# ![](media/image1.jpeg){width="0.7395833333333334in" height="0.78125in"}

# 

# Doing Business In Israel: 

# A Country Commercial Guide for U.S. Companies

# INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2008. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

-   [Chapter 1: Doing Business In
    ...](#chapter-1-doing-business-in-israel)

-   [Chapter 2: Political and Economic
    Environment](#chapter-2-political-and-economic-environment)

-   [Chapter 3: Selling U.S. Products and
    Services](#chapter-3-selling-u.s.-products-and-services)

-   [Chapter 4: Leading Sectors for U.S. Export and
    Investment](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

-   [Chapter 5: Trade Regulations and Standards](#ch5)

-   [Chapter 6: Investment Climate](#chapter-6-investment-climate)

-   [Chapter 7: Trade and Project
    Financing](#chapter-7-trade-and-project-financing)

-   [Chapter 8: Business Travel](#chapter-8-business-travel)

-   [Chapter 9: Contacts, Market Research and Trade
    Events](#chapter-9-contacts-market-research-and-trade-events)

-   [Chapter 10: Guide to Our
    Services](#chapter-10-guide-to-our-services)

U.S. exporters seeking general export information/assistance or
country-specific commercial information should consult with their
nearest **Export Assistance Center** or the **U.S. Department of
Commerce\'s Trade Information Center** at **(800) USA-TRADE**, or go to
the following website: [http://www.export.gov]().\
\
To the best of our knowledge, the information contained in this report
is accurate as of the date published. However, **The Department of
Commerce** does not take responsibility for actions readers may take
based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other
commercial arrangements. **The Department of Commerce** can assist
companies in these endeavors.

# Chapter 1: Doing Business In Israel

-   [Market Overview](#market-overview-return-to-top)

-   [Market Challenges](#marketchallenges)

-   [Market Opportunities](#market-opportunities-return-to-top)

-   [Market Entry Strategy](#market-entry-strategy-return-to-top)

## Market Overview [**Return to top**](#chapter-1-doing-business-in-israel)

[]{#marketchallenges .anchor}

• After growth of 6.2% in 2000, Israeli growth was negative in 2001 and
2002. Growth resumed in 2003 with GDP of 1.7%, and continued to grow by
4.4% in 2004, 5.2% in 2005, 5.1% in 2006 and 6% in 2007.

• GDP nominal per capita in 2007 was \$31,767 (source: IMF).

• Inflation: 1.2% in 2004, 1.3% in 2005. In 2006 inflation was slightly
negative, in 2007 it was 3.4%.

• Unemployment declined to 9% in 2005 from 10.4% in 2004. It continued
to decline in 2006 to 8.5% and in 2007 to 7.4%.

• Israel ranked 3rd in the world for U.S. patents per capita, following
Japan and Taiwan.

• Exports to Israel in 2007 amounted to \$13.019 billion, making Israel
the 22nd largest export market in the world for U.S. goods and services.
Imports from Israel amounted to \$20.812 billion, creating a negative
trade balance of \$7.8 billion.

• The United States is Israel\'s largest single country trade partner,
despite heavy European competition.

• U.S. exports accounted for 28% of Israel\'s imports in 2007.

• Locally or regionally produced U.S. brands contribute to an even
higher profile for U.S. products among Israeli consumers and
manufacturers.

• Israel\'s commercial relationship with the United States has grown
seven-fold since the signing the Free Trade Area Agreement (FTAA) in
1985.

• Since 1995, nearly all tariffs on trade between U.S.-Israel have been
eliminated

## Market Challenges [**Return to top**](#chapter-1-doing-business-in-israel) 

-   Competition from the EU is intense.

-   Agricultural trade issues, inadequate-intellectual property rights
    protection, and a range of technical standards issues remain active
    [non-tariff trade
    barriers.](http://www.buyusa.gov/israel/en/services.html#_section8)

-   Frequently there is a tense political and security environment given
    the complex geopolitical neighborhood and stagnation in the Peace
    Process.

-   Israel is largely a mature market in most sectors and U.S. companies
    should be prepared to compete.

-   The business environment and style here will seem familiar to
    Americans, but personal relationships sometimes play a relatively
    larger role.

## Market Opportunities [**Return to top**](#chapter-1-doing-business-in-israel)

-   Hi-tech and defense dominate Israel\'s trade numbers, and Israel
    remains a global center for hi-tech design and R&D.

-   Hi-tech continues to provide the best opportunities for U.S.-Israel
    commercial partnerships specifically in safety and security
    equipment and services, defense equipment, medical technologies and
    biotechnology products. Power generation and education/training also
    represent other good opportunities.

-   U.S.-Israeli commercial linkages often consist of U.S. firms
    providing electronic inputs which Israeli firms integrate into final
    products that are often re-exported.

-   Proposed infrastructure and electricity projects, if implemented,
    will provide solid opportunities for U.S. exporters: gas-driven
    independent power producers (IPPs), including cogeneration plants;
    renewable energy power stations, such as solar energy stations and
    wind driven turbine generators.

-   The ongoing devaluation of the U.S. dollar against the shekel bodes
    well for U.S. exports to the Israeli market.

-   Road technology and infrastructure projects could offer millions of
    dollars worth of export opportunities for U.S. firms over the next
    five years, especially since Israel adopted U.S. standards in
    intelligent transportation systems.

With over 500 U.S. companies represented in Israel, the Embassy is
continuously and actively engaged in support of U.S. commercial
interests.

## Market Entry Strategy [**Return to top**](#chapter-1-doing-business-in-israel)

-   Identify the appropriate distribution and sales channels.

-   Distribution methods vary by type of product, but typically the
    following arrangements apply:

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-   Commissioned Agents: used mainly for industrial equipment, raw
    materials and commodities;

-   Non-Stocking Agents: used mainly by manufacturers;

-   Stocking Agents: used mainly for high volume items;

-   Importers/distributors: used especially for consumer goods.

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-   The U.S. Commercial Service at the American Embassy in Tel Aviv and
    its office in Jerusalem offer valuable assistance to U.S. businesses
    interested in selling goods and services. Its Commercial
    Specialists, covering both Israeli and Palestinian markets, provide
    expert counseling and can help American companies identify trade
    opportunities and find local partners. To read about our services
    and trade promotion activities, please visit our
    [website](http://www.buyusa.gov/israel/en/services.html).

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```
-   Franchising has significantly increased in popularity, since its
    introduction to the local market in the mid-1980s

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```
-   Particularly popular in the fast food restaurant sector; the U.S.
    share of the Israeli fast food franchising market exceeds 50%.

-   Franchising has also penetrated other industry sectors. ACE Hardware
    and Office Depot opened franchises in 1993 and 1994, respectively,
    for example. Toys-R-Us opened its first outlet in 1995.

-   Additional franchise operations include Office Depot and Re/MAX.

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```
-   Direct marketing is fairly common.

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```
-   Door-to-door sales are uncommon in Israel and considered a nuisance.

-   Cable and satellite TV offer shopping channels.

-   Direct marketing is common also through mail order booklets,
    distributed monthly by credit card companies and through the
    Internet.

-   Telephone marketing is increasingly common, but with mixed results.

-   With a European level of GDP per capita, Israeli consumers are
    relatively well off and enjoy shopping as a popular pastime.

