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Israel Free Trade Agreement

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 2017, U.S. goods exports to Israel decreased 4.9 percent to $12.5 billion from 2016. Since 1985, when the United States-Israel FTA came into force, U.S. exports to Israel have risen by 456 percent, although in 2017, the United States ran a $9.4 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. 

Standards Dialogue

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 2017, 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 the February 2016 JC meeting, Israel 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 after the Uruguay Round was concluded. The first ATAP, negotiated in 1996, allowed for limited preferential tariff treatment. A 2004 successor ATAP achieved modest additional market access for U.S. agricultural products. That ATAP was only to remain in effect until December 2008, but the United States and Israel have extended the 2004 ATAP each year since then to permit negotiations on a successor agreement.    

 

U.S. - Israel Bilateral Trade and Investment

Israel is currently our 24th largest goods trading partner with $34.5 billion in total (two way) goods trade during 2017. Goods exports totaled $12.6 billion; goods imports totaled $21.9 billion. The U.S. goods trade deficit with Israel was $9.4 billion in 2017.

Trade in services with Israel (exports and imports) totaled an estimated $13.2 billion in 2017. Services exports were $5.9 billion; services imports were $7.4 billion. The U.S. services trade deficit with Israel was $1.5 billion in 2017.

Exports

  • Israel was the United States' 24th largest goods export market in 2017.
  • U.S. goods exports to Israel in 2017 were $12.6 billion, down 4.9% ($648 million) from 2016 and down 2.6% from 2007. U.S. exports to Israel are up 456% from 1985 (pre-FTA).
  • The top export categories (2-digit HS) in 2017 were: precious metal and stone (diamonds) ($5.0 billion), machinery ($1.4 billion), aircraft ($1.2 billion), electrical machinery ($989 million), and optical and medical instruments ($643 million).
  • U.S. total exports of agricultural products to Israel totaled $545 million in 2017. Leading domestic export categories include: tree nuts ($128 million), soybean meal ($51 million), distillers grains ($41 million), other feeds & fodders ($35 million), and soybeans ($29 million).
  • U.S. exports of services to Israel were an estimated $5.9 billion in 2017, 10.6% ($561 million) more than 2016, and 84.4% greater than 2007 levels. Leading services exports from the U.S. to Israel were in the travel, transport, and technical and other services sectors.

Imports

  • Israel was the United States' 18th largest supplier of goods imports in 2017.
  • U.S. goods imports from Israel totaled $21.9 billion in 2017, down 1.2% ($273 million) from 2016, but up 5.5% from 2007. U.S. imports from Israel are up 981% from 1985 (pre-FTA.
  • The top import categories (2-digit HS) in 2017 were: precious metal and stone (diamonds) ($7.4 billion), pharmaceuticals ($4.3 billion), electrical machinery ($1.7 billion), optical and medical instruments ($1.6 billion), and special other (returns) ($1.4 billion).
  • U.S. total imports of agricultural products from Israel totaled $372 million in 2017. Leading categories include: snack foods ($70 million), processed fruit & vegetables ($37 million), wine and beer ($30 million), planting seeds ($23 million), and tree nuts ($23 million).
  • U.S. imports of services from Israel were an estimated $7.4 billion in 2017, 11.8% ($779 million) more than 2016, and 86.4% greater than 2007 levels. Leading services imports from Israel to the U.S. were in the research and development, travel, and transport sectors.

Trade Balance

  • The U.S. goods trade deficit with Israel was $9.4 billion in 2017, a 4.2% increase ($375 million) over 2016.
  • The United States has a services trade deficit of an estimated $1.5 billion with Israel in 2017, up 17.1% from 2016.

Investment

  • U.S. foreign direct investment (FDI) in Israel (stock) was $26.7 billion in 2017, a 158.3% increase from 2016. 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 $11.9 billion in 2017, down 2.8% from 2016. 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 $4.2 billion in 2015 (latest data available), while sales of services in the United States by majority Israel-owned firms were $2.3 billion.