Israel WT/TPR/S/157/Rev.1 
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II. TRADE AND INVESTMENT REGIMES 
(1) INSTITUTIONAL FRAMEWORK  
1. Israel has no formal constitution; several cons titution-like laws, formulated in "basic laws", 
and a series of decisions by the Supreme Cour t lay down the foundations for government and the 
rights of individuals.1  Legislative authority rests with the Kn esset (the unicameral parliament), with 
120 members elected by universal suffrage for four  years (subject to dissolution), on the basis of 
proportional representation.  The Chairperson and the Vice-Chairperson of the Knesset are elected by its members.  The Knesset's functions are to le gislate, oversee government operations, and approve 
the State Budget.  The current Kness et has representatives of 15 parties.  The Knesset also elects the 
State Comptroller, who audits and reports on th e assets, finances, and obligations of the State 
(including the operations of Ministries, the Centra l Bank, state-owned enterprises and institutions, 
local authorities, and other agencies subject to inspection by law).   
2. The President, head of State, is elected by th e Knesset for a (non renewable) term of seven 
years.  Presidential duties include calling on a Kn esset member to initiate the process of forming a 
new government, signing laws adopted by the Knesset , and appointing the Governor of the Central 
Bank.  The next parliamentary elections are sch eduled for 21 November 2006.  However, as at 
November 2005, a crisis in the governing coaliti on increased the possibility of early elections.  
3. Executive powers lie with the Government, led by  the Prime Minister.  As established by the 
basic law on the Government, the President gives one of the Members of Parliament (usually the head 
of the largest party) the instruction to form a Government.  The Government takes office after 
receiving a vote of confidence in the Knesset.   
4. The judicial branch is divided into general law c ourts and tribunals.  There are three levels of 
general courts: magistrate, district, and the Supreme Court, which try both civil and criminal matters.  
The Supreme Court, on the basis of a basic law, ma y overturn a law passed by the Knesset if it finds it 
to be in direct contravention of the basic law.  The Supreme Court also serves as a High Court of Justice and tries cases against the Israeli Governme nt.  All tribunals are supervised by the Supreme 
Court, which has the ultimate authority.  Judges are appointed by the President on the 
recommendation of a committee of nine members comprising the President of the Supreme Court
2, 
two other Supreme Court judges, the Minister of Justice, an additional minister, two Knesset members, and two members of the Israeli Bar Association.  
(2) T
RADE POLICY FORMULATION AND IMPLEMENTATION  
5. In general, policies, including trade policies,  are formulated and implemented through the 
adoption of laws.  Bills may be initiated by the Government or individual members of the Knesset. 
They generally go through three readings before thei r adoption by the Knesset.  After the first reading 
the bill is referred to the appropriate committee for di scussion;  in the second, it is reviewed in plenary 
session;  and in the third reading, a final vote is ta ken.  Thereafter the President, the Prime Minister, 
and the minister concerned sign the bill into law.   
                                                      
1 The basic laws are on the Knesse t, State Lands, the President, th e Government, the State Economy, 
Israel Defence Forces, Jerusalem, the Judiciary, th e State Comptroller, Human Dignity and Liberty, and 
Freedom of Occupation. 
2 The most senior Supreme Court judge is generally appointed as the Presiden t of the Supreme Court. WT/TPR/S/157/Rev.1 Trade Policy Review 
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6. The framework for trade policy formulation and implementation has remained broadly 
unchanged since Israel's last TPR in 1999.  The Ministry of Industry, Trade and Labor3 (MOITAL), 
through its Foreign Trade Administration, is the main body in charge of the formulation and administration of trade policy.  This includ es conducting and coordinating international trade 
negotiations, proposing tariff changes, establishing trad e controls and rules of origin, administering 
quotas on products, and conducting anti-dumping, count ervailing, and safeguard investigations.  
Depending on the subject, other relevant minist ries may be involved (such as the Ministry of 
Agriculture or the Ministry of Finance), as well as specialized agencies.  Inter-ministerial committees 
are established in specific cases requiring  deeper multi-agency examination. 
7. The Government consults regularly on trade-re lated issues with private-sector organizations 
such as the Israeli Chamber of Commerce and the Manufacturers' Association of Israel.  For consultative purposes, the MOITAL has established the Foreign Trade Forum, which meets on a 
bi-monthly basis; it is composed of representatives of  the Manufacturers' Association, the Chamber of 
Commerce, the Israeli Export and International Cooper ation Institute, the Ministry of Finance, and the 
Ministry of Foreign Affairs.  The Israeli Export and International Cooperation Institute also works 
closely with the Government on export promotion.  Regarding consumer protection, the Ministry has 
established a bi-monthly Consumer Forum comprising  representatives of consumer organizations, the 
Ministry of Justice, the Manufacturers' Associati on, the Chamber of Commerce, and the Advertisers' 
Association.  Consultations with representatives of consumer organizations, manufacturers, and 
importers are carried out by the Standards Commission er before any change in compulsory standards. 