-   The Internet is widely used in Israel, and represents an
    increasingly successful marketing avenue.

```{=html}
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```
-   The Government of Israel encourages both joint ventures and
    licensing.

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```
-   Joint ventures are the most popular methods of cooperation for
    Israeli firms, especially in technology-related industries.

-   Israeli businesses prefer obtaining licensing agreements for a
    five-year period automatically renewable clause that would last for
    another five years.

-   Manufacturing under licensing agreements is also common in Israel.

-   Israelis generally prefer agreements in which the licensor takes
    equity with the licensee.

-   The norm for royalties is 4-5% of the turnover.

-   Higher rates are common for luxury articles, author\'s fees, and for
    specialized machinery.

-   A 10-15% withholding tax on royalties and fees is often deducted at
    the source.

-   The licensee may repatriate royalties through an authorized bank.

-   The licensee is entitled to claim an income tax deduction on
    royalties and fee payments.

-   It is advisable to seek advice from a respected law firm and
    accounting firm when trying to figure out tax liabilities.

-   The United States and Israel have signed a [tax
    treaty](http://www.law.wayne.edu/mcintyre/text/Treaty_Class/israel.PDF)
    to avoid double taxation.

# Chapter 2: Political and Economic Environment

For background information on the political and economic environment of
the country, please click on the link below to the U.S. Department of
State Background Notes.

(<http://www.state.gov/r/pa/ei/bgn/3581.htm>)

[Return to table of contents](#section)

# Chapter 3: Selling U.S. Products and Services 

-   [Using an Agent or
    Distributor](#using-an-agent-or-distributor-return-to-top)

-   [Establishing an Office](#establishing-an-office-return-to-top)

-   [Franchising](#franchising-return-to-top)

-   [Direct Marketing](#direct-marketing-return-to-top)

-   [Joint Ventures/Licensing](#joint-ventureslicensing-return-to-top)

-   [Selling to the
    Government](#selling-to-the-government-return-to-top)

-   [Distribution and Sales
    Channels](#distribution-and-sales-channels-return-to-top)

-   [Electronic Commerce](#electronic-commerce-return-to-top)

-   [Trade Promotion and
    Advertising](#trade-promotion-and-advertising-return-to-top)

-   [Pricing](#pricing-return-to-top)

-   [Sales Service/Customer
    Support](#sales-servicecustomer-support-return-to-top)

-   [Protecting Your Intellectual
    Property](#protecting-intellectual-property-return-to-top)

-   [Due Diligence](#due-diligence-return-to-top)

-   [Local Professional
    Services](#local-professional-services-return-to-top)

-   [Web Resources](#web-resources-return-to-top)

## Using an Agent or Distributor [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Israeli industry generally prefers to purchase goods through an agent
that will be able to provide after-sales service. Government entities
and government-owned industries will often require an agent in the
market. One of the first issues a potential agent will raise with the
U.S. manufacturer is the possibility of exclusivity, and the vast
majority of agencies have exclusive representation rights given the
relatively small size of the Israeli market. Some exporters use a
commission agent who conducts limited promotional campaigns and calls on
potential buyers. Exporters of more expensive, heavy industrial
equipment most commonly use this approach.

Partnering up with a good local representative who has good contacts in
the industry, proven reliability, loyalty, technical suitability and
after-sales service capability is a key factor to success in selling and
maintaining a continued presence in the Israeli marketplace. U.S.
companies need to be aggressive in their pursuit of business
opportunities and maintain an active in-country presence.

U.S. exporters can understand the cultural, economic and commercial
nuances for sales bound for the Palestinian market, via the [U.S.
Commercial Service in Jerusalem](http://www.buyusa.gov/westbank/en/). We
encourage American exporters wishing to market their goods in the West
Bank & Gaza to strongly consider using local Palestinian agents and
distributors. Using Israeli agents for Palestinian markets does not
utilize local, Palestinian market expertise, and does not allow U.S.
firms to maximize their sales exposure to the local market.

For the Israeli market, the most common approach used by exporters of
light industrial equipment and consumer goods is to obtain a local
importer/distributor. Distributors will import on their own account,
carry sufficient stock to satisfy ongoing demand or to use for
demonstration, maintain their own sales organization, supply spare parts
and maintain a service division, if applicable. The local representative
often provides legal support for ongoing operations. In concluding a
representation agreement U.S. companies should be sure to include the
following elements:

1\. Contract duration;

2\. Exclusivity (if applicable);

3\. Compensatory amount as a function of contract duration, in case of
termination of exclusivity;

4\. Promotional input by agent and volume of sales; and

5\. Dispute settlement mechanism, either by arbitration, or by assigning
a tribunal (preferably U.S.).

*The U.S. Commercial Service (CS) and the U.S. Foreign Agricultural
Service (FAS) at the U.S. Embassy in Tel Aviv provide services that help
U.S. companies establish themselves in the Israeli market. Please see
our website (<http://www.BuyUSA.gov/israel>). You may also wish to
contact the Department of Commerce Trade Information Center,
800-872-8723 (800-USA-TRAD,) or see
[http://www.export.gov](http://www.export.gov/).*

## Establishing an Office [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

American firms can operate in Israel as a foreign company, a foreign
partnership or by establishing a branch office. There are no
restrictions on foreign ownership of Israeli companies or securities.
Israel allows repatriation of foreign investment capital and profits.
Prior to establishing an office in Israel, U.S. firms should evaluate
tax ramifications under the [U.S.-Israel Agreement on the Prevention of
Double
Taxation](http://www.law.wayne.edu/mcintyre/text/Treaty_Class/israel.PDF).
Possible higher corporate and income taxes in Israel should be weighed
against other expenditures and marketing advantages.

American firms interested in establishing an office in Israel are
required to register with the Registrar of Companies at the Ministry of
Justice. The American company must file a copy of the document
certifying that it is incorporated in the United States, stating its
objectives and rules, and lists its directors and the name of its
representative in Israel. If these documents are in English, they must
be accompanied by a Hebrew translation. There is no requirement for the
managers or directors of the company to be Israeli citizens or
residents. However, U.S. representatives assigned to manage the Israel
office must first obtain work permits from the Employment Service
Division of the Ministry of Industry, Trade & Labor. Authorization from
the Ministry and, if applicable, the Investment Center, is necessary
before the Ministry of Interior can issue a visa to begin employment in
Israel. U.S. companies wishing to establish an office in Israel are
advised to seek legal advice from a local accounting or [law
firm](http://www.buyusa.gov/israel/en/serviceproviders.html?bsp_cat=80120000).

## Franchising [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Franchising has become increasingly popular in Israel since the
introduction of this retail model to the local market in the mid-1980s.
It is particularly popular in the fast food restaurant sector. Due to
the strong presence of such companies as Ben & Jerry's Ice Cream,
Dominos, Kentucky Fried Chicken, McDonald\'s and Pizza Hut, the U.S.
share of the Israeli fast food franchising market exceeds 50%. Hooters
also entered the Israeli market in 2007. Franchising has also penetrated
other industry sectors. ACE Hardware and Office Depot opened franchises
in 1993 and 1994, respectively, and operate branches in the main
commercial centers of the country. Toys-R-Us opened its first outlet in
1995. Dale Carnegie also operates in Israel and will begin offering
courses regularly in the Palestinian markets this year.

The key to success in franchising in Israel lies in establishing a
strong management team and good, ongoing, in-country training programs
to ensure continuing high quality standards. Flexibility and adaptation
to local consumer demand is important for success. Companies that
continually offer a variety of products that are new and improved or
specifically tailored for the Israeli market have seen long-term success
in Israel.

## Direct Marketing [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Direct marketing in Israel picked up significantly in 1992, with the
introduction of cable TV and a home-shopping channel. Direct marketing
is common also via mail order inserts distributed by credit card
companies and through the Internet. Door-to-door sales are uncommon in
Israel and considered a nuisance, while telephone marketing is rare and
has had disappointing results. Israeli consumers enjoy shopping as a
popular pastime. However, direct marketing, including Internet sales,
play a small role in relation to total retail sales.

## Joint Ventures/Licensing [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Joint ventures are one of the most popular methods of cooperation for
Israeli firms, especially in technology-related industries.
Manufacturing under licensing agreements is also common in Israel. The
Government of Israel encourages both methods of operation. Chapter 6 of
this guide provides further information on investing in Israel. Israeli
businesses strive to obtain licensing agreements for a five-year period,
with an automatically renewable clause that would last for another five
years. They prefer agreements in which the licensor takes equity with
the licensee.

The norm for royalties is 4-5% of the turnover, although higher rates
are common for luxury articles, author\'s fees, and for specialized
machinery. A 10-15% withholding tax on royalties and fees is often
deducted at the source even though the actual payment of this amount of
tax by the representative is not clear. The licensee may repatriate
royalties through an authorized bank by producing a statement from a
certified accountant. The licensee is entitled to claim an income tax
deduction on royalties and fee payments. It is advisable to seek advice
from a respected law firm and accounting firm when trying to calculate
tax liabilities. The United States and Israel have signed a [tax
treaty](http://www.law.wayne.edu/mcintyre/text/Treaty_Class/israel.PDF)
to avoid double taxation.

## Selling to the Government [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Israel is a signatory to the WTO government procurement code. Under the
1993 Public Procurement Law, all Government of Israel (GOI) entities and
government-owned companies are required to procure goods or services by
issuing a tender. In 1995, the Knesset approved the Preference for
Israeli Products regulations and the Mandatory Commercial Cooperation
regulations.

The \"Preference for Israeli Products\" regulations stipulate that a 15%
preference may be given to Israeli manufacturers for certain items
exempted by the WTO and for products with at least 35% Israeli content
and with a value not exceeding 355,000SDR (approximately \$500,000).
Israeli manufacturers in \"National Priority Zones\" receive an
additional 5-15% advantage.

\"Mandatory Commercial Cooperation\" requirements are an integral part
of each international tender document valued at \$500,000 or more. The
regulations require foreign companies to enter into offset agreements at
a negotiable 28% of the value of the contract. While the foreign firm is
required to make every effort to fulfill its offset obligations, there
is no penalty connected with a failure to do so. However, due to the
importance the GOI attaches to commercial cooperation, failure to
fulfill one\'s obligations will almost certainly result in a lack of
success in future tenders.

The Industrial Cooperation Authority (ICA), a division of the Ministry
of Industry, Trade & Labor, is responsible for negotiating and
monitoring the implementation of the offset agreements. The agreements
may be for local subcontracting, investment in Israel, technology
transfer, R&D contracts, or procurement of Israeli products. The first
four options are preferred because of their potential long-term impact
on the Israeli economy.

For additional information U.S. firms are advised to consult the ICA
website at
[http://www.tamas.gov.il/NR/exeres/B0B48981-357D-446F-AFAC-91A358E93C87.htm](http://www.tamas.gov.il/)
, or contact the ICA office in the United States:

Mr. Zuri Valenci, U.S. Director, ICA

Government of Israel Economic Mission

800 Second Ave., 17th Floor

New York, NY 10017

Tel: (212) 499-5740, fax: (212) 499-5745.

E-mail: [zuri_valenci@emus.gov.il](../zuri_valenci@emus.gov.il)

By court ruling, the use of industrial cooperation as a factor in the
award process is not allowed. However, in the competitive Israeli
market, the industrial cooperation arrangements made by foreign
companies play a decisive role in the competition. U.S. companies
interested in selling to the GOI are strongly advised to appoint a
well-connected local agent to assist in dealing with the Israeli
bureaucracy. In public tenders for large projects, in which the public
entity is looking for involvement of foreign companies, the tendering
party has several tender options:

\- Open International Tender, requiring the foreign bidder to partner
with a local firm, or use local subcontractors;

\- Closed International Tender, following an open or closed
pre-qualification process;

\- Open or Closed National Tender, requiring Israeli bidders to team up
with foreign companies.

As a result of this bidding process, foreign companies will not always
be aware of major tenders. 2007 saw some troublesome cases concerning
transparency in government procurement in Israel. U.S. companies are
advised to contact the [U.S. Commercial Service in Tel
Aviv](http://www.buyusa.gov/israel/en/contact_us.html) (CS Tel Aviv) to
obtain information on upcoming projects and how best to position
themselves. CS Tel Aviv regularly receives requests from Israeli firms
looking for U.S. partners for such projects.

## Distribution and Sales Channels [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Distribution methods vary by type of product. For industrial equipment,
raw materials and commodities manufacturers use non-stocking
commissioned agents, while stocking agents represent high volume items.
Agents will often insist on exclusivity due to the small size of the
country. Most consumer goods are sold through importers and
distributors, but increasingly large retail chains and department stores
import directly without intermediaries. In most cases, distribution
firms serve the entire country.

Almost 20% of Israel\'s 7.1 million people are concentrated in the Tel
Aviv District, Israel\'s commercial and financial center. Other major
concentrations of the population are the Haifa area (15%), a major port
city and center for the petrochemical and high tech industries, and
Jerusalem (12%). Almost all goods are imported through Israel\'s two
Mediterranean ports, Haifa in the north and Ashdod in the south, and
through Ben Gurion International Airport. These ports have good
transportation links to the rest of the country. While most companies
are headquartered in the Tel Aviv or Haifa metropolitan areas, a growing
number of firms maintain branches, showrooms, or service facilities in
Jerusalem and Beer Sheva.

Consumer malls and shopping centers are popular in Israel. Over 200
malls exist and others are planned. Many American specialty shops, chain
stores, and franchises have their outlets in malls and shopping centers.
The key to success is offering an increasing variety of new products and
services to the Israeli consumer.

Israel\'s food market is valued at an estimated \$12 billion. The
institutional market, including the army, hospitals, hotels, restaurants
and places of employment, occupies 30% of the total. Over 60% of the
total food supply directed at non-institutional consumers is sold
through supermarkets and retail chains. Two major supermarket chains
with hundreds of outlets throughout the country dominate the retail food
market. The average floor size of a supermarket is 600 square meters.
Some of the larger stores have areas of 1,000 - 2,000 square meters.
Typical Middle Eastern-style open-air markets and small groceries serve
the remaining part of the food market. In recent years specialty food
stores have developed in all of the main metropolitan centers, as well
as more than 150 convenient stores opened in gasoline stations and are
open 24 hours 7 days a week. Organic food is a growing consumer trend in
Israel.

## Electronic Commerce [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

According to a 2003 report in the Israeli daily Ha\'aretz, the total
volume of online trade in Israel in 2003 was estimated at approximately
NIS 1.4 billion (approx. 334 million), compared to about NIS 1 billion
(\$238 m) in 2002. The report cited a study conducted by the TASC
research company. Four or five main players control the market,
accounting for approximately 60% of sales, mostly electrical appliances
and computer products. The majority of the remaining online trade is
divided among niche sites, which focus on various areas: books, tourism,
food, tickets for entertainment events and flowers.

## Trade Promotion and Advertising [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Aggressive product promotion and advertising are effective tools in
Israel, especially for consumer goods, where brand image is important
and U.S. products face fierce competition from local and European
suppliers. There are several effective means of advertisement including
through commercial television and radio. Channel Two is a commercial
Israeli TV station broadcasting nationwide and is permitted by law to
carry private TV commercials, while state-owned Channel One carries
sponsored advertising by public corporations. Some Israeli and
internationally broadcast cable stations also carry advertisements. The
state-owned Kol Israel (the Voice of Israel) radio station broadcasts
commercial ads via two of its several channels. In addition, 13
privately owned and authorized regional radio station operators accept
commercial ads.

[The U.S. Commercial
Service](http://www.buyusa.gov/israel/en/services.html)

*Major Newspapers and Business Journals*

\- English Language:

[Ha'aretz (daily English version)](http://www.haaretz.com/)

[The Jerusalem Post (daily newspaper)](http://www.jpost.co.il/)

[Globes](http://www.globes.co.il/serveen/)

[The Jerusalem Report (weekly)](http://www.jrep.com/)

[The International Herald Tribune - local
edition](http://www.iht.com/pages/africa/index.php)

*The local edition of the International Herald Tribune includes an
abridged English language version of the Hebrew language Ha\'aretz
daily.*

\- Hebrew Language (dailies):

[Ha'aretz](http://www.haaretz.co.il/)

[Globes (financial)](http://www.globes.co.il/Finance/)

[Ma\'ariv](http://www.maariv.co.il/)

[Yediot Aharonot](http://www.yediot.co.il/)

## Pricing [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Israel is a highly competitive market, and price is a key factor in
purchasing decisions by Israeli companies and consumers. Presenting U.S.
products as good quality at fair market prices may be a better marketing
strategy to capture long-term sales. Distributors prefer exclusivity and
a special pricing clause should be incorporated into representation
contracts. In July 2006, Israel's VAT was reduced to 15.5%. The VAT is
charged on virtually all services and products sold in Israel (except
fresh fruits and vegetables), including imports. The VAT on imports is
levied on the CIF landed cost plus purchase tax. VAT is recovered by the
importer upon resale of the goods and is ultimately paid by the
consumer. Israel levies purchase taxes on many consumer goods. The GOI
reduced or eliminated the tax on more than 600 items in 2000, including
televisions, washing machines, electrical appliances and cosmetics.
Rates that had ranged from 25-85% were reduced to 5-45%. Some rates were
further reduced in 2003. Purchase taxes of up to 90% on motor vehicles,
fuel, tobacco and liquor were left unchanged.

## Sales Service/Customer Support [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

The Ministry of Industry, Trade & Labor requires that all businesses
provide adequate after-sales service and customer support. Regulations
exist that oblige local distributors to provide customers with full
technical support for a period of up to ten years. U.S. firms must
include a clause related to after-sales service and client support in
their contracts with the local agent, to ensure competitiveness in the
Israeli market.

U.S. firms should also ensure that their local representatives receive
adequate and ongoing customer service training and technical support.
The "time between a product failure and the time to repair" is one of
the main issues affecting purchasing decisions by Israeli companies and
government-owned entities. Providing reliable, long-term, after-sales
service is the key to successful sales of most products and services.

## Protecting Intellectual Property [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Israel is a member of the WTO and the World Intellectual Property
Organization (WIPO). It is a signatory to the Berne Convention for the
Protection of Literary and Artistic Works, the Universal Copyright
Convention, the Paris Convention for the Protection of Industrial
Property, and the Patent Cooperation Treaty. Israel was obligated to
implement the WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) by January 1, 2000. The United States continues
to encourage Israel to accede to the WIPO Copyright Treaty and the WIPO
Performance and Phonograms Treaty (commonly known as the WIPO Internet
Treaties), particularly in view of the importance of Israel\'s
high-technology software and telecommunication industries.

In April 2005, Israel adopted limited data exclusivity legislation that
provided some new protection from unfair commercial use of the
confidential test data of pharmaceutical firms. However, these data
exclusivity provisions provide data protection periods that fall far
short of the periods provided in OECD-level economies, as well as other
countries in the Middle East. Furthermore, even during these truncated
periods of protection, generic companies are not prohibited from relying
on the undisclosed test data of U.S. companies to get approvals for the
export of the generic product. Research and development, as well as
clinical trial expenditures made by international pharmaceutical
companies, have fallen in recent years as these companies have moved
these activities to countries with more favorable data protection
regimes.

In December 2005, the Israeli government passed legislation that
curtailed existing pharmaceutical patent term adjustments granted to
compensate for delays in obtaining regulatory approval of a drug. This
legislation further weakened the protection for intellectual property of
research-based pharmaceutical companies in Israel. The new legislation
references a group of 31 countries (Australia, the United States,
Iceland, Japan, Norway, Switzerland and the countries of the EU) in
determining the length of patent term extension. In addition, the
legislation creates numerous bureaucratic obstacles for patent holders
who wish to apply for a patent term extension. The legislation also
applies retroactively to all pending applications for patent term
extensions and already granted patent term extensions.

As a result of the deficiencies of the data exclusivity legislation and
the prospect of passage of the patent term extension legislation, Israel
was placed in April 2005 on the Special 301 "Priority Watch List" and to
this date remains there. The U.S. Government continues to urge the
Israeli government and the Knesset to take steps that will provide a
reasonable period of non-reliance on confidential data and periods of
patent term extension similar to those granted in OECD countries.

Israel has increased its budgetary, educational, police, and judicial
resources devoted to the enforcement of the country's copyright and
trademark laws. In addition, Israel passed amendments to its copyright
laws that should make it easier for law enforcement officials,
prosecutors, and judges to pursue, prosecute, and punish copyright
crimes. In 2005, U.S. industry estimated the loss due to inadequate
intellectual property protection for motion pictures, records and music,
business software, entertainment software and books to be \$154 million.

Please see the Investment Climate Statement (Chapter 6) for more up to
date information, specifically on the ongoing negotiations between
Israel and the USTR on pharmaceutical data exclusivity.

## Due Diligence [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

American firms interested in doing business in Israel are advised to
perform due diligence before concluding any kind of business deal in the
market. Due diligence can include, but is not limited to, checking if
the company or contact is listed on the internet. Several marketing
firms in Israel publish lists of companies and contacts. The U.S.
Commercial Service in Tel Aviv also provides a list of [local business
service
providers](http://www.buyusa.gov/israel/en/serviceproviders.html?bsp_cat=80120000)
on their website. Many Israeli companies are increasingly developing
their own websites and this information can be very useful to an
American company's research.

The U.S. Commercial Service in Tel Aviv can provide basic information on
companies and individuals via the [International Company Profile
(ICP)](http://www.buyusa.gov/israel/en/services.html#_section5) service.
An ICP provides standard information about a local company or entity,
its financial standing, reputation in the business community and
includes a site visit to the local company and a confidential interview
with the company management. The ICP has a 15 workday turnaround time.
There are also several firms in Israel that can provide comprehensive,
in depth, due diligence reports, which relate to the bona fides and
financial stability of companies or individuals (CS Tel Aviv can provide
a list of such companies).

Most American banks correspond with the leading Israeli banks, such as
Bank Leumi and Bank Hapoalim, and can provide due diligence information.
It is advisable, especially when working with new clients, to seek
verification from a corresponding U.S. bank on the authenticity of
documents stemming from the Israeli banking system.

## Local Professional Services [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

Please see the list of local "Business Service Providers" on CS Israel's
website:
[http://www.buyusa.gov/israel/en/serviceproviders.html](http://www.buyusa.gov/israel/en/page70.html).
American firms may also contact E-mail:
<tel.aviv.office.box@mail.doc.gov> or fax: 972-3-510-7215.

## Web Resources [**Return to top**](#chapter-3-selling-u.s.-products-and-services)

**Local Newspapers:**

[Ha'aretz](http://www.haaretz.com/)

[The Jerusalem Post](http://www.jpost.co.il/)

[Globes](http://www.globes.co.il/serveen/)

[The Jerusalem Report](http://www.jrep.com/)

[Globes (financial)](http://www.globes.co.il/serveen/)

[Ma\'ariv](http://www.maariv.co.il/)

[Yediot Aharonot](http://www.yediot.co.il/)

[Industrial Cooperation
Authority](http://www.tamas.gov.il/NR/exeres/B0B48981-357D-446F-AFAC-91A358E93C87.htm)

[Return to table of contents](#section)

# Chapter 4: Leading Sectors for U.S. Export and Investment 

-   [Agricultural Sector](#agricultural-sectors-return-to-top)

**Commercial Sectors**

-   [Automotive Aftermarket Parts &
    Equipment](#automotive-aftermarket-parts-services)

-   [Educational Services](#educational-services)

-   [Electronic Components](#electronic-components-elc)

-   [Energy](#energy)

-   [Homeland Security](#homeland)

-   [Intelligent Transportation Systems]{.underline}

