 40 thousand jobs in 2013 (latest data available).

Exports

  • Israel was the United States= 23rd largest goods export market in 2014.
     
  • U.S. goods exports to Israel in 2014 were $15.1 billion, up 9.6% ($1.3 billion) from 2013, and up 64% from 2004.  U.S. exports to Israel are up 587% from 1984 (Pre-FTA).
     
  • The top export categories (2-digit HS) in 2014 were: Precious Stones (diamonds) ($6.8 billion), Electrical Machinery ($1.8 billion), Machinery ($1.1 billion), Aircraft ($1.0 billion), and Optic and Medical Instruments ($565 million).
     
  • U.S. exports of agricultural products to Israel totaled $692 million in 2014.  Leading categories include: tree nuts ($124 million), corn ($99 million), feeds and fodders ($61 million), and soybeans ($61 million).
     
  • U.S. exports of private commercial services to Israel were $4.7 billion in 2013 (latest data available), 15.8% ($635 million) more than 2012, and 123% higher than 2003. Travel, transportation (air), and intellectual property (industrial processes and computer software) categories accounted for most of U.S. exports.

 

Imports

  • Israel was the United States= 21st largest supplier of goods imports in 2013.
     
  • U.S. goods imports from Israel totaled $23.1 billion in 2014, a 1.1% increase ($242 million) from 2013, and up 58% from 2004.  U.S. imports from Israel are up 1,203% from 1984 (Pre-FTA).  U.S. imports from Israel accounted for 1.0% of overall U.S. imports in 2014.
     
  • The five largest import categories in 2014 were: Precious Stones (diamonds) ($9.4 billion), Pharmaceutical Products ($4.6 billion), Electrical Machinery ($1.5 billion), Machinery ($1.5 billion), and Optic and Medical Instruments ($1.4 billion).
     
  • U.S. imports of agricultural products from Israel totaled $347 million in 2014.  Leading categories include: snack foods (including chocolate) ($61 million), and tree nuts ($39 million).
     
  • U.S. imports of services were $5.1 billion in 2013 (latest data available), down 0.4% ($20 million) from 2012, but up 144% from 2003.  R and D services, transportation, and travel categories accounted for most of the U.S. services imports from Israel.

 

Trade Balance

  • The U.S. goods trade deficit with Israel was $8.0 billion in 2014, a 12.0% increase ($1.1 billion) over 2013.
     
  • The United States has a services trade deficit of $466 million with Israel in 2013 (latest data available), down 58.4% from 2012.

 

Investment

  • U.S. foreign direct investment (FDI) in Israel (stock) was $9.5 billion in 2013 (latest data available), a 9.9% increase from 2011.
     
  • U.S. direct investment in Israel is primarily concentrated the manufacturing sector.
     
  • Israel FDI in the United States (stock) was $9.5 billion in 2013 (latest data available), up 4.6% from 2012.
     
  • The distribution of Israel FDI in the U.S. is primarily concentrated in the manufacturing sector.
     
  • Sales of services in Israel by majority U.S.-owned affiliates were $3.0 billion in 2012 (latest data available), while sales of services in the United States by majority Israel-owned firms were $2.9 billion.