(3) T
RADE POLICY OBJECTIVES  
8. As a small country with limited natural resources,  Israel is highly dependent on foreign trade 
as an engine for the growth and the further devel opment of an innovative, competitive, and outward-
looking economy.  It believes that economic grow th, peace, and security are mutually supportive.  
Israel seeks to liberalize its trade regime on an MFN basis through WTO negotiations, on a bilateral 
basis through reciprocal agreements, and on a unilateral basis through autonomous initiatives.   
9. Regional initiatives should serve as a catalyst to  even greater openness and cooperation at the 
multilateral level.  Israel is seeking further multila teral liberalization of the non-agriculture sector, 
where it maintains a generally open approach.  In agriculture, however, protec tion rates and domestic 
support remain substantial, to address, according to the authorities, various non-trade concerns.  With 
regard to services, Israel seeks further multilateral lib eralization, and is read y to take on substantial 
commitments, subject to reciprocal commitments by its trading partners. Moreover, Israel continues, 
on a unilateral basis, to dismantle import tariffs, in  particular on non-agricultural products, and to 
eliminate non-tariff barriers. 
10. Israel is exploring the possibility of free-trade agreements with newly industrialized countries 
in Asia and Latin America.  However, further st eps in this regard depe nd on developments in the 
multilateral area. 
(4) MAIN TRADE LAWS AND REGULATIONS  
11. International agreements do not ca rry the force of law in Israel.  Several domestic laws have 
been amended to reflect Israel's international co mmitments.  Nonetheless, in the case of conflict 
between an international agreemen t and domestic law, the provisions of the domestic law prevail.   
                                                      
3 In 2003, "Labor" was added to the purview of the former Ministry of Industry and Trade. Israel WT/TPR/S/157/Rev.1 
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12. There have been no significant changes to Israel's  main laws in the area of trade and related 
policies since its last TPR in 1999 (Table II.1).  The main legislation related to international trade is 
the Import and Export Ordinance of 1979, which pr ovides the legal basis for the regulation and 
development of foreign trade.  The Licensing of Imports Order of 1939 has substantially been 
superseded by the Free Import Order of 1978, whic h permits the free importation of all commodities, 
except those listed in its Annexes 1 (non-automatic licensing), 2 (specified conditions apply) and 5 
(prohibited goods) (Chapter III(2)(v)).  The Customs Ordinance of 1957 regulates customs administration, control, documentation, warehousing,  valuation, payments of duties, drawback, and 
legal procedures.  The Customs Order (Regulation of Imports) of 1986 regulates imports of a number 
of products;  Annex 1 establishes conditions for the import of a list of products, mainly agricultural 
products and dangerous chemicals, arms and m unitions, while its Annex 2 lists goods that are 
prohibited from entry into Israel. 
Table II.1 
Israel's main trade-related legislation, June 2005 
Area Legislation 
General trade legislation Import and Export Ordinance of 1979  
  Import regulations Free Import Order of 1978 (for free importati on of products, except those listed in Annexes 1, 2 and 5), a nd 
Licensing of Imports Order of 1939  
  Export regulations Free Export Order of 1978 (for free exports of products with the exception of a list of products for which  an 
export permit is required) 
Customs Customs Ordinance of 1957 (on customs administra tion, control, documentation,  warehousing, valuation, 
payments of duties, drawback, and legal procedures),  and the Customs Order (Regulation of Imports) of 
1986 (on imports of a list of products) 
Anti-dumping, 
countervailing, 
and safeguard measures Trade Levies Law of 1991 (on anti-dumping and c ountervailing duties);  no le gislation on safeguard 
measures within the meaning of Article XI X of the GATT and the Agreement on Safeguards 
Taxation Purchase Tax Law of 1952 
Free zones Free Port Zone Law of 1969, Eilat Free Trade Zone Law of 1985, and Free Export Processing Zone Law of 
1994 
Investment incentives 
and state aid Encouragement of Capital Investments Law of 1959, Encouragement of Capital Investments Law 
(Agriculture) of 1980, Encouragement of Investme nts (Capital Intensive Companies) Law of 1990, 
Encouragement of Industrial Research and Developm ent Law of 1984, Encouragement of Industry (Taxes) 
Law of 1969, Income Tax Law (Adjustments  for Inflation) of 1985  
Standards Standards Law of 1953 
Sanitary and phytosanitary measures Animal Diseases Regulations of 19 72 (Transfer Arrangements for Cattle);  Animal Diseases Regulations of 
1974 (Meat Importation);  Animal Diseases Regula tions of 1975 (Micro-organisms, Vaccines and 
Transmitters);  Animal Diseases Regulations of 19 88 (Import and Export of Animal Products);  Animal 
Diseases Regulations of 1996 (Feeding of Animals);  Regulations for the Control of the Export of Animals 
and Animal Products of 1998 (Fish, Ostriches, Honey and Milk and Products Produced therefrom, and Egg 
Products);  Plant Protection Law of 1956;  Plant Impor t Regulations of 1970;  Seed Law of 1956;  Seed 
