WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/G/272 
25 September 2012  
 
(12-5069) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
ISRAEL 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the fourth policy statement by Israel is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Israel. Israel WT/TPR/G/272 
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CONTENTS 
 
  Page 
I.  THE ISRAELI ECONOMY: RECENT DEVELOPMENTS 5  
 (1)   MAIN DEVELOPMENTS  5  
 (2)   FOREIGN TRADE  6  
 (3)   TRADE IN SERVICES  9  
 (4)   ISRAEL 'S MONETARY POLICY  10  
 (5)   EMPLOYMENT AND THE LABOUR MARKET  12  
 (6)   OECD  13 
II.  FOREIGN INVESTMENT 13  
III.  STRUCTURAL AND SECTORAL  REFORM INITIATIVES 15  
 (1)   MAIN INITIATIVES  15  
 (2)   "DOING BUSINESS TASK FORCE " 16  
IV.  TECHNOLOGICAL INNOVATION 17  
 (1)   RESEARCH AND DEVELOPMENT  17  
 (2)   ISRAEL NEWTECH 19  
 (3)   INTELLECTUAL PROPERTY RIGHTS  19  
V.  ISRAEL'S TRADE POLICY 21  
 (1)   INTRODUCTION  21  
 (2)   TRADE POLICY  21  
 (3)   WTO  22 
 (4)   DOHA DEVELOPMENT AGENDA  22  
 (5)   BILATERAL TRADE AGREEMENTS  23  
 (6)   UNILATERAL TRADE LIBERALIZATION  24  
 (7)   CONCLUSION  24  
 
  
 
  
 
  
 
  
 
_________________________________________________________________________________ 
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I. THE ISRAELI ECONOMY: RECENT DEVELOPMENTS 
(1) MAIN DEVELOPMENTS  
1. The State of Israel is an open, industria lized democracy. Since 1990, Israel has seen 
improvements in most economic indicators. Gro ss Domestic Product ("GDP") increased on average 
by 4.3% annually from 2006 through 2011.  This ra te has exceeded the average growth rate of 
advanced economies. In 2009, as most of the world experienced a decline in GDP, Israel experienced 
a 0.8% growth in its GDP.  
2. The Israeli economy grew at a healthy pace in 2011,  continuing a trend of recovery that began 
in 2009, following an economic slowdown in 2008 a nd the first part of 2009. Although there was 
relatively high annual growth in 2011, growth was m oderate in the second half of the year and in the 
first quarter of 2012. While GDP growth averaged 0.8%  in 2009, growth returned to pre-crisis levels 
of 4.8% in 2010 and 2011, driven by an increase in foreign and domestic demand. In the first quarter 
of 2012, GDP increased at an annual rate of 2.9%, co mpared to 3.3% and 3.1% in the third and fourth 
quarters of 2011, respectively.  In addition to GDP, there were significant improvements in the labour market with a notable decrease in the unemployment ra te and an increase in the participation rate. In 
2011, GDP per capita stood at a level of US$30,175. 
3. GDP is expected to grow by 3.1% in 2012 and by 3.4% in 2013, according to the Bank of 
Israel's forecast.  The moderation in the economy's pace of  growth in 2012 re flects the expected 
impact of the current cr isis on the Israeli economy. 
4. Since the 1990s, Israel's fiscal and monetary po licies have been formulated and coordinated 
with the overarching goals of enhancing economic  growth, reducing the tax burden, narrowing the 
Government's fiscal deficit, and maintaining low levels  of inflation. In the last ten years, prices have 
risen by an average of 2.2% annually. The average rate of inflation stood at 3.3% in 2009, 2.7% in 2010 and 3.5% in 2011. 
5.  As part of its economic policies, the Government has pursued a policy of privatizing State-
owned enterprises, including banks.  
6. The budget deficit amounted to 3.3% of GDP in 2011, just slightly above the budget deficit 
target of 3% for that year. Since 2009, the budget deficit has been on a declining path, amounting to 5.1% of GDP in 2009 due to the decrease in tax reve nues resulting from the global financial crisis (the 
2009 budget deficit target was set at 6%), and to 3. 8% of GDP in 2010 (the 2010 budget deficit target 
was set at 5.5%). The 2012 budget deficit is expected to exceed the original target of 2%. According 
to an estimate of the Accountant General at the Ministry of Finance, the 2012 budget deficit is 
expected to range between 3.5% and 4% of GDP.  
7. Due to a shortfall in tax revenue in the first half of 2012, and the expected effects of the 
ongoing economic crisis in Europe , the Government has approved a plan (June 2012) which provides 
that the deficit for 2013 will be set at 3% of GDP , with additional incremental reductions to 2% of 
GDP for 2016 and 1.5% of GDP for 2019. In accorda nce with the Government 's long-term fiscal 
policy, government expenditure will not exceed the limit that was set forth in the Expenditure Law 
and the Government remains committed to  reaching a 60% debt/GDP ratio in 2020.
 In addition, the 
Knesset Finance Committee approved an increase in the Value Added Tax ("VAT") by 1%, to 17% starting from September 2012. These measures (among other steps) would permit  the Government to 
meet its 2012-2013 budget defic it target and address the implications of the uncertain global 
economic environment WT/TPR/G/272 Trade Policy Review 
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8. In 2011, Israel's current account surplus was 0.1%  of GDP, lower than the surplus in previous 
years (3.8% of GDP in both 2009 and 2010). The sli ght surplus in 2011 was driven by a substantial 
expansion in imports. Imports of goods rose in  all categories, including consumer goods, raw 
materials and investment goods.  
(2) FOREIGN TRADE  
9. Exports of goods and services remain a crucial element of the economy's overall performance 
and competiveness. Exports (goods and services) constituted 42.9% of GDP in 2011. The annual 
growth rate of industrial exports stood  at 18.7% in 2007, and 17.2% in 20081. In 2009, however, 
industrial exports were acutely affected by the gl obal economic crisis, contr acting by 14.5%. In 2010, 
the trend of growth resumed and industrial exports  increased by 21.4%. In 2011, industrial exports 
grew, by 11.2% (Figure 3).  
05,00010,00015,00020,00025,000
2007 2008 2009 2010 2011USA EU Asia AfricaFigure 1. 
Exports of goods by region
(US $ million, F.O.B)
Source:       Central Bureau of Statistics.Gross exports (including diamonds returned by importers abroad and other returns to exporters in Israel). Note: 
 
 
                                                      