```{=html}
<!-- -->
```
-   [Medical Instruments](#medical-equipment)

-   [Telecommunications Equipment](#telecommunications-equipment)

-   [Travel and Tourism Services](#telecommunications-equipment)

## Agricultural Sectors [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

**Agreement on Trade in Agricultural Products (including value added
food products)**

In 1996, Israel and the United States signed a five-year Agreement on
Trade in Agricultural Products (ATAP), in which Israel was allowed to
protect a number of sensitive crops and livestock products with a
combination of tariff-rate quotas and relatively high duties.

In 2004, the agreement was extended until the end of 2008. Israel also
has free trade agreements with Canada, Bulgaria, EFTA, Jordan, Romania,
Turkey, Mexico, and the European Union. Israel has a customs union with
the Palestinian Authority. As a member of the World Trade Organization
(WTO), Israel implemented the WTO Customs Valuation Agreement that
requires legislation to eliminate non-tariff barriers.

**Trade and the Market for U.S. Products and Services**

First estimates by the Central Bureau of Statistics (CBS) show that in
2006, agricultural and processed foods imports to Israel totaled \$2.8
billion, 11.5 percent above previous year levels. Of total agricultural
imports, \$375.5 million (13.5 percent) were from the United States and
\$1.19 billion (43 percent) from the EU. Israeli food and agricultural
exports in 2006 totaled over \$1.7 billion, of which \$166 million (9.8
percent) were to the United States and \$1.1 billion (mainly vegetables
products) to the EU.

In 2006, prepared food, beverages and tobacco products imports rose by
more than 9 percent compared to the previous year (from \$1.1 billion to
\$1.2 billion) (from \$1.1 billion to \$1.2 billion). Imports of those
products from the EU increased by 16 percent to \$783 while imports from
the U.S. decreased by 5 percent (from \$85 million to \$81 million). The
decrease in U.S. food imports is attributed to relatively high prices,
high shipping costs and increasing barriers, like veterinary
restrictions, labeling requirements and changes in standards. Food
imports from Thailand and Argentina have increased by 10 percent and 54
percent, respectively, compared to the previous year. In addition, in
recent years food imports from Turkey have increased significantly.

**Consumer Buying and Eating Habits**

The monthly household consumption expenditure in 2005 totaled \$2,403,
of which 16.3 percent (\$392) was directed to food purchases and
consumption. When buying food, Israelis are quality oriented and are
ready to pay a premium for quality food products. The Israeli consumer
is acquainted with American products and wishes more available, but at
competitive prices. Since the last decade, more consumers buy their
products through supermarket chains, instead of at more traditional
open-air markets and small grocery stores. Kosher certification is not
an obligatory requirement for importing food into Israel, except for
meat (beef and poultry). However, non-kosher products have a much
smaller market share as the large supermarket chains and hotels refuse
to carry them. Approximately 2/3 of Israeli consumers buy kosher food
products.

###### Opportunities and Challenges for U.S. Exporters to Israel

  ----------------------------------- -----------------------------------
  **Opportunities**                   **Challenges**

  The current exchange rate between   The shipping costs are high.
  the U.S. dollar and the euro        
  continues to favor U.S. suppliers,  
  as European products become more    
  expensive.                          

  There is tremendous growth in the   The competition from Eastern
  number of food stores               Europe, Turkey, Former Soviet
  (supermarkets, grocery stores,      Union, South America and the Far
  24-hour convenience stores), and    East. Products from those areas are
  restaurants.                        cheaper then products from the U.S.
                                      and EU.

  The Israeli consumer appreciates    Restricted food ingredients, for
  American products, which are in     example non-kosher meat, poultry
  demand.                             and pork.

  Israel has the potential to be a    U.S. suppliers' interest in the
  "bridge" to the Palestinian         Israeli market is still low.
  Authority with its rapidly growing  
  population.                         

  Agricultural trade agreement        Israeli buyers unfamiliar with U.S.
  between the U.S. and Israel.        suppliers and products.

                                      U.S. exporters lack knowledge of
                                      the Israeli market and are unaware
                                      of new opportunities.
  ----------------------------------- -----------------------------------

###### Consumer Taste and Preference

The food service industry is expanding and consumer habits are changing.
Over the last few years, Israelis have begun to dine out more frequently
and choose premium food when doing so. Approximately 20 percent of
Israel\'s 7.1 million inhabitants are concentrated in the Tel Aviv
district, Israel\'s commercial and financial center. Other major
concentrations of the population are the Haifa area (15 percent), a
major port city and center for the petrochemical industry, and Jerusalem
(12 percent). While most companies are headquartered in the Tel Aviv or
Haifa metropolitan areas, a growing number of firms maintain branches,
showrooms, or service facilities in Jerusalem and Beer Sheva.

Consumer malls and shopping centers are popular in Israel. Over 200
malls exist and others are planned. Many American specialty shops, chain
stores, and franchises have their outlets in malls and shopping centers.
The key to success is offering an increasing variety of new products and
services to the consumer.

The institutional services, including the army, hospitals, hotels,
restaurants, banquet halls and places of employment, account for 30
percent of the total market share (households and institutional). Over
50 percent of the total food supply directed at non-institutional
consumers is sold through supermarkets and retail chains.

# Best High Value Products Prospects

-   High quality beef meat (if BSE ban is lifted)

-   Wine and beer

-   Energy drinks

-   Coffee and tea

-   Organic food

-   Ice cream

-   Soy food-products

-   Frozen pizza

-   Breakfast cereals

-   Fish and seafood products

-   Baby food

-   Frozen bagels

-   Frozen vegetables

-   Pet food

-   Vinegar and olive oil

-   Dried fruits & nuts

-   Sauces and condiments

-   Intermediate products for further processing (whip toppings, corn
    and potato starch, milk powder, products for the baking industry)

[Return to table of contents](#section)

## Automotive Aftermarket Parts & Services

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

(\$ Millions)

  ------------------------ -------------- ------------ -------------------
                           2005           2006         2007 (estimated)

  Total Market Size        141            121          126

  Total Local Production   20             22           24

  Total Exports            77             97           100

  Total Imports            198            196          202

  Imports from the U.S.    15             14           15
  ------------------------ -------------- ------------ -------------------

The automotive aftermarket sector in Israel consists of original
equipment manufacturer (OEM) parts and their substitutes. Industry
sources predict a 6% increase in 2007 sales in comparison to 2006. There
are about 2.3 million cars on Israeli roads of which 4.1% are built in
the United States, and the balance from Europe (48.1%) and Asia (47.8%).
In 2006, total imports of aftermarket products amounted to \$196
million, of which \$14 million was from the U.S., \$43 million from
Germany, \$17 million from Japan and \$18 million from France, \$16
million from Italy and the balance from China, Korea and Taiwan. There
are presently between 600--700 importers of aftermarket products and
around 20 local manufacturers of aftermarket parts and accessories in
Israel.

About six years ago new legislation was passed by the Anti-Trust
Authority to stop car importers from forcing garages and car owners to
use only OEM parts. American spare parts are recognized for their high
quality although over the years Israel has progressively adopted
European standards as the bulk of cars being imported are from Europe
and the Far East. The Government of Israel has recently appointed an
inter-ministerial committee to review the Israeli car market in general.
One of the committee's main objectives is to open up the Israeli car
market to competition and to eventually reduce taxes on cars from 90% to
65%. Taxes in Israel are among the highest in the world, which industry
sources blame as the main factor preventing the car market from reaching
its potential. Discounting taxes, car prices in Israel were among the
lowest in the world, up to 40% less than in Europe.

### Best Prospects/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

-   Car security and anti-theft devices: anti-theft electronic systems,
    locking devices,

-   Car body: bumpers, radiator grills, hood and trunk lids, wings,
    front and rear lamps (i.e. the parts most vulnerable in car
    accidents).

-   Service parts: disc break pads, shock absorbers, front suspension
    parts, filters for oil and lubrication, air conditioning parts,

-   Replacement service parts: tires, fan belts, water hoses, water
    pumps, brake components, engine and transmission components,
    electrical components, undercarriage items that need replacing at
    the end of the warranty period.

-   Vehicle accessories: car care products, polish, wax, upholstery
    spray

-   Water-coolants (Glycol) for radiators

-   Electronic accessories: TV screens for the rear seats, GPS systems,
    sound systems etc.

-   Universal lubricants: well-known brand names of high-grade oils,
    lubricating, glycol, wax. The market demands well-known brand names.

### Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Israeli importers are always on the look out for quality products at
competitive prices -- usually in that order.

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

[Central Bureau of
Statistics](http://www1.cbs.gov.il/reader/?MIval=cw_usr_view_Folder&ID=141)

## Educational Services

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

In the academic year that ended, the student body and university degree
takers in Israel numbered 212,660 and enrollment was up by 2.2% over the
previous year. Of that number, 163,525 students, representing 76.9% of
the entire student body, were undergraduates. Post-graduate students
taking masters' degrees numbered 39,140, or 18.4% of the student body.
PhD students numbered 9,995, or 4.7% of the student body. The total
excludes the 42,500 students studying at the Open University and the
1,260 non-degree diploma students. The [Council of Higher
Education](http://www.che.org.il/eng.htm) accredits all new institutions
and programs and authorizes them to award academic degrees. The growing
number of entering college students has changed the profile of Israeli
higher education. The growth in the student population has led to the
establishment of new colleges to meet the demand of qualified students.
These colleges are accredited and must offer the same quality of
education as the BAs taught in the local universities. Undergraduate
students are entering these institutions in ever-increasing numbers
(45.5% of all undergraduate students in 2006/7), thereby allowing the
eight universities to focus more on graduate and research level studies.
Today, institutions of higher education in Israel include 8
universities, 8 regional colleges associated with universities, 23 other
regional colleges, 22 teacher training colleges, 12 institutions that
offer a diploma recognized by the Ministry of Education, 11 art schools,
and 59 technological colleges. In 2006, revenues of the top 20 local
universities and community colleges exceeded \$2 billion.

### Best Products/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Israeli undergraduate students typically apply for law, psychology,
medicine, and veterinary medicine, engineering-and fields that are not
offered as BAs in Israel such as hotel administration, advertising, art
and therapy. Short-term or non-degree study includes fields such as
English language, culinary arts, sound engineering, jazz or acting,
architecture and institutions offering sports scholarships. Popular
majors include: law, clinical psychology, industrial/organizational
psychology, business, culinary arts, film, music, video editing,
advertising, East Asian studies, international relations, computer
sciences, architecture, social work, mass communications, pre-med, and
life sciences. Increasingly popular are ecology, environmental sciences,
make up artistry, image consulting, drug and substance abuse counseling,
and various expressive therapies.

### Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Today, attention in Israel has turned to secondary study and relevant
accreditation, be it degree, diploma or certificate. Israelis are
looking to broaden their horizons both professionally and personally and
are investigating opportunities to study overseas. Best prospects for
U.S. educational facilities is to offer a degree integrated with
practical work experience. According to 2007 statistics, a total of
25,000 Israelis requested information and showed interest in study
programs in the States. In 2006/7 there were 2,683 Israeli students
studying in the United States. (Breakdown: 967 under-graduate, 1,382
graduate and 334 other).

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

[United States-Israel Educational
Foundation](http://www.fulbright.org.il/) (Fulbright), [Central Bureau
of Statistics](http://www1.cbs.gov.il/reader/cw_usr_view_Folder?ID=141)
,

[Council of Higher Education](http://www.che.org.il/)

## Electronic Components (ELC)

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

  ------------------------ -------------- ------------ -------------------
                           2004           2005         2006 (estimated)

  Total Market Size        900            950          1,097

  Total Local Production   1370           1,395        1,800

  Total Exports            1340           1,345        1,700

  Total Imports            870            900          997

  Imports from the U.S.    396            337          350
  ------------------------ -------------- ------------ -------------------

(Insert footnote information here)

The electronic components industry remains one of Israel's strongest
sectors, and good export opportunities exist to support Israel's robust
manufacturing industry. According to industry sources, the electronic
components market increased by 15% in 2006. Active and passive
components increased by 12% each, while RF and microwave components
marked an 8% increase.

Israel is a major importer of electronic components with imports
reaching approximately \$1 billion in 2006. About \$350 million worth of
Israeli electronics imports come from the U.S., making it a very
attractive country for U.S. exporters to target. Israel's impressive
capability in the electronics industry has attracted a great number of
international companies to establish research and development facilities
and manufacturing plants in the country. These include Applied
Materials, General Electric, HP, IBM, Intel, Microsoft, National
Semiconductor, and Vishay, among others.

Most imported components are integrated into various types of systems or
subsystems, and then usually exported. Israeli companies purchase
electronic components from the U.S. (44%), Europe (44%), and Asia (22%).
Recently, companies have started outsourcing their purchasing activities
and many use subcontractors to supply them with needed components.

In early 2003, the European Parliament adopted the Restriction of
Hazardous Substances directive (RoHS), which aims to protect human
health and the environment through the restricted use of several
hazardous substances, including lead. Generally, lead is introduced into
electronic systems and serves as an integral part of electronic
products. Exports of electronic products to the European Community
accounted for approximately 37% of the total electronic products
exports. Therefore, Israeli manufacturers and integrators exporting to
European countries will have to comply with this new directive and start
using lead-free components and technologies.

There are three key points that influence competition in the Israeli
electronic components market:

**Product's technical features** - Demand for the most updated
innovative technologies components is very high. Israeli companies
always look for components that can enhance their products' technical
features.

**Technical support** - Providing technical support is very important
for the Israeli customer. Bad technical support will negatively
influence recurring purchasing decisions.

**Price** - When quality is not an issue, Israeli companies prefer to
purchase inexpensive components from Asian countries. Electronic
components imported from the U.S. are more expensive and therefore local
companies tend to purchase American components when they need to produce
reliable systems for defense, safety and security systems.

[Best Prospects/Services [**Return to
top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)]{.mark}

Israel, as a developed technological market is always looking for
advanced and innovative technologies, and components to enhance the
products technical features. Developments in the Israeli IT and telecom
markets have had a positive effect on the increased demand for
electronic components. Israel's purchasing nature is based on two main
factors, price and technical support.

[Opportunities [**Return to
top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)]{.mark}

Israel offers opportunities for U.S. exporters of passive components,
active components, RF & microwave, power amplifiers and semiconductors.
There are a large number of Israeli companies that represent U.S. firms
in this sector, always looking for new-to-market U.S. companies with
good service and competitive prices that they can represent.

[Resources [**Return to
top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)]{.mark}

[www.iaei.org.il](http://www.iaei.org.il/)

<http://elec.co.il/>

## Energy

Israel Electric Corporation (IEC)

The state-owned IEC is Israel's only integrated electric utility with
full ownership and control over the transmission and distribution
networks and 98 percent of the generation capacity.  The company owns
and operates 17 power stations sites (including 5 major thermal power
stations) with an aggregate installed generating capacity of 10,899 MW.
In 2006, the IEC sold 46,175 GWh, of electricity. For the past decade,
demand for electricity has grown at an average annual rate of 5.5
percent. Israel's electricity network is not connected to those of the
neighboring countries.

To meet increased electricity demand, the company has made substantial
investments in the construction of new generation facilities and for
expansion and improvements to its transmission and distribution systems.
To meet projected future electricity demand, the Company\'s capital
investment program provides for an installed capacity of 15,000 MW by
the end of 2010, by adding 6 combined cycle plants as well as wind
turbines providing 150MW.   The implementation of these plans will
require investments of at least \$1.2-1.3 billion annually. IEC's
expansion plans have been delayed due to the government's plans to
privatize/restructure the company.

Independent Power Producers (IPP)

The Electricity Law provides the framework for the increase of IPP's to
20% of Israel's installed generating capacity. The infrastructure for
the supply and distribution of natural gas to its industry is in an
advanced stage of development. An offshore pipeline along the coast has
been completed and an overland transportation system is being built. IEC
is in the process of converting its oil-driven power stations to natural
gas.

Last year, the Electricity Authority issued several licenses for IPPs
including those to Dorad for an 800MW power station and for combined
cycle plants at Nesher Cement Works, Dead Sea Works, Hadera Paper Mills,
Dalia Power, and the Via Maris desalination plant. In addition, several
existing industrial combined cycle stations will be converted to natural
gas. The Ministry of National Infrastructures (MNI) is cooperating with
the industry in removing the remaining regulatory obstacles to the
development of the IPP sector, e.g. by establishing a safety net for IPP
developers. In MNI is expected to issue a tender shortly for two BOT
solar energy plants in the Negev with a total capacity of 250MW. In
2007, IEC purchased approximately \$20 million worth of electricity from
IPP's. In 2008, this number is expected to increase by 60 percent.

Natural Gas Supply

Israel has been in negotiation with British Gas, the owner of drilling
rights for a gas field located off the Gazan shore, as a potential
supplier of natural gas. In addition, MNI is holding discussions with
several suppliers and governments for the supply of natural gas and the
building of a pipeline corridor from Turkey to Israel along the
Mediterranean coast.

Israel remains a good market for U.S. suppliers of equipment and
services to the energy sector. With the favorable dollar exchange rate,
U.S. equipment suppliers currently enjoy a price advantage over EU-based
manufacturers.

### Best Prospects/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Electrical Power Generation, Transmission and Distribution Equipment

### Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

1.  IPP's, in particular cogeneration plants; conversion of existing
    cogen plants to natural gas.

2.  Renewable energy power stations, i.e. a solar energy plants and wind
    driven turbine generators.

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

[Ministry of National Infrastructures](http://www.mni.gov.il/)

[Israel Electric Corp.](http://www.israel-electric.co.il/)

## Homeland Security

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Israel is a well-developed and sophisticated market for homeland
security equipment and services. Israel's security-awareness and high
level of preparedness are the driving forces for the development of the
country's cutting edge security industry. After 9/11, this sector became
one of Israel's fastest growing export industries. Appproximately 600