Regulations of 1975 (Control of Imports);  Public H ealth Regulations of 1997 (Food, Pesticide Residues)     
Government 
procurement Mandatory Tenders Law of 1992 (together with several regulations on preferences to domestic industries, 
certain regions, and local sub-contracting) 
Competition Restrictive Business Practices Law of 1988 a nd Regulations of 2004, Cons umer Protection Law of 1981 
Price controls Law For the Supervision of  Prices of Goods and Services of 1996 
Intellectual property 
rights Copyright Law of 1911;  Copyright Ordinance of 1924 ;  Copyright Order (Berne Convention) of 1953; 
Copyright Order (Universal Copyright Convention) of 1955;  Performers' and Broadcasters' Rights Law 
of 1984;  Trademarks Ordinance of 1972;  Merchandise  Marks Ordinance of 1929;  Appellations of Origin 
(Protection) Law of 1967;  Plant Breeders' Rights Law of 1992;  Protection of Integrated Circuits Law of 
1999 
Investment Capital Investment Law of 1959  
Source : Information provided by the Israeli authorities.  WT/TPR/S/157/Rev.1 Trade Policy Review 
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(5) INVESTMENT REGIME  
13. Israel has a generally open investment regime, with most activities open to private investment 
(both foreign and national).  The main exceptions ar e telegraph services and delivery of postal items 
below 500 g, over which the Israeli Postal Authorit y has monopoly rights.  Restrictions also apply to 
international fixed telecommunications services (up to  74% foreign equity participation is allowed) 
and wireless telecommunications services (up to 80% foreign equity participation).  In tourism, ownership of hotels, travel agencies, and tour operato rs is restricted to Israeli-registered companies, 
while tourist guide services are restricted to Israeli re sidents or citizens.  In addition, travel agencies 
are required to employ at least one Israeli-licensed travel expert.  
14. Foreign-owned companies are entitled to own or lease land.  However, before acquiring land 
rights, they must receive prior approval from the Israeli Land Administration, following a recommendation from the Committee for Urban or Agricultural Land.
4  Approval is normally granted 
for business purposes.  As at November 2005, th e legal regime governing land rights was under 
review. 
15. There is no approval or registration requirement fo r investment in Israel, except for those in 
place for certain enhanced benefits to foreign inv estors (see below).  There are no restrictions on the 
repatriation of profits or capital.  Both reside nts and non-residents may purchase any security traded 
on the Israeli stock exchange and purchase certif icates of participation in mutual funds. 
16. Israel encourages both local and foreign investme nt by offering a wide range of incentives 
and benefits.  However, the Government provides enhanced incentives to foreign-owned companies, 
thereby discriminating against Israeli-owned companies.5  Investment incentives are outlined in the 
Law for the Encouragement of Capital Investment .  They include grants, tax incentives (rebate on 
profit tax), research and development support, wage financing, and training support.  The incentives 
offered depend on the location of the company, as well as on the type of activities;  preference is given to industrial, tourism, and agricultural project s.  Special emphasis is put on high-tech companies 
and R&D activities (Chapter III(4)(i)).   
17. In addition to the benefits available to all investors, the Government provides additional 
incentives to "approved" investors, i.e. additional tax benefits within the framework of Israel's main 
state-aid programme, the regional aid programme.  Such investors must apply for "approved" enterprise status.  Before incentiv es are accorded, the project is exam ined by the Investment Centre, 
which determines the admissibility of applications .  To receive "approved" investment status, a 
project must consist exclusively of fixed assets;  the company must finance at least 30% of the 
approved project with capital equity paid in cash;  th e project must be completed within three years of 
the grant's approval;  and at least 25% of the work must be completed within one year.  The approval 
procedure takes about five months on average.  The share of "approved" investment in total 
investment is about 27%. 
18. The amount of tax reduction for "approved" co mpanies depends on the share of foreign 
ownership (Table II.2). While the company tax ra te is 25% for an approved company owned by a 
local investor, the rate for approved foreign inv estors varies between 10% and 20%, depending on the 
percentage of foreign ownership; the standard rate is 34%.  The tax benefits for an approved 
enterprise are granted for a period of seven consecutiv e years, starting in the first year the company 
earned taxable income, provided that 14 years have  not passed since the approval was granted, and 
                                                     
 
4 OECD (2002). 
5 The status of "foreigner" or "Israeli" depends on the country of residence rather than on citizenship. Israel WT/TPR/S/157/Rev.1 
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that 12 years have not passed since the enterprise began operation.6  Tax revenue forgone for 
approved investors amounted to NIS 400 milli on in 2004, up from NIS 300 million in 2001. 
