RESTRICTED  WORLD TRADE  
ORGANIZATION  GPA/MOD/ISR/8 
8 May 2006 
 
 (06-2225) 
Committee on Government Procurement Original:   English 
  
 
PROPOSED MODIFICATION TO APPENDIX I OF ISRAEL  
 
Communication from Israel Pursuant to Article XXIV:6(b)
1 of the GPA  
  
 The following communication, dated 5 May 200 6, from the delegation of Israel is being 
circulated to the Parties to the Agreement on Government Procurement.  
_______________ 
  
1. Pursuant to Article XXIV:6(b) of the Agre ement on Government Procurement (GPA), Israel 
hereby wishes to notify the Committee on Gove rnment Procurement of the following proposed 
modification to Annex 3 of Appendix I of the GPA:   - Withdraw "Bezeq, the Israel Telecommunications Corp. Ltd." ("Bezeq"), which is 
inaccurately mentioned as "Bezek (Israel Communication Company). 
 2. The modification is based on the ongoing economic  restructuring and privatization efforts of 
the Israeli Government.  
3. Further details concerning Bezeq's privatization are attached in Attachment A.  Also attached 
to this document are Attachment B, which shows Israel's proposed modifications to the current 
Annex 3 of Appendix I, and Attachment C, which s hows the complete modified version of Israel's 
Annex 3 of Appendix I.
2 
                                                      
 1 Article XXIV:6(a) reads as follows:  Rectifications or Modifications   (b) Where a Party wishes, in exercise of its 
rights, to withdraw an entity from Appendix I on the grounds that  government control or influence over it has been effectively 
eliminated, that Party shall notify the Committee.  Such modi fication shall become effective the day after the end of the 
following meeting of the Committee, provided that the meeting is  no sooner than 30 days from the date of notification and no 
objection has been made.  In the event of an objection, th e matter may be pursued in accordance with the procedures on 
consultations and dispute settlement contained in Article XXII.  In considering the proposed m odification to Appendix I and any  
consequential compensatory adjustment, a llowance shall be made for the market-opening effects of the removal of government 
control or influence. 
2 Attachments B and C are in English only.  GPA/MOD/ISR/8 
Page 2  
 
 
ATTACHMENT A 
 
BACKGROUND MATERIAL ON THE PRIVATIZATION OF BEZEQ,  
THE ISRAEL TELECOMMUNICATIONS CORP. LTD. 
 
  Bezeq, the Israel Telecommunications Corp. Lt d. ("Bezeq"), is the previously State-owned 
telecommunications corporation.  Its operations are subject to regulatory arrangements by the 
Government, including tariff and structural superv ision.  Arrangements im plemented since 1994 are 
designed to increase competition in the communicat ions sector.  International telephony services are 
provided by six companies (of which one is a wholly -owned subsidiary of Bezeq).  Cellular services 
are provided by four companies (of which one is w holly-owned by Bezeq).  In June 1999, Bezeq's 
exclusive right to supply fixed telecom services was terminated.  Since the end of 2000, initial steps 
have been taken to introduce competition into the supply of fixed telecom services and other internal 
communication services, including competition from other communication companies involved in the 
cellular and cable services.  Between July 1997 and February 1998, the State sold an approximately 21.4% interest in Bezeq in a sale to Merrill Lync h & Co. and in a public offering in Israel, which 
together raised a total of $508.7 million and redu ced the State's ownership level to 54.6% (fully 
diluted).  In 2003, the State reduced its holdings in Bezeq in two tranches, representing approximately 
3.6% and approximately 5.8%, and resulting in income to the Government of more than NIS 1 billion.  
As of November 2003, the State held approximately  49.1% of Bezeq's shares.  As a result of these 
sales, Bezeq (with its subsidiaries) became a Mi xed Company.  In June 2004, the State sold 
approximately 2.7% of Bezeq's issued share capita l on the Tel Aviv Stock Exchange, which raised a 
total of $76.2 million, and after which the Stat e's holdings in Bezeq declined to 46.383%. 
 
 In July 2004, the Privatization Committee deci ded to sell 30% of the total outstanding shares 
of Bezeq coupled with an option to buy another p ackage of 10.66%.  In addition, Bezeq's employees 
would be entitled to purchase 4.71% at a disc ount.  In August 2004, the State published an 
announcement concerning the beginning of a competitiv e process considering the selling of the states 
holdings.  The announcement invited those wishing to  participate in the sale process to apply to the 
authority.  In May 2005, the State chose a preferre d bidder for the sale.  The transfer of 30% of the 
total outstanding shares of Bezeq coupled with an  option to buy another package of 10.66% was 
completed in October 2005.  The selected bidder offe red a total of $972 million.  After the completion 
of the sale and if all options are exercised (10.66%) and if all options granted to the employees in November 2005 are exercised (4.71%) the State's ow nership in Bezeq will be 1.01% (fully diluted). 
 