1 Figures in this section are excluding diamonds, unless otherwise indicated. Israel WT/TPR/G/272 
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05,00010,00015,00020,00025,00030,000
2007 2008 2009 2010 2011USA EU Asia AfricaFigure 2. 
Imports of goods by region
(US $ million,  C.I.F)
Source:       Central Bureau of Statistics.Gross imports (including un-worked diamonds returned to suppliers abroad and other returns to exporters 
abroad).Note: 
 
010,00020,00030,00040,00050,00060,00070,000
2007 2008 2009 2010 2011Agriculture Industrial Diamonds Total (net)Figure 3. 
Exports of goods by major groups
(US $ million, F.O.B)
Source:     Central Bureau of Statistics.Excludes trade with the West Bank and the Gaza strip.   Total (net) exports equal total gross exports 
(Agriculture, Industrial, Diamonds and other goods) less goods returned to Israeli exporters. 
Excluding ships and aircrafts.Note: 
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010,00020,00030,00040,00050,00060,00070,00080,000
2007 2008 2009 2010 2011Consumer goods Production inputs Diamonds Investment goods Total (net)Figure 4. 
Imports of goods by major groups
(US $ million, C.I.F)
Source:       Central Bureau of Statistics.Excludes trade with the West Bank and the Gaza strip. 
Net exports equal total gross exports (Consumer Goods,  Production Inputs, Diamonds, Investment Goods and 
other goods) less goods returned to Israeli exporters. Excluding ships and aircrafts.  Note: 
 
10. In 2010, import of goods totalled US$58.7 billion,  compared to exports of US$50.8 billion (a 
trade deficit of US$7.8 billion. In 2011, import of goods totalled US$72.7 billion, (annual increase of 
14.2%) compared to exports of US$58.1 billion (annual increase of 23.9 %). Net goods trade 
deficit in 2011 was US$14.6 billion (Figures 3 and 4) .   
11. Exports of agricultural products increa sed by 7.7% in 2009 after a decrease of 5.4% in 
2008. Exports of agricultural produ cts increased by 4.1% in 2011 after an increase of 7.9% in 2010 
(Figure 3). The growth in U.S. dollar terms is partly  attributable to the increase in agricultural input 
and output prices. 
12. The composition of Israel's trade in goods reflect s the industrialized nature of its economy. In 
2010, exports of goods consisted primarily of manufactured goods, and in particular high-tech 
products (Figure 3). Raw materials and capital inv estment, including energy and diamonds, comprised 
84% of imported goods (Figure 4). 
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0102030405060708090100
2007 2008 2009 2010 2011Goods ServicesFigure 5. 
Exports of goods and services
Source:  Central Bureau of Statistics.21.1
50.324.1
57.722.0
46.324.2
56.126.9
62.9(US $ billion)
 
(3) TRADE IN SERVICES  
13. The services sector consists of retail and wholesale trade, professional services, banking, 
hotels and other services. In 2010, the share of empl oyees in the services and trade sector amounted to 
84%, which reflects the services orientation of Israel's economy. 
14. Exports of services decreased by 9.9% in 2009.  This decrease occurred following an increase 
of 14% in 2008. Exports of services increased by  12.3% in 2010 and further increased by 7.5% in 
2011. 
15. In 2010 total services exports were at US$24. 2 billion, while services imports stood at 
US$18 billion, reflecting a trade surplus of appr oximately US$6.2 billion. Exports of business 
services2 accounted for 63% of total services exports . (Figure 6). Tourism (20%), transportation 
(17%), and insurance and governmental services (les s than 1% each) accounted for the rest of services 
exports. Imports of services were comprised of t ourism (19%), transportation (32%), insurance and 
government 2% each, while business services were 45% of the total services imports (Figure 7). 
16. In 2009, Israel's main services exports destin ations were the United States (48% of total 
exports) and Europe (29%). Import of Business se rvices from the United States and Europe was 29%, 
32% respectively while 39% of total business services imports were from the rest of the world. In the 
business services category export of R&D and computer related services accounted for 40% and 25% respectively of the total business services exported.  
                                                      
2 According to Central Bureau of Statistics classifications, (using extended balance of payments 
method) business services include, inter alia,  telecoms, R&D, construction, computer and related services, 
royalties and legal services. WT/TPR/G/272 Trade Policy Review 
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Tourism, 20%
Government, 0%
Transportation, 17%
Insurance, 0%Business services, 63%
Source:     Central Bureau of Statistics.Figure 6. 
Services export by category, 2010
 
 
  
Tourism, 19%
Government, 2%
Transportation, 32%
Insurance, 2%Business services, 
45%Figure 7. 
Services imports by category, 2010
Source:     Central Bureau of Statistics. 
(4) ISRAEL 'S MONETARY POLICY  
17. Since 1985, when the "Economic Stabilization" Plan was adopted, (in order to deal with the 
hyperinflation crisis of that time), Israel has made  significant progress in stabilizing inflation through 
effective implementation of monetary policy by the Bank of Israel, together with fiscal restraint and Israel WT/TPR/G/272 
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trade liberalization promoted by the Government. In  recent years, the primary objective of Israel's 
monetary policy has been to maintain price stability and to reduce inflation to levels similar to those 
prevailing in other industrialized countries. Since 2001, the annual inflation target  rate has been set at 
1%-3%. 
18. In response to the 2008 crisis the Bank of Israel implemented in 2009 an unprecedented 
expansionary policy, resembling the policies adopted  in many other countries. The Bank implemented 
its policy by using three important tools: (1) setting th e interest rate, the principal tool in managing its 
monetary policy, within the framework of an infl ation target; (2) purchasing foreign currency in the 
market; and (3) purchasing government bonds in the secondary market. The rapid interest rate-cutting 
resembled exceptional measures which were taken by other developed countries, in order to confront 
the implications of the financial crisis and in order to minimize the risk of sliding into a deflationary 
environment while supporting activity and market stability.  
19. The interest rate stood at 4.25% in December 2008.  In 2009 the Bank of Israel cut the interest 
rate to a minimal level of 0.5% in April, and left the rate at this low level until August. In 
December 2009, when indications of improvement  in the economic environment accumulated, the 
Bank of Israel continued to adjust the interest rate , and raised it to 1%, increasing it again to 2% in 
December 2010. Inflation, economic activity, and m onetary policy changed direction in 2011. In the 
first half of the year, as the annual inflation rate  exceeded the target range and the economy expanded 
rapidly, the Bank of Israel raised its monetary inte rest rate from 2% to 3.25%. In light of current 
indications of slowing economic activity and prospect of  risks posed by the crisis in other markets, in 
the course of 2012 the Bank has reduced its monetary interest rate to its current level of 2.25%.  
20. The new Bank of Israel Law that passed in March 2010 creates framework for the operation 
of the Bank in line with international norms, and which allows it to achieve its objectives. These 
objectives are specified and ranked in the Law: to  maintain price stability, to support growth, 
employment and the narrowing of socio-economic gaps, and maintain financial stability. The Law 
grants the Bank independence in the employment of  policy instruments to achieve its objectives, 
while maintaining transparency and accountability vis-à-vis the Knesset, the Government and the 
public. The Law defines the framework for decision-ma king regarding the interest rate and monetary 
policy, with these decisions being taken by the Monetary Committee headed by the Governor, and 
administrative decisions being approved by the Administrative Council. 
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1.46.5
-1.91.22.4
-0.13.43.8 3.9
2.7
2.2
-3.0-2.0-1.00.01.02.03.04.05.06.07.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Figure 8. 
CPI inflation rate (year end-co mpared to previous year end)
Source:  Central Bureau of Statistics.
 