Table II.2 
Rates of taxation applicable to various types of investor 
(Per cent) 
 Percentage of foreign ownership 
 0-49 
(local investor) 49-74 74-90 90-100 Company that is not 
an approved 
enterprise 
Company tax rate 25.00 20 15.00 10.0 36 
Dividend tax  11.25 12 12.75 13.5 16 
Total tax on distributed income 36.25 32 27.75 23.5 52 
Source : Ministry of Industry, Trade and Labor (2004), The Israeli Economy at a Glance . 
19. To facilitate and promote foreign investment in  Israel, the Government has set up Invest in 
Israel (formerly the Investment Promotion Center) in the MOITAL, an investment marketing agency 
designed to be a "first-stop shop" fo r foreigners interested in investi ng in Israel.  Invest in Israel's 
tasks include: 
− arranging business trips to Israel for foreign comp anies seeking strategic local partners as well 
as investment opportunities; 
− providing foreign company representatives with customized pre-visit briefing material, 
including a preliminary research of Israeli companies and technologies that might be of interest, and personalized services during their visit;  and  
− providing a wide range of services to the forei gn entrepreneur including  arranging meetings 
with relevant parties, providing detailed in formation on various production costs, assessing 
site location, and resolving potential techni cal/management problems with local authorities 
and the like.  
20. There are no restrictions on outward investment.  However, Israeli companies are required to 
report activities abroad that involve money tr ansactions with foreign residents or banks. 
21. Israel has concluded investment pr otection agreements with 29 countries.
7  Investment 
agreements with a number of other countries have been negotiated, but not yet ratified 
(November 2005).8  Israel is a member of the Multilateral Investment Guarantee Agency (MIGA).  It 
subscribed to the OECD Declaration on Internat ional Investment and Multinational Enterprises in 
September 2002 and is an observer in the OECD's I nvestment Committee.  Israel is a party to a 
number of double taxation treaties, most of which are drafted in accordance with the OECD model, 
covering most international aspects of income a nd capital gains tax.  Treaties in force cover 34 
countries.9   
                                                      
6 If at least 25% of an enterprise's shares are owned by foreign investors, the enterprise is eligible for a 
benefits for ten years. 
7 Albania, Argentina, Armenia, Belarus, Bulgaria, Croatia, Cyprus, Czech Republic, El Salvador, 
Estonia, Georgia, Germany, Hungary, India, Kazakhstan , Korea, Latvia, Lithuania, Moldova, Poland, Romania, 
Slovak Republic, Slovenia, Thailand, Turkey, Turkmenistan, Ukraine, Uruguay, and Uzbekistan. 
8 China, Ethiopia, Mongolia, Peru, Serbia-Montenegro, and South Africa. 
9 Austria, Belarus, Belgium, Canada, China, C zech Republic, Denmark, Finland, France, Germany, 
Greece, Hungary, India, Ireland, Italy, Jamaica, Japa n, the Netherlands, Norway , the Philippines, Poland, 
Romania, Russia, Singapore, Slovak Republic, South Africa, Korea, Spain, Sweden, Thailand, Turkey, the United Kingdom, the United States, and Uzbekistan. WT/TPR/S/157/Rev.1 Trade Policy Review 
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(6) TRADE AGREEMENTS  
(i) World Trade Organization 
22. Israel has been a contracting party to the GATT since 1962 and an original Member of the 
WTO since 1995.  It grants at least MFN treatment to all WTO Members, and to non-WTO Members 
with which it has MFN trade agreements.  Israel has not been a defendant or complainant in any 
dispute under the WTO.  Since its last TPR in 1999,  it has, however, reserved third-party rights in 
three cases relating to Sections 301-310 of the Unite d States' Trade Act of 1974, to Canada's Patent 
Protection for Pharmaceutical Products, and to th e United States' Byrd Amendment concerning anti-
dumping measures.10  Notifications made by Israel to the WTO since 1999 are listed in Table II.3. 
