WT/TPR/S/157/Rev.1 Trade Policy Review 
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III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) OVERVIEW  
1. Since its last TPR in 1999, Israel has conti nued to implement trade liberalization reforms, 
albeit at a somewhat slower pace than in the pr evious six-year period.  The average applied MFN 
tariff has fallen from 10.8% in 2000 to 8.9% in 20 05, with a maximum rate of 560%.  However, 
tariffs on agricultural goods (WTO definition) rema in high, with an average rate of 32.9%.  The 
average MFN tariff on non-agricultural products is si gnificantly lower, with an average of 5.1%.  
About 48.5% of all tariff lines now carry the zero ra te.  For 11 tariff lines, applied MFN rates exceed 
the corresponding bound rates.  Moreover, the imposition of non- ad valorem  duties, while most of 
Israel's bound tariffs are ad valorem , remains a potential difficulty. 
2. Most of Israel's trade is conducted under vari ous preferential agreements.  Israel bound other 
duties and charges at zero.  However, in addition to  tariffs, imported goods are subject to a wharfage 
fee of 1.02% on the c.i.f. value;  some items, mainly  edible oils, are subject to "safeguard" levies, a 
tariff surcharge which, according to the author ities, is not a measure within the meaning of 
Article XIX of the GATT 1994.  Domestic indirect taxes consist of a 16.5% VAT, a purchase tax of 
5% to 20% on a number of "luxury goods", and various  excise taxes;  no distinction is made between 
foreign and domestic goods. 
3. Israel has lifted a general prohibition on im ports from WTO Members that do not allow 
imports from Israel;  however, a licensing requirement remains in place for eight other countries that prohibit imports from Israel.  Import licences are ma intained for tariff quota administration and safety 
and security reasons.  Between January 1999 and No vember 2005, Israel initiated eight anti-dumping 
actions and imposed definitive anti-dumping measures in five cases.  No countervailing and safeguard 
measures have been in force.  Israel's technical regulations are increasingly based on  internationally 
accepted standards. 
4. No export duties, taxes or other charges are in place on exported goods.  A wide range of 
products is subject to export control and licensing, ma inly for sanitary and quality control.  Exports to 
Iran, Lebanon and Syria are prohibited.  Israel c ontinues to grant subsidies for agricultural exports, 
mainly cut flowers and citrus fruits.  Moreover, a pu blic export insurance scheme is in place.  Israel 
also grants substantial support for the promotion of R&D, small and medium-sized enterprises, and 
regional development;  state aid has gradually shif ted away from aid for regional development and 
R&D to SME support. 
5. With the exception of purchases subject to pr ovisions of the plurilateral Agreement on 
Government Procurement, Israel's  public procurement regulations aw ard price preferences to local 
suppliers.  Competition rules provide that all restri ctive arrangements must be registered with, and 
approved by, the anti-trust authority.  State-owners hip remains extensive;  however, the Government 
has launched an ambitious privatization plan, providi ng for the divestiture of a number of major state-
owned companies.  Israel has amended its IPR legisl ation with a view to being fully compliant with 
the TRIPS Agreement;  it has also st rengthened enforcement measures. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Documentation and customs procedures  
6. Israel has no registration requirement for im porters.  However, importers who choose to 
declare the wholesale price of their products for th e payment of purchase taxes must be registered 
with the Customs Authority.  To be registered, a person must import goods for over US$100,000 per Israel WT/TPR/S/157/Rev.1 
 Page 21 
 
 
calendar year and must not have been convicted of a tax offence in the past  five years.  As at 
November 2005, 21 importers were registered.  Trad ing activities are open to nationals and foreigners 
alike. 
7. Imports must be accompanied by a detailed commercial invoice in three copies;  and a bill of 
lading in two copies (or an airway bill in the case of air cargo shipments).  A packing list is required 
only if shipment contains more than one package, or  if the invoice does not detail the contents of each 
package.  Import declaration forms, available free of  charge, are the same for all imports.  There are 
no provisions for consular endorsement.  For ite ms requiring an import licence, the importer must 
apply for the licence according to the procedures and regulations of the issuing authority 
(section (2)(v)(b)).   
8. Customs clearance procedures are the same for MFN and preferential imports.  Israel has a 
fully computerized customs system to which all customs brokers are linked.  All imports are processed by computer.  The time required for cl earance procedures is 30-40 minutes in more than 
90% of the cases;  the duration depends on the insp ection method used.  Inspection of imported goods 
is based mainly on risk assessment (a profili ng system) and to a much lesser extent on random 
selection.  Selection criteria include the origin of  the goods (country, supplier), complaints regarding 
the violation of intellectual property rights, and past de ficits or defects with a particular importer.  No 
provisions are available for clearan ce prior to the landing of the imports, although the documentation 
can be prepared in advance.  Israel has no regula tions relating to preshipment inspection and does not 
require it on imports. 
9. Goods landed in Israel may be stored at th e port or placed in public bonded warehouses or 
other places approved by Customs.  Containers and partial shipments weighing up to 10 tonnes are 
subject to a port storage fee after four days; additi onal charges apply after 30 days.  The fee is charged 
after six days on containers above te n tonnes are charged after six days. 
10. Israel has implemented the WTO Agreement on Customs Valuation since January 1998.
1  
Under the Customs Ordinance Amendment Law of 1997, the basis for customs valuation is the 
transaction value.  The transaction value is defined as the price paid or payable for the goods when 
they are sold for export to Israel.  Ad valorem  duties are applied on the transaction value, adjusted to 
reflect some costs and services not already included in  the price incurred by the buyer.  The costs and 
services include those for fees and commissions (oth er than buyers commissions);  containers;  
packaging;  royalties and licence fees;  transportatio n to the ports;  loading, unloading and handling;  
and insurance.  The transaction value (as declared by importers) was used for customs valuation of 
roughly 99% of all imports subject to ad valorem  duties in 2004.  For goods subject to specific duties 
on a weight basis, the dutiable weight is the net weight. 
11. Israel's customs appeals procedures are laid dow n in Chapter 8 of the Customs Ordinance of 
1957.  In cases of disagreement with the customs au thorities, the importer must stipulate on the import 
declaration form that the disputed customs duties we re paid under protest.  Appeals must first be made 
to the High Customs Authority and then to the c ourts;  they can be lodged against any customs 
decision.  According to available information, mo st appeals are settled within three months.  No 
statistics on appeals are maintained. 
                                                      
1 WTO document G/VAL/N/1/ISR/1, 12 May 1998. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 22 
 
 
(ii) Rules of origin 
12. Israel does not maintain any non-preferential rules of origin.2  Within the framework of its 
trade agreements, Israel applies preferential rules of  origin, based on value-added criteria, or change 
in tariff heading (Table III.1).  Following the th ird Euro-Mediterranean Trad e Ministerial Conference 
in Palermo in July 2003, which extended the Pan European system of cumulation to the 
Mediterranean countries, Israel has taken steps to ame nd the protocols on rules of origin in its relevant 
FTAs (with Bulgaria, EFTA, EU, Jordan, Romania, Turkey).  The new protocols apply the Model 
Protocol of the system of Pan-European cumula tion.  Therefore, these FTAs will contain identical 
rules of origin, based on changes in tariff classi fication under the Harmonized System.  The Pan-
European Cumulation System allows traders to use originating material from any country within the 
zone to produce an originating product while retaini ng preferential origin, provided that a preferential 
trade agreement is applicable between the countries involved.  The new protocols of origin will enter 
into force upon completion of the ratifi cation process in the respective parties.3 
Table III.1 
Preferential rules of origin, 2005 
Agreement Origin criteria 
Bulgaria, European Free Trade Association (EFTA), 
European Union, Jord an, Romania, Turkey Wholly obtained or sufficien tly worked or processed based on conditions set out 
in a "processing list" (tariff shift and/or added value) 
United States Wholly obtained or substantial transfor mation with minimum 35% of the value 
of the materials produced including the direct costs of processing 
Romania Wholly obtained or sufficiently worked, based on conditions set out in a 
"processing list" (tariff shift and/or added value) 
Canada Wholly obtained or su fficiently worked or processe d based on conditions set out 
in a "processing list"  
Mexico Wholly obtained or sufficiently worked based on conditions set out in a 
"processing list" (tariff shift and/or added value) 
Source : Information provided by the Israeli authorities.  
(iii) Tariffs 
(a) MFN tariff structure 
13. Israel's tariff is based on the Harmonized Commodity Description and Coding System (HS).  
The 2005 tariff contains 8,967 lines at the eight-digit level, of which 99.4% carry ad valorem  duties 
(Table III.2).  Non- ad valorem  tariffs comprise specific (0.3% of total tariff lines), mixed (1.4% of 
total), compound (2.0% of total) and other types of duty (4 tariff lines);  they mostly apply to agricultural products.  The tariff comprises 102 bands, including the ad valorem  equivalents (AVEs) 
of the non- ad valorem  tariffs.  Some 48.5% of all tariff lines are duty-free, up from 45.1% in 2000;  
this makes zero the modal rate (Chart III.1).  Other frequent tariff rates are 12% (2,094 lines), 10% 
(614 lines), and 8% (603 lines).  Some 46.4% of the tariff lines carry duties between zero (excluded) and 15% (included).  Some 50.7% of non-agricultura l tariff lines (WTO definition) bear the zero rate, 
while only 33.9% of agricultural lines are duty free. 
                                                     
 
2 WTO document G/RO/N/13, 19 November 1996. 
3 The protocol with EFTA entered into force on 1 July 2005. Israel WT/TPR/S/157/Rev.1 
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Table III.2 
Overview of MFN tariffs in Israel, 2000-05 
(Per cent) 
 2000 2001 2002 2003 2004 2005 
1. Bound tariff lines (% of all tariff lines) .. .. .. .. .. .. 
2. Duty-free tariff lines (% of all tariff lines) 45.1 47.1 47.1 47.2 47.5 48.5 
3. Non- ad valorem  tariffs (% of all tariff lines)a 13.0 7.0 7.1 7.0 7.2 6.6 
4. Tariff quotas (% of all tariff lines) 1.2 1.2 1.2 1.2 1.2 1.2 
5. Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 13.0 7.0 7.1 7.0 7.2 6.6 
6. Simple average tariff rate 10.8 9.9 9.9 9.4 9.3 8.9 
Agricultural products (WTO def.)a 42.8 41.2 41.0 38.2 35.8 32.9 
Non-agricultural products (WTO def.)b 5.9 5.2 5.2 5.2 5.1 5.1 
Agriculture, hunting, forestry and fishing (ISIC 1) 52.2 49.9 48.5 46.1 41.3 41.0 
Mining and quarrying (ISIC 2) 0.3 0.2 0.2 0.2 0.2 0.2 
Manufacturing (ISIC 3) 8.4 7.8 7.8 7.6 7.8 7.3 
7. Domestic tariff "peaks" (% of all tariff lines)c 5.4 4.9 4.9 4.8 4.9 4.2 
8. International tariff "spikes" (% of all tariff lines)d 11.6 6.5 5.5 5.1 5.2 4.7 
9. Overall standard deviation of a pplied rates 30.1 29.7 29.4 28.1 25.7 25.3 
10. Nuisance applied rates (% of all tariff lines)e 1.1 1.0 1.0 1.1 1.3 0.9 
.. Not available. 
a WTO Agreement on Agriculture. 
b Exclude petroleum. 
c Domestic tariff spikes are defined as those exceeding three times the overall simple average applied rate (indicator 6). 
d International tariff peaks are defined as those exceeding 15%. 
e Nuisance rates are those greater than zero, but less than or equal to 2%. 
 
Source:  WTO Secretariat calculati ons, based on data provided by the Israeli authorities.  
(2.3)(0.9)(48.5)
(1.7)(18.4)(26.3)
(1.5)
05001,0001,5002,0002,5003,0003,5004,0004,5005,000
0% 0-5% 5-10% 10-15% 15-30% 30-50% >50%0102030405060708090100
The figures in brackets correspond to the percentage of total lines. They do not add to 100% since AVEs are not 
estimated for 50 lines.
WTO Secretariat calculations, based on data provided by the Israeli authorities.Chart III.1
Breakdown of applied MFN tariffs, 2005
Number of tariff lines
Note:
Sourc e:Percentage
Number of lines
Cumulated percentage (right hand scale)
 WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 24 
 
 
14. The average applied MFN tariff in 2005 is 8.9%, down from 10.8% in 2000 (Table III.3).  
The coefficient of variation of 2.8 indicates high ta riff dispersion, with rates ranging up to 560% on 
fresh or dried dates (Table AIII.1).  MFN tariff ra tes on non-agricultural products (WTO definition) 
are generally lower (5.1% on average), with the highest  rates (ranging up to 34.4%) applying to fish 
and fishery products and textiles and clothing.  MFN tariffs on agricultural prod ucts (WTO definition) 
remain high, with an average tariff of 32.9%, and rates varying considerably among product groups.  Tariffs are particularly high on dairy products (with  an average rate of 124.4%), fruit and vegetables 
(54.0%), and live animals and products thereof (50. 4%).  Tariffs are relatively low on chemicals and 
photographic supplies (with an average rate of 2.2%), mineral products (3.6%), and transport 
equipment (3.6%). 
Table III.3 
Summary analysis of Israel's MFN tariff, 2005  
Applied 2005 rates 
Analysis No. 
of linesa No. of lines 
used Simple avg. 
tariff (%) Range tariff 
(%) Std-dev 
(%) CV Imports 2003b
(US$ million)
Total 8,967 8,917 8.9 560-0 25.3 2.8 34,091.9 
By WTO definitionc               
Agriculture 1,246 1,232 32.9 560-0 61.6 1.9 2,050.7 
Live animals and products thereof 159 158 50.5 190-0 54.0 1.1 141.0 
Dairy products 55 55 124.4 247-0 68.9 0.6 23.6 
Coffee and  tea, cocoa, sugar, etc. 221 220 22.1 255-0 43.3 2.0 581.0 
Cut flowers and plants 59 59 8.2 170-0 22.5 2.7 33.1 
Fruit and vegetables 308 306 54.0 560-0 89.5 1.7 189.5 
Grains 23 23 10.0 114-0 26.8 2.7 419.2 
Oil seeds, fats, oils and their products 130 128 6.6 114-0 14.8 2.2 295.0 
Beverages and spirits 112 112 14.2 45-0 10.9 0.8 120.5 
Tobacco 15 7 3.4 12-0 4.7 1.4 115.3 
Other agricultural products 164 164 6.8 105-0 16.3 2.4 132.5 
Non-agriculture (excl. petroleum) 7,693 7,657 5.1 34.4-0 5.5 1.1 28,768.4 
Fish and fishery products 241 224 10.5 34.4-0 6.4 0.6 141.7 
Mineral products, precious stones and 
precious metals 439 439 4.1 16.9-0 5.0 1.2 9,128.7 
Metals 1,137 1,137 3.6 12-0 4.7 1.3 1,689.3 
Chemicals and photographic supplies 1,067 1,066 2.2 12-0 4.2 1.9 3,783.9 
Leather, rubber, footwear and travel 
goods 264 264 5.9 12-0 5.4 0.9 426.9 
Wood, pulp, paper and furniture 335 330 5.5 12-0 5.7 1.0 1,058.3 
Textiles and clothing 1,415 1, 409 8.1 22-0 5. 7 0.7 1,341.3 
Transport equipment 358 357 3.6 12-0 3.8 1.1 2,235.6 
Non-electric machinery 1,047 1,047 5.3 12-0 5.1 1.0 3,335.0 
Electric machinery 644 644 4.4 12-0 5.5 1.2 3,990.5 
Non agricultural articles n.e.s. 746 740 4.9 12-0 5.3 1.1 1,637.3 
By ISIC sectord        
Agriculture, hunting, forestry and 
fishing 454 443 41.0 0-560 80.3 2.0 782.6 
Mining 103 103 0.2 0-12 1.3 7.5 10,520.3 
Manufacturing 8,410 8,371 7.3 0-340 16.9 2.3 22,671.4 
By stage of processing        
Raw materials 889 867 24.6 560-0 62.6 2.5 11,793.3 
Semi-processed products 2,540 2,535 3.1 40-0 5.0 1.6 4,755.3 
Fully-processed products 5,538 5,515 9.1 247-0 18.9 2.1 17,425.8 
a The total number of tariff lines is higher than the sum of lines by sub-item as lines with no ad valorem  equivalent are excluded from the 
latter.  
b The total of imports is higher than the sum of sub-items as US$117.5 million are not classified in the HS. 
c 28 tariff lines are excluded from both WTO agriculture and non-agriculture definitions (essentially petroleum products).  
d International Standard Industrial Classification (Rev.2). 
Note: CV = coefficient of variation. 
Source : WTO Secretariat estimates, based on data provided by the Israeli authorities.  Israel WT/TPR/S/157/Rev.1 
 Page 25 
 