 
(5) EMPLOYMENT AND THE LABOUR MARKET  
21. The unemployment rate dropped to 7.1% in 2011 from 8.4% in 2010, lower than pre-crisis 
unemployment levels (7.6% in 2008). The unemployment rate increased to 9.5% during 2009 
reflecting the effects of the global economic downtur n. The labour market began to improve by the 
second half of 2009, and the unempl oyment rate has gradually decreased since then, reaching a three-
decades low of 6.7% in April 2012.3 The participation rate remained  relatively stable throughout 2011 
and into 2012, standing at 63.2% at the end of the first quarter of 2012. 
22. The labour force participation rate (the labour force as a percentage of the population over the 
age of 15) stood at 62.6% in 2011, just slightly a bove the 2010 rate of 62.5%, continuing the gradual 
upward trend that started in 2002 when it stood at 58. 9%. The participation rate is negatively affected 
by the ultra-religious, non-working population in Israel . The increase in the pa rticipation rate and the 
number of Israelis employed is attributed to, among other factors, overall economic growth and the 
successful implementation of the Government's policy to cut transfer payments and lower taxation on 
labour. 
23. Based on 2009 statistics, approximately 29% of  adults between the ages of 25 and 64 are 
academics. Utilizing its highly educated population,  Israel has developed a technology-based and 
export-oriented economy. In 2010, 30% of the Isr aeli work force consisted of employees with an 
academic, scientific, technical or related pr ofessional background, wh ile 23% consisted of 
administrative employees. These percentages compar e favourably with the percentages of such 
workers in other developed countries.  
                                                      
3 In April 2012, the Central Bureau of Statistics ch anged its labour survey methodology, resulting in a 
restatement of figures, reflecting hi gher unemployment rates in recent m onths of 2012. The changes include 
conducting the labour survey on a monthly (rather than a quarterly) basis, as well as changes in modeling and calculation methods, which are intended in part to co nform to the labour survey methodology of the OECD. Israel WT/TPR/G/272 
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24. Most recent figures indicate a rise in employees in the private sector who are being 
discharged from their positions during th e second and third quarters of 2012. 
25. In light of the of the current crisis experienced  in some large economies,  with apparent impact 
on Israel's export sector, the labour market and unemployment related issues may  present a challenge 
in the short and medium term. 
(6) OECD 
26. Israel became the 33rd member of the OECD on 7 September 2010. Israel's accession process 
to the OECD began in 2007, based on a "roadmap" that established eighteen areas in which Israel's 
policies will be reviewed, for example investment s, employment and social policies, trade, and 
corporate governance.   Peer re views assessed the country's positi on on OECD legal instruments and 
the degree of coherence of policies with those of OECD member countries, providing a valuable opportunity for the Government to reassess polici es and align with OECD standards and best 
practices.  
27. Israel's accession to the OECD has further confirmed its commitment to an open economy 
based on free trade, non-discrimination and transparency. It was a catalyst for important reforms, for 
instance, in the area of chemicals management, envi ronmental protection, anti-bribery legislation and 
policy, and intellectual property rights. By adhering  to the OECD codes of liberalization of capital 
movements and current invisible operations, Israel has improved market access and accepted a standstill commitment, with regards to its foreign investment regime and financial services sector. 
28. Israel is an active participant in the OECD's wo rk, striving both to contribute to the OECD's 
current projects with Israeli experience, and to  utilize the OECD knowledge, such as benchmarking, 
policy insights and best practices, to enrich inte rnal policy making. Notable examples of such 
cooperation are in the fields of green growth stra tegy, consumer products saf ety, skills beyond school 
project, eco-innovation, etc.  
29. It is Israel's view that the work done in th e OECD in many areas complements the work of the 
WTO and could contribute to the process of on-going trade negotiations. 
II. FOREIGN INVESTMENT 
30. During the period covered by the current report,  Israel has reinforced its global position and 
image as an open economy with favourable environment for foreign investment. 
31. Foreign investment inflow into Israel rec overed during 2010 and the first half of 2011 and 
exceeded pre-crisis levels: net foreign investment in Israel totalled US$11.07 billion in the first six 
months of 2011, US$18.18 billion in 2010 and US$10.87 billion in 2009. These figures include direct 
foreign investment, investment in Israeli secur ities traded both on the Tel Aviv Stock Exchange 
(TASE) and on foreign exchanges, direct credit to th e public sector and to residents, trade finance and 
credit to suppliers, and deposits by  non-residents in Israeli banks. 
32. The global slowdown had an apparent effect on foreign investments, with sharp decreases in 
non-residents' direct investments in Israel (decrease of 68%) and in Israelis' direct investments abroad 
(decrease of 84%) in 2009, compared to a 35% decrease in direct investment flows in the entire world 
during that period. The sharp decrease in direct i nvestments in Israel in 2009, derived from the fact 
that most of these investments are directed at  export industries, which are highly sensitive to 
economic turmoil. However, the volume of direct inv estments as a ratio of GDP in Israel in the years WT/TPR/G/272 Trade Policy Review 
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2007-2008, was higher than the worldwide average a nd even slightly higher than the average in 
developing countries during those years. 
33. During the years 2008-2009, two competing tre nds were evident as a consequence of the 
global recession.  The first was the trend towards capital import, resulting from the local economy's 
out-performance of other economies, inducing an appreciation of the New Israel Shekel. The 
opposing trend was the Bank of Israel's active cap ital exports (foreign-currency purchases), intended 
to moderate the appreciation of the shekel. In 200 8, the Bank of Israel's foreign-currency purchases 
policy created a turnaround in the appreciation tre nd. The shekel depreciat ed substantially from 
June 2008 until May 2009, but the process of a ppreciation resumed in mid-2009. These currency 
shifts occurred while the Israeli economy was rec overing relatively rapidly from the global recession, 
and changing its monetary policy to  allow global interest-rate spreads and to intervene in the foreign-
currency market. In August 2009, the Bank of Is rael announced that it was moving from fixed 
foreign-currency purchases to designated purchases,  in such circumstan ces where the shekel 
exchange-rate adjustments do not match the fundamental conditions in the economy. These 
developments contributed to a growth in private cap ital imports, which offset the effect that the Bank 
of Israel's foreign-currency purchases had on the exchange rate. 
34. Economy-wide investment is primarily affected by the long-term real interest rate and the 
economy's risk premium. An increase in investment  is the key to sustainable growth as well as the 
continued decline in the rate of unemployment. In li ght of the falling interest rate over the last year 
and the decline in the country's risk premium, fo reign fixed-asset investment in the Israeli economy 
was US$1.03 billion in 2011, up  from US$0.99 billion and US$0.95 billion in 2010, and 2009 
respectively.  
35. Israel's assets abroad grew by about US$10.68 billion in 2011, to a total of US$71.59 billion, 
more than 870% up from US$9.09 billion in 2000. FD I inward stock grew by about US$7.97 billion 
in 2011, to a total of US$66.76 billion, more than  325% up from US$20.42 billion in 2000. Most of 
the increase was due to non-residents' investments in "Makam" (three-months Treasury bills) and 
direct investments.4  
36. Foreign investment in the non-banking private sector totalled US$9.97 billion in 2011 
compared with US$7.01 billion in 2010. These investme nts reflect foreign investors' confidence in the 
economy. 
37. The financial account diverged significantly dur ing the two halves of 2011. During the second 
half of the year, as a result of growing fears of a debt crisis in Europe a nd numerous other factors, 
there was a change in short-term capital flows: the inflow of capital halted completely;  and pressure 
for a capital outflow began to emerge. As a result, the shekel depreciated, which led to a halt in the 
purchases of foreign currency by the Bank of Isr ael. Additionally, the growing fear of the re-
emergence of a global crisis led to a sharp drop in investment by foreign residents in securities in 
Israel and also in the investment by Israeli resi dents abroad. However, foreign direct investments 
increased during the second half of the year, as a result of the acquisition by ChemChina of Makhteshim Agan Industries from Koor Industries. 
38. In 2011, Israel's balance of payments and inte rnational investment position vis-à-vis the rest 
of the world were relatively strong . It had an account surplus and its gross debt was relatively low, 
and the risk of local contagion from the European cris is was considered to be quite low. In addition, 
Israel's composition of liabilities is favourable, with most liabilities in the form of equity instruments 
                                                      