Table II.3 
Israel's notifications under the WTO Agreements, November 2005 
WTO Agreement Description of requirement/content WTO document and date (latest document if recurrent) 
Agreement on Agriculture  
Article 18.2 Domestic support  G/AG/N/ISR/37, 30 August 2005 
Article 10 Export subsidies G/AG/N/ISR/36, 8 November 2005 
Article 18.2 Imports under tariff quotas  G/AG/N/ ISR/39, 16 September 2005 
 
Article 5.7 Special safeguards G/AG/N/ISR/38, 16 September 2005 
 Administration of tariff quotas G/AG/N/ISR/27, 26 March 2003  
  G/AG/N/ISR/27/Corr.1, 4 November 2003 
Agreement on Implementation of GATT Article VI (Anti-dumping)  
Article 16.4 Semi-annual report G/ ADP/N/132/ISR, 28 September 2005 
GATT   
Article XXVIII:5 Notification of Sche dule XLII G/MA/79, 3 November 1999 
Agreement on the Application of Sanitary and Phytosanitary Measures 
Article 7, Annex B Emergency measures  G/SPS/N/ISR/4-6, 27 March – 15 May 2001 
Agreement on Subsidies a nd Countervailing Measures  
Article 16.1 and 
Article 25 Notification of subsidies G/SCM/N/71/ISR, 4 July 2005 
G/SCM/N/95/ISR, 4 July 2005 
G/SCM/N/123/ISR, 4 July 2005 
 
Article 25.11 Semi-Annual Report G/ SCM/N/87/Add.1, 18 October 2002 
Agreement on Technical Barriers to Trade  
Article 10.6 Voluntary and mandatory standards G/TBT/N/ISR/32-119, 16 Ja nuary 2004 - 12 October 2005 
Agreement on Trade-Related Aspect s of Intellectual Property Rights   
Article 63.2 Laws and regulations IP/N/1/ISR/C/1-9, 14 March 2000 
Article 63.2 Main dedicated intellectual property laws 
and regulations IP/N/1/ISR/D/1, 14 March 2000 
IP/N/1/ISR/G/1-2, 14 March 2000 
 IP/N/1/ISR/I/1-3, 14 March 2000 IP/N/1/ISR/L/1-2, 14 March 2000 
IP/N/1/ISR/P/1, 14 March 2000 
Article 1.3  Eligibility criteri a for protection provided by 
the Rome Convention IP/N/2/ISR/1, 22 March 2000 
Article 69 Notification of contact point  IP/N/3/Rev.7/Add.1, 23 February 2004 
 Checklist of issues on enforcement IP/N/6/ISR/1, 20 April 2000 
  Table II.3 (cont'd) 
                                                      
 10 WTO documents WT/DS152/R,  22 December 1999;  WT/DS114/R, 17 March 2000;  and 
WT/DS217/R, 16 September 2002. Israel WT/TPR/S/157/Rev.1 
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WTO Agreement Description of requirement/content WTO document and date (latest document if recurrent) 
GATT (Article XXIV:7)  
 Agreement with EU WT/REG110/N/1, 7 November 2000 
 Agreement with Mexico WT/REG124/N/1, 8 March 2001 
 Agreement with Bulgaria WT/REG150/N/1, 14 April 2003 
 Agreement with Romania WT/REG199/N/1, 25 April 2005 
Source: WTO documents. 
23. At the Doha Ministerial in 2001, Israel under lined its commitment to a new round of trade 
negotiations with a clear development profile.11  Its position on the Doha Development Agenda was 
reiterated at the Cancún Ministerial Conference in 2003.12  Under the Doha Development Agenda, 
Israel has submitted various proposals on rul es, in conjunction with other WTO Members.13  I n  
agriculture, Israel recognizes the long-term objective of establishing a market-oriented trading system, 
but considers non-trade concerns to be an essential elem ent of this sector:  they should be an integral 
part of any future multilateral agreement.  With  regard to market access for non-agricultural goods, 
Israel supports ambitious plans for tariff reductions  in both developing and de veloped countries;  it 
also believes that more progress needs to be achieve d in the elimination of non-tariff barriers.  In 
services, Israel seeks further multilate ral liberalization and was one of the first Members to submit its 
initial offer in the framework of the services negotiations. 
24. Israel participated actively in the negotiati ons on basic telecommuni cations and financial 
services, and has signed the Fourth and Fifth Protocol s to the GATS.  It is party to the Information 
Technology Agreement and to the plurilatera l Agreement on Government Procurement. 
(ii) Preferential trade agreements 
25. Israel has continued to expand the coverage of bilateral free-trade agreements since its last 
TPR in 1999, by expanding existing agreements, a nd by signing new ones with Mexico, Romania, and 
Bulgaria.14  In addition, Israel has preferential agreem ents with Canada, the European Union, the 
European Free Trade Association, Jordan, Tu rkey, and the United States (Table II.4). 15  Bilateral 
tariff quotas on agricultural products are described in Table AIII.4.  Israel has not been involved in 
any trade dispute under its free-trade agreements duri ng the period under review.  It is not currently 
negotiating any free-trade agreements (FTA).  Nonetheless, as at November 2005, Israel and 
MERCOSUR were negotiating a Framework Agreemen t on Trade, aimed at creating the conditions 
and mechanisms to negotiate a free-trade agreement.   The two parties intend to start negotiations on 
an FTA during 2006. 