 
15. Using ISIC (Revision 2) definition, agriculture  remains the most tariff protected sector, with 
an average tariff of 41.0%, followed by manufacturi ng (7.3%), while imports of mining and quarrying 
products face the lowest tariffs (0.2%). Most fresh  fruit and vegetables are subject to seasonal tariffs, 
generally specific, with relatively high AVEs in mo st cases (Table III.4).  The duration of the out-of 
season period varies from product to product.  
Table III.4 
Seasonal tariffs in Israel, 2005 
  Seasonal tariff 
 Product  Period Tariff  Period Tariff 
1. Potatoes, fresh or chilled  
(07.01.90.00) January-April 
 NIS 1.77/kg. but not 
more than 230%  May-December 230% 
2. Tomatoes, fresh or chilled  
(07.02) June-October 
. NIS 0.89/kg. but not 
more than 2.72%  November-May NIS 1.19/kg. 
BNM 272% 
3 Fresh or chilled onions and 
shallots (07.03.10) January-April NIS 1.08/kg. but not 
more than 298%  May-December NIS 0.78/kg. but not 
more than 298% 
4 Fresh or chilled cauliflowers  
(07.04.10) September-February NIS 1.05/kg. but not 
more than 128%  March-August NIS 0.79/kg but not 
more than 128%  
5. Carrots and turnips 
(07.06.10.00) December-May NIS 1.05/kg. 
BNM 213.0%  June-November NIS 1.37/kg. but not 
more than 213%  
6. Aubergines (07.09.30.00) May-October NIS 0.54 /kg. but not 
more than 89%  November-April NIS 0.54/kg. but not 
more than 89%  
7. Marrow (07.09.90.30) May-October NIS 0.52/kg. but not 
more than 128%   November-April NIS 0.79/kg. but not 
more than 128% 
8. Fresh figs (08.04.20.10) May-November NIS 2.42/kg. but not 
more than 102%   December-April NIS 1.52/kg. but not 
more than 102% 
9. Fresh mangoes, guavas, and 
mangosteens (08.04.50.00) June-December NIS 1.98/kg. but not 
more than 85%   January-May NIS 1.52/kg. but not 
more than 102% 
10. Watermelons (08.07.11.00) October-May NIS 0.46/kg. but not 
more than 102%  June-September NIS 0.44/kg. but not 
more than 102%  
11. Melons (08.07.19.00) October-May NIS 1.21/kg. but not 
more than 102%  June-September NIS 0.66/kg. but not 
more than 102%  
12. Apricots (08.09.10.00) April-August NIS 1.53/kg but not 
more than 89%  September-March NIS 0.97/kg. but not 
more than 89% 
13. Cherries (08.09.20.00) April-July NIS 3.67/kg but not 
more than 81%  August-March NIS 1.73/kg. but not 
more than 81% 
14. Peaches, including nectarine 
(08.08.30.00) April-November NIS 1.32/kg. but not 
more than 89%  December-March NIS 0.84/kg. but not 
more than 89% 
15. Plums and sloes 
(08.09.40.00) May-November NIS 1.13/kg but not 
more than 102%  December-April NIS 0.7/kg. but not 
more than 102% 
16. Strawberries (08.10.10.00) October-May NIS 4.2/kg. but not 
more than 94%  June-September NIS 1.36/kg. but not 
more than 94%  
17. Kiwifruit (08.10.50.00) September-June NIS 3.41/kg. but not 
more than 94%  July-August NIS 1.62/kg. but not 
more than 94%  
18. Persimon (08.10.90.10) August-February NIS 1.32/kg. but not 
more than 94%  March-July NIS 0.92/kg. but not 
more than 94%  
19. Lychee (08.10.90.20) June-September NIS 5.49/kg. but not 
more than 94%   October-May NIS 3.46/kg. but not 
more than 94% 
20. Loquat (08.10.90.30) March-July NIS 4.83/kg. but not 
more than 94%   August-February NIS 3.39/kg. but not 
more than 94% 
21. Ginger, other than spices in 
form of powder or granules (09.10.10.90) October-February NIS 6/kg.  March-September 15% 
Note: Corresponding HS code is  provided in parenthesis. 
Source : WTO Secretariat, based on  informati on provided by the Israeli authorities.  
16. In aggregate, mainly due to high protecti on for agricultural commodities, Israel's tariff 
displays mixed escalation, negative from the first stag e of processing (with an average tariff of 24.6%) 
to semi-finished products (with an average rate of  3.1%), and then positive to fully processed goods 
on which tariffs average 9.1% (Chart III.2).  Furthe r disaggregation of the tariff at ISIC (Revision 2) 
two-digit level depicts positive escalation mainly in the textiles and apparel, wood-products, and 
chemicals and plastic products subsectors, while escalation is mixed in the food and beverages 
subsector.  In general, in the absence of incen tives, this tariff structure does not ensure the 
competitiveness of locally manufactured agricultural products. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 26 
 
 
0.05.010.015.020.025.030.035.040.045.0Chart III.2
Tariff escalation by ISIC 2-digit industry, 2005
Per cent
Sourc e: WTO Secretariat estimates, based on data provided by the Israeli authorities.
All product s
Food, beverages
Textiles,
apparel
Wood products
Paper, printing
Chemicals ,
plastics
Non-metalli c
minera l
products
Basic meta l
products
Fabricated meta l
products
Other manufac -
turingNOT APPLICABLEAgriculture
MiningRaw materials Semi-processed Fully processed
NOT APPLICABLE
 
 
17. Israel has bound some 76% of its ta riff lines, all agricultural lines  (WTO definition)  and some 
73% of non-agricultural lines.  Bound rates range from 0% to 560% on agricultural goods, and from zero to 170% on non-agricultural goods.  Israel has not transposed its schedule of commitments from HS92.  In September 2005, it requested a one-year extension of the waiver with respect to the 
introduction of HS96.
4 
18. As at October 2005, the MFN the applied tariffs  on 11 lines at the HS eight-digit level exceed 
bound rates (Table AIII.2).  Moreover, a potential di fficulty is that, while most bound tariffs are 
ad valorem , some corresponding applied MFN tariffs are non- ad valorem .  Depending on the import 
price, MFN applied tariffs may exceed their bound ra tes on some 51 items at the HS eight-digit level, 
mostly agricultural products (Table AIII.3).   
19. Total fiscal revenue (customs tariffs, VAT, pur chase tax) derived from imports  amounted to 
US$8,370 million in 2004, up from US$7,081 million in 1999.  The Israeli Tax Authority is 
responsible for the collection of all tax revenue due to the State.   
(b) Preferential tariffs  20. Israel's foreign trade largely takes place under preferential agre ements, mainly with the EU 
and United States.  In addition, Israel grants (reciprocal) tariff preferences to Bulgaria, Canada, the 
European Free Trade Association, Jordan, Mexico, Romania, and Turkey.  The tariff preferences are 
generally subject to quotas (preferential tariff quotas (section (v)(b) below).   
                                                     
 
4 WTO Document G/L/744, 6 September 2005. Israel WT/TPR/S/157/Rev.1 
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(c) Duty concessions and exemptions 
21. Israel grants tariff concessions and exempti ons within the framework of several schemes 
(Table III.5).  Concessional duties are granted th rough a duty-drawback sch eme, which provides for 
refund of customs duty and internal taxes paid on imported inputs.  Newly arrived immigrants and 
returning residents are exempt from duty or subject to a reduced rate on households belongings and 
personal effects.  In addition, Israel offers duty-free imports to  foreign country representations, 
international organizations, intern ational aid organizations, petrol eum companies, and performing 
troupes of artists and entertainers. 
Table III.5 
Duty concessions and exemptions, 2005  
 Scheme Eligibility Incentives 
1. End-use provision 
schemes Importer listed in the Customs Tariff 
Book Duty free on 201 items in total  
2.  Duty-drawback system Any exporter Refund of customs duty and domestic internal taxes paid on 
imported inputs after realization of export  
3. Temporary imports Any importer for temporary use on 
government procurement projects Duty free imports 
4. Immigrants programme Newly arrived immigrants Duty free on household effects imported in accompanying cargo, 
work tools, households effects, and reduced rate on boats and 
trailers, radios, cars, motorcycles, motor scooters;  passenger vehicles (25%), and certain additional household appliances (50% 
of MFN rate) 
5. Returning residents 
programme Returning residents Duty free on personal effects, work tools, (up to a value of 
US$1,000), and households effects 
6. Programme under the 
Petroleum Law of 1952 Holders of petroleum rights and 
contractors operating on their behalf Duty-free imports 
7. Programme under the 
Petroleum Pipeline Concession Law of 1968 Petroleum Services Co. Ltd. or the 
Oil Refineries Co. Ltd.   Duty-free imports   
8. President of the State  Duty free on goods imported or acquired from a licensed 
warehouse for the use of the President 
9. President Dr. Chaim 
Weizmann Memorial House  Duty free on goods for use in the late President Dr. Chaim 
Weizmann Memorial House  
10. Foreign country 
representations Embassy, legation, general consulate, 
consulate or consular agency of  
foreign country, etc. Duty-free imports 
11. International organizations United Nations and other international 
organizations Duty-free imports (except tobacco, motor vehicles, and office 
equipment) 
12. International agreementsa 35 international organizations or countries Duty-free imports 
13. Programme under 
Section 2(D) of the 
Red Shield of David Law 
of 1950 Israel Ambultory Services Conditional exemptions on goods not manufactured at the required 
level in Israel 
14. International aid 
organizations  Duty-free imports 
15. Performing troupes of 
artists and entertainers  Duty-free imports 
a The agreements are listed in the Customs Tariff Book, section Group 1. 
Source : WTO (1999), Trade Policy Review:  Israel ;  and information provided by  the Israeli authorities..  
22. Fiscal revenue forgone in 2004 under Israel's tariff concession and exemption schemes was 
highest for duty-drawbacks (NIS 127.6 milli on), followed by international agreements 
(NIS 46.6 million), and petroleum companies (NIS 4.4 million). WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 28 
 
 
(iv) Other taxes and charges 
(a) Border taxes 
23. Israel bound other duties and charges at zero on all products covered by its tariff binding 
commitments.  However, in accord ance with the Trade Levies Law of 1991, Israel collects a levy on a 
number of imported goods.5  The levy is used partly as an inst rument to enhance the flexibility of the 
tariff system.  The imposition of the levy requires approval by the Parliament.  The levy may be imposed by the Minister of Industry, Trade and Labor on imports and exports of goods and services, 
on the possession of goods or on the pr ovision of services, in a wide range of circumstances, such as 
to regulate production, demand or consumption of ag ricultural and fishery products;  or to protect 
local production against substantial injury caused by im ports;  or to restrict th e export of raw materials 
produced or mined in Israel, in order to prevent sh ortages in the local market.  The Israeli customs 
book carries a separate column indicating the items on which the levy applies.  In August 2005, five 
items, mainly types of oil and oilcake, were subject  to the surcharge (Table III.6).  The rate differs 
depending on the country of origin;  for example, imports from the United States are generally subject 
to lower rates than other imports. Fiscal revenue from the levy amounted to NIS 8.3 million in 2005
6, 
up from NIS 2.1 million in 2003. 
Table III.6 
"Safeguard" levies, August 2005 
Description of goods Levy rate (%) 
1. Soya-bean oil, sunflower-seed oil an d rape oil, edible or for the food i ndustry (excluding oils approved by the 
Director of the Ministry of Industry, Trade, and Labor fo r use as raw material in the chemical industry) (15.07, 
15.12, 15.14)  
 - U.S. or EU  origin 4 
 - Other origin 7 
2. Safflower oil, edible or for the food industry (excludi ng oils approved by the Director of the Ministry of 
Industry, Trade, and Labor for use as raw material in the chemical industry)  (15.12)  
 - U.S. or EU  origin 4 
   
 - Romanian origin – whose total amount  does not exceed 2,400 tonnes (15.12.1920) 3 
 - Other origin   7 
3. Mixture of vegetable fats or oils, edible or for food i ndustry, containing soya-bean oil, sunflower oil, rape oil, 
safflower oil, cotton-seed oil or sunflower oil (excluding  mixture approved by the Director of the Ministry of 
Industry, Trade, and Labor for use as raw material in the chemical industry) (15.17.90.22)  
 - U.S. or EU  origin 4 
 - Other origin 7 
4. Oilcake of soya (excluding oilcake approved by the Dir ector of the Ministry of Industry, Trade, and Labor for 
use as raw material in the food industry) (23.04)  
 - U.S. origin 4.5 
 - Other origin 7.5 
5. Oilcake, not made of soya (23.05, 23.06)  
 - U.S. origin 2 
 - Other origin 2.8 
Note: HS code is indicated in parenthesis. 
Source : WTO Secretariat, based on informati on provided by the Israeli authorities.  
24. The wharfage fee is a border charge, applicable on trade through maritime ports.  Israel's port 
authorities charge importers 1.02% of the c.i.f. cost of imports into Israel for the use of ports, whereas 
                                                      
5 The levy is called the "safeguard levy" but it does not have the same meaning as under the WTO 
Agreement on Safeguards or under Article XIX of the GATT. 
6 January to September. Israel WT/TPR/S/157/Rev.1 
 Page 29 
 
 
exporters using the same services face a charge of 0.2% on the f.o.b. value.  Total annual income from 
the wharfage fee is about NIS 800 million.  The authorities are in the process of reforming the 
wharfage fee system. 
(b) Internal taxes 
25. Imports, like domestic products, are subject to a purchase tax and a value-added tax, while 
certain items (such as fuels and tobacco) are subjec t to excise taxes and stamp duties (Table III.7).  
The standard rate of the VAT is 16.5%.  Products  purchased in Eilat, whether imported or produced 
domestically, are exempt from VAT.   
Table III.7 
Taxes on imported and domestic goods and services, September 2005 
   Taxation base 
Tax Product Rate (%) Imports Domestic 
Value-added 
tax  Fresh fruit and vegetables, ships and airlines 
for service on international lines, travel tickets for international sea and air-lines, cargo 
transportation by sea and air, hotel 
accommodation for foreign tourists All other products and services 0% 
  