4 http://www.cbs.gov.il/w ww/yarhon/g1_h.htm ; http://www.unctad-docs.org/files/UNCTAD-
WIR2012-Annexes-Tables-en.pdf  Israel WT/TPR/G/272 
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(such as investment by foreigners in common stock of Israeli companies) and only a small portion in 
debt instruments (bonds and loans), most of which are denominated in shekel s and were therefore not 
exposed to foreign currency risk. The high level of  foreign currency reserves and the balance (and 
slight surplus) in the current account also contribut ed to stability. The current account is expected to 
improve further in the medium-term due to the repla cement of energy imports with local natural gas, 
which is expected to commence in mid-2013.  
39. In May 2010, MSCI added Israel to the developed market index,  after having removed it from 
the emerging markets index. MSCI's reclassification of Israel had no significant effect on net capital flows, or on share prices of Israeli companies. 
III. STRUCTURAL AND SECTORAL REFORM INITIATIVES 
(1) M
AIN INITIATIVES  
40. During the period covered by the report the Government continued to initiate various 
structural and legislative reforms, with the view  of enhancing competitiveness and performance of the 
economy. As it is customary in Israel, for each  proposed reform, the Government initiated the 
convening of a high level dedicated committee of experts which held deliberations including a process 
of open public/stakeholders' hear ings. The hearings are followed by the submissions of draft 
recommendations for the consideration of the G overnment and Knesset (as necessary). The process 
concludes with the adoption of final recommendati ons and enactment of the appropriate laws. The 
following section outlines several important reforms which have been introduced during the period 
covered by the report.5 
41. Steps to decentralize the banking system- Bach ar Committee reform: following the enactment 
of the Bachar legislation6, the process of decentralizing the financial system was nearly completed in 
2007, when the mutual funds and provident fund s were removed from the banks' control and the 
management of the public's savings  was transferred to insurance companies and private brokers. This 
process led to increased competition for the manageme nt of the public's savings and paved the way 
for the development of a more independent advice ne twork at the banks, free from conflicts of interest 
and that is more accessible to the public. 
42. Tax and royalty reform in the petroleum sector  - Sheshinski Committee: following the recent 
discoveries of large natural gas reserves off the coas t of Israel, the Government has decided that the 
oil and gas fiscal and taxation regime, which has b een in place since 1952, needs significant changes, 
in order, among other objectives, to bring it in line with current international practices. The Taxation 
of Petroleum Profits Law 2011 was approved by th e Knesset on 30 March 2011. It implements the 
conclusions of the report of a governmental co mmittee which was appointed in 2010, headed by 
Prof. Eytan Sheshinski. The law imposes a new levy  on petroleum profits, in addition to the 12.5% 
royalty, which has been left untouched. The law imposes a progressive levy on profits derived from 
petroleum reserves, while defining such profits as the difference between the "current revenues" and 
the "current costs" in each year (all terms are defi ned in the law).  In practice, no levy would be 
charged during the first years of production, but only when investments have been reimbursed. As a 
result, according to the Sheshinski Committee, the Government take in  the net profit from the sale of 
oil and gas would increase from 33% to about 52%, or 62% in the case of relatively profitable petroleum reserves. The levy would be treated as  a deductible expense for income-tax purposes and 
would also be imposed on existing projects. 
                                                      