                                                      
11 WTO document WT/MIN(01)/ST/101, 12 November 2001. 
12 WTO document WT/MIN(03)/ST/45, 11 September 2003. 
13 WTO documents TN/RL/W/6, 26 April 2002;  TN/RL/W/10, 28 June 2002;  TN/RL/W/18, 
4 October 2002;  TN/RL/W/28, 15 November 2002;  TN/RL/W/28/Rev.1, 22 November 2002;  TN/RL/W/31, 
25 November 2002;  TN/RL/W/46, 24 January 2003;  TN/RL/W/45, 27 January 2003;  TN/RL/W/63, 
12 February 2003;  TN/RL/W/76, 19 March 2003;  TN/RL/W/83, 25 April 2003;  TN/RL/W/93, 2 May 2003;  TN/RL/W/113, 6 June 2003;  TN/RL/W/119, 16 June 2003;  TN/RL/W/171, 15 February 2005;  
TN/RL/W/174/Rev.1, 7 April 2005;  and TN/RL/W/181, 25 May 2005. 
14 Israel has notified its new preferential agreements  to the Committee on Region al Trade Agreements:  
WTO documents WT/REG124/N/1, 8 March 2001;  WT/REG150/N/1, 14 April 2003;  and WT/REG199/N/1, 
25 April 2005. 
15 Information about Israel's free-trade agreements is available online at:  
http://www.moit.gov.il/NR/exeres/C 3AFB803-731C-4668-BEB2-59838FB3C9 C6.htm (14 November 2005). WT/TPR/S/157/Rev.1 Trade Policy Review 
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Table II.4 
Israel's preferential tr ade agreements, June 2005 
Trading 
partner Date of agreement  
(entry into force) Major provisions on trade in goods Other major areas of cooperation 
(excluding WTO commitments) 
Bulgaria 8 June 2001 
(1 January 2002) Phased tariff reduction on industrial products (duty free 
since 1 January 2004) 
Tariff quotas on some agricultural products Safeguard measures, dispute settlements, 
intellectual property, government 
procurement, and state aid 
Canada 31 July 1996 
(1 July 1997) Duty free on industrial products since 1 July 1999 
Further market access for agricultural goods was 
implemented in November 2003  Competition, safeguard measures and 
dispute settlement 
European Free 
Trade 
Association  17 September 1992 
(1 January 1993) Duty free on all industrial goods since 1 January 1993 
Duty free on some fish, marine and processed 
agricultural products (bilateral agreements covering some agricultural products) Competition, state aid, state monopolies, 
intellectual property rights, government 
procurement, services and investment 
European 
Union 20 November 1995 
(1 January 1996)a Duty free on all industrial products and some agricultural products since 1 January 1989 with further concessions 
in agricultural products since 1 January 2004 Tariff quotas on some agricultural goods Competition, state monopolies, 
intellectual property rights, government 
procurement, and dispute settlement 
Jordan December 2004 
(23 September 
2005) Phased tariff reduction on industrial products  Trade co-operation, intellectual property 
rights, safeguard measures, customs 
cooperation 
Mexico 10 April 2000 
(1 July 2000) Phased tariff reduction on industrial products (duty free 
since 1 January 2005) 
Tariff quotas on some agricultural products Safeguard measures, government 
procurement, competition policy, 
monopolies, and state enterprises 
Palestinian 
Authority 29April 1994 
(29April 1994) Customs and standards union Movement of Labor, tourism, insurance 
Romania 30 January 2001 
(1 July 2001) Phased tariff reduction on industrial products (duty free 
since 1 January 2004) Tariff quotas on some agricultural products   
Negotiations on further liberalization of trade in 
agriculture products started in February 2005 Safeguard measures, dispute settlement, 
intellectual property, government procurement, and state aid 
Turkey 14 March 1997 
(1 May 1997) Phased tariff reduction on industrial products (duty free 
since 1 January 2000) 
Tariff quotas on some agricultural products Competition, state aid, state monopolies, 
intellectual property rights, safeguard measures, government procurement, and 
dispute settlement 
United States 22 April 1985 
(1 September 1985) 4 November 1996 
(4 December 1996) Duty free on all industrial products since 1 January 1995 
Tariff quotas on some agricultural products Further market access for agricultural goods was 
implemented in January 2004 Infant industries, balance of payments, 
government procurement, and dispute settlement 
a The trade agreement replaced a 1975 trade accord, which in turn replaced  a trade accord signed in 1970. 
Source :  WTO Secretariat, based on informati on provided by the Israeli authorities.  
(a) European Union 
26. The European Communities was the first trading partner with which Israel signed a 
preferential agreement.  As a result of various am endments to the agreement, originally signed in 
1975, trade in industrial products has been tariff-fre e since 1989.  In 1995, Israel and the European 
Communities signed an Association Agreement, whic h replaced the 1975 preferential agreement.  In 
July 2003, two new protocols on agriculture were signe d;  they entered into force in January 2004.  
These protocols cover a wider list of agricultura l products, extend some of the existing duty 
reductions, and expand vari ous existing tariff quotas. 