local companies are involved in the sector, with over 450 exporters.
Many of these are integrators and service providers. In 2007, the
turnover of Israel's security industries was estimated at over \$4.5
billion, with exports estimated at \$1.2 billion, a 20% increase over
2006.

Israel is an attractive market for U.S. manufacturers of high-end
equipment and of components that can be integrated into Israeli systems.
Israeli manufacturers are important end-users of imported security
equipment and components that are integrated into locally produced
for-export security systems. In addition, many of the homeland security
systems are sold to the Israel Ministry of Defense. These procurements
are made with Foreign Military Funding (FMF), giving an advantage to
U.S. manufacturers.

The import market, estimated at \$510 million has a 70% U.S. market
share. U.S. exporters dominate the market for sophisticated equipment
used in homeland security applications. U.S. security equipment, which
enjoys an excellent reputation in Israel due to its high reliability, is
often used for sensitive applications, by high-security industries and
for key infrastructures and installations. The market offers good
opportunities for U.S. exporters of high quality and sophisticated
detection and screening systems, cctv, sensors, biometric solutions,
x-ray systems, non-lethal weapons, etc.

U.S. companies should be aware of the U.S. requirement for export
controls in particular in cases in which Israeli companies re-export the
U.S. equipment after it is integrated into an Israeli system.

### Best Prospects/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

CCTV, X-ray systems and screening systems using alternative
technologies, non-lethal weapons, sensors, biometric solutions

##  

[]{#homeland .anchor}

## Intelligent Transportation Systems (ITS)

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Intelligent Transport Systems (ITS) is a broad-based term that describes
a wide range of communication and computing technologies used to improve
various transportation systems. Innovations in ITS are moving Israel
towards an all-encompassing computer coordinated transportation system
that will improve every source of transportation, from trains to roads,
buses and even bike paths. Not only do these improvements make
transportation more convenient and efficient, but they also allow
increased safety. Improvements in traffic management, driver assistance
technologies, navigation aides, freight management dispatch systems,
information for multi-modal transport users, rescue systems an
environmental management are not only providing users with significant
reductions in total costs and travel time, they are also helping to save
lives.

Total planned transportation infrastructure spending in Israel is
planned to reach \$10 billion in the medium term (2006-2010). Highway
spending alone could reach approximately \$6.4 billion over the next
five years. The two key products that Israel is expected to import as
part of this spending surge include traffic safety devices and
intelligent transportation systems (ITS). ITS spending by the Israel
National Roads Company (INRC) may reach as high as \$46.5 million.

### Best Products/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Roughly forty percent (40%) of the ITS budget is allocated for procuring
hardware components such as; cameras, electronic signage and detectors.
This group of products alone is expected to consume \$18.6 million in
the next five years.

### Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

U.S. manufacturers of ITS products and services are encouraged to take
advantage of the opportunities in the Israeli market.

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

[Israel National Roads
Company](http://www.pwd.co.il/MazInternet/General/Pages/HomePage_EN.aspx)
; [Ministry of Transport &
Safety](http://www.mot.gov.il/wps/portal/!ut/p/.cmd/cs/.ce/7_0_A/.s/7_0_S5/_s.7_0_A/7_0_S5)

## Medical Equipment

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Over 75% of Israel's \$800 million medical equipment market (HS 9018;
9021; 9022) is imported, representing great market opportunities for
American manufacturers who already account for 27% market share. A
favorable dollar exchange rate increased demand for U.S. made medical
devices during 2007. This trend is likely to continue in 2008. U.S.
companies that opened a subsidiary in Israel include: 3M; J&J; Boston
Scientific; GE Healthcare; Medtronic; Tyco Diagnostics; Covidien (Tyco
Healthcare);

*Data Table: the Israeli Market of Medical Equipment (\$ millions)*

+---------------------------+---------------+------------+------------+
|                           | 2005          | 2006       | 2007       |
|                           |               |            |            |
|                           |               |            | (          |
|                           |               |            | estimated) |
+---------------------------+---------------+------------+------------+
| Total Market Size         | 625           | 750        | 800        |
+---------------------------+---------------+------------+------------+
| Total Local Production    | 1,314         | 1,579      | 1,780      |
+---------------------------+---------------+------------+------------+
| Total Exports             | 1,187         | 1,392      | 1,600      |
+---------------------------+---------------+------------+------------+
| Total Imports             | 498           | 563        | 620        |
+---------------------------+---------------+------------+------------+
| Imports from the U.S.     | 178           | 192        | 220        |
+---------------------------+---------------+------------+------------+

Sources: U.S. Census Bureau and the Israel Central Bureau of Statistics

U.S. Dept. of Commerce TradeStats Express
[http://tse.export.gov](http://tse.export.gov/)

### Best Prospects/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Israel\'s mandatory National Health Insurance provides a universal
package of public healthcare services to all Israeli citizens regardless
of age or medical condition. In addition, private insurance companies
offer complimentary healthcare programs that upgrade the choice of
doctors and care. A well-developed private sector dominates the areas of
dental care, eye laser surgery, plastic/aesthetic surgery and
alternative medicine.

In 2007, 27% of Israel's \$800 million medical equipment market
originated from the United States. This market continues to present an
outstanding export potential to U.S. manufacturers of advanced medical
technologies, instruments and disposables in the following categories:

Imaging instruments

Cardiology equipment

Equipment and supplies for plastic surgery

Dental instruments

Equipment and technologies for pain management and physiotherapy

Ozone & oxygen therapy

OR equipment & single use products

Point of care diagnostic kits

### Technology Cooperation Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

*Technology & Research Cooperation*

Israeli medical companies are ranked third worldwide in the number of
granted patents per capita, rendering the medical sector highly active
and innovative. Opportunities for U.S. companies exist in the area of
research, clinical trials and academic and professional exchanges.
Israel's 250 medical device companies develop implantable and disposable
therapeutic devices for cardiovascular and peripheral vascular disease,
oncology, neurodegenerative diseases and other age related diseases such
as ophthalmic and orthopedic. Other industry areas include diagnostic,
imaging and monitoring devices. A smaller number of companies focus on
endocrinology, wound management and respiratory disease. (Source: Israel
Life Science Industry)

*Promotional Opportunities*

The U.S. Commercial Service in the American Embassy in Israel helps
American exporters enter the market through partner search and trade
promotion programs. Please visit <http://www.BuyUSA.gov/israel> or
contact: <yael.torres@mail.doc.gov>

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

U.S. Dept. of Commerce TradeStats Express
[http://tse.export.gov](http://tse.export.gov/)

Israel Central Bureau of Statistics
[http://www.cbs.gov.il](http://www.cbs.gov.il/)

## Telecommunications Equipment

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

  -------------------- ---------------- ---------------- ----------------
                       2005             2006             2007 (estimate)

  Total Market Size    1,620            1,683            1,750

  Total Local          3,290            3,418            3,554
  Production                                             

  Total Exports        2,920            3,034            3,155

  Total Imports        1,250            1,299            1,351

  Imports from the     315              327              333
  U.S.                                                   
  -------------------- ---------------- ---------------- ----------------

Israel's telecommunications market is currently estimated at \$6
billion. In an era of fast communications and accessible information,
the telecommunications market has been a major driving force in the
Israeli economy. In 2005-2006, the average growth rate was 3.9%. The
main factors in this growth are the cellular, Internet, and
multi-channel television fields. Telecommunications presently contribute
approximately 4% of the Gross National Income, and in 2006, the average
ratio of household communications expenditures from total household
consumption expenditure was 7% (130\$).

The year 2007 included many developments in the telecommunications
market. According to a local analyst, the future lies in "Triple Play
convergence", i.e. voice, data video, all on a single network. Mergers
and acquisitions in the telecommunications market, and consolidation of
different companies offering cellular, Internet and fixed services are
already in progress. The end result will be three major
telecommunication groups offering everything under one umbrella.

The Israeli telecom market consists of four domestic cellular operators,
six international service providers, one cable television provider as
well as one satellite television provider, three leading Internet
service providers and two fixed domestic operators with universal
service obligation. Mobile services are the leading market segment that
constitutes 50% of the revenue, followed by fixed services, cable TV,
international long distance calls and Internet. There are 3.1 million
direct exchange lines, 7.7 million cellular telephone subscribers, 1.4
million multi-channel TV subscribers, and over 2 million households have
an Internet connection, mainly broadband.

Many Israeli companies are active in developing and manufacturing
telecommunications and networking equipment. Case in point, and the
original cell phone technology was largely developed by Motorola Israel.
Still, Israel imports over \$1 billion of telecommunications equipment
each year, of which \$300 million is imported from the United States. In
addition, over \$100 million in telecom services are imported from the
United States.

The substantial changes that have taken place in Israel's communications
market over recent years are due, in part, to a basic change in policy
on the part of the Ministry of Communications, which serves as the
primary sector regulator. The Ministry of Communications' objectives for
the coming year, include: Expanding competition in the fixed market, by
licensing new competitors without universal service obligation;
preparing a policy on VOIP communications (Voice Over Internet Protocol)
based on VOB (Voice over Broadband) Technology and on a
recently-published consultation with the public; promoting the Wimax
technology and developing a policy on Wimax; promoting the deployment of
advanced cellular services and promoting the competition in the cellular
market- MVNO (Mobile Virtual Network Operator) concept is being
discussed as one possibility; ensuring the existence of original Hebrew
productions;

### Best Prospects/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Israel has one of the highest household broadband penetration rates in
the world, building on even higher Internet penetration. Three major
Internet service providers serve more than four million users, over 60%
households and 80% businesses. Israel's very high broadband penetration
rate provides great potential for triple play and digital media market
developments. Both Bezeq, with its satellite TV subsidiary YES and HOT,
the merged operating entity of the three Israeli cable TV companies,
have the potential to easily deliver triple play services as each
possesses both content and delivery mechanisms. IPTV is a hot area
today, but the service is still under development.

Another area of development is the Fixed Mobile Convergence (FMC)
market. A market survey conducted by BBDO Consulting shows that over 65%
of fixed and mobile operators will have implemented FMC services into
their products over the next three years. There are a number of Israeli
companies offering FMC solutions allowing for Dual-Mode Handset service.
Bezeq's (the Israeli ILEC) long-term goal is to merge its activities
with those of its subsidiaries in order to become one group that
provides cellular, wireline (local and international calls), IPTV, and
Internet services, over converged fixed-mobile infrastructure. However
for now, regulations in Israel require structural separation between
service providers. This means a complete separation between cellular,
international calls and local calls operators; i.e., separate
infrastructures, subscriber base and management.

The cellular market segment is the main growth engine behind the Israeli
telecommunications market. All four operators in Israel provide digital
technology countrywide coverage and modern 3G (third generation)
services. Pelephone uses CDMA2000 technology. The second operator,
Cellcom, uses the American IS-136 TDMA, European DCS 1800 and UMTS.
Orange (Partner Communications), the third operator, uses GSM technology
DCS 1800 and UMTS. The last licensed cellular operator is MIRS, which
uses iDEN ESMR technology. The penetration rate of mobile phone
subscription exceeds 100% (over 7.7 million mobile subscribers).

The cellular market continues to search for new and innovative
applications such as value added services for its customers. Israel is a
highly urbanized, technologically-literate society. Israelis are used to
having world-leading technology in many fields, and mobile phones are no
exception. All mobile operators make a good profit from the high volume
of traffic generated. According to market players, voice is not what
makes the cellular market interesting. Israel is a good market for
operators to test new applications. Israel is technologically oriented,
making launching new services easier. With mobile penetration reaching
107 percent, Israel is a market of users who know what they want and how
to use what they get. There is a continual demand for technology that is
more sophisticated as Israelis update their handsets regularly, at least
once a year. The \"experience rate\" for new hardware and applications
is high. Operators are aware of this and strive to accommodate their
subscribers. Many Israeli companies are active in developing and
manufacturing telecommunications and networking equipment.

### Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Opportunities are in the IP Networks -- Voice, Video, Data and
Multimedia, FMC, IPTV, Wi-Fi, WiMAX and VOB. As the Israeli telecoms
industry continues to expand and increase in revenue and with the
introduction of new technologies, the market will continue to offer many
opportunities for U.S. exporters.

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

<http://www.moc.gov.il/new/english/index.html>

<http://www.iaei.org.il/>

## Travel & Tourism Services

### Overview [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Israel's \$1 billion travel-to-the-U.S. market holds enormous potential
for the U.S. travel industry. In order to increase their share in the
market, U.S. travel entities are encouraged to promote their products
and services directly to consumers. The Commercial Service in Israel
offers services that are tailored to the needs of the U.S. travel
industry to assist successful entry to the market. Please contact the
author of this report for details at: <yael.torres@mail.doc.gov>

2006 witnessed a record of 3.1 million air departures by Israelis
according to the Israel Central Bureau of Statistics. Israeli travelers
continued to rank the United States as their preferred travel
destination. The U.S. Department of Commerce Office of Tourism
Industries recorded a 3% growth in the number of Israeli travelers to
the United States between 2004-2005 with over 290,000 entries. The
majority of Israelis who travel to the United States are business
travelers, though considerable numbers of individuals, tour groups and
families also visit the United States. The average expense per person
per day in the United States is approximately \$200 including
accommodations, meals, and shopping (not including airfare). Industry
experts report over \$1 billion in expenditure per year by Israelis
within the United States on travel-related services, not including
airfare.

El Al Israel Airlines, Continental Airlines and Delta Airlines operate
over 35 weekly direct flights from Tel Aviv to New York, Atlanta and Los
Angeles. Delta Airlines resumed flights to Israel in 2006, adding
100,000 seats annually on direct flights between Tel Aviv and Atlanta.
Israel's charter airline company, Israir, operates a low fare service to
New York. Most European airlines offer very competitive prices and
routes to a large selection of US destinations with a stop in Europe.

## The Israel Outbound Travel Market

  ------------------------------- ----------- -------------- --------------
                                  2004        2005           2006

  Total Outbound Departures of    2,862,000   2,980,000      3,100,000
  Israelis by Air                                            

  Total Departures by Israelis to 275,373     284,000        289,000
  the United States                                          
  ------------------------------- ----------- -------------- --------------

Source: Israel Central Bureau of Statistics and the Office of Travel &
Tourism Industries, U.S. Dept. of Commerce

### Best Prospects/Services [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

Over 500 travel agents and about 20 tour operators work in the Israeli
outbound travel market. This market is fast-paced and extremely
competitive. Operators and airlines advertise special packages and
seasonal deals on an almost daily basis, especially around the
July-August summer vacation and the Jewish holidays in September,
October and April. Tour operators specialize in market segments rather
than in specific destinations, and most operators are conservative in
selecting new travel products.

U.S. passenger service companies, travel attractions, restaurants,
outlet shopping and family travel destinations may find opportunities in
Israel, especially by offering new travel products and a high level of
services. Best prospects are in family vacations, eco-tours, charter
deals to major cities including special sports or cultural events, and
business travel to major trade shows, combined with sightseeing.

### Opportunities [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

The Commercial Service is recruiting an Israeli Buyer and Media
delegation to Pow Wow, the U.S. Travel Industry Association (TIA) travel
event, April 21-25, 2007 in Anaheim, CA. During the 3-day event, Israeli
buyers will hold 1,000 meetings with their U.S. counterparts. In
addition, representatives from the Israeli press will also be available
for meetings. For information and a delegation profile please contact
Commercial Specialist Mrs. Yael Torres at: <yael.torres@mail.doc.gov>

You can also contact us for customized, individualized or standard
information on the Israeli travel market, responding with specific
information relevant to your products or services. We can provide
answers regarding the overall marketability of a product or service,
market size and trends, customary distribution and promotion practices,
market entry requirements and potential agents, distributors, or
strategic partners.

### Resources [**Return to top**](#chapter-4-leading-sectors-for-u.s.-export-and-investment)

[U.S. Dept. of Commerce Office of Travel & Tourism
Industries](http://www.tinet.ita.doc.gov/)

[Israel Central Bureau of Statistics](http://www1.cbs.gov.il/)

[Return to table of contents](#section)

[]{#ch5 .anchor}**Chapter 5: Trade Regulations and Standards**

-   [Import Tariffs](#import-tariffs-return-to-top)

-   [Trade Barriers](#trade-barriers-return-to-top)

-   [Import Requirements and
    Documentation](#import-requirements-and-documentation-return-to-top)

-   [U.S. Export Controls](#u.s.-export-controls-return-to-top)

-   [Temporary Entry](#temporary-entry-return-to-top)

-   [Labeling and Marking Requirements](#twentyone)

-   [Prohibited and Restricted
    Imports](#prohibited-and-restricted-imports-return-to-top)

-   [Customs Regulations and Contact Information](#twentyfour)

-   [Standards](#twentyfive)

-   [Trade Agreements](#trade-agreements-return-to-top)

-   [Web Resources](#web-resources-return-to-top-1)

## Import Tariffs [**Return to top**](#ch5)

Since January 1988, Israel\'s tariff classification has been based on
the Harmonized System (HS) and the 1996 revision of the HS has been
implemented. With most products from the United States, the European
Union and the European Free-Trade Association receiving duty free status
in the Israeli market, relatively few of Israel\'s imports are subject
to customs duties.

Israel's Customs and Purchase Tax Tariff is the main instrument used for
the classification of goods. The correct classification of goods is the
key to determining tax rates, as well as obtaining various
authorizations, permits and licenses, and all other conditions of
importation, in accordance to the applicable laws, regulations and
instructions. We recommend contacting a professional customs broker for
consultation since classification of goods requires professional
knowledge.

The Tariff is available online at:
<http://www.mof.gov.il/customs/eng/mainpage.htm>

It is currently in a trial mode and is intended for a preliminary
valuation for payment of taxes. If you encounter a problem please
contact the Israeli Customs Authorities at <meches@mof.gov.il> For
additional classification information you may also contact Mr. M. A.
Knittel, Head of Classification Department, Phone: 972-2-670-3478, Fax:
972-2-624-1061.

Some goods are charged with countervailing or anti-dumping charges. For
further information on these charges please contact the Ministry of
Industry, Trade & Labor at email: <orlyer@moital.gov.il> , phone:
972-2-666-2622, fax: 972-2-666-2939.

## Trade Barriers [**Return to top**](#ch5)

In general, Israel offers a good commercial environment for U.S.
companies. The United States-Israel Free Trade Area Agreement (FTAA) has
eliminated most all tariffs, leaving Israel\'s agricultural sector as
the only one with substantial barriers. The FTAA also provides for a
joint committee comprised of representatives from both countries to
review the functioning of the agreement (the committee last me in July
2004). Israel is a member of the World Trade Organization (WTO).

A 1996 Agreement on Trade in Agricultural Products (ATAP) with the
United States permits Israel to maintain non-tariff protection for
certain agricultural products. This framework expired at the end of 2001
but the signed agreement was extended until the end of 2008. Under the
agreement, Israel permits free access to a long list of food products
and duty-free access for certain quantities of a list of U.S. products
under tariff rate quotas (TRQ). American exporters and Israeli
importers, however, complain that these TRQs provide an insufficient
duty-free quota for many fruits and other products, and very high fees
on additional quantities (above quota). Israel excludes some U.S.
fruits, including grapes, citrus, peaches, and nectarines, on
phytosanitary grounds. Israel is revising its phytosanitary restrictions
making them consistent with WTO requirements.

The American Embassy in Tel Aviv is very actively pursuing much-needed
improvements in the export and investment climate for U.S. firms in
Israel. The efforts are focused in three specific areas: incorporating
technical standards in Israel that do not discriminate against U.S.
products, protecting intellectual property rights, and establishing
greater transparency in Israel's public procurement process. For further
information about how these issues may affect your export prospects in
Israel, please contact the Commercial Service in Israel.

Regarding intellectual Property Rights, while there has been improvement
in the level of illegal production, importation, and sale of copyrighted
and trademarked goods, serious problems still exist. *For more details,
see "Intellectual Property Rights, in Chapter 6, "Investment Climate
Statement."*

## Import Requirements and Documentation [**Return to top**](#ch5)

All administrative import licensing requirements for U.S.-made consumer
and industrial goods have been eliminated under the FTAA, including the
requirements for most food and agricultural products. However, in the
case of products for which there is a TRQ, the Ministry of Agriculture
or the Ministry of Industry, Trade & Labor issues a license exempting
the bearer from duty on the quantity indicated in the license. Importers
wishing to bring in goods without availing themselves of the TRQ are not
required to obtain a license except for veterinary, phytosanitary or
public health purposes. The Israel Veterinary Services (IVS), the Plant
Protection and Inspection Services (PPIS) and the Food Control Service
(FCS) of the Ministry of Health issue these, respectively. For
information on entry procedures and requirements for food products,
please direct inquiries to the Israeli authorities at the Ministry of
Health, Food Control Services, 12-14 Haarba'a St., Tel Aviv 64739,
Israel; 972-3-627-0116, fax: 972-3-627-0126.

*Shipping Documentation*

The Israeli Customs stringently enforces import documentation
regulations, including the requirement for a U.S. Certificate of Origin
for Exports to Israel. Therefore, U.S. exporters should meticulously
follow the advice given below and always double-check with freight
forwarders and shippers before the goods leave the United States to
avoid potentially lengthy delays when the goods enter Israel.

######## U.S. Certificates of Origin for Exporting to Israel

In order for U.S. exporters to qualify for preferential access to the
Israeli market, a special certificate of origin must accompany all
shipments from the United States to Israel. The United States-Israel
Free Trade Area Agreement (FTA) came into full effect in 1995. Under
this agreement, American companies exporting to Israel can gain greater
market access, reduce transaction costs, increase sales, enhance export
revenues and become more competitive in the Israeli marketplace. Israeli
Customs advises that it will no longer be possible for goods to be
cleared through customs if the correct certificate of origin form is not
attached to the other standard shipping documents. U.S. exporters are
encouraged to qualify for preferential tariff treatment and to obtain,
when necessary, a certificate of non-manipulation for trans shipments.

The certificate does not need to be notarized or stamped by a Chamber of
Commerce if the exporter is also the manufacturer. Instead, the exporter
should make the following declaration in box 11 of the certificate:
\"The undersigned hereby declares that he is the producer of the goods
covered by this certificate and that they comply with the origin
requirements specified for those goods in the U.S.-Israel Free Trade
Area Agreement for goods exported to Israel.\" The actual forms are
printed by a number of commercial printing houses in the United States.
For more information, please see the U.S. Commercial Service webpage on
the [Certificate of Origin in
Israel](http://www.buyusa.gov/israel/en/certificateoriginisrael.html).

Israeli Customs Contact Information:

[Customs Attache in the United
States:](http://www.mof.gov.il/customs/eng/directr.htm#a2)

Mr. Igal Saar

800 Second Avenue\
New York, NY 10017\
Tel: 212-499-5750 / 1 / 2

Fax: 212-499-5745\
E-mail: <igal.saar@emus.gov.il>

[Contact for Rules of
Origin:](http://www.mof.gov.il/customs/eng/directr.htm#a7)

Mr. David Houri, Senior Chief Coordinator\
5 Bank of Israel St.\
The New Government Complex\
Jerusalem, Israel\
Tel: 972-2-666-3797\
Fax: 972-2-666-3795

*Other Documentation*

The Israeli Customs Services prefer that exporters use their own
commercial invoice forms containing all required information including
name and address of supplier, general nature of the goods, country of
origin of the goods, name and address of the customer in Israel, name of
the agent in Israel, terms, rate of exchange (if applicable), Israel
import license number (if applicable), shipping information, and a full
description of all goods in the shipment including shipping marks,
quantity or measure, composition of goods (by percentage if mixed),
tariff heading number, gross weight of each package, net weight of each
package, total weight of shipment, price per unit as sold, and total
value of shipment. The total value of the shipment includes packing,
shipping, dock and agency fees, and insurance charges incurred in the
exportation of the goods to Israel. The commercial invoice must be
signed by the manufacturer, consignor, owner, or authorized agent. U.S.
exporters should also double check with their freight forwarder,
shipping company or importer to find out if any other documentation,
including bill of lading and packing list, is required. It is imperative
that these issues be addressed before the goods arrive at the Israeli
port, to avoid any possible delays and storage fees. In addition, U.S.
goods that are transshipped through third countries require a
Certificate of Non-Manipulation from the customs authority of the third
country, in order to qualify for the FTA preferential tariff.

*Authorization Procedures for \"Approved Exporter\" Status*

A manufacturer or exporter who wishes to become an \"Approved Exporter\"
should complete a declaratory form and present it to the Export
Department, Israel Customs Services, 32 Agron Street, P.O. Box 320,
Jerusalem. Potential candidates are U.S. firms with total annual exports
to Israel of at least \$20 million that have a clean record with the
Israel Customs Services. Israel Customs will examine whether the
manufacturer or exporter complies with the criteria and grant approval
for \"Approved Exporter\" status. The approved exporter will be given an
identity number to be stamped on all invoices. The approval is valid for
six months, after which the exporter should receive an automatic
extension from Israel Customs. If the exporter does not receive an
extension notice he/she must terminate use of the approval.

*Compliance Procedures for Approved Exporters*

The \"Approved Exporter\" should stamp the invoice with his/her identity
number and add the following declaration: \"The undersigned hereby
declares that the goods listed in this invoice were prepared in the
United States and they comply with the origin requirements specified for
those goods in the U.S.-Israel Free Trade Area Agreement for goods
exported to Israel.\" For shipments of mixed goods, separate invoices
must be prepared for goods that do not comply with origin requirements
and/or for which approval to operate as an \"Approved Exporter\" has not
been granted.

## U.S. Export Controls [**Return to top**](#ch5)

U.S. exporters to Israel must follow the standard U.S. Government
requirements regarding export control documentation for sensitive U.S.
exports. For information on this subject contact the U.S. Department of
Commerce Bureau of Industry and Security, Internet web site:
<http://www.bis.doc.gov/>, or the Trade Information Center at
1-800-872-8723.

Although Israel is not a signatory to the Wassenaar Arrangement, it has
adopted the Wasennar list of dual-use items subject to control. As of
January 1, 2007, the Ministry of Industry, Trade & Labor is responsible
for the administration of Israel's dual-use export control system.
However, it lacks sufficient trained personnel to shoulder this
responsibility completely and continues to rely on staff work of the
Ministry of Defense. The Ministry of Defense has established a new
division to deal exclusively with the export controls of defense items.

U.S. export licenses are required for exports to Israel of certain high
technology, defense related equipment and technologies and weapons for
chemical and biological warfare. U.S. exporters should ensure that they
are in compliance with the export control regulations as administered
through the U.S. Department of Commerce, Bureau of Industry & Security
and U.S. Department of State, Office of Defense Trade Controls.

## Temporary Entry [**Return to top**](#ch5)

Temporary entry of U.S.-made goods may be effected either with an \"ATA
Carnet\" issued by a U.S. Chamber of Commerce or through payment of a
deposit, reimbursable upon re-export.

## Labeling and Marking Requirements [**Return to top**](#ch5)

Israel has strict marking and labeling requirements that frequently
differ from those of other countries. U.S. exporters should consult with
their Israeli importer prior to shipping any product that will be
offered to the local market. At present, some labeling and marking
requests from the Ministry of Health have been inconsistent. Embassy Tel
Aviv is working with the Ministry to try to resolve any discrepancy.
Specific information on labeling and packaging standards is available
from the Director, Department of Weights and Measures, Ministry of
Industry, Trade, and Labor 30 Agron Street, Jerusalem 94190; phone:
972-2-622-0678, fax: 972-2-622-0670, email:
[timor.zarin@moit.gov.il](../%7BF8446%7D)

All imports into Israel must have a label indicating the country of
origin, the name and address of the producer, the name and address of
the Israeli importer, the contents, and the weight or volume in metric
units. In all instances, Hebrew must be used; English may be added
provided the printed letters are no larger than those in Hebrew.

Nutritional labeling is compulsory on all packaged foods. For
information on food labeling and packaging contact the Israel Ministry
of Health, Food Control Services, 12-14 Haarba'a Street, Tel Aviv 61070;
phone: 972-3-563-4812-, fax: 972-3-568-4602, email:
<eli.gordon@moh.health.gov.il>

Israel has no declared government policy on genetically modified
organisms (GMO) although regulations are being prepared which will
require positive labeling when a product or an ingredient is genetically
modified. Israel's main export market for food is Europe where consumer
concern over GMO is considerable. Thus, many Israeli importers of raw
materials require an exporter's declaration that the product is free of
GMO.

Marking should be done by printing, engraving, stamping, or any other
means, on the package or the goods themselves. If marking is not
possible, a label should be well sewn or stuck to the goods or package.
Marking details should be clear, legible and in a different color from
the background in order to be clearly distinguishable. Printing dyes and
other marking materials should not affect merchandise quality. The
marking should not be blurred. On a multi-layered package, the external
layer should be marked. If the external layer is transparent the marking
should be done underneath that layer, provided it is still clear and
legible. On a package containing sub-packages, the labeling should
specify the number of such sub-packages, the net content of a
sub-package, and the overall net weight of the package. An aerosol
container should indicate the net quantity weight unit for semi-solid or
powder products, and volume unit for liquids. For products that tend to
lose weight under regular marketing/commercial conditions, the maximum
quantity of expected depletion should be mentioned.

Specific labeling regulations apply to some consumer goods, paper
products, handbags, musical recordings, fertilizers, insecticides,
chemicals, pharmaceuticals, some food products, seeds, and alcoholic
beverages. Outside and inside containers of dangerous articles, such as
poisons, insecticides, drugs, flammable goods, ammunition, explosives,
reptiles, insects, bacteria and radioactive materials should be clearly
marked.

## Prohibited and Restricted Imports [**Return to top**](#ch5)

Israel maintains restrictions on imports of products the government
considers to be economically sensitive and subject to agricultural
policy considerations. U.S. meat exports face an especially difficult
environment due to a ban on non-kosher meat imports.

Israeli law determines that the sole authority for certifying food as
kosher is the Council of the Chief Rabbinate of Israel. Hence, products
considered kosher in the United States still must obtain certification
from Israel\'s Chief Rabbinate to be considered kosher in Israel. With
the exception of meat, poultry and their products, there is no legal
requirement that imported food be kosher. However, for commercial
considerations, in most cases it is advisable to obtain kosher
certification for products and raw materials as surveys show that
between 60 and 65 percent of the Jewish population prefer Kosher food.
Please contact Agricultural Specialist Yossi Barak for more details at
<yossi.barak@usda.gov>, tel: 972-3-519-7686.

[]{#twentyfour .anchor}

## Standards [**Return to top**](#ch5)

-   [Overview](#overview-return-to-top-8)

-   [Standards Related Issues](#standards-related-issues-return-to-top)

-   [Standards Organizations](#standards-organizations-return-to-top)

-   [Conformity Assessment](#conformity-assessment-return-to-top)

-   [Product Certification](#product-certification-return-to-top)

-   [Accreditation](#accreditation-return-to-top)

-   [Publication of Technical
    Regulations](#publication-of-technical-regulations-return-to-top)

-   [Labeling and Marking](#labeling-and-marking-return-to-top)

-   [Special Licensing Procedures for Medical
    Equipment](#special-licensing-procedures-for-medical-equipment-return-to-top)

###  Overview [**Return to top**](#twentyfive)

The [Standards Institution of Israel
(SII)](http://www.sii.org.il/siisite.nsf/EngHomePage?OpenForm) is the
only statutory body in Israel that develops and establishes standards.
Created by an act of the Knesset (Parliament), \"The Standards Law of
1953\" mandates SII's responsibility for the preparation, publication of
technical specifications and standards for products and services, which
are produced locally or imported. Today, the SII incorporates
standardization, testing, conformity assessment, product certification,
management system certification and training activities under one roof.
It has laboratories in almost all technological areas, providing testing
and inspection services to industry and commerce, as well as regulatory
services to government. Overseeing the SII's policy is the Ministry of
Industry, Trade & Labor's Commissioner of Standards.

The supreme body of the SII is the General Assembly, comprised of 70
members from the following sectors: manufacturing, construction,
commerce, services, trades, consumers, engineering associations,
universities and government. The General Assembly annually elects a
Board of Directors and President. The SII's Standardization Division
coordinates the preparation of standards through the work of hundreds of
standardization committees that include volunteer representatives from
all sectors of the Israeli economy. The adoption of Israeli standards is
voluntary, however, standards may be declared mandatory by the relevant
government ministry in the interest of public health and safety or
protection of the environment.

As the mandated national standards body, the SII represents Israel in
two international standards organizations, the International
Organization for Standards (ISO) and the International Electromechanical
Commission (IEC). Israeli legislation also mandates the adoption of
multiple, proven international standards whenever possible to maximize
benefits to the Israeli consumer of a competitive market.

However, a disturbing trend in Israeli standards policy is its clear
drift towards European standards. The SII recently indicated that it is
in the process of applying for membership in European standards
development organizations, the European Committee for Standardization
(CEN) and the European Committee for Electro technical Standardization
(CENELEC).

Under the terms of the CEN agreement, SII will become a Partner
Standardization Body (PSB). As a PSB, Israel must agree to implement as
a national standard the European standards developed by the CEN
technical committees in which it participates. PSB agreements typically
include a clause requiring signatories to withdraw conflicting standards
from the market. This is particularly troublesome in the case of Israel
and deviates from domestic legislation, which specifically allows for
the adoption of multiple international standards, in compliance with
technical regulations. The USG has expressed concern at the highest
levels of the Israeli Government that CEN membership will further
disadvantage U.S. exporters, particularly small and medium sized firms.
The SII states that it will maintain the right to adopt parallel
standards, including U.S.-based standards, citing national deviations as
the reason to include non CEN-developed standards.

According to the terms of the agreement with CENELEC, the SII would be
allowed to join any committee, with the requirement that it adopt
standards developed by the technical body of which it is a member. SII
will be able to join at the level of Working Group, which usually deals
with one specific standard. As a member of the working group, SII will
commit to adopt any standard(s) resulting from the working group.
Eighty-five percent of CENELEC standards are IEC-based standards. SII
indicated its interest in joining only those committees where no
international standard exists and only in cases where there is interest
by the Israeli industry. This affiliate status is not a
government-to-government agreement, but an arrangement between SII and
CENELEC.

###  Standards Related Issues [**Return to top**](#twentyfive)

Technical standards may pose non-tariff barriers, which limit U.S.
exporters\' access to the Israeli market. Since 1999, Israeli law has
mandated that the SII adopt multiple international technical standards
whenever possible. However, this legislation has not been implemented
widely, to the detriment of U.S. exporters. In addition, SII\'s formal
process for adopting or developing technical standards is a significant
market access obstacle to U.S. exporters, despite concerted U.S.
Government efforts to address issues of access and transparency. Each
government ministry may adopt additional mandatory regulations that can
prevent the importation of U.S.-made products and services to Israel.
This procedure has created difficulties for U.S. exporters who contend
that transparency and due process are frequently lacking, including for
food imports.

In addition, U.S. industry sources report that requirements for
technical standards are often not uniformly enforced. In some instances,
domestic products appear to have an advantage over imports because
enforcement of labeling requirements and standards on domestic producers
has been inconsistent, while standards requirements are more strictly
enforced with respect to imported goods. U.S. companies that have been
doing business in Israel for many years are increasingly confronted with
new, often EU-based, standards that arbitrarily discriminate against
U.S. products. In addition, the SII will not recognize U.S. testing or
accreditation of electrical components and products unless the product
undergoes additional and often costly tests in Israel.

It is the position of the U.S. Government that American products and
services exports should not be disadvantaged by the adoption of
technical standards. Relevant bodies, including the SII should recognize
U.S. technical standards alongside other, internationally recognized
standards, wherever feasible. The Embassy and the U.S. Department of
Commerce continue to actively advocate this position with the
appropriate Israeli governmental authorities and urge all affected U.S.
companies, or their agents, to contact the Commercial Service with any
standards-related market access issues. The Embassy proactively supports
the work of the AmCham's Technical Standards and Regulations Committee,
one of four such ad-hoc committees created by the Chamber's [Forum of
U.S. Companies in
Israel](http://www.amcham.co.il/main/siteNew/index.php?page=1&action=sidLink&stId=8).

###  Standards Organizations [**Return to top**](#twentyfive)

The [SII](http://www.sii.org.il/siisite.nsf/EngHomePage?OpenForm) is the
sole organization that develops standards in Israel. On a yearly basis
the SII prepares its work plan that includes a list of standards they
plan to develop. Members of the various technical committees, as well as