 
 16.5% Value of goods for 
customs purpose plus customs duties, port and 
stevedoring fee, levy 
(if applicable) Value of 
transaction 
Purchase tax Certain luxur y and consumer goods, most 
notably motor vehicles, consumer electrical 
goods, alcoholic beverages, and a limited number of intermediate goods 5-120% Customs value plus 
customs duties plus the 
TAMA (if applicable) Wholesale price 
 Tobacco 55% + NIS 51/ 
1,000  cigarettes  Retail price before VAT  Retail price 
before VAT 
Excise taxes Gasoline NIS 2,019/     
1,000 litres   
 Kerosene NIS 70/ 
1,000 litres   
 Diesel NIS 106/ 
1,000 litres   
 Heavy fuel oil NIS 10-14/ tonne   
 Gas  NIS 14-19/ tonne   
 Coal NIS 7/ tonne   
Stamp duties Several types of  contracts and financial 
transactions 0.4-3.0% The amount written in the 
document Value of 
transaction 
according to the 
contract 
Source : Information supplied by the Israeli authorities. 
26. In general, internal taxes are levied on the dut y-inclusive c.i.f. value of imports, and on the 
wholesale price of locally produced goods.  Howeve r, Israel uses a system called "TAMA" (the 
Hebrew acronym for additional rate of increase) to  approximate local wholesale prices of imported 
goods by adding estimated profits, insurance, and inla nd freight to the declared value of imports for 
purposes of calculating purchase taxes;  coefficien ts for calculation of the TAMA vary from industry 
to industry and from product to product.  Importers have the option of declaring the actual wholesale 
value of their products.   
(v) Import prohibitions, licensing, and authorizations 
(a) Import prohibitions 
27. Israel operates import prohibitions for reasons of  human health, public morals, environment, 
and security.  It is a signatory to the Basel Convention on Hazardous Wastes, the Montreal Protocol, WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 30 
 
 
and CITES.  The importation of 17 pr oducts or groups of products is  prohibited (Table III.8).  The 
prohibitions apply equally to all trad ing partners.  The legal basis for Is rael's import prohibitions is the 
Appendix of the 2005 Customs Order and Annex 5 of  the 1978 Free Import Order. In addition, since 
December 1994, Israel has maintained a ban on imports of non-kosher me at and meat products.  
However, the Government permits  limited domestic production, sale,  and consumption of non-kosher 
meat.   
Table III.8 
Import prohibitions, November 2005 
Items subject to import prohibition Reason for prohibition 
Wine, spirits products and grape juice with incorrect or misleading geographical indications (22) Protection of human health 
Matches made from white or yellow phosphorus (36.05) Environment protection 
Licentious or indecent films (37.06) Public morals 
Currency notes, bank notes or coins which are legal tender in any country or which have been at some time 
legal tender in any country, whether counterfeit or imitation (49.07, 71.18, 97.04) Public morals 
Tickets or publicity items for lottery or gambling (49.11) Public morals 
Sales invoice form that is a form or other paper which purports to be a form which it is possible to fill in 
blank spaces so as to use it as  a sales invoice for goods from fo reign countr ies (48.20, 49.11) Public morals 
Used bags for packaging vegetable material (63.05) Protection of human health 
Knives, cutlasses, spears, and swords having a serrated point or sharp blade, except for knives which are of 
a kind for professional work or domestic use (82.11, 93.07) Protection of human life 
Disruptive instruments of laser speed measuring meters Public safety 
Firearms resembling a pen, starting pistols, items activated by gas, etc. (93.03) Security 
Nerve gas container resembling a gun (93.04) Security 
Games of chance or part of them as defined in the Penal Code (95.04) Public morals 
Goods of all types which carry a false commercial description as defined in the Consumer Protection Law 
of 1981 Public morals 
Postal packages containing live creatures such as vipers, explosives, inflammable materials and other 
dangerous packages Protection of human health 
Used equipment for bee farming Protection of human health 
Goods that can be used as tools for preparing or consuming dangerous drugs as defined in the Dangerous 
Drug Order (1973). Protection of human health 
Goods that can be used to incite violence, terror, or racism as defined in Chapter H of the Penal Code  Security 
Note: The corresponding HS code is provided in parenthesis. 
Source:  Information provided by the Israeli authorities.  
28. Since Israel's last TPR in 1999, import prohibiti ons have been lifted on a number of products.  
Items that are no longer covered by an import prohibition include:  tropical and subtropical fruit trees and fruit shrubs and parts thereof with certain excep tions;  vegetative cultivating material originating 
in a tropical or subtropical region;  invertebrate liv e animals at all levels of development;  fresh roots, 
fruit and vegetables, onion, and garlic , whose country of origin is in a tropical or subtropical region;  
and cotton plants and parts ther eof with certain exceptions.  
29. Since July 2003, Israel has lifted its genera l prohibition on imports from WTO Members that 
have no diplomatic relations with it or prohibit imports from Israel, i.e. Bahrain, Bangladesh, Brunei, 
Chad, Cuba, Indonesia, Kuwait, Malaysia, Morocco, Pa kistan, Tunisia, and the United Arab Emirates. 
The authorities hope that this unilateral step will be appreciated and reciprocated by those countries.  
Nonetheless, import prohibitions remain in  place for Iran, Lebanon, and Syria.   
(b) Import licensing and authorizations 
30. The Free Import Order of 1986 regulates licen sing and authorization procedures for the 
import of certain products.  Annex 1 describes th e goods subject to licensing when imported into 
Israel and specifies the authority allowed to gran t the licence.  By broad category, Annex 1 includes Israel WT/TPR/S/157/Rev.1 
 Page 31 
 
 
about 150 items, many for safety and security reasons  (Table AIII.4).  Annex 2 sets forth conditions 
for the import of certain goods in order to  ensure safety and security objectives.   
31. Licences are also required on imports for tari ff quota management purposes.  MFN tariff 
quotas are maintained on 12 product groups.  Howeve r, most of these quotas have been redundant 
during the period under review, as the applied rates ha ve generally been lower than the in-quota rates 
(Chapter IV(2)(i)).  Moreover, with the excepti on of the agreement with EFTA, all of Israel's 
preferential trade agreements include provisions on tariff quotas on agricultural goods (Table AIII.5).  
Five tariff lines are subject to bilateral quotas fo r Mexico, 21 for Canada, 24 for Romania, 27 for 
Turkey, 49 for Bulgaria, 103 for Jordan, 109 for the European Union, and 92 for the United States.  
32. The quota system is administered by the Mini stries of Agriculture and Rural Development 
(for agricultural products and fresh food) and Industry, Trade, and Labor (for processed food).  At the 
end of each calendar year, both ministries announce the opening of the quotas on their websites and in two newspapers.  The announcement includes inform ation on source countries, HS codes, and quota 
volumes.  Importers must submit their requests for an import licence within four weeks;  there are no restrictions on eligibility.
7  All import licences issued by the Mi nistry of Industry, Trade and Labor 
and most licences issued by the Ministry of Ag riculture and Rural Development are valid from 
1 January to 31 July.8  In August, the ministries publish another notice, inviting importers to submit 
requests for the quantities not utilized in the first sev en months of the year. Those licences are valid 
from 1 September to 25 December.  
33. Import licensing is required for 7.8% at all tariff lines (Chart III.3).  Licences are issued by 
the Ministries of Industry, Trade and Labour;  Agriculture and Rural Development;  Health;  
Transportation;  and Environment, depending on th e type of merchandise.  In special circumstances 
the Minister is authorized to exempt goods from licensing requirements and conditions.  The validity of licences also depends on the type of goods.  An im port licence is normally issued within 14 days;  
in most cases, it is issued in less than seven days.   
34. Israel maintains a licensing mechanism on imports from eight non-WTO Members that have 
no diplomatic relations with Israel or prohibit imports from Israel into their markets, i.e. Afghanistan, 
Algeria, Iraq, Libya, the Democratic People's Repub lic of Korea, Saudi Arabia, Sudan, and Yemen. 
Licences are granted for imports from these c ountries on an ad hoc basis, under exceptional 
circumstances (e.g., economic necessity), and with authorization by the Director General of the 
MOITAL.  
(vi) Contingency trade remedies 
35. Israel's legislation on anti-dumping and count ervailing measures is the Trade Levies Law of 
1991, which provides for the imposition of three type s of levies: anti-dumping, countervailing, and a 
"safeguard" levy (Box III.1). 
 
                                                     
 
7 Importers who, in previous years, failed to use their quotas may be excluded. 
8 The validity of some licences issu ed by the Ministry of Agriculture  is shorter.  In these cases, 
importers may submit requests throughout the year. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 32 
 
 
0102030405060708090100
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21Chart III.3
Import licensin g by HS section, 2005               
Per cent
Source :     WTO Secretariat calculations, based on data prov ided by the Israeli authorities.Percentage of all tariff lines 
sub ject to import licensing 
(7.8% )
01 Live animals and prod.   
02 Vegetable products03 Fats and oils      04 Prepared food, etc.
05 Mineral products
06 Chemical and prod.07 Plastic and rubber
08 Hides and skins09 Wood and articles10 Pulp, paper, etc.
11 T extiles and articles
12 Footwear, headgear13 Articles of stones
14 Precious stones, etc.15 Base metals and prod.16 Machinery
17 T ransport equipment
18 Precision instrument19 Arms and ammunition
20 Miscellaneous manuf.21 Works of art, etc.
 
36. In June 2005, the Knesset passed a bill to amend th e Law, to bring it into conformity with the 
WTO Agreements on Anti-Dumping, and on Su bsidies and Countervailing Measures.  The 
amendment inserts specific provisions (taken dir ectly from the WTO Agreements) concerning a wide 
range of subjects including:  domestic support for the initiation of the investigation, deadlines for the 
completion of the investigation, and parameters for establishing injury to  the domestic market.  It also 
addresses administrative issues during the handling of  investigations, such as the addition of more 
members to the Minister's advisory committee in order to handle more than one case at a time.9  The  
authorities intend to notify the legislation to the WTO Anti-Dumping Committee as soon as it is 
translated into English. 
37. Although the Trade Levies Law was notified to the WTO Committee on Safeguards in 
June 1995, Israel has, according to the authorities,  no safeguard legislation within the meaning of 
Article XIX of GATT 1994 and the Agreement on Safeguards.10  Moreover, since the establishment 
of the WTO, Israel has not applied safeguard me asures within the meaning of Article XIX of the 
GATT and of the Agreement on Safeguards.  Ho wever, Chapter Two of the Trade Levies Law 
contains provisions on so-called saf eguard levies (section (iv)(a)).   
 
                                                      
9 The amendment also provides for the abolition of the research levy, not used since 1996. 
10 WTO document G/SG/W/180, 12 June 1996. Israel WT/TPR/S/157/Rev.1 
 Page 33 
 
 
Box III.1:  Summary of Israel's anti-dumping, countervailing and "safeguard" procedures  
Anti-dumping duties  may be imposed when goods are imported at dumped prices, and when such imports will, or 
are liable to, cause material injury to a branch of producti on, or are liable to prevent the development of enterprises 
producing similar goods.  A dumped product is a product with an export price less than the "normal" value of identical or similar goods;  the normal price is defined as the price paid in the ordinary course of business for 
identical or similar goods intended for consumption in the country in which they were produced.  Countervailing 
duties  may be imposed when it is proven that the exporter or the foreign manufacture of the goods receives specific 
subsidies (such as export subsidies), and the importation of such goods may cause serious injury to certain industries or may curtail the development of an industry in Israel.  
The Commissioner, appointed by the Minister of I ndustry, Trade and Labor, heads an anti-dumping and 
countervailing unit in charge of, inter alia , initiating complaints, carrying out investigations and adopting 
preliminary determinations.  The law grants the Minister the authority to impose anti-dumping and countervailing duties.  At the Minister's disposal is an Advisory Commi ttee, made up of seven members (three representatives of 
the public, two staff members of MOITAL, of which one may be the Commissioner, and two staff members of the 
Ministry of Finance).  If the imported good falls within the responsibility of another Ministry, a staff member of that Ministry is added to the Committee 
The examination must be completed within 21 days of receivi ng the complaint if there is any prima facie basis for a 
complaint, and decisions to initiate an investigation are published in the Official Gazette  and in two daily 
newspapers.  The interested parties have a maximum of 30 days from the date of publication to respond.  The Commissioner brings the results of the examination before the Committee within 240 days of initiation of the investigation.  The time-limits may be extended by 30 days.  The Committee delivers its conclusion no later than 45 days after the complainant was brought before it on, inter alia , the existence of dumped or subsidized imports, and 
proposals on the imposition of anti-dumping or countervailing duties, the rate and period of effect.  The maximum anti-dumping levy is the rate of some or all of the difference between the normal price and the export price, while a countervailing levy is set at the rate of part or all of the subsidy:  the "lesser duty rule" is applied in Israel when imposing the levies. 
The final decision is taken by the Minister of Industry, Trade and Labor within 15 days of the date of the Committee's recommendation.  The measure remains in forc e for a maximum period of five years from the day of 
its imposition.  The Law allows for "sunset reviews", admi nistrative reviews and "new shipper reviews".  Appeals 
can be filed with the district court. 
Provisional anti-dumping measures, in the form of a "temporary surety", are required for a period of six months (can be extended for three months) where it appears to the Commissioner that goods imported or about to be imported are dumped or subsidized, and that injury is likely to be caused to a branch of production.  The duration of an investigation is limited to one year from its in itiation, or in special circumstances, 18 months.   
A "safeguard" levy  may be imposed by the Minister of Industry, Trade and Labor on imports or exports of goods 
and services in any of the following circumstances:  (i) to prevent deterioration of Israel's balance of payments or 
foreign currency reserves;  (ii) to regulate production, dema nd or consumption of agricultural and fishery products;  
(iii) to protect production against substantial injury caused or that may be caused by competing imports;  (iv) to 
prevent exhaustion of mineral deposits;  (v) to restrict the export of raw materials produced or mined in Israel, in order to prevent shortages in the local market, or to regulate the price of these raw materials;  (vi) to absorb or prevent excess profits due to legislative provision;  (vii) to absorb assistance or benefits accorded by the Government in respect of goods that were intended for use in Israel but were actually exported;  (viii) to adopt economic countermeasures against any States that violated an agreement with Israel;  and (ix) to restrict or prevent 
imports from any countries that prohibit or restrict trade with Israel or impose discriminatory measures against 
Israeli products. 
A safeguard levy is in effect for a maximum of two years;  the Minister may reimpose the levy or extend its effect 
by order, as long as it is required for one of the purposes  enumerated above.  A safeguard levy is set as a proportion 
of the goods' value or a fixed sum or a proportion of th e excess profit or according to any other calculation, as 
prescribed by the Minister. 
Source :  WTO document G/ADP/N/1/ISR/2, 10 January 1996;  and information provided by the Israeli authorities. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 34 
 