5 This section is not exhaustive, additional reforms such as the mobile telecom market reform are not 
discussed here.  
6  See Israel's 2006 TPR (WT/TPR/S/157/Rev.1, page 77) WT/TPR/G/272 Trade Policy Review 
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43. Increasing Competitiveness in the Economy- Shan i Committee: on 17 June 2012, the Cabinet 
adopted a draft law concerning increasing competit iveness in the economy. The draft was adopted 
following the submission of the final recommendations in the report by the committee for increasing 
competitiveness in the economy ("Shani Committee" ) which was appointed in October 2010. The 
draft legislation is yet to be enacted by the Knesset, which may introduce changes to the proposed 
Law. Among other topics, the cabinet adopted the Committee's recommendations in respect to: 
a. Allocation of public  assets (privatizations ): the relevant authoroties in charge 
will be obligated to take into account  considerations of competition in the 
framework of the allocation of resources and privatization proceedings. To this 
end, these entities will be obliged to  consult the Antitrust Commissioner 
whenever the value of the right or the asset  is in excess of NIS 150 million, or in 
lower values wherever the economic value of the asset does not reflect entirly its 
importance to the public. 
b. Prohibitition of  control or holding in a significant financial entity by a significant 
real entity:  A significant real entity or a controlling shareholder in a significant 
real entity will not control a significant financial entity and will not have a 
holding therein exceeding the rate to be set by the regulators and which will not exceed 10% (for signifcant financial entiti es with no control core, the rate of 
holding will not exceed 5%). 
c. Control by means of a pyramid holding structure:  holding of public companies 
and debenture companies with a pyramid hol ding structure of only two layers will 
be permitted. Corporate governance rules will apply to companies that belong to 
the second layer of a pyramid structure.  For existing companies with such pyramid structures – at the end of the transition period of six years, pyramid structures will have to make changes in the holding structure, such that they will 
include three layers at most. More stri ngent corporate governance rules than those 
that apply to companies in the second layer will apply to companies in the third 
layer. 
(2) "D
OING BUSINESS TASK FORCE "  
44. In 2009 the Government of Israel established a hi gh level inter-ministerial task-force, led by 
the Ministry of Finance,with the participation of the business sector, whose aim would be to improve 
business-doing processes and facilitate bureaucratic pro cesses in general. The team focused its work 
on two topics which were identified by the "Doi ng Business Report" of the World Bank as most 
problematic and which required immediate attention: starting a business and registering property.  
45. In the field of starting business, a process is  being examined to create a Single Point of 
Contact which would consolidate and streamline the f unctions of four different authorities with which 
a new business must register. Given the high penetr ation rate of broadband internet access in Israel7, 
the Committee is currently examining a process whereby a business would be opened remotely without the need to visit a government office at all.  The successful completion of the reform is likely 
to reduce the time required for opening a business fr om 34 days (currently needed according to the 
"doing business report") to less than one week.  
                                                      
7 According to CBS, 66.3% of all households are connected to the Internet: 
http://www.cbs.gov.il/www/pub lications/isr_in_n11e.pdf  Israel WT/TPR/G/272 
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46. As for registering property, the Task Force is in the final stages of its work, leading towards 
several changes in legislation which would allow deducting a deposit from the amount considered as 
paid in the process of a real estate transaction, against future taxation. This would allow the 
completion of the transaction in a significantly shorter timeframe, allowi ng the Tax Authority to 
conduct its own evaluation of the taxes due for the transaction. In addition, other processes within the 
tax authority are being examined and streamlined. It is expected that the reform will reduce the time 
required for registering property by as much as 50%. 
IV. TECHNOLOGICAL INNOVATION 
(1) RESEARCH AND DEVELOPMENT  
47. Israel maintains its strong position in innovati on related parameters, which is evident in 
international studies and reports published by variou s institutions and organizations. Israel excels on 
international scale in particular in such areas as total expenditure on R&D as a share of the GDP, 
venture capital availability, number of patents per ca pita and the quality of research institutions. The 
business environment is conducive to entrepreneurship  and favours risk-taking, as noted by several 
publications.  
48. In the past years since the last trade policy re view, Israel continued its policy of industrial 
innovation via various industrial R&D programs through the Office of the Chief Scientist (OCS), in the Ministry of Industry Trade and Labour. The OC S is charged with the execution of government 
policy for support of industrial R&D. The goal of  the OCS is to assist in the development of 
technology in Israel as a means of fostering ec onomic growth, encouraging technological innovation 
and entrepreneurship, leveraging Israel's scien tific potential, enhancing the knowledge base of 
industry in Israel, stimulating high value-added R&D, and encouraging R&D collaboration both on 
the national level  and internationally.   
49. A variety of on-going support programs develope d and offered by the OCS play a major role 
in enabling Israel's high tech entrep reneurship. Those instruments include: 
 Support fund for Industrial R&D;  
 "Magnet" program, designed to encourage the development of innovative generic 
technologies through cooperation between academ ic research institutes and industry;  
 "Tech Incubators" program aimed to promote and support the creation of start-up companies 
based on innovative new products and te chnologies, initiated by individuals; 
 "Tnufa program" designed to encourage and s upport technological entrepreneurs at the pre-
seed stage, during the earliest stages of their pr ojects, to help them in the evaluation of the 
technological and economic potential of the id ea, preparation of a patent submission, 
construction of a prototype, and preparation of a business plan. 
50. In 2008, MOITAL initiated the "Project Center  for Multinational Companies" program. The 
program is intended to encourage multi-national comp anies to conduct joint R&D projects with Israeli 
partners (company or academic institute) to form  project centres, while focusing the activity in 
national priority areas and/or in the traditional (low-medium tech) industry. 
51. In recognition of its strong positioning in the global high-tech and R&D fields, Israel was 
nominated to serve as the president of Eureka Netw ork, one of the top international industrial R&D WT/TPR/G/272 Trade Policy Review 
Page 18 
  
programs worldwide, and served in this position fro m June 2010 until June 2011.  Over one-quarter of 
the overall number of projects approved in the framework of Eureka during the past year involve Israeli participants. 
52. Israel has been fully associated with the Seventh Framework Program for Science and 
Technology ("FP7") of the European Union, since it was launched at the end of 2006. FP7 has been 
operational since 2007 and will expi re in 2013. The program, which is the most comprehensive 
worldwide, involving academia, business and industry, has provided Israel with access to EUR 50 billion in R&D funding while Israel contribut es to the program according to the terms agreed 
for its participation. To date, Israel has contri buted approximately EUR 400 million to the program. 
53. According to Israel Central Bureau of Sta tistics (CBS), the high-tech sector accounted for 
261,000 jobs in 2010 (8.8% of total employed in the Israeli market)
8. However, the high-tech portion 
of Israel's manufacturing exports  (excluding diamonds) in 2007, 2008, 2009, and 2010 was 45%, 
42%, 51% and 50%, respectively.9 
54. The competitive advantage of the Israeli high-tech  sector is based on various factors, notably 
an innovation culture and infrastruct ure that benefits from the world's highest expenditures, 4.4% as a 
share of GDP, for civilian R&D according to CB S. As for 2011 there were about 4,000 start-up 
companies in Israel and 250 foreign R&D centres of Multinational Corporations. 
55. In 2011, 546 Israeli high-tech companies attracted US$2.14 billion from local and foreign 
venture investors, the highest amount in 11 year s. This is almost 70% above the US$1.26 billion 
which was raised by 391 companies in 2010 an d 91% above the US$1.12 billion raised in 2009. 
(Chart 1) 
05001,0001,5002,0002,500
2007 2008 2009 2010 2011
Israeli VCs Foreign & othersChart 1. 
Capital raised by Israeli high-tech companies 2007-2011
Source:  IVC Research Center.1,7592,076
1,1221,2622,139
61%
39%62%
38%63%
37%71%
29%75%
25%(US $ million)
 