government ministries, provide input.

###  Conformity Assessment [**Return to top**](#twentyfive)

The sole authority for conformity assessment in Israel is the SII.

###  Product Certification [**Return to top**](#twentyfive)

SII operates product and system certification programs. Use of the
Standards Mark is generally voluntary but Israeli law mandates that
certain classes of products must be certified before they are sold. The
Standards Mark program operates in accordance with EN 45011. To qualify
for the Standards Mark, a product must conform to the requirements of
the applicable standard or standards, and be manufactured in a plant
with an approved quality assurance system, similar to ISO 9002.\
\
The Standards Mark Board appoints technical committees of
representatives from the public and private sectors in various
technological areas, which meet regularly to evaluate the findings of
the test reports and quality assessment reports. These committees report
their findings to the Licensing Committee, which is responsible for
granting or canceling a license.

Once a license is issued, follow-up inspections of the product and
quality assurance review is performed. These inspections are performed
by laboratory personnel and certified auditors. In addition, samples of
the product are taken several times a year to insure continuous
compliance of the product with the relevant standard or standards. In
order to ease the process for foreign manufacturers wishing to enter the
Standards Mark program, agreements have been reached with independent
foreign testing and certification organizations to perform testing and
inspection services on behalf of SII.

The SII has signed Mutual Recognition Agreements (MRA) with the
following U.S. organizations:

  ------------------------------------------ -----------------------------------------------------
  Dept. of Defense                           QPL AND QML for Electronic components

  [ETL](http://www.intertek-etlsemko.com/)   Standards Mark recognition - Electrical and energy
                                             products

  [FCC](http://www.fcc.gov/)                 Recognition

  [IAPMO](http://www.iapmo.org/)             Hydraulic products\
                                             Standards Mark

  [NSF](http://www.nsf.org/)                 Food Safety, HACCP-9000, HACCP

  [UL](http://www.ul.com/)                   Mutual recognition in fields of: Electricity,
                                             electronics, hydraulics, mechanics, fire. Standards
                                             Mark supervision in fields of: Electricity,
                                             electronics, hydraulics, mechanics, fire
  ------------------------------------------ -----------------------------------------------------

###  Accreditation [**Return to top**](#twentyfive)

The Israel Laboratory Accreditation Authority (ISRAC) is the only body
in Israel, which is internationally and legally recognized to accredit
testing and calibration laboratories according to ISO/IEC 17025 and to
recognize laboratories in accordance with the OECD rules of Good
Laboratory Practice (GLP).\
\
The Government of Israel decided in its resolution No. 3778 from August
14, 1994 to set up a National Authority for the accreditation of testing
and calibration laboratories (ISRAC) and empowered the Minister of
Industry, Trade & Labor to implement this resolution as a voluntary
scheme for laboratories wishing to be internationally recognized for
their competence in testing. The law for the national accreditation
authority (ISRAC) was passed in the Knesset in May of 1997.\
\
ISRAC has accredited laboratories in the areas of food, water,
cosmetics, pesticide chemistry, biology, microbiology as well as many
calibration, engineering, construction laboratories NDT (non destructive
testing) and EMC (telecommunications).

###  Publication of Technical Regulations [**Return to top**](#twentyfive)

Technical standards are published in the official Israel Government
Gazette in hard copy only and can be purchased in bookstores that sell
legal textbooks or by subscription. Prior to publication, the Director
General of the SII officially informs the relevant industry sectors of
pending additions and amendments. U.S. entities can influence the
content and adoption of technical standards through active participation
at the technical committee level.

###  Labeling and Marking [**Return to top**](#twentyfive)

Israel has strict marking and labeling requirements that frequently
differ from those of other countries. U.S. exporters should consult with
their Israeli importer prior to shipping any product that will be
offered to the local market. Specific information on labeling and
packaging standards is available from the Director, Department of
Weights and Measures, Ministry of Industry and Trade, 30 Agron Street,
Jerusalem 94190;Tel: 972-2-6220678, fax: 972-2-6220670, E-mail:
<timor.zarin@moit.gov.il>

All imports into Israel must have a label indicating the country of
origin, the name and address of the producer, the name and address of
the Israeli importer, the contents, and the weight or volume in metric
units. In all instances, Hebrew must be used; English may be added
provided the printed letters are no larger than those in Hebrew.

Nutritional labeling is compulsory on all packaged foods. For
information on food labeling and packaging contact the Israel Ministry
of Health, Food Control Services, 12-14 Haarba'a Street, Tel Aviv 61070;
phone: 972-3-5634812, fax: 972-3-5684602, E-mail:
<dorit.n@health.gov.il>

Israel has no declared government policy on genetically modified
organisms (GMO) although regulations are being prepared which will
require positive labeling when a product or an ingredient is genetically
modified. Israel's main export market for food is Europe where consumer
concern over GMO is considerable. Thus, many Israeli importers of raw
materials require an exporter's declaration that the product is free of
GMO.

Marking should be done by printing, engraving, stamping, or any other
means, on the package or the goods themselves. If marking is not
possible, a label should be well sewn or stuck to the goods or package.
Marking details should be clear, legible and in a different color from
the background in order to be clearly distinguishable. Printing dyes and
other marking materials should not affect merchandise quality. The
marking should not be blurred. On a multi-layered package, the external
layer should be marked. If the external layer is transparent the marking
should be done underneath that layer, provided it is still clear and
legible. On a package containing sub-packages, the labeling should
specify the number of such sub-packages, the net content of a
sub-package, and the overall net weight of the package. An aerosol
container should indicate the net quantity weight unit for semi-solid or
powder products, and volume unit for liquids. For products that tend to
lose weight under regular marketing/commercial conditions, the maximum
quantity of expected depletion should be mentioned.

Specific labeling regulations apply to some consumer goods, paper
products, handbags, musical recordings, fertilizers, insecticides,
chemicals, pharmaceuticals, some food products, seeds, and alcoholic
beverages. Outside and inside containers of dangerous articles, such as
poisons, insecticides, drugs, flammable goods, ammunition, explosives,
reptiles, insects, bacteria and radioactive materials should be clearly
marked.

### Special Licensing Procedures for Medical Equipment [**Return to top**](#twentyfive)

Licensing of imported and locally manufactured medical devices and
equipment is subject to enforcement according to a Ministry of Health
directive, which went into effect on January 1, 1995. Companies
interested in exporting medical equipment or devices to Israel should
first request a letter of acceptance from the Ministry of Health in
accordance with the export provisions contained in Section 801(e) of the
U.S. Federal Food, Drug & Cosmetic (FD&C) Act. The request discussed
above should be accompanied by one of the following documents:

\- 510(k)

\- Pre-Market Approval (PMA), or

\- Investigational Device Exemption (IDE)

Because the Ministry of Health uses the FDA's standards and ECRI
nomenclature for the purpose of issuing licenses, the licensing
procedures for American-made medical equipment are fairly easily
facilitated.

Implantable medical devices require mandatory labeling in the patient's
file for tracking and surveillance purposes. The labels must contain the
following information:

\- Name and address of the manufacturer

\- Name and address of the importer

\- Type of implant

\- Sub-type of implant

\- Size

\- Serial number

\- Batch number

\- Reused implant

\- Medication element needed

The registration authority can be reached at:

Ministry of Health

Pharmaceutical Division

Medical Device Department

P.O. Box 1176

Jerusalem 91010

Tel: 972-2-568-1216/17; Fax: 972-2-672-5827

Email: [elona.shlomy@moh.health.gov.il]{.underline}

## Trade Agreements [**Return to top**](#ch5)

Israel has adopted a liberal import policy. In addition to its Free
Trade Agreement (FTA) with the U.S., it has FTAs with Bulgaria, Canada,
the Czech Republic, Hungary, Mexico, Poland, Romania, the Slovak
Republic, Slovenia, Turkey, the European Union (EU), and EFTA (Iceland,
Liechtenstein, Norway, and Switzerland). Israel also has a preferential
trade arrangement with Jordan and maintains a customs union with the
Palestinian Authority. In late 2002, the European Union began imposing
customs duties on goods manufactured by Israeli companies located in the
Palestinian territories.

In 1997, Congress amended the law governing the U.S./Israeli Free Trade
Agreement to enable the creation of so-called qualifying industrial
zones (QIZs) with Jordan and Egypt. Jordan took advantage of this
opportunity beginning in 1997. Products manufactured in Jordan enjoy
duty and quota free access to the U.S. market if, inter alia, they
contain a certain minimum percentage of Israeli inputs. Jordan has
established a number of QIZs. Both Israeli/Jordanian trade and Jordanian
exports to the U.S. have grown significantly as a result of the QIZs.
Egypt signed the QIZ agreement in December 2004. Egyptian products
manufactured within a designated zone with 11.7% Israeli inputs, and a
combined 35% value added, may enter into the U.S. duty free. Since
signing the agreement, Egypt\'s imports to the U.S. have nearly doubled.
A list of current Egyptian QIZ-eligible companies and zones can be
obtained at [http://www.qizegypt.gov.eg](http://www.qizegypt.gov.eg/).
All products manufactured in the Palestinian territories also may enter
into the U.S. duty free.

## Web Resources [**Return to top**](#ch5)

[Ministry of Finance -- Israeli Department of Customs &
VAT](http://www.mof.gov.il/customs/eng/mainpage.htm)

**Regarding Standards Issues:**

[Standards Institution of
Israel](http://www.sii.org.il/siisite.nsf/EngHomePage?OpenForm)

[Ministry of Industry, Trade &
Labor](http://www.moital.gov.il/NR/exeres/B0B48981-357D-446F-AFAC-91A358E93C87.htm)

[Federation of Israeli Chambers of
Commerce](http://www.chamber.org.il/english/)

[The "Forum of U.S. Companies in Israel" Ad-hoc Committee on Standards,
The Israel - America Chamber of Commerce
(AmCham)](http://www.amcham.co.il/main/siteNew/index.php?mod=search&page=42&searchWords=forum&st_id_search=8&time=0&sub=1)

**U.S. Certificates of Origin for Exporting to Israel:**

[Trade Information Center](http://www.trade.gov/td/tic/)

[U.S. Commercial
Service](http://www.buyusa.gov/israel/en/certificateoriginisrael.html)

**U.S. Department of Commerce Bureau of Industry and Security:**

[Bureau of Industry and Security](http://www.bis.doc.gov/)

[**Labeling/Marking Requirements:**](http://www.bis.doc.gov/)

[Ministry of Industry, Trade &
Labor](http://www.moital.gov.il/NR/exeres/B0B48981-357D-446F-AFAC-91A358E93C87.htm)

[Ministry of Health](http://www.health.gov.il/english/)

[Return to table of contents](#section)

# Chapter 6: Investment Climate

-   [Openness to Foreign
    Investment](#openness-to-foreign-investment-return-to-top)

-   [Conversion and Transfer
    Policies](#conversion-and-transfer-policies-return-to-top)

-   [Expropriation and
    Compensation](#expropriation-and-compensation-return-to-top)

-   [Dispute Settlement](#dispute-settlement-return-to-top)

-   [Performance Requirements and
    Incentives](#performance-requirements-and-incentives-return-to-top)

-   [Right to Private Ownership and
    Establishment](#right-to-private-ownership-and-establishment-return-to-top)

-   [Protection of Property
    Rights](#protection-of-property-rights-return-to-top)

-   [Copyright](#copyright)

-   [Transparency of Regulatory
    System](#transparency-of-regulatory-system-return-to-top)

-   [Efficient Capital Markets and Portfolio Investment](#fortytwo)

-   [Political Violence](#political-violence-return-to-top)

-   [Corruption](#corruption-return-to-top)

-   [Bilateral Investment
    Agreements](#bilateral-investment-agreements-return-to-top)

-   [OPIC and Other Investment Insurance
    Programs](#opic-and-other-investment-insurance-programs-return-to-top)

-   [Labor](#labor-trade-zones-return-to-top) Trade Zones

-   [Foreign- /Free Ports](#foreign-trade-zonesfree-ports-return-to-top)

-   [Foreign Direct Investment
    Statistics](#foreign-direct-investment-return-to-top)

-   [Web Resources](#web-resources-return-to-top-2)

## Openness to Foreign Investment [**Return to top**](#chapter-6-investment-climate)

Israel is open to foreign investment, and the government actively
encourages and supports the inflow of foreign capital. There are few
restrictions on foreign investors, except for parts of the defense
industry that are closed to outside investors on national security
grounds. There is no screening of foreign investment and no regulations
regarding acquisitions, mergers, and takeovers that differ from those
that Israelis must follow. Foreign investors are welcome to participate
in Israel\'s privatization program. Investments in regulated industries
(e.g. banking, insurance), however, require prior government approval.
Investments in certain sectors may require a government license. Other
regulations may apply, though usually on a national treatment basis.

The Investment Promotion Center of the Ministry of Industry and Trade
seeks to encourage potential investors to invest in Israel. The Center
stresses Israel's developed infrastructure, educated work force, open
economy, and ties to the U.S. and Europe, and provides information about
investment incentives available in Israel (details are discussed in the
section Performance Requirements).

## Conversion and Transfer Policies [**Return to top**](#chapter-6-investment-climate)

Israel's foreign exchange liberalization process was completed on
January 1, 2003, when the last restrictions placed on the ability of
institutional investors to invest abroad were removed. Foreign-currency
controls have been completely abolished, and the Israeli shekel has
become a freely convertible currency. Israeli individuals can invest,
without restriction, in foreign markets. Foreign investors can open
shekel accounts that allow them to invest freely in Israeli companies
and securities. These shekel accounts are fully convertible into foreign
exchange.

Most transactions must be carried out through an authorized dealer. An
authorized dealer is a banking institution licensed to arrange, inter
alia, foreign currency transactions for its clients. The authorized
dealer must report large foreign exchange transactions to the Controller
of Foreign Currency. There are no limitations or significant delays in
the remittance of profits, debt service and capital gains.

## Expropriation and Compensation [**Return to top**](#chapter-6-investment-climate)

There have been no expropriations of U.S.-owned businesses in Israel in
the recent past. Israeli law requires adequate payment, with interest
from day of expropriation until final payment, in cases of
expropriation.

## Dispute Settlement [**Return to top**](#chapter-6-investment-climate)

Israel has a written and consistently applied commercial law based on
the British Companies Act of 1948 as amended. Israel\'s commercial law
contains standard provisions governing company bankruptcy and
liquidation. Personal bankruptcy is covered by a separate bankruptcy
ordinance. Monetary judgments are always awarded in local currency.

The GOI accepts binding international arbitration of investment disputes
between foreign investors and the state. Israel is a member of the
International Center for the Settlement of Investment Disputes (ICSID)
and the New York Convention of 1958 on the Recognition and Enforcement
of Foreign Arbitral Awards.

## Performance Requirements and Incentives [**Return to top**](#chapter-6-investment-climate)

There are no universal performance requirements on investments, but
performance requirements, including investment requirements, are often
included in sales contracts with the government. In some sectors, there
is a requirement that Israelis own a percentage of a company. Israel's
visa and residency requirements are not onerous. The GOI does not impose
preferential policies on exports by foreign investors. Israel complies
with TRIMS.

The Israeli government offers a wide variety of investment and business
incentives to both domestic and foreign investors who meet certain
requirements. Among these are grants, tax incentives, marketing and
training assistance, technological incubators, and incentives for
investment in research and development (R&D) and in specified regions of
the country. All benefits available to Israelis are also available to
foreign investors, who in some cases may enjoy even more generous tax
treatment than domestic investors. Some of the benefits and requirements
are described below.

For complete information, potential investors should contact:

Investment Promotion Center

Ministry of Industry, Trade and Labor

5 Bank of Israel Street,

Jerusalem 91490

Tel: 972-2-666-2610

Fax: 972-2-666-2938

[http://www.investinisrael.gov.il]{.underline}

E-Mail: <infoipc@moit.gov.il>

Israel Investment Center

Ministry of Industry, Trade and Labor

5 Bank of Israel Street,

Jerusalem 91490.

[http://www.moital.gov.il/NR/exeres/111C2143-2296-44C0-96F9-C29C082A19CC.htm]{.underline}

Tel: 972-2-666.2236

Fax: 972-2-666.2905

Ministry asks that requests be in writing.

Israeli laws that authorize investment incentives include the
Encouragement of Capital Investments Law, 1959 (with amendments); the
Encouragement of Industry (Taxes) Law, 1969; the Encouragement of
Industrial Research and Development Law, 1984; and the Law for the
Encouragement of Investments (Capital Intensive Companies), 1990.

To receive certain investment incentives, an investment must receive
"approved enterprise" status. To obtain this designation, an investor
must apply to the Investment Center (not the same as the Investment
Promotion Center), providing physical and financial details of the
projected investment; background information on the investors; sources
of financing; forecasts of sales, operating results, cash flow, and
\"break-even point\"; and projected manpower requirements. Among the
criteria applied by the Investment Center in deciding whether to grant
approved enterprise status is a legally mandated cost-benefit test that
evaluates the long-term value of the project from the point of view of
the Israeli economy. Government approval for the incentives program is
not given if investment in a proposed area is considered saturated.
Investors may be required to disclose proprietary information in the
application for approved status.

Investors may apply for grants or tax exemptions as incentives. The
extent of the benefit is determined by the geographic location of the
investment. For purposes of investment support, Israel is divided into
three national priority areas: A) the Negev desert and Northern Galilee,
B) Western Galilee and certain areas between Jerusalem and Ashdod, and
C) coastal region from Haifa to Ashkelon. Priority area A receives the
most generous treatment and area C, the least.

## Right to Private Ownership and Establishment [**Return to top**](#chapter-6-investment-climate)

The Israeli legal system protects the right of both foreign and domestic
entities to establish and own business enterprises, as well as the right
to engage in remunerative activity. Private enterprises are free to
establish, acquire, and dispose of interests in business enterprises. As
part of its current privatization efforts, the Israeli government
actively encourages foreign investment in privatizing government‑owned
entities.

Israel has a law against unfair competition. It is government policy to
equalize competition between private and public enterprises, although
the existence of monopolies and oligopolies in several sectors stifles
competition. In the case of monopolies, defined as entities that supply
more than 50% of the market, the government controls prices.

## Protection of Property Rights [**Return to top**](#chapter-6-investment-climate)

Israel has a modern legal system based on British common law that
provides effective means for enforcing property and contractual rights.
Courts are independent. Israeli civil procedures provide that judgments
of foreign courts may be accepted and enforced by local courts. Secured
interests in property are recognized and enforced by the Israeli
judicial system. A reliable system of recording such security interests
exists.

Patent protection is provided for twenty years from filing. Both product
and process patent protection for pharmaceuticals are permitted. However
the Israeli patent system still allows for pre-grant opposition to
patents, which may result in significant delays for some applicants.
Israel employs compulsory licensing in very limited circumstances,
mostly when the product is not being supplied in Israel on reasonable
terms.

Israel is a Member of the WTO and the World Intellectual Property
Organization (WIPO). It is a signatory to the Berne Convention for the
Protection of Literary and Artistic Works, the Universal Copyright
Convention, the Paris Convention for the Protection of Industrial
Property, and the Patent Cooperation Treaty. Israel was obligated to
implement the WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) by January 1, 2000.

[]{#copyright .anchor}Of particular importance is the inadequate
protection against unfair commercial use of data generated to obtain
marketing approval for pharmaceuticals. Administrative delays at the
Ministry of Health further erode the ability of U.S. pharmaceutical