 
38. Since January 1999, Israel has initiated eight  anti-dumping actions and imposed definitive 
anti-dumping measures in five cases (including thr ee cases that were initiated before January 1999).11 
As at June 2005, two definitive anti-dumping measures were in force, on imports of carbon steel butt-
weld pipe fittings from China (with anti-dumpi ng duties between 10.78% and 26.37%, depending on 
the exporter), and on imports of grey Portland cement from Turkey (US$5.83 per tonne). Four 
procedures were not completed as of November  2005: multi-density fibreboard (MDF) and plywood 
faced by veneer or lacquer paper from China, flexib le corner drywall tape from China, nucleotides 
oligos from the United States, cutting and grinding wheels from China.  Two investigations did not result in definitive measures, the cases being withdrawn: hydrogen peroxide from the EU, aluminum 
aerial bundle conductors from India.  As at June 2 005, two undertakings were in force, concerning 
imports of grey portland cement and fresh moist yeast from Turkey.  Israel has no countervailing measures in force. 
(vii) Standards and other technical requirements 
(a) Standards, testing, and certification 
39. The Standards Institution of Israel (SII), a statutory non-governmental organization 
established in 1953, is responsible for the overall management and coordination of standardization 
activities in Israel. SII is largely a self-financing institution, but receives support (2.5% to 5% of its budget) from the Government for its standardizat ion activities. The Israeli Standards Law of 1953 
empowers the SII as the authority for the devel opment of standards, compliance testing, and 
certification of quality assurance systems and products manufactured in or imported into Israel, and to 
enact the necessary rules for the general public.  The Commissioner of Standardization (in the 
MOITAL) is in charge of mandatory standards enfo rcement and approval of testing laboratories.  
Depending on the type of standard, other agencies such as the Ministries of Health, Communication, 
Agriculture and Rural Development, and Industry, Trade and Labor are involved in developing or 
enforcing standards.   
40. The SII has published over 2,600 standards, up from 2,226 in April 1999 (Table III.9);  
604 standards are mandatory (up from 533 in 1999).  Mandatory standards are particularly important 
in electrical and mechanical engineering, and food.  About one third of Israel's mandatory standards 
are equivalent to international standards (up from 24% in 1999).  Since its last Review, Israel has 
removed or made voluntary more than 200 mandatory standards that were deemed non-tariff barriers, 
mostly on food products.   
41. The standardization process is laid down in the Rules for the Preparation of Israeli Standards 
of 1991.  Voluntary standards are elaborated by  one of the SII's technical committees; the SII 
circulates each draft standard for comments  prior to  adoption.  The MOITAL may declare a particular 
standard to be a mandatory standard, after c onsultation with representatives of producers and 
consumers, and with the consent of the Minister c oncerned.  Pursuant to an amendment adopted by 
the Knesset in 2000, the SII shall in  general, in developing a stan dard, adopt internationally accepted 
standards (used in developed countries).  If there ar e different standards in developed countries, the 
SII may publish alternative standard s, provided that each is based on a current international standard.  
In this context, the authorities note the difficulties in harmonizing Israel's standards with its two main 
trading partners - the European Union and the United States - which often apply different standards, 
and the absence of international standards in sp ecific areas (e.g. on food labelling and construction 
materials). 
                                                     
 
11 WTO documents G G/ADP/N/105/ISR, 11 November 2003; G/ADP/N/119/ISR, 20 September 2004; 
G/ADP/N/126/ISR, 13 May 2005; and G/ADP/N/132/ISR, 28 September 2005. Israel WT/TPR/S/157/Rev.1 
 Page 35 
 
 
Table III.9 
Equivalence of Israeli standards with  international standards, April 2005 
Area Total no. of Israeli 
standards No. of mandatory 
Israeli standards No. of mandatory 
Israeli standards 
equivalent to 
international norms Equivalence 
(%) 
Building  286 39 6 15 
Electrical engineering 353 143 108 76 
Chemicals 207 25 5 2 
Mechanical engineering 277 76 28 37 
Food 182 160 0 0 
Textiles, leather and paper 176 9 1 1 
Polymers 157 27 3 1 
Electronics 90 24 10 41 
Water appliances 172 32 3 9 
Information system 186 0 0 n.a. 
Environmental protection 104 0 0 n.a. 
Motor vehicles 77 12 3 25 
Medical equipment 116 30 14 46 
Packaging 43 5 0 0 
Safety 128 22 12 54 
Management quality 20 0 0 0 
Total  2,604 604 193 32 
n.a. Not applicable. 
Source:  Information provided by the Israeli authorities. 
42. Most imports are systematically inspected at posts of entry, whereas domestic products are 
subject to market inspection.  The customs tari ff book contains a column indicating whether a product 
is subject to requirements in accordance with t echnical regulations.  These requirements apply to 
approximately 700 items at the HS eight-digit leve l or 7.8% of the tariff lines in the 2005 tariff, 
compared with 39.4% in 1999.  Compliance testi ng, both for domestic a nd imported products, is 
carried out by one of the SII's laboratories.  Products with an SII Standards Mark, certifying compliance with a certain standard, can enter Israel  without being tested.  Laboratories issuing this 
Mark are certified by the Standards Mark Policy Bo ard, composed of 13 members and chaired by the 
Commissioner of Standardization.  The procedur es for imports without the Mark depend on the 
degree of product safety and the reliability of th e importer.  Since June 2005, all imported goods 
subject to mandatory standards have  been classified into four levels  of examination according to the 
degree to which they might endanger public health and safety.  For goods in Group 1, representing the 
highest danger level, an examination of each shipme nt continues to be required.  Goods in the other 
groups, with a lower danger level or intended solely for industrial use, are subject to type approval 
tests or conformity declarations.  At the same time, penalties for misclassifications were drastically increased from US$4,000 to US$45,000 for individua ls and up to US$70,000 for corporate bodies. 
43. The SII has adopted the ISO 9000 series of standards for quality system certification. 
Currently, 2,544 Israeli companies involved in ISO 9000 certification with the SII are from the service 
industry.  The SII also offers certification accord ing to ISO 14000 for environmental management 
systems. Currently, 214 Israeli companies are certif ied to ISO 14000.  Since its began its programme 
in 1990, the SII has approved 5,659 organizations for ISO 9000 certification. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 36 
 
 
44. Israel has accepted the Code of Good Practice for the Preparation, Adoption, and Application 
of Standards.12  The Ministry of Industry, Trade, a nd Labor is its enquiry point under the TBT 
Agreement.13  Between January 2004 and October 2005, Israel submitted 88 notifications to the 
Committee on Technical Barriers to Trade, mostly concerning the adoption or revision of voluntary or 
mandatory standards.14 
45. Israel has signed mutual recognition agreements  on test data with several certification and 
testing organizations worldwide (45  organizations in 20 countries).  It  has also signed memoranda of 
understanding for mutual recognition of ISO 9000 re gistration with nine foreign organizations. 
(b) Sanitary and phytosanitary measures 
46. The Plant Protection and Inspection Service (PPIS)  and the Veterinary Service in the Ministry 
of Agriculture and Rural Development are Israel 's national enquiry points and the notification 
authorities with respect to the SPS Agreement;  they are also in charge of ensuring compliance with 
SPS measures.15  The Ministry of Agriculture and Rural Development is in charge of all issues 
relating to animal and plant health, while the Minist ry of Health is the regulatory agency responsible 
for the safety of cosmetic and pharmaceutical pro ducts.  All food and health products must be 
registered with the Ministry of Health before they can be sold in Israel.   
47. Shipments of cattle must be accompanied by a health certificate signed by a government 
veterinary office stating that no contagious disease has existed in the area six months prior to the 
shipment and that the animals are free from disease (Animal Disease (Transfer Arrangements for Cattle) Regulations of 1972).  Re quests for import permits for breed ing cattle and other animals are 
considered individually according to animal species and sex, and to the current  epidemiological status 
of the exporting country.  According to the authoritie s, the requirements are formulated in conformity 
with the guidelines of the World Organisation for Animal Health (OIE).  Sanitary certificates for 
shipments of frozen and chilled meats must state th at the meats are fit for human consumption and 
had been properly frozen or chilled up to the time th ey were placed on board.  Sanitary certificates are 
also required for shipments of hides and animal parts (skin, bone, hoofs, wool, hair, and bristles).  In 
addition, sanitary certificates and/or import permits (issued before shipment of goods) are required for 
all plant propagation material (including seeds) and most other plants and materials, fresh fruits, vegetables, certain dried fruit, nuts, and cut flowers.   
48. For certain foods - meat in particular - Kosher certificates may be required.
16  The competent 
authority for Kosher certification is the Chief Rabbina te in Israel.  A number of Rabbis located abroad 
have been approved by the Chief Rabbinate to issue Kosher certificates.  Companies seeking 
certification must pay the costs of rabbinical in spection to determine that the ingredients and 
manufacture of the products satisfy religious standard s.  According to the authorities, the fee charged 
is based on the cost of sending the inspector to the premises of the manufacturer (including transportation, accommodation, and a predetermined per diem fee).  U.S. businesses have complained 
that the process of granting Kosher certifi cates in Israel is expensive and complex.
17  
                                                      
12 WTO document G/TBT/CS/N/66, 26 May 1997. 
13 WTO document G/TBT/N/ISR/29, 23 December 2003. 
14 WTO documents G/TBT/N/ISR/32-119, 16 January 2004 to 12 October 2005. 
15 WTO document G/SPS/ENQ/18, 20 December 2004.  
16 "Kosher" refers to those foods th at are subject to Jewish dietary la ws, such as the separation of meat 
and milk.  Companies wishing to obtain the Kosher cert ificate must comply with these dietary laws and be 
approved by the Chief Rabbinate (GATT, 1995(b)). 
17 USTR (2004), p. 238. Israel WT/TPR/S/157/Rev.1 
 Page 37 
 
 
49. Since its last TPR in 1999, Israel has notif ied three emergency measures to the WTO, all 
concerning the importation of live bovine animals and products thereof from countries where BSE is 
prevalent.18  Imports of these products from the following countries are prohibited (November 2005):  
Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, 
Italy, Japan, Liechtenstein, Luxemburg, the Netherla nds, Poland, Portugal, Slovakia, Slovenia, Spain, 
Switzerland, the United Kingdom, and the United States.  
(c) Marking, labelling, and packaging 50. All products must be labelled.  Cigarettes and textiles must be labelle d before being imported 
into Israel.  The Consumer Protection Law (5741-1981 ) establishes the information that must be on or 
attached to consumer products:  the name of the co mmodity;  the country of production;  the name, ID 
number, and address of the producer or importer;  the quantity of the commodity;  and a detailed list 
of the basic materials of which it is composed.  Unless provided otherwise, labelling must be in Hebrew.   
51. The Consumer Protection Order of 1983 contains  specific labelling requirements for:  house 
wares, furniture, paper and cartons, paints, te xtiles, polyethylene bags, handbags, and tobacco 
products.  In addition, labelling rules are laid do wn by the relevant ministries for: fertilizers, 
insecticides, chemicals, pharmaceuticals, some food products, seeds, and alcoholic beverages.  
Containers of dangerous articles, such as pois ons, insecticides, drugs, flammable goods, ammunition, 
explosives, reptiles, insects, bacteria and radioac tive materials,  should be clearly marked.  The 
Consumer Protection Regulation of  2002 requires special labelling on the specific absorption rate of 
cellular phones.     
52. Marking of goods should be by printing, e ngraving, stamping or any other means on the 
goods or the package.  On a multi-layered packag e, the external layer should be marked.  The 
Consumer Protection Order of 1983 (Labelling of Go ods) requires that all goods bear a trade mark if 
any exists, and that the country of production be specified. 
53. As established by the Consumer Protection Or der of 1998 (Labelling and Packaging of Food 
Products), food products to be sold in Israel must be packaged in fixed package sizes, using the metric 
weights and volumes system, or bear indication of the unit weight price at retail.  Special requirements apply to fruit, plants, and meat.  Is rael does not maintain a labelling requirement for 
GMOs. 
54. The SII runs several product certification and labelling programmes open to both foreign and 
domestic companies.  These programmes include th e Standards Mark (used for more than 1,400 
consumer products), the Safety Mark (indicating co mpliance with certain safety standards), and the 
Green Label for environment-friendly go ods (based on EU Directive 880/92).   
(viii) Other measures 
55. Israel maintains strategic reserve stocks of wheat grain for human consumption.  It follows 
United Nations' resolutions with respect to trade embargoes. 
                                                     