 GPA/MOD/ISR/8 
Page 3 
 
APPENDIX I ISRAEL  ANNEX 3 Page 1/2
 
13 February 2006 (WT/Let/513)   
ATTACHMENT B 
 
ANNEX 3 
 
All Other Entities which Procure in Accordance 
With the Provisions of this Agreement 
 
 Supplies  Threshold : 355,000 SDR 
 Services   (specified in Annex 4)  Threshold : 355,000 SDR 
 
Construction   (specified in Annex 5)  Threshold : 8,500,000 SDR;  during the 
period beginning from 1 January 2006 until 31 December 2008, the threshold shall be set at 5,000,000 SDR 
 
List of Entities : 
 Israel Airports Authority Israel Ports Development and Assets Company Ltd. (1) Ashod Port Company Ltd. (1) 
Haifa Port Company Ltd. (1) 
Eilat Port Company Ltd. (1) Israel Railways Limited (1) Israel Broadcasting Authority Israel Educati onal Television 
Israel Postal Authority 
Bezek (Israel Communication Company) (1) (2)
 
The Israel Electric Corp. Ltd. (1) (2a) Mekorot Water Co. Ltd. Sports' Gambling Arrangement Board The Standards Institution of Israel 
National Insurance Institute of Israel 
All entities operating in the field of urban transpor t, except those operatin g in the field of bus 
services (2b)  
Notes to Annex 3  
 (1) Procurement of cables is excluded. 
 (2)
 With regard to procurement by Bezek, this Agr eement shall apply only to goods and services of 
the US.  
 
 Israel is willing to negotiate the opening of its  telecommunication sector also to other Code 
members  under the condition of reciprocity.  
 (2a) Excluded products:  cables (H.S. 8544), electro-mechanic mete rs (ex. H.S. 9028), transformers 
(H.S. 8504), disconnectors and switchers (H.S . 8535-8537), electric motors (H.S. 8501). GPA/MOD/ISR/8 
Page 4 
 
APPENDIX I ISRAEL  ANNEX 3 Page 2/2
 
13 February 2006 (WT/Let/513)  (2b) With regard to procurement by entities operati ng in the field of urban transport, except those 
operating in the field of bus services, this Ag reement shall apply only to goods and services, 
including construction services, of the European Community. 
  Israel is willing to negotiate the opening of pr ocurement by entities operating in the field of 
urban transport, except those operating in the fi eld of bus services, to other Parties to the 
Agreement under the c ondition of reciprocity. 
 GPA/MOD/ISR/8 
Page 5 
 
APPENDIX I ISRAEL  ANNEX 3 Page 1/1
 
... (WT/Let/...)  ATTACHMENT C 
 
ANNEX 3 
 
All Other Entities which Procure in Accordance 
With the Provisions of this Agreement 
  
Supplies  Threshold : 355,000 SDR 
 Services   (specified in Annex 4)  Threshold : 355,000 SDR 
 Construction   (specified in Annex 5)  Threshold : 8,500,000 SDR;  during the 
period beginning from 1 January 2006 until 
31 December 2008, the threshold shall be set at 5,000,000 SDR 
 List of Entities : 
 
Israel Airports Authority Israel Ports Development and Assets Company Ltd. (1) Ashod Port Company Ltd. (1) Haifa Port Company Ltd. (1) 
Eilat Port Company Ltd. (1) 
Israel Railways Limited (1) Israel Broadcasting Authority Israel Educati onal Television 
Israel Postal Authority The Israel Electric Corp. Ltd. (1) (2a) 
Mekorot Water Co. Ltd. 
Sports' Gambling Arrangement Board The Standards Institution of Israel National Insurance Institute of Israel All entities operating in the field of urban transpor t, except those operatin g in the field of bus 
services (2b) 
 
Notes to Annex 3  
 
(1) Procurement of cables is excluded.  
(2a) Excluded products:  cables (H.S. 8544), electro-mechanic mete rs (ex. H.S. 9028), transformers 
(H.S. 8504), disconnectors and switchers (H.S . 8535-8537), electric motors (H.S. 8501). 
 (2b) With regard to procurement by entities operati ng in the field of urban transport, except those 
operating in the field of bus services, this Ag reement shall apply only to goods and services, 
including construction services, of the European Community. 
  Israel is willing to negotiate the opening of pr ocurement by entities operating in the field of 
urban transport, except those operating in the fi eld of bus services, to other Parties to the 
Agreement under the c ondition of reciprocity. 
__________