                                                      
8 http://www.cbs.gov.il/reader/s hnaton/templ_shnaton.html?num_tab=st12_32x&CYear=2011   
9 http://www.cbs.gov.il/reader/s hnaton/templ_shnaton.html?num_tab=st16_11x&CYear=2011   Israel WT/TPR/G/272 
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56. The average company financing round was US$3.92 million in 2011, exceeding the 2010 
average of US$3.23 million and the 2009 average, US$2.51 million10. 
57. In 2010, the Government announced a progr am to mobilize venture capital from local 
institutional investors, with a view to limit the industry's reliance on foreign capital. The program, 
funded with about NIS 200 million, provides a safety net for institutional investors, guaranteeing up to 
25% of their investments in case of commercial failure.   
(2) ISRAEL NEWTECH 
58.  With the aim of responding to increasing global environmental challenges and the water 
shortage in Israel, the Government launched "I srael NewTech" national programs in 2006 and 2008, 
focused on water and renewable energy technologies respectively. This pioneering national program 
is led by the Ministry of Industry, Trade and Labor, and is supported by  a number of additional 
government agencies. Israel NewTech helps to adva nce the water and sustainable energy sectors by 
supporting academia and research, encouraging implemen tation of novel solutions in the local market, 
and promoting those solutions in the international arena. 
(3)  INTELLECTUAL PROPERTY RIGHTS  
59. Intellectual property rights in Israel are protected through a comprehensive system of 
statutory law and common law covering acquisition,  maintenance, and enforcement of rights in 
patents, designs, registered and unregistered tr ademarks, geographical indications, copyright and 
related rights, trade secrets, topographies of in tegrated circuits, and new plant varieties.  
60. Israel, among the world leaders in patenting ac tivity and high tech industries generally, has a 
prime interest in maintaining an intellectual prope rty law system that is transparent conforms to 
relevant international obligations and that promotes trade and growth. Israel considers that adherence 
to those principals is of interest to Members of the WTO. 
61. The high levels of patenting activity in Israel , as reported by the World Intellectual Property 
Organization, is a major indicator of high levels of inventive activity and investment taking place in 
Israel. In 2011 Israel was once again ranked amongs t the top 15 Patent Cooperation Treaty receiving 
office countries for absolute numbers of PCT applications filed in a receiving office11; and in the top 
15 countries for PCT national phase entries by national origin of inventor12 indicated on the PCT 
application; of national phase entries by origin; th ree of Israel's research universities ranked amongst 
the top 50 universities in the world for numbers of PC T patent applications filed: Hebrew University 
of Jerusalem (22nd); Tel Aviv University (32nd); and, Weitzman Institute (Yeda) (48th).13   
62. Some important developments took place in the IP  area in Israel since the last TPR in 2006.  
The most important in the area of patents (and related issues) are: 
(1) In 2006 the Government of Israel decided to transform the Patent Offi ce into an executive 
agency, similar to the U.K. model, which would henceforth be called "The Patents Authority" 
and have greater autonomy in budget setti ng and other administrative functions. This 
structural change enables the Patent Authorit y greater flexibility in managing its own affairs 
in order to improve service to the public gene rally, and in particular shorten examination 
                                                      
10 http://www.ivc-online.com/Portals/0/RC/Survey/IVC_Q4-11_Survey_PR-Eng-Final.pdf  
11  http://www.wipo.int/freepublications/en/patents/901/wipo_pub_901_2012.pdf   - at page 24 thereof.  
12 Ibid at page 49.  
13  Ibid at page 37.  WT/TPR/G/272 Trade Policy Review 
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times and improve examination quality. As an ex ecutive agency, the aut hority is obliged to 
meet various quantitative criteria wh ich are being reviewed annually.  
(2) The Patent Authority was chosen by WIPO in 2009 to become an International Search and 
Examination Authority within the framework  of the Patent Cooperation Treaty. An 
implementing legislation to that effect was enacted in December 2011.14 Pursuant to the 
amendment and after taking all the necessary steps, the Patent Authority serves as 
International Search and Examina tion Authority as of June 2012.   
63. The following amendments are a result of an  Understanding between Israel and the United 
States regarding Intellectual Property Rights in ph armaceutical products, dated 18 February 2010: 
(1) Publication of patent applications  legislation  – An amendment to the Israeli Patent Law15 
enacted on July 2012, stipulates the requirement of publication of a patent application after 
18 months from the filing date in Israel, or s oon after a PCT has entere d the national phase.  
In addition, reasonable royalties are awarded in cases of infringement of a patent in the period 
between the patent application pub lication and the patent approval;  
(2) Patent term extension legislation  – An amendment to the Patent Law would reduce the 
number of reference countries and would fu rther improve relevant PTE examination 
procedures in Israel. Such changes incl ude: commencing the examination of a PTE 
application prior to the final approval of a reference PTE and setting time tables for PTE 
examination and PTE opposition procedures. The Amendment16 is in the relevant Knesset 
committee for deliberations before p assage (second and third readings).  
(3) Drug data exclusivity protection legislation  – An amendment to the Israeli Pharmacists' 
Ordinance17 was enacted on July 2011. It extends th e duration of data exclusivity from 5 to 
6 years after marketing approval was granted in Isra el, or 6.5 years (instead of 5.5 years) after 
receiving final marketing approval in a recognized country  
64. Main developments related to  Copyrights: 
(1) A revision and modernization of the Copyright Law18 was enacted in 2007, reinforcing 
existing copyright and neighbouring rights a nd codifying recent legal and technological 
developments.  The most notable reform c oncerns copyright exceptions and limitations, 
where the new Act completes the transition fro m a relatively restrictive "fair dealing" 
approach to the more flexible and open-ended approach of "fair use". 
(2) Legal presumption to enhance enforce ment of copyright in sound recordings - An 
amendment to the Copyright Law was enacted  July 2011, determining that the name 
appearing on sound recording as producer is to be deemed producer of the sound recording and first owner of copyright therein. 
                                                      