 
18 WTO documents G/SPS/N/ISR/4-6, 27 March to 15 May 2001.  WT/TPR/S/157/Rev.1 Trade Policy Review 
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(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Registration and documentation 
56. There is no registration requirement for exporte rs.  Similar documenta tion requirements apply 
to importers and exporters  (section (2)(i) above). An export decl aration is required for all exports 
except for goods under US$100 that are exported wit hout financial compensation and that have not 
undergone a sales transaction. 
(ii) Export taxes, charges, and levies 
57. Israel has not imposed any export duties, taxes or other charges during the period under 
review.  It does not maintain any minimum export prices. 
(iii) Export prohibitions, restrictions, and licensing 
58. In accordance with the Ordinance on Trade with Enemy States, Israel prohibits exports Iran, 
Lebanon, and Syria.   
59. Products subject to export controls are include d in Annexes 1 and 3 of the Free Export Order 
of 1978.  Currently some 35 items, by broad categor y, require a licence for various reasons, such as 
the control of quality and standards of Israeli goods, compliance with international agreements 
(including those regarding dangerous  drugs and protection of plants and animals), and conservation of 
local resources (Table III.10).  Most of the goods covered by the control requirement are agricultural 
products or chemicals.  Licences are issued free of charge. 
Table III.10 
Goods requiring licence upon export, 2005 
Items subject to export licensing 
Annex 1 of the Free Export Order 
Live poultry (01.05) 
Poultry cuts and offal (including livers) (02.07) 
Poultry fat (not rendered), fres h, chilled, frozen, salted, in brine, dried or  smoked (02.09) 
Birds' eggs, in shell, fresh,  preserved or cooked (04.07) 
Birds' eggs not in shell and yolks, fr esh, frozen, preserved or cooked (04.08) 
Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, dormant, in growth or in flower (06.01) 
Other live plants (including their roots), cutting and slips; mushroom spawn (06.02) 
Cut flowers and flower buds of a kind suitable for bouquets or fo r ornamental purposes, fresh, dr ied, dyed, bleached, impregnat ed or 
otherwise prepared (06.03) 
Palm branch, ruscs, myrtle (06.04) 
Edible vegetables, fresh or chilled (07) 
Coconuts, brazil nuts and cashew nuts, fresh or drie d, whether or not shelled or peeled (08.01) 
Other nuts, fresh or dried, whether or not shelled or peeled (08.02) 
Bananas, including plantains, fresh (08.03) 
Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens (08.04) 
Citrus fruit, fresh or dried (08.05) 
Grapes, fresh (08.06) 
Melons (including watermelons) and papaws (papayas), fresh (08.07) 
Apples, pears and quinces, fresh (08.08) 
Apricots, cherries, p eaches (including nectarines), plums and sloes,  fresh (08.09) 
Other fruits, fresh (08.10) 
Oil seeds and oleaginous fruits, whole or broken (12)  
Seeds, fruit and spores, of a kind used for sowing (12.09) 
Cotton linters (14.04.2000) 
Dairy food; protein concentrates from soy beans (21.06) 
Ores, slag and ash (26) 
Table III.10 (cont'd) Israel WT/TPR/S/157/Rev.1 
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Items subject to export licensing 
Plutonium, except which contains isotopic c oncentration over 80% in plutonium 238; Uran ium 233; Enriched Uranium with isotope 2 35 or 
233; Uranium which contains natural isotopic concentration that is  not of lode form or residue;  any other substance containing one or more 
of the substances mentioned above (28.44) 
Bromide wire (29.03.300) 
Ostrich skins (41.03.002) 
Cotton, not carded or combed (52.01) 
Cotton waste (52.02) 
Rough diamonds exported to countries th at do not implement the Kimberley Process (71.02.10, 71.02.21, 71.20.31) 
Other moving, grading, levelling,  scraping, excavating, tamping, compacting, ex tracting or boring machinery, for earth, mineral s or ores; 
pile drivers and pile extractors; coal cutters (84.30.8429) 
Dumpers (87.04) 
Crane, not the kind used for towing vehicles (87.05.1090) 
Annex 3 of the Free Export Order 
Elementary phosphorus, Hydrogen Fluoride, Arsenic Trichloride, P hosphorus Pentachloride, Thionyl Chloride, Phosphorus Trichlori de, 
Phosphorus Oxychloride (Phosphoryl Oxychloride), Phosphorus Pent asulfide, Sodium Fluoride, Ammonium Bifluoride, Potassium 
Fluoride, Sodium Bifluoride, Potassium Bifluoride, Potassium Cyanide, Sodium Cyanide, Pi nacolyl Alcohol, Chloroethanol 
(Ethanol-2-Chlorn), (Ethylene Chlorohydrin), (B-Chloroethyl Alc ohol), (2-Chloroethanol), Orthoc hlorobenzaldehyde, Pinacolone,  
Trimethyl Phosphite, Methyl Phosphonic Acid Diesters, Demeth yl Methylphosphonate, (Methyl Phosphorus Acid-Dimethyl-Ester), 
(DMMP), Diethyl Methylphosphonate, Dimethyl Phosphite, (Dimethyl Hydrogen Phosphite), Bensilic Acid, Diethyl Methylphosphonate,  
Diethyl Phosphite, Diethyl Etylphosphonate, Dimethylamine, (N -Metylmethanamine), Dimethylamine Hydrochloride (Dimethyl 
Ammonium Chloride), Di-Isopropylamine, Di-Isopropylamionethyl Chloride, Dialkyl Amino Aldyl Chlorides, Diethanolamine, 
Triethanolamine, N-Alkyl Diethanol Amine, Dialkyl Amino Alc ohols, 2-Di-Iisopropylaminoethanol , 2-Dicyclohexacarbodiimide, Di-
Isopropylcarbodiimide, Di-O-Tolylcarbodiimid e, 2-Cyanoacetamide, Malononitrile, Dialky l Amino Thiols, Phosphinyl Dichloride, 
Thiodiglycol (Thiodiethylenegl ycol) (Thiodiethanol), Diethyl N-Dimethylphos phoroamidate, N-Propylphosphonous Dichloride, 
Ethylphosphonothioic Dichloride, Ethylophosph onousdichloride, Methylphosphonyl Difluoride, (Methyl-Phosphorus Acid-Difluoride) 
(Difluoro) (DF)  (Methylphosphonyl Dichloride) (Methyl-Phos phorus Acid Dichloride), Methylphosphonothioic Dichloride, 
Methylphosphonousdichloride (Methyldichlorophosphine), Ethyl Phos phonyl Dichloride, Ethyl Phosphonyl Difluoride, 3-Hydroxy 1 
Meth1piperidine, 3-Quinuclidinol, 3-Quinuclidinone. (28 and 29) 
Note: The HS code is provided in parenthesis. 
Source:  Information provided by the Israeli authorities. 
60. Israel maintains an export authorization syst em on some food and fresh agricultural products, 
for sanitary and quality reasons;  diamonds;  certain t ools;  and certain religious articles (Table III.11).  
These products require a special certificate upon exportation. 
Table III.11 
Goods subject to export authorization, 2005  
Product/product group Permit issued by 
Live animals (01) Veterinarian Serv ice in the Ministry of Agriculture 
Meat and edible offal (02) Veterinarian Service in the Ministry of Agriculture 
Fish and crustaceans, molluscs and other a quatic invertebrates, living in water, 
fresh, chilled or frozen (03) Veterinarian Service in the Ministry of Agriculture 
Dairy and dairy products, eggs, honey, and edib le products of animal origin (04) Veteri narian Service in the Ministry of Agricu lture 
Bovine, sheep, and goat semen (05.11) Veterinari an Service in the Mini stry of Agriculture 
Trees and other plants, bulbs, tuberous roots, cut flowers, deco rative foliage (06) Plant Protec tion & Inspection Services in t he 
Ministry of Agriculture 
Edible vegetables, fresh and chilled (07) Pl ant Protection & Inspection Services in the 
Ministry of Agriculture 
Fruits & nuts, fresh and chilled (08.01, 08.02,  08.03, 08.04, 08. 05, 08.06, 08.07, 
08.08, 08.09, 08.10) Plant Protection & Inspection Services in the 
Ministry of Agriculture 
Sausages and similar products, of meat, meat offal or blood; food preparations 
based on these products (16.01) Veterinarian Service in the Ministry of Agriculture 
Meat, meat offal or blood prepared or preserved (16.02) Veterinarian Service in th e Ministry of Agriculture 
Essential oils (with or without terpenics)  concentrated and absolute, resinoids, 
made of citrus (33.01) Ministry of Industry, Trade and Labor 
Ostrich skins (41.03.002) Veterinarian Se rvice in the Ministry of Agriculture 
Diamonds (71.02) Ministry of Industry, Trade and Labor 
 Table III.11 (cont'd) WT/TPR/S/157/Rev.1 Trade Policy Review 
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Product/product group Permit issued by 
Rough diamonds (71.02.10, 71. 02.21, 71.02.31) Ministry of Indus try, Trade and Labor, on condition 
that original Kimberley Process Certification is 
attached to the shipment, filled out and signed officially 
Hand saws; blades for saws of all ki nds (including toothless saw blades) 
equipped with a layer of diamond grains or diamond powder (82.02) Ministry of Industry, Trade and Labor 
Files, rasps, pliers and pincers equipp ed with a layer of diamond grains or 
diamond powder (82.03) Ministry of Industry, Trade and Labor 
Hand tools (including glaziers’ diamonds ) with moving parts equipped with a 
layer of diamond grains or diamond powder (82.05) Ministry of Industry, Trade and Labor 
Interchangeable tools for hand tools with  moving parts equipped with a layer of 
diamond grains or diamond powder (82.07) Ministry of Industry, Trade and Labor 
Jewish religious articles: torah scrolls, phylact eries, mezuzot (801)  Ministry of Religions 
Note: HS code is provided in parenthesis. 
Source:  Information provided by the Israeli authorities.  
61. Israel does not maintain any export quotas. 
(iv) Export subsidies, and duty and tax concessions for exports 
62. Israel grants export subsidies on various agricu ltural products (cut flowers, vegetables, fruits, 
and goose liver).  Outlays totalled US$598,000 in the marketing year 2003/04 and US$4,193,000 in 
2002/03 (Chapter IV(2)(i)).19  
63. Exporters can benefit from duty and tax drawb acks on imported inputs, raw materials, and 
capital goods. Exporters can choose between a ta x percentage method used by about 70% of 
exporters), and a credit method with an annual pr ojection of imports.  Reimbursement amounted to 
NIS 127.6 million in 2004, down from NIS 128.8 million in 2002.  In addition, exporters pay less than 
importers for the use of ports and st evedores:  importers pay 1.02% of the c.i.f. cost of imports into 
Israel; exporters pay 0.2% of the f.o.b. valu e of exports.  Exports are exempt from the VAT. 
(v) Export finance, insurance, and guarantees 
64. Israel abolished its public export credit progra mme in 1994;  no government-supported export 
financing has been available since then.   
65. The state-owned company ASHRA (formerly IFTRIC ), instituted in 1957, offers a wide range 
of insurance instruments to Israeli exporters.  It s income consists entirely of premiums, with no 
transfers from the Government since 1994.  ASHR A insures investments and medium- and long-term 
export credit transactions (one to ten years) ag ainst political and commercial risk, mostly in 
developing countries.  It covers up to 95% of losse s for political risk;  coverage for commercial risk 
was expanded to a maximum of 90% in 2004.  The maximum commitment per transaction is 
US$40 million.  In 2004, ASHRA insured over 100 tran sactions with a total value of US$2.1 billion. 
The authorities indicate that ASHRA does not face competition from private insurance companies, 
since it generally insures the most risky operations.   
66. ASHRA also guarantees loans granted by domes tic commercial banks to Israeli exporters 
with relation to medium and long term export.  It does not face any competition from the private 
sector in this area.  Before 2001, ASHRA (IFTRIC at the time) offered both short-term, and medium- 
                                                      
19 WTO documents G/AG/N/ISR/32, 16 July 2004, and G/AG/N/ISR/36, 8 November 2005. Israel WT/TPR/S/157/Rev.1 
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and long-term guarantees.  Since the privatization of the short-term division in 2001, it has been 
insuring only medium and long-term transactions. 
(vi) Export promotion and marketing assistance 
67. Export promotion activities are administered  by the Israel Export and International 
Cooperation Institute (IEICI), founded in 1958 as a join t-venture between the Israeli Government and 
the private sector.  The IEICI provides a wide  range of services, including product and market 
promotion and development, specialized support ser vices to exporters (including marketing, quality 
control, and publicity), and participation in internatio nal trade fairs.  It employs about 90 staff and has 
representations in 49  countries.  IEICI 's activities are co-fi nanced by the Government (50%), and 
regular or voluntary contributions (50%).  The G overnment's contribution amounted to NIS 28 million 
in 2004.  
68. The Marketing Tutoring Program, administered by the MOITAL aims to encourage exporters 
to adopt advanced marketing strategi es, to use advanced marketing tool s, to assist them in building a 
marketing infrastructure and provide them the necessary marketing training.20  Support is provided to 
companies (in all sectors) that export up to US$500,000 per year and need tutorial assistance for 
building a marketing infrastructure.  It is provided in  the form of grants amounting to 50% of marketing 
tutorial fees, up to a ceiling of 200 hours.  Outl ays amounted to NIS 1.9 million in 2004, down from 
NIS 138.7 million in 2000. The programme replaced the Encouragement of Marketing F und, which 
was operational until 2003. 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Incentives 69. Israel operates state aid programmes and schemes with a view to promoting R&D activities, 
small and medium-sized enterprises, and regional  development.  While state aid to SMEs has 
increased in recent years, support for regional deve lopment and R&D has generally declined.  Data 
showing the trade effects of the subsidies is genera lly not available. Tax revenue forgone under these 
incentive schemes amounted to NIS 1.1 billion in 2 004, up from NIS 1.0 billion in 2001. Israel has 
notified its various support sch emes and programmes to the WTO Committee on Subsidies and 
Countervailing Measures.
21   
(a) Research and development schemes 70. Israel has one of the highest shares of R&D in  GDP in the world;  in 2004 it amounted to 
4.6%.  The private sector assumes about 75% of ci vilian R&D spending.  The Government supports 
R&D through a multitude of programmes and institutions , all of which are implemented by the Office 
of the Chief Scientist at the Ministry of Industry, Trade, and Labor.
22  
71. Israel's main legal instrument on support for R&D activities is the Law for the 
Encouragement of Industrial Research and Devel opment (5744, 1984).  Under the Law, companies 
for all sectors are eligible for grants of up to 50 % of the cost of industrial research provided it is 
aimed at the discovery of new knowledge for the development or substan tial improvement of new 
products or processes.  Grants shall be repaid as a percentage of the total revenues derived from the 
sale of the newly developed product, up to the entire  amount of the grant in U.S. dollar terms, with the 
                                                      
20 WTO document G/SCM/N/123/ISR, 4 July 2005. 
21 WTO document G/SCM/N/123/ISR, 4 July 2005. 
22 An overview of Israel's R&D policy is provided by Trajtenberg (2000). WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 42 
 
 
addition of yearly interest equal to the Libor rate .  According to the authorities, about 50% of the 
projects are successful.  Disbursements under this scheme amounted to US$186 million in 2004, down from US$298 million in 2001.  The decrease is due  mainly to the reduction of the coverage of 
the grants to 50% in April 2003, from 66%. 
72. Under an additional programme, instituted in August 2001, support for industrial R&D is 
available for large investors.  Grants cover up to  50% of the cost of research projects and shall be 
repaid as a percentage of the total revenues deri ved from the sale of the newly developed product    To 
be eligible, a company must:  (i) employ ove r 200 R&D employees or ha ve annual R&D spending 
exceeding US$20 million;  (ii) have yearly revenu es exceeding US$100 million;  and (iii) have repaid 
all grants under the Law for the Encouragement of  Industrial Research and Development, without 
having received any new grants.  Requests for suppor t must not exceed 20% of the company's yearly 
R&D budget. Grants shall be repaid as a percentage of the total revenues derived from the sale of the 
newly developed product. Dis bursements under the programme amounted to US$17.4 million in 
2004, down from US$26 million in 2002. 
73. Three different "Magnet Programmes" aim to encourage the development of innovative 
generic technologies through cooperation between academic research institutes and industries.  
Magnet consortia, operating since 1994, provide grants to joint research projects of academic research 
institutes and private companies, covering up to 70% of R&D expenses.  Mini Magnet (Magneton), 
established in August 2002, suppor ts cooperation agreements between  academic research institutes, 
with grants covering up to 66% of R&D expenses (maximum NIS 3.4 million).  NOFAR, established 
in June 2004, provides support to encourage applie d research activities in biotechnology.  Grants 
cover up to 90% of R&D expenses (NIS 420,000 maxi mum).  Complementary costs must be financed 
by an industrial company which, however, has no rights on the outcome of the research.  Total disbursements for all Magnet programmes were  US$41 million in 2004, down from US$64 million in 
2000. 
74. The technological Incubators Programme, first established in 1993, supports new 
entrepreneurs in developing i nnovative technological ideas into ma rketable products, and attracting 
funding from the private business se ctor.  Grants are given for a period of two years, and cover 85% 
of R&D expenses, with a maximum amount of US$300,000.  If the project is successful, the grant must be repaid.  Outlays under the programme amounted to US$25 million in 2004, down from 
US$31 million in 2001. 
75. The Government Seed Fund (Heznek), established in January 2003, supports the 
establishment of start-up companies whose primary ac tivity is research and development.  Support is 
in the form of state investment in the share capita l of the company, of up to 66% of R&D expenses 
(NIS 5 million maximum) for two years.  After two years, the investor has the option to purchase the State’s shares at a price equal to the State’s origin al total investment plus interest.  Disbursements 
under this programme amounted to US$5 million in 2004. 
76. The purpose of the Taufa programme, initiated in  August 2001, is to encourage and support 
technological entrepreneurs at the pre-start-up stage; and to help them evaluate the technological and economic potential of their ideas, prepare a patent proposal for submission to patent authorities, construct of a prototype, and prepare a business  plan.  Grants cover up to 85% of expenses 
(NIS 210,000 maximum).  Disbursements under th is programme amounted to US$ 2.6 million in 
2004, up from US$1.0 million in 2002. 
77. The Support for Research Institutions programme, in itiated in 2004, is aimed at strengthening 
the technology infrastructure of research institu tions, allowing them to develop technologies and Israel WT/TPR/S/157/Rev.1 
 Page 43 
 