companies to obtain a fair term of protection, even if they submit
registration requests in Israel immediately upon approval in the United
States. Israel's use of a pre-grant opposition system for patents
impairs the ability of rights holders to protect innovation. In 2005,
Israel reduced the term of extension of pharmaceutical patent protection
provided to compensate for delays in obtaining regulatory approval of a
drug. The 2005 legislation has discouraged U.S. companies from
substantial investment in the health sector.

## Copyright [**Return to top**](#chapter-6-investment-climate)

Israel\'s present copyright law is based on the United Kingdom Copyright
Act of 1911, with subsequent amendments. Protections include the
exclusive right to (a) copy or reproduce the work; (b) produce,
reproduce, perform or publish translations; (c) publicly perform plays
or novels; and (d) make recordings of literary, dramatic or musical
works. Criminal penalties are also provided for certain commercial
infringing activities.

The Knesset recently passed new copyright legislation that will take
effect in Spring 2008. In general, this law is an improvement over the
old Israeli law, in that is more modern its structure, terminology and
scope. Temporary copies are explicitly protected and a "making
available" right is explicitly provided. Under this law, a person who is
a non-Israeli national has no rights in their sound recordings that were
not published for the first time in Israel, unless the person is a
national of country that has an agreement with Israel concerning sound
recordings. In the case of the United States, the Israeli government
promulgated an order which implements a 1950 bilateral agreement between
Israel and the United States which does protect U.S. sound recordings.

The term of protection for sound recordings is 50 years; for other
works, it is the lifetime of the author plus 70 years.

Copyright law in Israel also falls short of certain protections that
have become common in the copyright laws of developed countries
including, protection of "technological protection measures," "rights
management information," provisions related to internet service provider
liability and safe harbors and parallel import protection. Israel has
also not acceded to the "WIPO Internet Treaties."

## Transparency of Regulatory System [**Return to top**](#chapter-6-investment-climate)

[]{#fortytwo .anchor}It is government policy to encourage increased
competition through market liberalization and deregulation, but tax,
labor, health, and safety laws can be impediments to the foreign
investor. Although the current trend is towards deregulation, Israel\'s
bureaucracy can still be difficult to navigate, especially for the
foreign investor unfamiliar with the system. It is important that
potential investors get approvals or other commitments made by
regulatory officials in writing before proceeding, rather than relying
on unofficial oral promises.

Israel is a signatory to the WTO Agreement on Government Procurement
(GPA), which covers most Israeli government entities and
government-owned corporations. Most of the country's open international
public tenders are published in the local press. However,
government-owned corporations make extensive use of selective tendering
procedures. In addition, the lack of transparency in the public
procurement process discourages U.S. companies from participating in
major projects and disadvantages those that choose to compete.
Enforcement of the public procurement laws and regulations is not
consistent.

## Efficient Capital Markets and Portfolio Investment [**Return to top**](#chapter-6-investment-climate)

Credit is allocated on market terms. Various credit instruments are
available to the private sector, and foreign investors can receive
credit on the local market. Legal, regulatory, and accounting systems
are transparent and conform to international norms, although the
prevalence of inflation-adjusted accounting means that there are
differences from U.S. accounting principles.

Three large banks - Bank Hapoalim, Bank Leumi, and Israel Discount
Bank - dominate Israel\'s banking sector. Hapoalim has assets of
approximately \$63 billion. Leumi's assets are almost \$65 billion.
Discount has assets of \$36 billion. Bank Hapoalim was fully privatized
in 2000. A little more than 10% of the shares of Leumi remain in the
hands of the State of Israel, and the bank remains on the agenda of the
Government of Israel to complete privatization. A group led by Mathew
Bronfman purchased 26% of the shares of Discount in 2005. The group has
the right to purchase an additional 25%, which remains in the hands of
the State of Israel.

Many Israeli firms are not publicly traded or are controlled through
integrated holding companies. In the case of publicly traded firms where
ownership is widely dispersed, the practice of \"cross-shareholding\"
and \"stable shareholder\" arrangements to prevent mergers and
acquisitions is common, but not directed in particular at preventing
potential foreign investment. Hostile takeovers are a virtually unknown
phenomenon in Israel, given the high concentration of ownership of most
firms.

Israel has no laws or regulations regarding the adoption by private
firms of articles of incorporation or association that limit or prohibit
foreign investment, participation, or control.

## Political Violence [**Return to top**](#chapter-6-investment-climate)

Israel is a parliamentary democracy with a stable domestic environment.
Nonetheless, the unresolved conflict between Israel and the Palestinians
means that the potential for politically inspired violence and terrorism
exists. The State Department web site provides updated information on
travel advisories: [http://travel.state.gov](http://travel.state.gov/)

Israel signed peace treaties with Egypt (1979) and Jordan (1994), and
its borders with them are open. The borders with Lebanon and Syria are
closed, and the potential for violent incidents remains, the most recent
example being the 2007 conflict with Hizbullah.

## Corruption [**Return to top**](#chapter-6-investment-climate)

Bribery and other forms of corruption are illegal under several Israeli
laws and Civil Service regulations. Israel is not a signatory of the
OECD Bribery convention. There are several NGOs that focus on public
sector ethics. Transparency International has a local chapter in Israel.

## Bilateral Investment Agreements [**Return to top**](#chapter-6-investment-climate)

Israel has protection of investment agreements with Albania, Argentina,
Armenia, Bulgaria, Croatia, Cyprus, Czech Republic, El Salvador,
Estonia, Ethiopia, Georgia, Germany, Hungary, India, Kazakhstan, Latvia,
Lithuania, Moldova, Poland, Romania, Serbia-Montenegro, Slovakia,
Slovenia, South Korea, Thailand, Turkey, Turkmenistan, Ukraine, Uruguay,
Uzbekistan. Agreements are waiting to be ratified with China, Guatemala,
South Africa, and Azerbaijan.

## OPIC and Other Investment Insurance Programs [**Return to top**](#chapter-6-investment-climate)

OPIC is involved in several projects in Israel and also finances
projects sponsored by U.S. investors in Israel, but not in the Golan
Heights. Israel is a member of the Multilateral Investment Guarantee
Agency (MIGA).

## Labor Trade Zones [**Return to top**](#chapter-6-investment-climate)

Israel\'s civilian labor force numbers approximately 2.9 million people.
Highly skilled and well educated, the Israeli labor force is the
economy's major asset. More than 40% of the work force has more than 13
years of education and over 22% have 16 or more years of education. More
than 30% of university students specialize in fields with high
industrial R&D potential, including engineering, mathematics, physical
sciences, and medicine. According to the Investment Promotion Center,
there are more than 135 scientists out of every 100,000 workers, the
highest in the world. The rapid growth of Israel\'s high-tech industries
in the late 1990s increased the demand for workers with specialized
skills. However, media coverage of a nationwide secondary teachers'
strike often cited declining test scores by Israeli students in
comparison to students from other countries, and raised fears that
reduced budgets and low teacher salaries were affecting the quality of
the Israeli education system.

As a result of the difficult security situation, global slowdown, and
slowdown in the high tech sector, unemployment l reached a level of
10.7% in 2003, and has subsequently declined since then, reaching a
level of 7.4% in 2007.

[]{.mark}

The number of Palestinian workers has declined drastically due to
security concerns. The number of foreign workers has significantly
declined in the last few years as a result of government policies to
reduce the number of foreign workers in order to encourage employment of
Israelis. There are currently around 186,000 (84,000 are estimated to be
illegal) non-Israeli workers employed in Israel.

The national labor federation, the Histadrut, organizes about one-third
of Israeli workers. Collective bargaining negotiations in the public
sector take place between the Histadrut and government entities. In the
private sector, negotiations at the national level between the Histadrut
and the employers association are supplemented by local negotiations to
finalize details. The number of strikes has declined significantly as
the public sector has gotten smaller. However, strikes remain a viable
negotiating vehicle in many difficult wage negotiations.

Israel strictly observes the Friday afternoon to Saturday afternoon
Sabbath and special permits must be obtained from the government
authorizing Sabbath employment. At the age of 18, most Israelis are
required to perform 2‑3 years of national service. Until age 50, Israeli
males are required to perform 30‑50 days of military reserve duty
annually, during which time they receive compensation from National
Insurance companies.

## Foreign-Trade Zones/Free Ports [**Return to top**](#chapter-6-investment-climate)

Israel has one free trade zone, the Red Sea port city of Eilat. In
addition to the Eilat Free Trade Zone, there are three ports that offer
free trade: Haifa Port (including Kishon), the Port of Ashdod and the
Port of Eilat.

The GOI has plans to expand and upgrade the major ports of Haifa (in the
north) and Ashdod (in the center). There is good quality warehousing
including cold storage in all of the major ports and trade zones, but
current capacity may become inadequate in the face of growing demand

Benefits available under the grants option include both direct
government subsidization of the investment (detailed below) and reduced
tax rates. The amount of the grant is based on planned investment in
fixed assets, such as buildings and equipment. The GOI usually requires
that at least 30% of the investment be financed by the investor\'s own
equity. Under the provisions of the grants scheme, 20% of the approved
program for industrial projects should be completed within 24 months of
the date of approval. The investment program should be completed within
5 years of the date of approval.

The investment incentives provided under the grant option include:

\- tax benefits and accelerated depreciation, and

\- direct grants, which depend on the type of project and its location
in the country.

Grants available as a percentage of investment value in Areas A and B

  ---------------------------------------- ----------------- -------------
  Type of Investment                       Priority Area A   Priority Area
                                                             B

  Industrial Projects up to NIS 140        24%               10%
  million (took out \$ as it will vary                       
  depending on when they do deal)                            

  Industrial Projects above NIS 140        20%               10%
  million                                                    

  Hotels and Accommodations                24%               10%

  Other Tourism Enterprises                15%               0%
  ---------------------------------------- ----------------- -------------

Approved industrial investments in Area A are eligible under the grants
option for tax exemptions for the first two years and five additional
years of reduced taxes.

Companies choosing the grant program receive tax benefits as well for a
period of seven consecutive years, starting with the first year in which
the company earns taxable income (grants are not considered income). Tax
benefits are determined by the percentage of foreign control: the more
foreign control in the enterprise, the higher the benefits. If at least
25% of an Approved Enterprise\'s owners are foreign investors, the
enterprise is eligible for a 10 year period of tax benefits

In addition to the benefits noted above, investments in certain
industries in the Negev region may be eligible for an additional 8%
grant, under the "Negev Law."

## Foreign Direct Investment [**Return to top**](#chapter-6-investment-climate)

Foreign Direct Investment in Israel totaled USD 14.3 billion in 2006, an
increase of almost 200% compared with FDI of USD 4.8 billion in 2005.
The sharp increase is due in large part to Berkshire Hathaway's purchase
of 80% of Iscar Metals for USD 4.4 billion and HP's (Hewlett Packard)'s
purchase of Mercury Interactive for USD 4.5 billion.

Foreign Direct Investments for the first 11 months of 2007 totaled
almost USD 9 billion. Source: Bank of Israel

## Web Resources [**Return to top**](#chapter-6-investment-climate)

[Ministry of Industry &
Trade](http://www.moital.gov.il/NR/exeres/B0B48981-357D-446F-AFAC-91A358E93C87.htm)

[Investment Promotion Center](http://www.investinisrael.gov.il/)

[State Department Website](http://travel.state.gov/)

[Multilateral Investment Guarantee Agency](http://www.miga.org/)

[The Overseas Private Investment Corporation ](http://www.opic.gov/)

[The National Committee for Labor Israel](http://www.laborisrael.org/)

[Bank of Israel](http://www.bankisrael.gov.il/firsteng.htm)

[Return to table of contents](#section)

# Chapter 7: Trade and Project Financing

-   [How Do I Get Paid (Methods of
    Payment)](#how-do-i-get-paid-methods-of-payment-return-to-top)

-   [How Does the Banking System
    Operate](#how-does-the-banking-system-operate-return-to-top)

-   [Foreign-Exchange
    Controls](#foreign-exchange-controls-return-to-top)

-   [U.S. Banks and Local Correspondent
    Banks](#u.s.-banks-and-local-correspondent-banks-return-to-top)

-   [Project Financing](#project-financing-return-to-top)

-   [General Financial
    Availability](#general-financing-availability-return-to-top)

-   [Web Resources](#web-resources-return-to-top-3)

## How Do I Get Paid (Methods of Payment) [**Return to top**](#chapter-7-trade-and-project-financing)

Israelis are generally reliable and pay on time. However, as there are
always exceptions to the rule, common precautionary measures should be
taken when doing business in Israel. The most common method of payment
is by Letter of Credit (L/C). Collection without a L/C is not unusual,
however. Cash Against Documents (CAD) is the most preferred mechanism by
many Israeli importers. Since there is no guarantee of payment, as there
is in a L/C transaction, some exporters prefer to collect an advance
payment or an irrevocable bank guarantee on a certain portion of the
sale. This practice is appropriate and recommended when there is no past
relationship and experience with the buyer. A combination of L/C and CAD
issued for the same Bill of Lading is also acceptable to most local
banks.

When substantial investment and engineering (as required for custom-made
products) are involved, it is not unusual for exporters to demand
advance payment of a certain portion of the selling price. The Bank of
Israel authorizes advance payment of up to 35% or \$200,000, whichever
is lower. The \$200,000 limitation is not applicable for the importation
of equipment.

Payment schedules vary. For raw materials, components and semi-finished
goods, credit is usually limited to 60 days. For equipment and
machinery, extended schedules may range from six months to two years.

The local banking system provides sources of short and long-term credit
and access to venture capital. Some importers have preferred to seek
[U.S. Export-Import (ExIm) Bank](http://www.exim.gov/) financing.
Eximbank has most of the leading Israeli banks as correspondents and may
supplement private sources of export financing with medium and long-term
loans.

## How Does the Banking System Operate [**Return to top**](#chapter-7-trade-and-project-financing)

Israel has a modern and sophisticated banking system. The remaining
government-owned shares of the largest bank, Bank Hapoalim, were sold in
2000. The government reduced its stake in the second largest bank, Bank
Leumi, to 35 percent in 2002. In 2000, Citibank was the first large
international bank to set up a full branch in Israel. HSBC soon followed
suit. Bank of America also has a representative office in Israel. The
government does not interfere in the day-to-day management of the banks.
Most types of loans and project financing traditionally available in
industrialized countries are available in Israel.

## Foreign-Exchange Controls [**Return to top**](#chapter-7-trade-and-project-financing)

Israel abolished most of its foreign exchange controls in the 1990s. The
last major restriction, on the amount Israeli institutional investors
may invest overseas, was eliminated at the end of 2002.

## U.S. Banks and Local Correspondent Banks [**Return to top**](#chapter-7-trade-and-project-financing)

Most U.S. banks maintain correspondent relationships with Israel\'s
three leading banks - Bank Leumi, Bank Hapoalim, and the Israel Discount
Bank, as well as with the Mizrahi Bank and the First International Bank
of Israel. Many Israeli banks have their own subsidiaries in major U.S.
cities. Interested parties should contact their U.S. banker or the
Israeli banks in the United States directly for more detailed
information on their respective services. Major Correspondent Banks:

Bank Hapoalim

Bank Leumi Le-Israel

First International Bank of Israel

Israel Discount Bank

United Mizrahi Bank

## Project Financing [**Return to top**](#chapter-7-trade-and-project-financing)

The U.S. Export-Import Bank (Eximbank) and the U.S. Overseas Private
Investment Corporation (OPIC) offer project financing and other
financial services. Eximbank provides a range of financial programs
ranging from medium and long term guarantees, insurance programs,
working capital guarantee to project finance. The Project Finance
Division provides financing to projects that are dependent on the
project cash flows for repayment. For more information see the Eximbank
website at [http://www.exim.gov](http://www.exim.gov/). OPIC finances
overseas projects through loans and loan guarantees that provide medium
to long-term funding to ventures involving significant equity and/or
management participation by U.S. businesses. OPIC also provides
insurance against a broad range of political risks. Rather than relying
on sovereign or sponsor guarantees, OPIC\'s project financing program
looks for repayment from the cash flows generated by the project. For
projects sponsored by U.S. small businesses or cooperatives, financing
may be provided through direct loans. These loans generally range in
amount from \$2 million - \$10 million. Loan guarantees, which typically
are used for larger projects, range in size from \$10 million - \$75
million, but in certain instances can be as high as \$200 million. For
information, consult the OPIC website at
[http://www.opic.gov](http://www.opic.gov/).

## General Financing Availability [**Return to top**](#chapter-7-trade-and-project-financing)

American companies will find that Israel does not suffer from any lack
of capital or trade financing. There are no unusual rules or regulations
concerning export financing, apart from the foreign currency regulations
noted above. Loans at market interest rates are available from
commercial banks to finance the manufacture of exports including the
import of raw materials and components for export products. Loans vary
depending upon the raw material requirements, cost of conversion and
collection timeframe.

U.S. exporters may find export financing and insurance available through
commercial sources; City/State-sponsored export financing and loan
guarantee programs; the U.S. Small Business Administration (SBA); the
U.S. Export-Import Bank (Eximbank), which can provide U.S. exporters
with export credit insurance, pre-export financing and working capital
guarantees; and other sources. Eximbank can also provide established
Israeli buyers with fixed-rate financing for their purchases from U.S.
exporters. Eximbank's Environmental Export Insurance Policy provides
enhanced short-term insurance for medium and long-term loans and
guarantees for environmental exports, projects and services. Israel does
not receive PL-480 or similar U.S. Department of Agriculture (USDA)
program commodity grants. USDA's GSM-102 funds and supplier credit
guarantees are available but not sufficiently attractive to most
parties. Information on these programs can be found at
[http://www.fas.usda.gov](http://www.fas.usda.gov/)

[Bilateral Funding Organizations]{.underline}

There are four bilateral U.S.-Israel Government funded organizations,
which provide financing for joint R&D and research projects.

*U.S.-Israel Binational Industrial Research and Development Foundation
(BIRD)*

BIRD supports joint industrial R&D projects designed to develop,
manufacture, sell and support an innovative product. A pair of
companies, one from each country, must conduct the project. BIRD often
plays a proactive role in bringing together potential U.S. and Israeli
strategic partners. BIRD's website is
[http://www.birdf.com](http://www.birdf.com/).

*U.S.-Israel Science and Technology Commission (USISTC)*

The USISTC promotes collaborative science and technology activities
between interested private sector entities. The U.S. and Israeli
governments have contributed \$30 million (\$15 million each) to fund
joint ventures between U.S. and Israeli firms in a number of technology
specific areas, as well as to remove regulatory impediments to
cooperation. For information, companies should consult the USISTC
website at [http://www.usistc.org](http://www.usistc.org/).

*U.S.-Israel Binational Science Foundation (BSF)*

The BSF supports cooperative research projects of mutual interest to the
United States and Israel, concerned with science and technology for
peaceful purposes. The research must be conducted jointly by U.S. and
Israeli researchers and may be conducted in either country. The BSF has
a website at [http://www.bsf.org.il](http://www.bsf.org.il/)

*U.S.-Israel Binational Agricultural Research and Development Fund