27. Since 1 May 2004, the Agreement has been extende d to the new EU members;  until that date, 
Israel had bilateral free-trade agreements with fi ve of the ten new EU members (the Czech Republic, 
Hungary, Poland, the Slovak Republic, and Slovenia).  As a result of the EU enlargement, the two 
parties signed a Protocol to the Association Agreement with various agricultural provisions. Israel WT/TPR/S/157/Rev.1 
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(b) United States 
28. The free-trade agreement between Israel a nd the United States entered into force in 
September 1985.  Their trade in industrial products has been duty-free since 1995.  Under an amendment to the U.S.-Israel Agreement signed in October 1996, the two parties entered into a five-
year programme of gradual improvement of ag ricultural market access;  following further 
negotiations, they agreed on additional improvements,  which entered into force on 1 January 2004.  
These include the expansion of tariff quotas and prefer ences, and the extension of duty-free treatment 
to additional agricultural goods.  In this context, the United States offers Israeli products, the same 
overall average tariff as Canadian and Mexican pr oducts, the lowest (0.7% in 2002) among all its 
trading partners.
16 
(c) Canada 
29. The FTA between Israel and Canada, signed in July  1996, entered into force in July 1997.  It 
provides for duty-free treatment of industrial product s and tariff reductions on agricultural and fish 
products.  Following bilateral negotiations, furt her market access for agricultural goods was 
implemented in November 2003.  An amendment to the agreement concluded in 2001, allows for the 
transhipment of goods through the United States, unde r certain conditions.  It also allows for minor 
processing in the United States without losing the original status.  In particular, processing should not increase the transaction value of the goods by more than 10%. 
(d) EFTA 
30. There have been no changes to Israel's prefer ential agreement with the European Free Trade 
Association (EFTA) since 1999.  The agreement calls fo r reciprocal free trade in all but four industrial 
goods (HS codes 35.01, 35.02, 38.24,  ex38.25), and in some fish, marine, and processed agricultural 
products.  It also contains evolutionary clauses pr oviding the basis for the future development of the 
agreement and its extension to cover new sectors.  In  July 2005, two decisions entered into force with 
regard to the Protocols to the Agreement:  Protocol  B, on rules of origin, was amended to allow for 
Pan-Euro-Mediterranean cumulation, and a new Protocol E lays down the rules on mutual 
administrative assistance in customs matters.  Is rael also has bilateral trade agreements with 
individual EFTA member states;  these improve the pa rties' access to the resp ective markets either by 
eliminating or reducing tariffs on some agricultural products.  
(e) Turkey 
31. Israel's free-trade agreement with Turkey ente red into force in May 1997.  Tariffs on most 
industrial goods have been duty-free since Janua ry 2000;  exceptions include casein, albumins, 
dextrins, finishing agents, natural cork, flax, and hemp.  Various agricultural products are subject to 
tariff quotas.  For the purpose of implementing the Pan-Euro-Mediterranean cumulation of origin, the 
agreement's protocol on rules of origin was amended in July 2005.  The amendment is yet to be implemented. 
(f) Mexico  
32. Israel's free-trade agreement with Mexi co entered into force in July 2000.
17  Under the 
agreement, tariffs on industrial products (with the exception of HS codes 35.02 and 35.05) were 
eliminated gradually by January 2005.  Various ag ricultural products are subject to tariff quotas. 
                                                      
16 WTO (2003). 
17 The text of the agreement is contained in WTO document WT/REG/124/1, 7 August 2001.  WT/TPR/S/157/Rev.1 Trade Policy Review 
Page 18 
 
 
(g) Bulgaria and Romania 
33. Israel's free-trade agreements with Bulgaria and Romania entered into force in January 2002 
and July 2001 respectively.  Under the agreements, tariffs on most industrial products were eliminated 
by January 2004.  Exceptions include HS codes 35. 0190, 35.02, and 35.05.  Various agricultural 
products are subject to tariff quotas.  Negotiations fo r further liberalization of trade in agricultural 
products started in February 2005.  For the pur pose of implementing the Pan-Euro-Mediterranean 
cumulation of origin, the protocols on rules of orig in in both agreements were amended in February 
(Romania) and September (Bulgaria) 2005. 
(h) Jordan 
34. A new Protocol to the Agreement on Trad e and Economic Cooperation with Jordan was 
signed in December 2004, replacing a 1995 version.   According to the authorities the protocol 
provides for duty-free access to more than 80% of Jord an's exports to Israel and more than 50% of 
Israel's exports to Jordan (in 2003 figures).  The tari ff reductions are listed in Annex 1 to the Protocol 
in six tables.  Table 1 contains more then 2, 200 tariff items exempted from customs duties both in 
Israel and Jordan as of 20 September 2005.  Table 2A lists goods exempted from customs duties when 
imported into Israel.  Table 2B lists agricultura l goods and items consider ed sensitive which, upon 
import into Israel, are either subject to a 50% reduction of customs duties (Group 1), or for which customs duties are phased out by 2010 (Group 2) .  Table 3 lists agricultural goods and items 
considered sensitive which, upon import into Jordan, are either subject to a 50% reduction of customs 
duties (Group 1), or for which customs duties are pha sed out by 2010 (Group 2).  In addition, the new 
Protocol introduces comprehensive annexes rega rding rules of origin, including provisions on 
bilateral and Pan-European cumulation.    