 
products that are relevant to industries but cannot be fully developed by them.  Grants of up to 90% of 
approved expenses are available.  Outlays under this  programme amounted to US$1.4 million in 2004.   
78. The Agricultural Research Organization (ARO), a ffiliated to the Ministry of Agriculture and 
Rural Development, is responsible  for planning, organizing, and implementing agricultural research 
programmes and projects.  The ARO's budget in 2004 was NIS 255.5 million. 
(b) Assistance to small and medium-sized enterprises (SMEs) 79. The wave of mass immigration from the former Soviet Union  in the early 1990s motivated 
the  authorities in charge of immigrant abso rption to focus on small business encouragement.  This led 
to the establishment, in 1993, of the Small Business Authority of Israel (SBAI), to formulate policies 
to encourage small businesses, entrepreneurship, and related activities, and coor dinate the operation of 
the various agencies working in this field.  Th e SBAI was renamed the Israel Small and Medium 
Enterprises Authority (ISMEA) in 1994.   
80. Under the auspices of the Ministry of Industr y, Trade and Labor, the ISMEA is established  
to: initiate legislation and apply government po licies for encouraging small business enterprises;  
coordinate all agencies and bodies operating in the fi eld of small business;  set up local, regional, and 
professional centres for encouraging small businesses;  assist,  guide, and monitor the activities of 
these centres;  conduct education and training in managing, establishing, and operating small 
businesses;  and initiate the establishment of capital funds and other financial resources for small  
businesses.  The Authority's budget amounted to NIS 20.5 million in 2004.  Its field activities are carried out by 25 small business developm ent centres located throughout Israel. 
81. The MOITAL and the Ministry of Finance manage the State Guarantee Fund for Small 
Businesses, instituted in September 2003.  The F und serves as guarantor for bank loans, allowing 
banks to extend loans to small businesses despite insu fficient collateral.  To be eligible for loans, 
enterprises may employ no more than 70 staff and have an annual turnover of under US$5 million.  
Loans are given for up to five years for the purchase of equipment and up to one year for working capital.  Banks require a detailed business plan, on wh ich the application for credit is judged.  The 
Fund guarantees to the banks up to 70% of each loan and up to 30% of the entire loan portfolio.  The 
credit limit for a single business is NIS 500,000.  Sinc e its inception, the Fund has guaranteed loans to 
some 2,800 small businesses, for a total of over NIS 350 million. 
82. In addition, the MOITAL also provides servic es directly to small businesses, in particular 
through business and design tutoring, and manageme nt programmes.  The Business Tutoring Project 
is meant to provide SMEs with managerial aids  and  professional counselling through training and 
practice at the firm level.  Some 400 skilled and experienced consultants from the business sector 
provide professional advice to enterprises employi ng between 5 and 100 staff.  The MOITAL covers 
75% of the consultant's fee for up to 150 hours of co nsultation for every enterprise.  Outlays for this 
programme amounted to NIS 17.8 million in 2004,  up from NIS 16.9 million in 2000.  Under the 
Industrial Design Tutoring Programme, grants ar e provided to manufacturers employing over five 
staff and who do not yet employ a designer and wish to develop innovative designs.   
83. The Quality Management Programme aims to  assist medium-sized enterprises to adopt 
innovative management systems by encouraging the use of advanced quality control technologies or 
adoption of international standardization processes of  industrial quality management.  Grants cover up 
to 50% of the expenses of the tutorial fees, with  a ceiling of 400 hours of  consultancy, and are 
provided to manufacturing companies employing be tween 50 and 500 staff.  Outlays for this 
programme amounted to NIS 5.4 million in 2004, up from NIS 3.9 million in 1999. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 44 
 
 
84. The Nitsos Programme, initiated in June 2000, is aimed at fostering creative and innovative 
management.  Grants cover up to 75% of the expe nses of the consultancy fees, with a ceiling of 
250 hours, and are provided to manufacturing companies employing between 10 and 500 staff.  Outlays for this programme amounted to NIS 5.4 million in 2004, up from NIS 2.4 million in 2000. 
(c) Regional assistance 
85. Israel continues to provide considerable stat e aid for regional development.  Support is 
provided through investment subsidies for specific  regions and participa tion in land development 
costs, as well as through a free zone and a free port located in Eilat. 
86. The Encouragement of Capital Investment Sche me aims to encourage the dispersion of the 
population to regions defined as development areas, to  absorb immigration, and to create new sources 
of employment.  Under this scheme, grants of up to 24% of the capital i nvestment are paid to 
companies located in development areas.  Developm ent areas are redefined at pluriannual intervals on 
the basis of indicators such as unemployment or inco me level, and subject to approval by the Knesset. 
The main development areas are located in the north  and south of Israel;  however, a change from 
merely geographical to welfare criteria is under co nsideration.  The budgeted outlays under this 
scheme were NIS 475 million for 2004, down from NI S 2,360 million in 2000.  In addition, the 
Encouragement of Capital Investment Law provides fo r enhanced tax benefits for foreign investment 
in development areas (Chapter II(5)).  The amount of  tax reduction depends on the share of foreign 
ownership.   
87. In accordance with the Law on Encouragement of  Capital Investment, the State also grants 
support of 30% for the cost of land development in development areas, up to NIS 50,000.  The 
support is granted for dirt work, access roads, se wers, lights and phone lines, and water pipes.  
Expenditure under this scheme amounted to NIS 54  million in 2004, down from NIS 160 million in 
2000. 
88. With the objective of promoting investment and regional development in its southernmost 
province, the Government of Israel has establishe d a free zone and a free port in Eilat.  Fiscal 
advantages granted under both programmes are not con tingent upon export performance. Legislation 
on export processing zones is also in place,  although no such zones currently exist.  
89. The purpose of the Eilat Free Trade Zone Law of 1985 is to encourage the development of the 
city of Eilat.  The Law provides for several ta x concessions and other benefits.  Most products 
(imported or domestically produced) purchased in Ei lat are exempt from value-added tax.  This tax 
benefit on products consumed in E ilat is available to Eilat residents and companies.  Employers 
receive refunds of up to 20% of gross wages paid to employees.  Resident individuals receive tax credits of up to 10% of their taxable income from employment in Eilat.   
90. The Free Port Zone Law of 1969 sets out the fra mework of operations and practices of the 
free ports in Israel.  Currently, only one port, the por t of Eilat, is operating in accordance with this 
Law.
23  Enterprises qualify for incentives including:  (i) exemption from income taxes for seven years, 
and reduction thereafter to a maximum ta x rate of 30%;  (ii) a tax rate  of 15% (usual rate is 34%) on 
dividends paid out of the above income, with no stipulated time limit;  (iii) no capital gains tax on 
inflationary gains, and no capital gains tax for foreign shareholders selling their shares in the 
enterprise, when the shares are purch ased in foreign currency;  and (iv) exemption from property tax. 
91. The Free Export Processing Zone Law of 1994 allows the establishment of free-processing 
zones.  Companies operating in the zones are exempt  from direct taxation for 20 years, and imported 
                                                      
23 This status was terminated for the port of Haifa in 1996, and Ashdod in 1997. Israel WT/TPR/S/157/Rev.1 
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inputs are not subject to import duties or most licensing requirements in effect in Israel, regardless of 
whether the processing is for the domestic or the export market.  Such companies are also exempt 
from collective bargaining and minimum-wage requirements, although arrangements regarding 
working hours, annual leave, and severance pay re quire ministerial approval.  No export processing 
zones are currently in operation.  
(ii) Competition policy and price controls  
92. Competition issues in Israel are covered by the Restrictive Business Practices Law of 1988 
and its 2004 Regulations (Table III.12).  The Law includes far-reaching provisions on mergers and 
acquisitions.  Violations of the Law may lead to criminal prosecution and may result in fines and 
prison terms.  Liability is imposed upon the corporation and its executives. 
Table III.12 
Key features of Israel's competition law  
Arrangement Definition Substantial provisions 
Restrictive 
arrangements Arrangements to which at least one 
of the parties imposes a restriction on him/herself that is liable to 
prevent or reduce business 
competition  Generally prohibited 
Examples of exemptions : 
- arrangements that are established under an enactment; 
- arrangements applying to the cultivation and marketing of several 
domestically produced agricultural goods (fruit, vegetables, field crops, milk, eggs, honey, beef, mutton, poultry, and fish); 
- arrangements applying to international sea or air transport;  and 
- arrangements contributing to public welfare 
Mergers and 
acquisition The acquisition of the principal 
assets of one entity by another or acquisition of shares in such an 
entity entailing control of more than 
25% of issued share capital, voting rights, rights to appoint directors or 
participation in profits; acquisition 
can be either direct or indirect, including via a voting agreement Mergers that substantially affect comp etition or injure the public through the 
price level, quality or supp lied quantity are prohibited 
Mergers requiring prior consent from the IAA : 
- if the transaction would result in control of more than 50% of sale, 
production, marketing or purchase of a product or service, or group thereof; 
- if the combined tur nover in Israel exceeds NIS 150 million and at least 
two of the companies involved have a combined turnover of at least NIS 10 million;  and 
- if one of the entities involved already operates as a monopoly 
Monopoly A company supplying more than 
50% of a given product or service's output in the domestic market Arrangements under supervision of the IAA  
Source : WTO Secretariat, based on the Restri ctive Business Practices Law of 1988.  
93. The Israel Antitrust Authority (IAA), an i ndependent agency established in 1994, is 
responsible for enforcing provisions set out in the Law.  The IAA is mandated to prevent, through 
merger control and anti-cartel enforcement, failure of market power, to restrain abuse by dominant 
firms of their positions, and to preserve competition in the various markets.  It is vested with powers 
to initiate civil and criminal proceedings and also  has the power to order monopolies not to act in a 
manner that constitutes abuse of dominant position.   All competition-restricting arrangements among 
individuals or firms, unless covered by the bloc k exemptions, must be approved by the Antitrust 
Tribunal, or obtain an exemption from the IAA.  The Law applies to all sectors of the economy and 
also covers state-owned enterprises. 
94. The Antitrust Tribunal, sitting with the District Court in Jerusalem, has exclusive jurisdiction 
over non-criminal governmental antitr ust proceedings; the District Court of Jerusalem has exclusive 
jurisdiction over criminal antitrust matters.  Interim orders and fina l decisions of the Tribunal and the 
District Court can be appealed to the Supreme Court.   
95. While restrictive arrangements are generally pr ohibited, the Law explicitly exempts certain 
activities, such as agricultural marketing boards, and arrangements applying to international sea or air WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 46 
 
 
transport.  Restrictive arrangements that are estab lished under an enactment ar e allowed, such as the 
recommendation by the Israeli Bar on certain legal se rvices supplied by lawyers.  Another example is 
certain organizations entrusted by law to determ ine entry criteria to the profession. Moreover, 
approval of a restrictive arrangement, such as a cartel , is granted if the applicant demonstrates that the 
arrangement is in the public interest.   
96. An amendment to the Law, adopted in 1999, provides for the possibility of block exemptions, 
provided that the restrictive arrangement does not reduce competition in a considerable share of the market and that its objective is not to reduce or eliminate competition.  The Law does not specify a certain threshold, but, judging by the block exempti ons in place, the authorities consider 30% to be a 
considerable share.  Since 1999, block exemptions ha ve been granted for:  restrictive arrangements 
causing immaterial harm to competition, joint-ve ntures, R&D agreements, exclusive dealing and 
distribution, franchising, restraints that  are ancillary to a merger transaction. 
97. Pursuant to Article 27 of the Law, all m onopolies (defined as a single enterprise supplying 
more than 50% of the domestic output of a given pr oduct or service) are subject to contract approval.  
A monopoly may also be subject to price regulation, although price regulations are more likely to be 
imposed under the 1996 Law on the Supervision of Prices of Goods and Services (see below), than 
the Restrictive Business Practic es Law.  The IAA publishes semi-annually a list of products and 
services that fall into the monopoly category.  The cu rrent official list of monopolized products and 
services comprises 83 declared monopolies.  
98. In
 2004, the IAA opened 43 administrative inquiries,  following public complaints that seemed 
to raise real competitive concerns.  The complain ts referred to a wide range of anti-competitive 
practices, such as restrictive arrangements and a buse of dominant positions.  The IAA also made 
decisions on 104 requests for restrictive arrangement s: 74 were accepted without conditions, 27 were 
subject to specified conditions, and three were rejected.  Decisions on mergers and acquisitions have 
decreased since 1999 (Table III.13). 
Table III.13 
Decisions on merger applications, 1999-04 
 1999 2000 2001 2002 2003 2004 
Applications 316 230 160 158 122 145 
Decisions 280 171 112 127 104 125 
  Approved (per cent) 88 86 79 80 79 91 
  Conditioned (per cent)  10 12 18 16 18 9 
  Blocked (per cent)  2 2 3 4 3 0 
Source: Israel Antitrust Authority (2004), Annual Report on Competition Policy Developments in Israel, Jerusalem 
99. In March 1999, Israel concluded a bilateral agreement on antitrust cooperation with the 
United States.24  The agreement provides for mutual notifi cations on relevant issues that may affect 
the interests of the other party as well as mutual assistance in and coordination of enforcement 
activities.  The Canada-Israel Free Trade Agreement also provides that both countries shall cooperate 
on enforcement policy, including mutual legal assistan ce, and exchange of information relating to the 
enforcement of competition laws and policies. 
100. The Law on the Supervision of Prices of Goods and Services of 1996 authorizes the Treasury 
and the Ministry of Industry, Trade and Labour to impose price controls on goods and services if they 
                                                      