14 See full text of the Amendment (Hebrew) at:  http://www.justice.gov.il/NR/rdonlyres/8C8A5EB0-
650F-40E1-B698-59783EE4E3FE/31926/2325.pdf  , page 54 
15 See full text of the Amendment (Hebrew) at:  http://www.justice.gov.il/NR/rdonlyres/D1526250-
06D1-4ACE-A89B-D6AFA64B5777/36538/2367.pdf , page 483   
16 See full text of the Amendment (Hebrew) at: http://www.justice.gov.il/NR/rdonlyres/E0812691-
CD3D-4E4C-AF74-75892065F394/35179/682.pdf  , page 792 
17 See full text of the Amendment (Hebrew) at http://www.justice.gov.il/NR/rdonlyres/51378FC3-
4A0C-420E-9849-B3C9DBC6B109/29421/2308.pdf ,  page 100 
18 The Israeli Knesset has passed the new Copyright Law on 19th November 2007 which came into 
force on 25 May 2008, repealing the Copyright Law 1911 (as amended) and the Copyright Ordinance 1924.  Viewed at:  http://www.wipo.int/wipolex/e n/text.jsp?file_id=132095 . Israel WT/TPR/G/272 
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(3) Internet piracy – In August 2012, a new law titled "Exposing the identity of up loaders in 
Electronic Communication Network" passed first reading in the Knesset and awaits deliberations in the relevant Committee in the Knesset. The bill  enables the discovery of the 
identities of up loaders of allegedly infringing material 
65. Industrial Design and Trade Marks: Key administrative changes as well as statutory 
amendments to Israel's Industrial D esigns and Trade Marks regime include: 
(1) Industrial Designs Law – An exposure bill of a new law, replacing the Industrial Design 
ordinance is to be  published in September 2012. The law establishes the industrial design 
legal framework; 
(2) Madrid Protocol for the International Registration of Trademarks  –Amendment no. 5 to 
the Trademark Ordinance was enacted in Sept ember 2010. The amendment enacted the entry 
into force of the Madrid Protocol and commenc ement of operations according to the Protocol.  
V. ISRAEL'S TRADE POLICY 
(1) I
NTRODUCTION  
66. International trade plays a vital role in the ec onomy of the State of Israel. Indeed, in recent 
years, the Israeli economy has integrated into th e global trading system in a rapid and efficient 
manner, by implementing multilateral and bilatera l trade agreements, as well as by pursuing a 
unilateral process of trade liberalization and struct ural reforms. International trade (exports plus 
imports) of goods and services amounted to 85.4% of  GDP in 2011 (up from 83.1% in 2010). In fact, 
in 2010 imports represent 26% of the resources of the Israeli economy while exports represent more 
than 27% of the uses. 
67. The Israeli economy has undergone a substantial pr ocess of structural reforms, so that in a 
relatively short time the Israeli economy has develo ped into a liberalized marketplace, trading in a 
wide range of manufactured goods and services worl dwide. Intense entrepre neurial activity became 
the hallmark of the business environment, attracting th e attention of foreign and local investors. The 
Israeli technological, research and knowledge-based  industries have gained worldwide recognition 
and have served as an engine for economic growth. Consequently, in the past two decades from 1990-
2010, export has risen five-fold, industrial exports  five-fold, high-technology export has risen two-
fold; and exports of machinery, electronics and IT products have risen in the past five years from 
2007 until 2011 by 173%. 
(2) TRADE POLICY  
68. Israel's trade policy objectives are as follows:  
(1) Continued integration of the Israeli economy  into the global trading system, through the use 
of policy instruments that relate to trade in goods, services, investment, competition, environment, intellectual property, and others. 
(2) Promote and maintain Israel's exports  competitiveness by expanding and updating the 
network of international agreem ents designed to promote trad e, facilitate market access, 
eliminate non-tariff barriers and enc ourage long term economic growth. 
(3) Increase the efficiency of resource alloca tion, by enhancing reforms that aim at the 
introduction of greater competition and increased  transparency in the domestic market.  
(4) Create an attractive climate for investors, businesspeople, and consumers. WT/TPR/G/272 Trade Policy Review 
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69. Israel's trade policy is enhanced by a wide ra nge of international ag reements and commercial 
arrangements with individual countries and internati onal bodies. In recent years, the Government of 
Israel has been pursuing its international trade polic ies in a well-coordinated effort, along three paths 
in parallel: multilateral, bilateral a nd unilateral. Israel believes in the primacy of the WTO multilateral 
system as the prime tool for the expansion of trad e and global prosperity. At the same time, Israel 
believes that its regional and bilateral agreements , concluded within the framework of Article XXIV 
of GATT 1994, complement its multilateral obligations  and allow further trade liberalization. Indeed, 
opening up to foreign competition th rough bilateral agreements has pa ved the way to the extension of 
greater liberalization vis-à-vis other WTO Member countries. 
(3) WTO 
70. Israel is a founding and active member of the WTO. Israel strongly supports the fundamental  
principles and norms of the WTO i.e. non-discrimina tion, rule based system, transparency, consensus 
in decision-making, fair trade, progressive liber alization and special & differential treatment for 
developing countries and LDCs. Israel believes that full observance of the above-mentioned principles 
and norms is imperative for the functioning of the WTO. As such, they should be respected by all 
existing WTO Members and future acceding countries. 
71. Israel was among the first group of countries that signed and acceded to the Government 
Procurement Agreement (GPA) upon the establishment of the WTO (and prior to that, in the GATT). 
Israel took an active part in recent negotiations to  update the 1994 GPA, and expects to ratify it during 
2013. Israel contributed significantly to the update d Agreement not only by adding new entities, but 
also by adopting a phase-out schedule to gradually eliminate its "offset" requirements under the GPA. 
Israel hopes that this step would serve as a signa l of openness to its trading partners. Experience 
shows that Israel, being an economy dominated by sm all- and medium-sized enterprises, is still facing 
difficulties in participating in other GPA member countries' public tenders. Israel expects that the 
revised Agreement, together with the work program  agreed upon, will further facilitate access for its 
companies in those markets. Israel  is of the view that the new Agreement allows for the flexibilities 
necessary for additional WTO members, including deve loping members to accede to it and hopes that 
the Agreement becomes more widely accepted.  
72. As an economy which is a world class lead er in the development of technologies and 
innovations in the telecommunications and informa tion technology industries, Israel was among the 
first group of WTO Member countries who signed on to the Information Technology Agreement 
(ITA), in 1997. That Agreement calls for the elim ination of duties on telecommunications equipment, 
computers and related equipment on an MFN basis. Is rael supports, and is taking an active part in the 
discussions to update this Agreement, as provided for in the Agreement itself. 
(4) DOHA DEVELOPMENT AGENDA  
73. Israel attaches great importance to the current  multilateral negotiations mandated by the Doha 
Development Agenda (DDA). Israel is of the view that it is imperative to reach a conclusion to these 
negotiations. Such a conclusion w ould preserve the relevance of the WTO and would allow it to 
respond to the challenges posed by the rapidly evolving and changing global environment.   
74. Israel is committed to contribute its part  towards the realization of this end. 
75. Israel recognizes the long-term objective of establishing a market-oriented trading system 
through reform in order to prevent distortions in global agriculture markets. Israel re-iterates its 
commitment to this reform, while emphasizing the signi ficance of the agriculture sector in today's life, 
economy, and culture and as an instrument for rura l and regional development. Therefore, non-trade Israel WT/TPR/G/272 
 Page 23 
 