(iii) Other arrangements 
(a) Protocol on economic re lations with the PLO 
35. Israel has a Protocol on Economic Relations with the Palestine Liberation Organization 
(PLO), which was signed on 29 April 1994.  It pr ovides for duty-free movement of goods between 
Israel and the areas under economic jurisdiction of the Palestinian Authority (PA), as well as common 
customs and standards measures for the two parties.
18  Clearance of customs revenues and fees levied 
on imports is conducted by the administrati on of the place of final destination.   
36. The PA has the right to determine, independent ly, the rates of customs and other charges on 
imports of specified quantities of commodities referred  to in lists A1 (30 items at the HS four-digit 
level) and A2 (23 items), with no restrictions on quantities of goods referred to in list B (various 
specified tools and equipment).19  The quantities the PA may import from lists A1 and A2 are 
                                                      
18 For the provisions of the Protocol not related directly to trade, see WTO (1999). 
19 List A1 includes 30 goods whose source (or the sour ce of at least 30% of their value added) must be 
an Arab State, and for 13 of these items, the source must  be either Egypt or Jordan  (indicated in the Agreement 
as originating in JE):  live sheep, dried yoghurt, dried le gumes, rye, barley, corn, rice,  palm kernel oil, sugar, 
cacao, silica and quartz sands, cement (JE), phosphatic fe rtilizers (JE), potassic fertili zers (JE), phosphatic and 
potassic mixed fertilizers (JE), cotto n, carpets (JE), unwrought aluminium, aluminium waste and scrap, 
aluminium powder and flakes, bars and rods of iron or non-alloy steel (JE), other bars and rods, gas and fuel 
stoves (JE), air conditioners (JE), household refrigerators  and freezers (JE), dishwashers (JE), washing machines 
(JE), electric space heaters (JE), and televisions sets (JE).  List A2 includes a number of goods repeated from list 
A1 plus: live sheep, beef, frozen beef, dried legumes, coffee, tea, wheat and meslin , rye, barley, corn, rice, 
wheat and meslin flour, sesame seeds, palm kernel oil, sugar, cacao, silica and quartz sands, cotton, cigarettes, 
alcohol, iron, and cement. Israel WT/TPR/S/157/Rev.1 
 Page 19 
 
 
determined according to Palestinian "market needs",  and for any quantities exceeding the agreed 
quotas (currently cement and sheep meat) the duties ar e the Israeli tariffs.  All other PA imports are 
subject, as a minimum, to the same level of custom s duties and other charges that apply to Israeli 
imports.  The PA's customs tariff rates may not be lower than the Israeli rates, in order to prevent 
leakage of imports from one area to the other.  Regarding standards (including sanitary and 
phytosanitary measures) and licensing, Israeli import policy applies to all PA imports, except for the 
quantities agreed to per lists A1 and A2.  
(b) Trade agreements with Jordan and Egypt 
37. With a view to strengthening regional economic cooperation and trade re lations, Israel signed 
an agreement with Jordan in November 1997.  Th ere is no formal link between this agreement and 
Israel's FTA with Jordan .  The agreement, in force since 1998, establishes "qualified industrial zones" 
in Jordan.  Under the umbrella of the U.S.-Isr ael Agreement, goods from these zones enjoy duty-free 
access to the United States, provided that they comp ly with all the requirements of the Israel-U.S. 
Free Trade Agreement and that at least 8% of thei r components are of Israeli origin.  Trade between 
Israel and Jordan has increased substantially as result of this accord, from US$35 million in 1998 to 
approximately US$200 million in 2004.   
38. Israel signed a trade protocol with Egypt on 14 December 2004, which entered into force in 
February 2005.  Designed in the style of the tr ade protocol with Jordan, it establishes qualified 
industrial zones in Egypt under the umbrella of  Israel's Agreement with the United States.  The 
authorities expect this protocol to strongly increase trade between Israel and Egypt.  Preliminary data 
on the first nine months of the implementation of th e agreement indicate that trade between Israel and 
Egypt has increased more than two-fo ld over the same period in 2004. 
(c) MFN trade agreements 
39. Israel has MFN trade agreements with fi ve non-WTO Members (Kazakhstan, Russia, 
Ukraine, Uzbekistan, and Viet Nam).  The main objective of these agreements is to establish basic 
principles for the conduct of economic and trade relations between the parties. 
(d) Generalized System of Preferences 
40. Israel does not grant preferences under the GSP,  nor do its exports receive GSP treatment 
from any other country.