24 The agreement is available online at:  http ://www.antitrust.gov.il/NR/rdonlyres/672C0F97-649C-
419C-985E-2BED380B9A7C/0/heskem.pdf. Israel WT/TPR/S/157/Rev.1 
 Page 47 
 
 
are supplied by a monopoly, or in the framework of restricted trade;  and if the producers benefit from 
government support.  The Law may also be applied if: (i) the product is essential and the restriction is 
in the public's best interest;  (ii) the product is scar ce because of special circumstances;  or (iii) the 
price should be restricted, in the view of the au thorities, as part of an economic plan for reducing 
inflation.  For the two latter cases, the order is a pplicable for up to a year, after which it needs to be 
reviewed before renewal under go vernment approval.  If necessary, the Law can be applied only on 
certain parts of the country. 
101. Various retail prices, constituting some 17.8 % of  the consumer price index, remain under the 
control of the Government (Table III.14).  These pr ices are either set directly by the Government 
(such as certain utilities, and communication and tran sportation fees) or are subject to supervision, 
requiring approval before they can be increased (c ertain foodstuffs, school books and medicines).  
Since 1999, cigarettes, malt beer, mother's milk s ubstitute, and pasta have been removed from the list. 
Table III.14 
Regulated prices in the consumer price index, 1999 and May 2005  
Controlled prices  Weight          
(‰) Prices under supervision (Supervision 
of Price of Goods and Services Law) Weight (‰) 
 2005 1999  2005 1999 
Railway transport 0.5 0.35 Margarinea 0.4 0.6 
Municipal taxes 23.3 21.0 Milkb 4.5 5.8 
Electricity (for domestic use) 27.5 19.0 Basic bread 2.9 1.4 
Water (for domestic use) 9.7 9.9 Cheese (cottage and yellow) 5.4 5.1 
Mail services 0.2 0.5 Edible salt 0.2 0.1 
Phone services (local  calls) 17.2 17.2 Butter 0.4 0.5 
Vehicle fees 5.2 5.7 Eggs 2.9 3.1 
Vehicle mandatory insurance 16.0 11.4 School books 1.3 1.7 
   Medicines 9.3 6.2 
   Day care centres and kindergarten 13.6 13.1 
   Fuelc  27 19.8 
   Domestic flights 0.2 0.15 
   Public bus transportation 6.0 14.6 
   Taxi rides 4.0 4.5 
   Bank commissionsd 0.5 0.2 
Total 99.6 85.05 Total 78.6 91.05e 
a Product of Israel Food Industries (IFI) only. 
b Milk in bags and cartons only, not enrich ed milk or milk in plastic containers. 
c Reduced-lead benzene and 96-octane benzene only. 
d When there is a monopoly or reduced competition.  e Includes also the four items removed from the list (cigar ettes, malt beer, mother's milk substitute, and pasta). 
Source : Information provided by the Ministry of Finance. 
102. The MOITAL handles applications for incr eases in prices of industrial goods under 
supervision.  Companied with supervised produc ts prices, may submit an application for price 
increases once a month.  The basis for granting pri ce increases is a minimum increase of 3% of total 
costs.  Should a company not receive a reply to its submission within 30 working days, the price 
increase is automatically granted by Law.  If a peri od of 12 months has elapsed since the last price 
increase, a company is entitled to apply for price in creases even when cost in creases are less than 3%.  
The decision to raise controlled prices is taken by the Treasury Ministry together with the Ministry 
responsible for the domain. 
103. Consumer protection falls unde r the Consumer Protection Law (5741-1981) and the Liability 
for Defective Products Law (5740-1980).  The laws deal with issues such as prohibition of deceit and 
exploitation of hardship.  A Consumer Protection Commissioner, appointed by the Government, deals 
with complaints of violations of consumer protection provisions. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 48 
 
 
(iii) Government procurement 
104. Israel is party to the plurilateral Ag reement on Government Procurement (GPA).25  I n  t h e  
context of the GPA, Israel has invoked developing- country status, allowing it to implement offset 
arrangements.  The decision adopted by the Committee on Government Procurement in 
December 2004 allows Israel to require offsets for up to 20% of a contract.26  "Civil" purchases by the 
Government (excluding local authorities) amounted to US$1,030 million in 2004;  about 56% of the 
contract value was awarded to foreign suppliers, the remainder was awarded either to local producers or importers.  Data broken down by procurement method are not available.  Data on purchases by 
other government instituti ons are not available.  
105. Israel's main legislation on government proc urement is the Mandatory Tenders Law (5752, 
1992) and related regulations.  The Law prescribes th e procurement method to be used depending on a 
scale of threshold values, which has remained uncha nged since Israel's last TPR in 1999.  Above a 
certain threshold, which varies with the procuring entity, public entities and state-owned corporations 
are normally required to procure by tender (Table III. 15).  However, regardless of the threshold value, 
there are exceptions to the required methods (sp ecified in the Mandatory Tenders Regulations of 
1993).  These cover, inter alia , the continuation of an initial contract, emergency situations, and the 
prevention of substantial harm to national secur ity, safety or the economy.  In such cases, the 
procuring entity is free to use any of the procur ement methods.  In 2004, 767 exceptions were granted 
for a total value of US$6.5 million. 
106. Public tenders are published in two daily Israeli newspapers, on the website of the 
Government Publications Office
27, and in one daily or weekly Arab ic publication.  The announcement 
must include the following information:  type of contract, general information on the contract, option 
to continue the contract, period of the contract, cond itions to participate in the tender, where to obtain 
the tender information and forms, and the place and date for submitting bids.  In the case of a tender 
under the GPA, the information must also be publis hed in an English newspaper (either the Jerusalem 
Post or the International Herald Tribune-Ha'aretz) .  The purchasing agency is required to notify all 
participants in the tender of its final decision.  Th ere have been claims of lack of transparency and 
lengthy procedures, as well as arbitrary awards of contracts, in Israel's procurement system.28  
107. Government agencies and state-owned compani es are required to follow an offset policy, 
designed to promote national manufactures (Mandato ry Tenders Regulation (Preference for Israeli 
Products and Mandatory Business Cooperation) of 199 5).  All international public tenders with a 
value of US$0.5 million or above must include a clause on "industrial cooperation" (IC) with Israeli 
entities in the amount of at least 35% (30% in tenders covered by the GPA) of the value of the contract.  To satisfy the IC offset requirement, a foreign supplier can subcontract to local companies, 
invest in local industries, undertake a know-how tran sfer, or acquire goods made in Israel or from 
work or services performed in Israel.
29  Agencies and companies subject to offset requirements must 
obtain clearance from the Industrial Co-operation Authority (ICA).  
                                                      
25 Israel's legislation implementing the GPA was reviewed by the Committee on Government 
Procurement in May 2001.  Israel replied to questions asked by Canada, Korea, and the United States (WTO 
document GPA/59, 18 October 2001). 
26 The decision modified Israel's Note to Appendix 1 (WTO document GPA/83, 17 December 2004). 
27 Available at:  http://michrazim.lapam.gov.il.    
28 USTR (2004), p. 238. 
29 For direct investment in advanced technology or i ndustrial R&D, the credit towards the IC target is 
equal to one and half times the actual investment.  Israel WT/TPR/S/157/Rev.1 
 Page 49 
 
 
Table III.15 
Key features of Israel's govern ment procurem ent provisions  
Method Instances when the method is applied 
Procurement procedures  
 No tender Contracts up to : 
    - NIS 43,000 for Ministries other than Defence; 
    - NIS 15,600 for defence establishments; and 
    - NIS 156,000 for government companies or subsidiaries 
  Other instances : a contract that is urgently needed in or der to prevent substantial harm; a contract 
pertaining to a transaction for which a tender is liabl e to cause substantial harm to national security; 
additional contracts within three years of the conclu sion of the first contract; and a contract concerning 
the subject of marketing of agricultural produce, advertising in the media, cultural, artistic, 
entertainment, or certain areas of medicine 
 Closed tender Contracts :  
 (award is based on 
most advantageous offer, mainly based 
on price)   - from NIS 43,000 up to NIS 312,000 for Mi nistries, other than Defence;  and 
  - from NIS 15,600 up to NIS 156,000 for defence establishments Other instances :  selective tendering procedure based on a lis t of qualified suppliers for the acquisition 
of goods with special properties and with "uncommon characteristics";   for the acquisition of medical 
equipment; insurance; R&D activities 
 Public tender Contracts above: 
 (award is based on 
most advantageous offer, mainly based on 
price)   - NIS 312,000 for Ministries, other than Defence; 
  - NIS 156,000 for defence establishments;  and   - NIS 156,000 for government company or subsidiary 
 Extraordinary tender Contracts:  
 (award is based on 
price, and technical 
and administrative 
details)   - transaction with respect to R&D or scientific work; 
  - when no technical specification is available; 
  - for educational or vocational training;  and 
  - when, for defence considerations, the Ministry will need to make investments in infrastructure. 
 Shortened tender 
(award is based on 
price only) Closed tender for purpose of shortening proce dures, applicable to tenders up to NIS 30,000 
Preferences for domestic industries 
A. All international tenders, except for GPA tenders: pr ice preference of up to 15%  to domestic suppliers 
Preferences for "priority areas" 
B. All tenders, including domestic, except for GPA tenders: price preference of 5% in respect of goods and services from Area B  and 
15% from Area Aa 
Preferences for local subcontracting 
C. Tenders offering local subcontracting, except for GPA tenders : a foreign company receives a 1% price advantage over other 
foreign companies for the first 10% and an additional 1% for ev ery additional 5% subcontracting, up to a maximum 35% of the 
contract; the maximum preference for local s ubcontractors may not be greater than 5% 
Business cooperation  
D. International public tenders with a valu e of above US$0.5 million:  minimum "coopera tion" of 35% (30% for GPA members) of 
the value of the contractb 
a The sum of these preferences and the domestic suppliers pr eferences may not exceed 15%.  Areas A and B are within the 
meaning of the priority areas defi ned in the Capital Investment Enc ouragement Law (see section 4(i)). 
b The offset requirement can be satisfied in  the form of subcontracting to local comp anies, investment in local industry, know- how 
transfer, or acquisition of goods made in Israel or of work or services in Israel. 
Source : WTO Secretariat, based on Mandatory  Tenders Law of 1992;  Mandatory Tenders Regulations of 1993;  
 Mandatory Tenders Regulations (Defen se Establishments Cont racts) of 1993;  Mandatory Tenders Regulations 
 (Preference for Israeli Products and Mandatory Busine ss Cooperation) of 1995;  Mandatory Tenders Regulations 
 (Preference for Products from National Priority Areas) of 1995; and Mandatory Tenders  Regulations (Preference 
 for Products from National Priority Areas) of 1998.  
108. Israel's tendering regulations award price prefer ences to local suppliers, certain regions, and 
local subcontracting.  However, these preference s do not apply to contracts subject to the GPA 
provisions.30  The price preferences are up to 15% fo r Israeli companies in public tendering 
                                                      
30 Article 5(A)(b) of the Mandatory Tenders Law of 1992 states that "Regulations under this Law shall 
apply to the extent that they do not conflict with an undertaking of the State in an international agreement", such as the GPA. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 50 
 
 
competitions.  In addition, a 5% to 15% price adva ntage is given to domestic suppliers located in 
priority development areas; the latter is also availa ble to foreign companies located in the same areas 
provided they are registered under Israeli law.  The sum of these preferences may not exceed 15%.  
Foreign companies willing to provide Israeli companies with subcontracting work are granted a price 
advantage over other foreign companies in compe ting for government tenders;  the foreign company 
receives a 1% price advantage for the first 10% and an additional 1% for every additional 5% 
subcontracting with an Israeli company, up to a maximum of 35% of the contract. 
109. Bid and performance bonds are generally requir ed.  Their amount and form are negotiable 
unless the project is publicly tendered with the guarantee requirements stipulated in the tender 
documents.  The amount of the performance bond is generally between 5% and 15% of the contract 
value. 
110. A party may challenge a tender at any stage of its process.  Contract awards may be 
challenged in the District Court in the region wh ere the tender was published.  The Court may cancel 
the awarding of the tender on the basis of incorrect pr ocedures or temporarily hold up the tender until 
the facts are checked.  
(iv) State-trading, state-owned enterprises, and privatization 
111. Various products are exported onl y by, or on behalf of, the Israeli Government.  These items 
include groundnuts, ornamental plants, fruit, vegeta bles, eggs, and poultry (Table III.16).  The Plant 
Production Board establishes export licensing criteria for other agencies:  licences are granted to 
private companies accounting for at least 30% of th e total exports of a product;  a maximum of three 
exporters can operate in each branch of an export product.31  
Table III.16 
Exports restricted to state-trading agencies, 2005 
 Products Responsible agency 
1. Groundnuts  Israel Groundnuts Production and Marketing Board 
2. Ornamental plantsa, fruitb, and vegetablesb Plant Production Board 
3. Eggs and poultryc Egg and Poultry Board 
a Some exporters who began their activity before 1976 (past-trad ers) retain their export licence.  Since 1992, private companie s 
can export dried flowers and propa gation materials to countries where the Board does not operate. 
b The Board establishes criteria for other export agencies and exports (currently up to three exporters). 
c The Board establishes criteria for other export agencies and exports through several different firms. The Board coordinates 
exports of goose livers and breast of turkeys, but other private traders compete on these products. 
Source : WTO document G/STR/N/ 1/USR/Rev.1, 26 September 1996;  GATT (1995), Trade Policy Review: Israel , 
Geneva, and information provided by the Israeli authorities. 
112. After the establishment of the State of Israel in 1948, all natural resources were nationalized, 
and the State maintained a dominant role in production.   However, the role of the State as an owner of 
enterprises and a producer has declined gradually fo llowing several privatization initiatives.  In 2003, 
the Government of Israel launched an ambitious pl an for the privatization of state-owned companies 
for a total value of NIS 7 billion, mainly throug h the stock exchange.  Since then, the following 
enterprises have been fully or partly privatized:  El Al (air transport), Bezeq (telecommunications), 
Bank Otzar Hashilton Hamekomi Ltd., Israel Disco unt Bank Ltd, and Bank Leumi Le-Israel B.M.  
Divestiture receipts are used to serve public debts.  
113. Israel's legislation distinguishes between statutory enterprises and government-owned 
companies.  The 41 statutory enterprises are norma lly not business-oriented; most are educational, 
                                                      
31 WTO document G/STR/Q1/ISR/1, 17 October 1997. Israel WT/TPR/S/157/Rev.1 
 Page 51 
 
 
cultural, or regional development ins titutions.  However, they also include the Israel Postal Authority, 
the Israel Airports Authority, and the Standard In stitute of Israel.  Government-owned companies, 
which are normally business-oriented, are divided into three groups, subject to different legal 
conditions:  public companies, excluding state banks  acquired pursuant to the Bank Shares Agreement 
(see below), which have government ownership of more than 50% of the voting shares;  mixed 
companies, in which the State owns  less than 50% but more than 25% of the voting shares;  and state 
banks.  Through Government decision, a statut ory enterprise may be transformed into a 
government-owned company. 
114. Government-owned companies operate under th e Government Companies Law, as well as 
directives of the Government Companies Authorit y (GCA) set up in 1960.  The Law regulates the 
management and operations of  government companies and the procedures under which the 
Government may sell shares in these companies.  Mixed companies remain subject to certain 
provisions, including on the appointment of the directors.  Privatization of government-owned companies, other than banks, is administered by the GCA.  The Privatization Committee (consisting 
of the Minister of Finance, as chairman, the Minister of Transportation, and the Minister of Justice) 
has the power to initiate the privatization of an y government company or mixed company, and to 
implement structural changes or other preparatory measures necessary for privatization (subject to approval by the Finance Committee of the Knesset)   The consent of the Minister directly responsible 
for such a company is not required.  The GCA also has authority over the management of government-owned companies, including the right to convene board meetings and to issue directives 
to the companies in relation to decisi ons of the Privatization Committee.  
115. Government-owned companies include several  public service monopolies and a number of 
companies that either engage in activities considered  crucial to national security or provide services to 
the Government (Table AIII.6).  In 2004, government-owned companies (excluding mixed 
companies) contributed about 1.9% to GDP, down from 2.6% in 2002. 
116. Pursuant to the 1983 Bank Shares Arrangement, responsibility for the privatization of banks 
is with the Ministry of Finance, through a wholly owned government entity (MI Holding).  
MI Holding manages privatization according to the Mini ster's instructions (Chapter IV(5)(ii)).     
(v) Intellectual property rights  
(a) Legal and institutional framework 
117. Israel has notified its intellectual property laws to the WTO.
32  The main dedicated domestic 
statutes for IPR protection are:  the Patents Law (5727-1967), the Copyright Order (5760-1999), the 
Copyright Act of 1911 (as amended), the Law to Am end Intellectual Property Laws to Implement the 
Provision of the TRIPS Agreement (5760-1999), the Protection of Appellations of Origin Law (5725-
1965), the Performers' and Broadcaster's Right s Law (5744-1984), and the Integrated Circuit 
Protection Law (5760-1999).  Israel's notified IPR contact point is the Commissioner of Patents, 
Designs, and Trademarks.33   
118. Israel is party to most major international tr eaties on intellectual property rights and a member 
of the World Intellectual Property Organization (Tab le III.17).  Since its last TPR in 1999, it has 
ratified the International Convention for the Prot ection of Performers, Producers of Phonograms and 
Broadcasting Organizations.  
                                                      