(BARD)*

BARD funds, generated from a \$100 million endowment, finance
cooperative agricultural research between scientists of the United
States and Israel on topics considered to be of mutual benefit to the
agriculture of both countries. BARD also supports international
workshops and provides post-doctoral fellowships. For further
information, consult the BARD website at
[http://www.bard-isus.com](http://www.bard-isus.com/)

## Web Resources [**Return to top**](#chapter-7-trade-and-project-financing)

[Export-Import Bank of the United States](http://www.exim.gov/)

[Country Limitation
Schedule](http://www.exim.gov/tools/country/country_limits.html)

[OPIC](http://www.opic.gov/)

[Trade and Development Agency](http://www.tda.gov/)

[SBA\'s Office of International Trade](http://www.sba.gov/oit/)

[USDA Commodity Credit
Corporation](http://www.fsa.usda.gov/ccc/default.htm)

[U.S. Agency for International Development](http://www.usaid.gov/)

[U.S. Department of Agriculture. Foreign Agricultural
Services](http://www.fas.usda.gov/)

**Bilateral Funding Organizations:**

[U.S.-Israel Binational Industrial Research and Development Foundation
(BIRD)](http://www.birdf.com/)

[U.S.-Israel Science and Technology Commission
(USISTC)](http://www.usistc.org/)

[U.S.-Israel Binational Science Foundation
(BSF)](http://www.bsf.org.il/)

[U.S.-Israel Binational Agricultural Research and Development Fund
(BARD)](http://www.bard-isus.com/)

**Commerical Banks:**

[Bank Hapoalim B.M.](http://www.bankhapoalim.com/)

[Bank Leumi Le-Israel B.M.](http://english.leumi.co.il/)

[The First International Bank of Israel
Ltd.](http://www.fibi.co.il/fibi/site/en/homepage.asp)

[Israel Discount Bank
Ltd.](http://207.232.52.177/cgi-bin/inetcgi/discount/front/eng_homepage.jsp?src=19322)

[United Mizrahi
Bank](http://www.mizrahi.co.il/cgi-bin/bvisapi.dll/Mizrahi/pages/EngHomePage.jsp)

[Return to table of contents](#section)

# Chapter 8: Business Travel

-   [Business Customs](#business-customs-return-to-top)

-   [Travel Advisory](#travel-advisory-return-to-top)

-   [Visa Requirements](#visa-requirements-return-to-top)

-   [Telecommunications](#telecommunications-return-to-top)

-   [Transportation](#transportation-return-to-top)

-   [Language](#language)

-   [Health](#health-return-to-top)

-   [Local Time, Business Hours and
    Holidays](#local-time-business-hours-and-holidays-return-to-top)

-   [Hotels and Restaurants](#hotels-and-restaurants-return-to-top)

-   [Temporary Entry of Materials and Personal
    Belongings](#temporary-entry-of-materials-and-personal-belongings-return-to-top)

-   [Web Resources](#sixtytwo)

## Business Customs [**Return to top**](#chapter-8-business-travel)

Visiting U.S. companies find Israel's business environment very similar
to that in the United States. It is a professional and westernized
business environment and most U.S. businesspeople feel very comfortable
doing business here. Appointments can be made on fairly short notice,
but punctuality is desired. Usually, Israelis arrive well prepared for
meetings and are very direct. Business cards in English or in English
and Hebrew are recommended. It is very expensive and often a difficult
task to have business cards made at short notice in Israel. Major hotels
will likely offer to make photocopies of a sample card if you need
additional cards at short notice. It is often better to have these
photocopied cards than no cards at all. Email addresses and websites
should be included with your contact information.

Israelis are familiar with the fact that most U.S. businesspeople dress
formally for meetings. However, this does not mean they will be dressed
formally, and especially in the summer months it is common for everyone
to shed the coat and tie or to wear them only for very formal meetings.
Business suits are appropriate for meetings with VIPs, some private
sector companies, and senior government officials. In general, American
business travelers will find business dress in both the private sector
and government offices to be much less formal than in the United States.

English is widely spoken in the business community and in government
offices, but knowing and using a few words in Hebrew, especially
introductory phrases and greetings, can be very useful.

Most businesses and government offices are open 40-45 hours/week, Sunday
thru Thursday. It may be possible to schedule appointments for Friday
morning, but no appointments or business are done on Saturdays. Common
office hours are from 8:00 a.m. to 5:00 p.m. Retail outlets are open
Sunday through Thursday from 9:00 a.m. to 7:00 p.m. and on Fridays, from
9:00 a.m.

to 2:00 p.m. Shops in malls usually remain open until around 10:00 p.m.

Banks are open in the mornings, Sunday through Friday and twice a week
in the afternoon. The American Embassy in Tel Aviv is open 8-4:30
Monday-Friday.

Israel is two hours ahead of Greenwich Mean Time (GMT), and does observe
Daylight Savings Time.

## Travel Advisory [**Return to top**](#chapter-8-business-travel)

The U.S. State Department issues travel advisories and warnings. Since
September 2000, there has been a travel warning in place that was issued
by the Department of State currently containing a recommendation to
remain mindful of security factors when considering travel to Israel and
Jerusalem, to defer travel to the West Bank and to avoid all travel to
the Gaza Strip due to current safety and security concerns. For the most
current information see the Department of State Travel Warning for
Israel or visit U.S. Embassy Tel Aviv\'s website at
[[http://israel.usembassy.gov/publish/consular.htm]{.underline}](http://israel.usembassy.gov/publish/consular.htm).

Automated Consular information is available at 972-3-519-7410. Travelers
may also contact the Consular Section of the U.S. Embassy in Tel Aviv at
telephone 972-3-519 7575 for information and help in Israel. The
after-hours number is: 972-3-519-7551. The fax number is 972-3-516-0315.
The E-mail address for American Citizen Services is:
[amctelaviv@state.gov](../amctelaviv@state.gov), and inquiries can be
made from 2:00 p.m. to 3:00 p.m. at 972-3-519-7475. The e-mail address
for non-immigrant visa services is:
[NIVtelaviv@state.gov](../NIVtelaviv@state.gov).

The e-mail for immigrant visa services is:
[ivtelaviv@state.gov](../ivtelaviv@state.gov). For information and help
in Jerusalem, the Gaza Strip, and the West Bank, U.S. citizens may
contact the U.S. Consulate General in Jerusalem: 972-2-625-3288. The
after-hours number is 972-2-625-3201. The fax number is 972-2-272-2233.
There is a U.S. Consular Agent in Haifa, tel:

972-4-853-1446, who reports to the U.S. Embassy in Tel Aviv. The
Consular Agent can provide some routine and emergency non-visa related
services in the North.

All travelers are advised to refer to the latest Country Specific
Information for Israel and travel advisories issued by the Bureau of
Consular Affairs, Department of State, Washington, D.C. Recorded travel
information is available at tel: (202) 647-5225. For information by fax,
call (202) 647-3000. Internet address:
[[http://travel.state.gov]{.underline}](http://travel.state.gov/). The
State Department advises U.S. citizens who plan to be in the region for
a substantial period of time to participate in the Online Internet
Registration for U.S. citizens residing or traveling abroad at:
[[https://travelregistration.state.gov/]{.underline}](https://travelregistration.state.gov/).
Registrants can receive e-mail updates to Consular Information Sheets,
Public Announcements and Travel Warnings specific to the countries they
choose. This site will allow both short- and long-term travelers abroad
to provide their itinerary, residence, and emergency contact
information. Organizations such as travel agencies or firms with
employees overseas may also enter information on their clients or staff.

In light of the US Travel Warning, Clal Insurance Company (one of the
largest private Israeli insurance companies) offers a special insurance
policy that is available to American business people traveling to
Israel. The policy has been specifically created to address the needs of
the business traveler to Israel at this time. Since this special
insurance policy does have certain restrictions, it is important for all
Americans to obtain full details of the policy directly from Clal before
leaving the United States. The Clal policy, called \"Because of the
Situation,\" offers American (and Canadian) citizens who are guests of
an Israeli company located in Israel full medical, personal injury and
life insurance coverage up to \$1 million during their stay in Israel.
Only Clal\'s agents offer the coverage in Israel and the application
process must be implemented via the host Israeli/American/Canadian
company in Israel. For specific information about this policy the
contact at Clal is: Mr. Yakov Mizrahi at tel:

972-3-638-7335, email: yakovm@clal.il.co

## Visa Requirements [**Return to top**](#chapter-8-business-travel)

Passports, an onward or return ticket, and proof of sufficient funds are
required for entry to Israel and the occupied territories. A three-month
visa may be issued free of charge to holders of U.S. passports upon
arrival, and may be extended by the Ministry of the Interior. Visitors
who plan to travel to Arab countries without diplomatic relations with
Israel may request to have their Israeli entry visas stamped on a
separate form at the port of entry. Interested U.S. visitors who have
been refused entry or have experienced difficulties with their visa
status during previous visits, or who have overstayed a visa during
previous visits, can obtain information from the Israeli Embassy in
Washington, D.C. or an Israeli consulate regarding the advisability of
attempting to return to Israel.

Americans of Palestinian ancestry or Israeli American dual nationals may
be subject to more particular restrictions and should read the Country
Specific Information for Israel, cited above.

Except during periods of closures, U.S. citizens, except those of
Palestinian ancestry may enter and exit the West Bank on a U.S. passport
with an Israeli visa. It is not necessary to obtain a visitor\'s permit
from the Palestinian Authority. American citizens of Palestinian
ancestry should check the Country Specific Information for the latest
updates on entry and exit requirements for Israel, Gaza and the West
Bank.

International crossing points are now in operation between Israel and
Jordan at the Arava crossing (Wadi Al-Arabah) in the South (near Eilat),
and the Jordan River crossing (Sheikh Hussein Bridge) in the North (near
Beit Shean). Prior visas are not necessary for American citizens using
these two crossing points to enter either Israel or Jordan, but such
travelers will have to pay a fee. Visas should be obtained in advance
for those wanting to cross the Allenby Bridge, which links Jordan and
the West Bank. (Note: Palestinian Americans with past or current
residency status in the West Bank or Gaza must cross into Jordan using
the Allenby Bridge). Procedures for all crossings into Jordan are
subject to frequent changes.

Travelers interested in the most up-to-date border crossing information
should contact the U.S. Embassy in Tel Aviv or the U.S. Consulate
General in Jerusalem. For further entry information, travelers may
contact the Embassy of Israel, 3514 International Drive, NW, Washington,
D.C. 20008, telephone (202) 364-5500, or the Israeli Consulate General
in Los Angeles, San Francisco, Miami, Atlanta, Chicago, New Orleans,
Boston, New York, Philadelphia, or Houston.

U.S. Companies that require travel of foreign businesspersons to the
United States should allow sufficient time for visa issuance if
required. Visa applicants should go to the following links.

[State Department Visa Website](http://travel.state.gov/visa/index.html)

[United States Visas.gov](http://www.unitedstatesvisas.gov/)

[Consular Section of the U.S. Embassy Tel
Aviv](http://www.usembassy-israel.org.il/publish/noniv.htm)

## Telecommunications [**Return to top**](#chapter-8-business-travel)

Israel\'s national and international telecommunications systems are
constantly improving and are competitive internationally. Internet
access is available from at least five different service providers.
Calling cards have become very popular and can be used in most payphones
for both local and international calls. All Israeli post offices, and
some private vendors, offer calling cards in shekel denominations. Cell
phones are available for rental at Ben Gurion Airport or through hotels.
It is estimated that Israel has one of the highest levels in the world
of people who own and operate a cell phone on a daily basis. According
to the Israel Ministry of Communications, the penetration rate of mobile
phone subscription is 95% (6.3 million mobile subscribers on 4
networks).

Telephone credit cards are also widely used and operated by such
companies as AT&T, MCI and Sprint. Many Israeli companies have modern
data communication equipment, providing an immediate business link with
clients and customers both domestically and internationally.

## Transportation [**Return to top**](#chapter-8-business-travel)

[]{#language .anchor}Israel is a small country - about the size of New
Jersey. Rental cars, taxis and limousines w/driver are readily available
to the visiting U.S. businessperson at comparable U.S. prices. U.S.
drivers may rent cars with a valid U.S. license or an international
drivers license. The accident rate in Israel is high and we recommend
hiring a driver or using caution when self-driving. Israel has an
extensive road network that connects the entire country. Israel also has
advanced inland (bus and plane) and international transportation
facilities.

One of the most notable advances in transport in Israel in recent years
has been the modernization of the train system, which is still
undergoing expansion. The system currently runs along Israel\'s
Mediterranean coast, being particularly useful for connections between
Haifa, Tel Aviv and the airport, as well as the most recent link to
Jerusalem. Commuter trains have become a popular means of travel between
these points as the rush-hour traffic and congestion continues to grow
around Tel Aviv and Jerusalem. Extensive freight services are available
and most often used between Haifa, the port in the north, and Ashdod,
Israel's primary port in the south, near the Beer Sheva region.

Ben Gurion International Airport is located between Tel Aviv and
Jerusalem, and offers connections to several international destinations.
Ben Gurion is the country's center of air passenger and cargo
operations. A new international terminal was completed and entered
service in late 2004. Frequent internal air services connect the major
cities of Tel Aviv, Haifa and Jerusalem to Eilat in the south and to the
Galilee region in the north.

Limited internal air service is available on Fridays and Saturdays.

The three main ports, located in Haifa, Ashdod and Eilat, offer full
freight services for international shipping.

## Language [**Return to top**](#chapter-8-business-travel)

Hebrew and Arabic are the two official languages of Israel. English is
the third and principal international language. Many signs in public
places are in all three languages. Due to the diversity of the immigrant
population, most Israelis are multilingual. Russian is also prevalent.

## Health [**Return to top**](#chapter-8-business-travel)

Modern medical care and medicines are available in Israel. Service may
be somewhat limited on Fridays and Saturdays so special attention should
be paid to making arrangements in advance if possible for service on
these days. Travelers can find information written in English about
emergency medical facilities and after-hours pharmacies in the
\"Jerusalem Post\" newspaper.

Doctors and hospitals often expect immediate cash payment for health
services. U.S. medical insurance is not always valid outside the United
States. Supplemental medical insurance with specific overseas coverage
has proven useful. The international traveler\'s hotline at the Center
for Disease Control, telephone (404) 332-4559, has additional health
information.

## Local Time, Business Hours, and Holidays [**Return to top**](#chapter-8-business-travel)

Most businesses and government offices are open 40-45 hours/week, Sunday
thru Thursday. It may be possible to schedule business appointments for
Friday morning, but no appointments or business are done on Saturdays.
Common office hours are from 8:00 a.m. to 5:00 p.m. Retail outlets are
open Sunday through Thursday from 9:00 a.m. to 7:00 p.m. and on Fridays,
from 9:00 a.m. to 2:00 p.m. Shops in malls usually remain open until
around 10:00 p.m. Banks are open in the mornings, Sunday through Friday
and twice a week in the afternoon. The American Embassy in Tel Aviv is
open 8-4:30 Monday-Friday.\
\
Israel is two hours ahead of Greenwich Mean Time (GMT), and observes
Daylight Savings Time.

*2008 Holidays*

January 1 New Year's Day

January 21 Martin Luther King's Birthday

February 18 Presidents' Day

April 20 \*Passover (first day)

April 26 \*Passover (last day)

May 8 \*Israel Independence Day

May 28 Memorial Day

June 9 \*Shavuot (Pentecost)

July 4 US Independence Day

September 1 Labor Day

September 30 \*Rosh Hashanah (New Year-first day)

October 1 \*Rosh Hashanah (New Year-second day)

October 9 \*Yom Kippur (Day of Atonement)

October 13 Columbus Day

October 14 \*Succot (Feast of Tabernacles)

October 21 \*Simhat Torah (Rejoicing of the Law)

November 11 Veterans Day

November 27 Thanksgiving Day

December 25 Christmas Day

January 1 New Year's Day 2009

\*Israeli National Holidays: All businesses in Israel are closed

## Hotels and Restaurants [**Return to top**](#chapter-8-business-travel)

Israel has a variety of business hotels and restaurants that offer a
wide range of services and international cuisine. Most hotels and major
restaurants accept internationally recognized credit cards such as Visa,
MasterCard, Eurocard, American Express and Diners Club. Prices are
comparable to major metropolitan areas in the United States. In Israel,
the food and water is generally safe, although bottled water is often
preferred, widely available, and fairly inexpensive. Visitors should be
wary of any food that may have been exposed too long in the hot, open
air. Diet drinks are very popular as well as a variety of fresh made
fruit shakes and popular beverages from the United States. Coffee bars
and pastry shops are on almost every street corner, and many small
kiosks offer regional specialties such as falafel and shwarma
sandwiches.

## Temporary Entry of Materials and Personal Belongings [**Return to top**](#chapter-8-business-travel)

[]{#sixtytwo .anchor}In general, Israeli practices follow international
standards and conventions. Trade samples of negligible or low value
(under US\$1), non-merchandisable samples and printed advertising
material are usually exempt. Trade samples with a value up to US\$100
should have an ATA Carnet if brought into Israel. If valued over US\$100
an import license is required. Duty paid may be redeemed providing the
goods are re-exported before the end of six months.

Video cameras and other electronic items must be declared upon entry to
Israel. Please note that the Embassy has received reports from travelers
that these items are sometimes seized by Israeli customs and security
officials and are sometimes returned either damaged after an often
lengthy delay, during which time the contents of the hard drive may be
downloaded and the loss or compromise of sensitive business or personal
data may occur. It is advisable to contact the Embassy of Israel in
Washington or one of Israel\'s consulates in the United States for
specific information regarding customs requirements.

Definitive information on customs requirements for the Palestinian
Authority is not available. Please see our information on customs
regulations at
[[http://travel.state.gov/travel/cis_pa_tw/cis/cis_1468.html]{.underline}](http://travel.state.gov/travel/cis_pa_tw/cis/cis_1468.html).

## Web Resources [**Return to top**](#chapter-8-business-travel)

[Internet-Based Registration System
(IBRS)](http://www.travelregistration.state.gov/)

[State Department Travel Advisory](http://www.travel.state.gov/israel)

[U.S. Embassy Israel Consular
Services](http://israel.usembassy.gov/publish/consular.htm)

[State Department Visa Website](http://travel.state.gov/visa/index.html)

[Online Internet Registration for U.S.
citizens](http://travelregistration.state.gov/)

[United States Visas.gov](http://www.unitedstatesvisas.gov/)

[U.S. Commercial Service Tel Aviv](http://www.buyusa.gov/israel/en/)

[Return to table of contents](#section)

# Chapter 9: Contacts, Market Research, and Trade Events

-   [Contacts](#contacts-return-to-top)

-   [Market Research](#market-research-return-to-top)

-   [Trade Events](#trade-events-return-to-top)

## Contacts [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

[U.S. Commercial Service Tel Aviv and
Jerusalem](http://www.buyusa.gov/israel/en/contact_us.html)

## Market Research [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

To view market research reports produced by the U.S. Commercial Service
please go to the following website:
[http://www.export.gov/marketresearch.html](http://www.export.gov/marketresearch.html )
and click on Country and Industry Market Reports.

Please note that these reports are only available to U.S. citizens and
U.S. companies. Registration to the site is required, but is free of
charge.

## Trade Events [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

Please click on the link below for information on upcoming trade events.

[Local catalog shows in Israel](http://www.buyusa.gov/israel/en) as
viewed on the local U.S. Commercial Service website.

[Trade events listed at
Export.gov](http://www.export.gov/tradeevents.html) where you may search
for trade events by country, industry, state, date and event type.

[Return to table of contents](#section)

# Chapter 10: Guide to Our Services

The U.S. Commercial Service offers customized solutions to help your
business enter and succeed in markets worldwide. Our global network of
trade specialists will work one-on-one with you through every step of
the exporting process, helping you to:

-   Target the best markets with our world-class research

-   Promote your products and services to qualified buyers

-   Meet the best distributors and agents for your products and services

-   Overcome potential challenges or trade barriers

For more information on the services the U.S. Commercial Service offers
U.S. businesses, please click on the link below.

<http://www.buyusa.gov/israel/en/services.html>

[Return to table of contents](#section)