 
concerns are an essential element of this sector and sh ould be an integral part of any future agreement 
on agriculture. Israel considers th at a future agreement on agricultu re should take due account of 
particular circumstances in which net-importing Memb ers like Israel are facing and should allow for 
an appropriate balance across the variou s pillars of the negotiations.     
76. Israel is highly interested in the negotiations  on the liberalization of non-agricultural goods 
(NAMA). Indeed, Israel is of the view that all WTO Member countries, developed, as well as developing Members, should be ready to take upo n themselves new and meaningful market access 
commitments for non-agricultural goods, as well as to el iminate non-tariff barriers. To that end Israel 
remains of the view that Members could continue and explore various modalities that would lead to a 
realistic and timely conclusion of the NAMA negotiations. Israel r ecalls its submission in document 
JOB/MA/84, suggesting a way forward, utilizing a request-and-offer method, as a complementary 
approach to supplement tariff reductions that would be achieved by the "Swiss Formula".  
77.  Israel is also committed to further liberaliza tion of the world services market. Israel was one 
of the Members that submitted their initial offer ve ry early on, and is ready to negotiate further 
commitments. The services sector is an important part of many economies today, and could serve as 
an engine for growth for developed as well as developing  nations. It is in this context that Israel has 
recently joined the plurilateral initiative to nego tiate a new services agreement. We hope that this 
initiative will succeed and that eventually most  WTO members will decide to join it. 
(5) B
ILATERAL TRADE AGREEMENTS  
78. Bilateral agreements have been an im portant pillar of Israel's trade policy.  Bilateral initiatives 
are useful as a supplementary way of achieving s ubstantial results more rapidly than would be 
possible at the multilateral level. They provide a pa rticularly effective alternative when they are 
conducted, as has been the case for Israel, with the c ountry's main target markets. Israel's bilateral 
trade agreements cover substantial, however decr easing portion of Israel's international trade.  
79. Israel has had free-trade agreements with its majo r trading partners for many years:  with the 
European Union since 1975; with the United Stat es since 1985; as well as with the EFTA States since 
1993.  In November 1995, Israel and the Euro pean Union concluded a more comprehensive 
agreement to cover wide aspects of economic relati ons beyond trade in goods, enabling Israel's 
participation in the European  Union's Research and Devel opment Framework Programs. The 
agricultural market access in Israel's agreements with the EU as well as with the United States is being 
further liberalized from time to time. A recent update with the EU became effective as of 2010; 
negotiations with the United States are currently under way.  
80. Other free-trade agreements include: Israel-Canada (1996), Turkey (1997), and 
Mexico (2000). The purpose of these agreements was to  further open markets and to maintain Israel's 
exports competitiveness in European  and North-American markets. 
81. The most recent free-trade agreement signed by Israel was with the MERCOSUR bloc. The 
agreement was signed in 2007 and b ecame effective in 2010; it marks Israel's recognition of the 
importance of emerging markets in Latin America and Asia. 
82. Continuing this strategy, Israel is looking at  new initiatives to expand its market access to 
other countries through either multilateral or bilate ral agreements and is currently negotiating free-
trade agreements with India and with Colombia. 
83. As customs duties are declining, Israel is looking for ways to remove non-tariff barriers as 
well. To that end Israel has concluded varied types of mutual recognition agreements with the WT/TPR/G/272 Trade Policy Review 
Page 24 
  
European Union (a framework ag reement with an Annex on pharma ceuticals), and with Canada (on 
telecom equipment). A similar agreement on teleco m is in final stages of negotiations with the 
Unites States.      
84. Economic relations with its nei ghbours in the Middle East are of particular importance to 
Israel.  Initiatives named Qualified Industrial Z one (QIZ), operating under the framework of the 
Israel-US free trade area agreement, have been c oncluded with Jordan (1997) and Egypt (2004). The 
QIZ Agreements have contributed substantially to the bilateral growth of trade between Israel and 
Jordan on the one hand, and Israel and Egypt on th e other hand. Israel holds that trade mechanisms 
have the potential to enhance coopera tion and stability in the region.  
(6) UNILATERAL TRADE LIBERALIZATION  
85. Israel continues to pursue trade liberalization as part of its general economic policy.  On 
1 January  and on 15 July 2012, as part of a more comprehensive package of economic steps, Israel 
has eliminated tariffs on more than 400 tariff lin es (at HS 8-digit level) on many consumer goods, 
where the prior level of customs duties had been in the range of 6-12%. In addition, on 15 July 2012, 
Israel announced a schedule to reduce or eliminate duties on some food and agricultural products over 
a period of three years. The reductions, if completed, are worth around US$15 million in annual 
customs revenue.   
(7) CONCLUSION  
86. Since its inception, Israel has been highly depe ndent on international trade as a means for 
economic growth and development. Throughout the year s, and particularly in the last twenty years, 
Israel has developed an integrated network of in ternational trade agreements, in which bilateral, 
regional and multilateral trade agreements work in ha rmony and in a joint effort to promote trade and 
facilitate market access in Israel's export markets, as well as to increase competition and efficiency in 
the allocation of resources in the Israeli economy. 
__________