32 WTO documents IP/N/1/ISR/C/1-8, IP/N/1/ISR /D/1-2, IP/N/1/ISR/G/1-2, IP/N/1/ISR/I/1-3, 
IP/N/1/ISR/I/1-3, IP/N/1/ISR/L/1-2, an d IP/N/1/ISR/P/1, all 14 March 2001. 
33 WTO document IP/N/3/Rev.7/Add.1, 23 February 2004. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 52 
 
 
Table III.17 
Israel's status in international IPR-related  agreements, conventions, and treaties 
Agreement Year of Israel's first 
membership  
Plurilateral agreements  
Berne Convention for the Protection of Literary and Ar tistic Works (Brussels Act, 1948), Brussels revision 
(1951), Stockholm revision (1967), Paris Act (1971) 1950 
Universal Copyright Convention (1952) 1955 
Convention establishing the World Inte llectual Property Organization (1967) 1970 
Nice Agreement Concerning the International Classificati on of Goods and Services for the Purposes of the 
Registration of Marks (1957) , Stockholm revision (1967) 1961 
Paris Convention for the Protection of Industr ial Property (1883), Stockholm revision (1967) 1970 
Strasbourg Agreement Concerning the Intern ational Patent Cla ssification (1971) 1975 
Lisbon Agreement for the Protection of Appellations of Origin and their International Registration , 1958, 
Stockholm revision (1967) 1966 
Madrid Agreement for the Repression of False or Deceptive Indications of Source of Goods (1891), 
Lisbon revision (1958), St ockholm revision (1967) 1950 
Geneva Convention for the Protection of Producers of  Phonograms against Unauthorised Duplication of 
their Phonograms (1971) 1978 
Budapest Treaty on the International Recognition of the Deposit of Microorganism s for the Purposes of 
Patent Procedure (1977, amended 1980) 1996 
Patent Cooperation Treaty (1970, amended 1984) 1996 
Convention for the Protection of New Varietie s of Plants (1979), Geneva Act (1991) 1988  
Rome Convention (1961), International Convention for the Protection of Performers, Producers of 
Phonograms and Broadcasting Organizations 2002 
Bilateral agreements  
United States - protection of copyright (a work first pub lished in the United States is protected in Israel as 
if it was first published in Israel; for unpublished work , if its author was an Am erican citizen when the 
work was created, it is protected in Isr ael as if its author was an Israeli) 1948 
Source : Information provided by the Israeli authorities. 
119. Israel invoked developing-country status with respect to the TRIPS Agreement; this resulted 
in a transition period up to 1 January 2000 to bring its legislation into conformity with the Agreement.  
Israel's IPR legislation was review ed by the TRIPS Council in June 2000.34  Israel replie d to questions 
asked by Australia, Canada, the European Communities,  Japan, Switzerland, and the United States.    
(b) Selected areas of intellectual property rights 
120. Patents, copyrights and related rights, tr ade marks, industrial designs, geographical 
indications, trade secrets, layout designs of integrat ed circuits and new plant varieties are all legally 
recognized in Israel (Table III.18). 
                                                      
34 WTO document IP/Q/ISR/1, 27 September 2000. Israel WT/TPR/S/157/Rev.1 
 Page 53 
 
 
Table III.18 
Summary of intellectual property  protection in Israel, April 2005 
Form Main legislation Coverage Selected exclusions 
and limitations Duration Sanctions 
Copyright and 
related rights UK Copyright Act of 
1911; Copyright 
Ordinance, 1924 as 
amended; Performers and Broadcasters 
Rights Law, 1984 as 
amended Original literary, 
dramatic, musical 
and artistic works, 
(including computer programs, 
films, sound 
recordings); Rental and moral rights; Related rights 
include performers' 
and broadcasters' rights Fair dealing Life of the author 
plus 70 years; 50 
years form the 
making of the original photograph 
or sound recording; 
50 years for performances. Civil damages and 
injunctions; 
imprisonment for 
up to 5 years and 
fines of up to NIS 2 million 
Patents Patents Law, 1967 as 
amended Products and 
processes that are 
new, useful and 
involve an inventive step Methods of 
therapeutic 
treatment of the 
human body; new varieties of plants 
and animals, except 
microbiological organisms not derived from nature 20 years from the 
date of filing; patents 
for medicaments may 
be extended for up to an additional 5 years 
in appropriate 
circumstances. Civil remedies 
and punitive 
damages for 
wilful infringement. 
Industrial designs Patents and Design 
Ordinance as 
amended Designs that are 
novel or original 
and have not been  previously 
published in Israel.  Up to 15 years from 
date of application. Civil remedies 
including 
damages and injunctions. 
Trademarks Trade Marks 
Ordinance, 1972 as 
amended. Passing 
Off pursuant to 
Commercial Wrongs Law Trade marks, 
service marks, 
collective marks 
and certification 
marks Marks contrary to 
morality or public 
policy; deceptive 
marks and non-
distinct marks 10 years from filing 
renewable for 
additional periods of 
10 years for as long 
as the mark is used Civil remedies; 
imprisonment of 
up to 3 years and 
fines of up to NIS 
1.5 million  
Geographical 
indications and 
appellations of origin Appellations of 
Origin and Geo-
graphical Indications (Protection) Law, 
1965 as amended; 
Trade Marks Ordinance Registered 
appellations of 
origin; geographical indications In accordance with 
TRIPS For as long as 
protected in the 
country of origin Civil and criminal 
remedies. 
Undisclosed Information Commercial Wrongs 
Law; Pharmacists 
Ordinance Trade secrets, 
including 
information not generally known or 
readily accessible 
that has commercial value; certain types of confidential test 
data filed with the 
Ministry of Health Independently 
created information Trade secrets are 
protected for as long 
as the information is maintained in 
confidence; test data 
will be protected for up to 5 years. Civil and criminal 
remedies 
New plant 
varieties Plant Breeders' 
Rights Law New and distinctive 
plant varieties; 
Foreign 
applications in accordance with 
UPOV Limited 
experimental uses Generally 20 years 
from date of 
registration; 25 years 
for varieties of vines, fruit trees, forest 
trees and other 
perennial plants.  Civil and criminal 
remedies 
Layout designs of integrated circuits Integrated Circuits 
Law Original integrated 
circuits Fair dealing type 
exceptions The earlier of 10 
years from date of 
first sale or 15 years 
from date of creation Civil remedies 
Source:  Information provided by the Israeli authorities. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 54 
 
 
121. Patents are available for a product or a process, in any field of technology, that is new, useful, 
capable of industrial application, and possesses an inventive step.  Excluded from patentability are 
methods of therapeutic treatment of the human body, plant or animal varieties, except micro-biological organisms not derived from nature, and me re ideas or discoveries.  If the invention is a 
process, the patent shall apply also to the direct  product of the process.  Patents are granted for 
20 years from the date of filing;  patents for me dicaments may be extended for an additional five 
years.   
122. Patent protection is granted only after the pa tent office has examined an application to 
confirm that an invention meets patentability crite ria.  Applicants may elect for either a full 
substantive examination, or an abbreviated exam ination on the basis of acceptance (of a parallel 
application) by an approved examining authority ab road, such as the European Patent Office or the 
U.S. Patent Office.  Patent applications may be filed directly with the Israel Patent Office or through the Patent Cooperation Treaty with the Israel Patent Office serving as a receiving office.  Abstracts of applications that have been accepted by the Patent Office are published in the monthly Patents and 
Designs Journal ;  the application file then becomes ope n to public inspection.  A three-month 
opposition period follows publication.  Applications that are not opposed, or on which opposition is 
rejected, will be granted.  
123. Trade mark registrations may be renewed as long as  the mark is in use in Israel and maintains 
its distinctive character.  Common law rights in tr ade marks may be established without registration, 
on the basis of use, and will be protected pursuan t to the "passing off" provision contained in the 
Commercial Torts Law.  Famous marks, registered  and unregistered, are protected under Israeli 
statutory law in accordance with the principles set  forth in the TRIPS Agreement and the Paris 
Convention. 
124. Copyright protection is available for original literary, artistic, dramatic, and musical works, 
including computer programs, sound recordings, ph otographs, cinematographic works, compilations 
of data, and works of architecture.  Protection is  generally from the date of creation until 70 years 
after the death of the creator.  Copyright in record s, tapes, and other means for recording voices lasts 
for 50 years from the creation of the master copy.  Copyright in photographs and lithographs lasts 50 
years from the creation of the first negative.  A nonymous and pseudonymous works are protected for 
a period of 70 years from the date of publication. 
125. In March 2005, the Knesset enacted legislation to  increase protection for confidential test data 
submitted to the Ministry of Health in connection with an application seeking regulatory approval for 
medicines that contain a "new chemical entity".   The amendment to the Pharmacists Ordinance 
provides drug innovators with substantially incr eased protection for new drugs.  The new provisions 
came into force on 1 July 2005.  Under the new legi slation, confidential data  submitted to a regulatory 
authority cannot be the base for approving an equiva lent generic drug product without the originator's 
permission for a period of five and a half years from the date that such drug was first approved for use 
in a "recognized country", or five years from the date  of registration in Israel, whichever comes first.
35 
126. New plant varieties may be protected in accordance  with the Plant Varieties Law.  The law is 
based on the 1991 revision of the International C onvention for the Protection of New Varieties of 
Plants (UPOV).  The Ministry of Agriculture is responsible for examining and registering new plant 
varieties.  To be eligible for registration as a breed er’s right, a variety must be new, distinctive, and 
sufficiently uniform and stable in  its fundamental characteristics. 
                                                      
35 Recognized countries (as defined in the Pharmacists Regulations) are:  Australia, Canada, the EU 
member States, Iceland, Japan, New Zealand,  Norway, Switzerland, and the United States.  Israel WT/TPR/S/157/Rev.1 
 Page 55 
 
 
127. The situation with regard to parallel imports is  not clear, due to various court decisions.  In 
the field of trademarks, parallel imports have been considered non-infringing in most cases.  
However, the case law has not yet defined the outer scope  of the exception.  In the fields of patents, 
designs, and copyrights, the case law is less clear, and at times contradictory. 
128. Unauthorized third-party use of a patented inve ntion is allowed in very limited circumstances 
and subject to remuneration.  According to the au thorities, the provisions dealing with compulsory 
licensing were scaled back following Israel's impl ementation of the TRIPS Agreement in 1999.  
129. Registrations of industrial designs and patents decreased from 1999 until 2001 and 2002, 
respectively, but have been rising since (Table III. 19).  Trade mark registrations reached a peak in 
2000.   
Table III.19  
Registration of intellectual property, 1999-04 
 1999 2000 2001 2002 2003 2004 
Registered       
Industrial designs 1,025 716 690 843 618 907 
Patents 2,024 2,033 1,833 1,474 1,814 2,499 
Domestic 419 455 349 233 311 357 
Foreign 1,605 1,578 1,484 1,241 1,503 2,142 
Trade mark 8,759 11,730 8,936 7,675 7,323 6,630 
Domestic 1,572 2,389 1,918 1,870 2,025 1,852 
Foreign 5,423 6,647 7,033 6,550 4,942 4,768 
Applications       
Industrial designs 1,797 1,857 1,416 1,367 1,034 1,348 
Patents 5,957 6,801 6,769 6,308 5,898 6,414 
Domestic 2,053 1,599 1,248 1,213 1,329 1,344 
Foreign 3,904 5,203 5,520 5,095 4,569 5,070 
Trade mark 8,759 11,730 8,936 7,675 7,323 7,968 
Domestic 2,612 2,997 2,508 2,881 2,196 2,731 
Foreign 6,147 8,733 6,428 4,794 5,127 5,237 
 
Source:  Information provided by the Mini stry of Industry, Trade and Labor. 
(c) Enforcement 
130. Israel has provided responses to the checklist of issues on enforcement.36  The authorities 
underline Israel's commitment to fight IPR violati on effectively.  Institutions in charge of IPR 
enforcement include the Ministry of Justice, the Cu stoms Authority, the Attorney General, a special 
police unit for IPR violations, and the Tax Authority.   
131. The Customs Authority may detain merchandise  suspected of trade mark or copyright 
violation and notify rightholders.  Rightholders are given the opportunity to inspect the suspected 
goods prior to their release;  if they initiate a c ourt action, the goods will be  detained until the end of 
the proceedings.  
132. IPR infringements and violations are subject to  fines or imprisonment.  The fines are up  to 
NIS 2 million;  prison terms are up to five years (Table III.18).  Civil remedies are available in all cases of infringement.  In addition, piracy may l ead to prosecution for tax evasion.  The authorities 
                                                     
 
36 WTO document IP/N/6/ISR/1, 20 April 2000. WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 56 
 
 
indicate that the courts are generally imposing sti ffer penalties than in the past, and that prosecution 
arguments with respect to the severity of IP R infringements are increasingly taken into account .  
Since 2000, for example, several defendants were se ntenced to serve prison terms for counterfeiting. 
133. A special Enforcement Forum, comprising re presentatives from the various enforcement 
agencies, has been set up to c oordinate enforcement measures .  The Forum is organized under the 
control and guidance of the Director of the Economic Department of the State Attorney’s Office.  Its 
functions include:  the coordination of IPR enfor cement between the agencies;  determination of a 
general enforcement policy; establis hment of contacts with righthol ders; formulation of rules of 
evidence required for the purpose of filing indict ments; formulation of directives and cooperation 
procedures between the agencies; and presenta tion and discussion of enforcement activities. 
134. The Government of Israel has also launche d various public awareness programmes in an 
effort to generate more effective IPR enforcement.   For example, the Ministry of Justice provides 
regular legal education seminars for judges, pros ecutors, government legal advisers, and customs 
agents. 
135. Copyrights and trade marks have been the ar eas most affected by infringement of IPR 
legislation during the period under review.