TAC Program - Making Trade Agreements Work for You!

It was signed in 1985 and came into full effect on January 1, 1995. Although the Agreement has no expiration date, it can be terminated by written notification of either party.

Who benefits from this Agreement?

Under this Agreement, American companies exporting U.S. goods to Israel can gain greater market access, reduce transaction costs, increase sales, enhance export revenues and become more competitive in the Israeli marketplace. Israeli companies exporting their goods to the U.S. receive similar benefits.

How can this Agreement help my company?

Under this Agreement, American exporters can expect to receive the following benefits:

1. No Israeli tariffs of any kind on your products (except for agricultural products). The following fees, however, may apply:

- A Port Fee of one percent on the cost, insurance, and freight value (CIF) of the product is imposed on goods sent by ship.

- A Stevedoring Fee of 0.5 percent of the CIF is imposed when products are unloaded from ships.

- A Compulsory Levy is imposed at various rates on the CIF value of food and agricultural products.

-- A Purchase Tax is applied to specific products, primarily luxury and consumer items, whether or not they are imported or produced locally. The purchase tax is levied on the wholesale price of the item.

-- Israel imposes a Value-Added Tax (VAT) on most goods and services sold in Israel, including all imports, with the exception of fresh fruits and vegetables. The VAT rate is presently 17 percent. The VAT on an imported product is recovered by the importer upon resale of the goods.

2. Limited import licensing requirements;

3 No other import restrictions, except on agricultural products;

4. No barriers or discrimination in bidding on Israeli government procurement;

5. No requirements to purchase locally produced goods or services;

6. Full intellectual property rights; and

7. An open market for trade in services

All American companies interested in exporting under this Agreement must satisfy two important conditions: your products must meet the Agreement's designated rules of origin criteria, and you must complete and affix all required documentation.

Rules of Origin

To satisfy the Agreement's rules of origin criteria, your products must either be grown, produced, or manufactured entirely in the United States. If they are not, they must be substantially transformed into new products with a different name, character, or use. You cannot simply combine or repackage your products to fulfill this requirement. You must also export your products directly from the United States into Israel, not through a third country. All U.S. goods entering Israel must be accompanied by a U.S.-Israel Certificate of Origin.

Other Documentation

The Israeli Customs Service prefers that exporters use their own commercial invoice forms to provide all required information. Exporters should include the following information on their invoice forms: the supplier's name and address, general nature of the goods, country of origin, name and address of the recipient in Israel, name and address of the agent in Israel, rate of exchange, terms, Israeli import license number (if applicable), shipping information, full description of all goods in the shipment, price per unit and total value of the shipment. The commercial invoice must be signed by the manufacturer, consignor, owner, or authorized agent.

For items that will be brought into Israel only temporarily (goods that are not to be sold but later re-exported - e.g., a camera shipped to Israel to film a movie and then re-exported), it is necessary to obtain a "carnet de passage". To obtain a carnet, contact the U.S. Council for International Business (1-800-538-8937 or 212-354-4480). A security deposit amounting to 100 percent of the value of the goods covered by the carnet must be provided. This security deposit must be made in the form of a certified cashiers' check.

Can the U.S. Government help me if I have a problem?

Yes. If your company is experiencing difficulties exporting under the U.S. - Israel Free Trade Area Agreement, contact the Trade Compliance Center at the U.S. Department of Commerce. The Center can help you understand your rights, and can activate the U.S. Government to make official inquiries that could help you resolve any problems that you encounter while exporting to Israel.

Does this Agreement have dispute settlement provisions?

Yes. When a dispute arises under this Agreement, the United States and Israel have agreed to make every effort to resolve the problem through bilateral consultations. If these consultations are unsuccessful, either party may: 1) Refer the matter to a Joint Committee composed of representatives from both countries which has 60 days to resolve the dispute,or longer if the Committee so agrees; and 2) If unresolved, refer the matter to a three-member conciliation panel which tries to get the parties to come to some agreement. If the panel fails to resolve the problem within three months, it presents a non-binding report to the two parties. This report includes findings of fact, a determination on whether a party has failed to implement the Agreement's obligations, and a proposal for settling the dispute. After the panel's report has been issued, the affected party is entitled to take any appropriate measures.

How can I get more information?

The complete text of the U.S.-Israel Free Trade Area Agreement is available through the Office of Trade Agreements Negotiations and Compliance's web site.

If you have questions about this Agreement or how to use it, you can e-mail the Office of Trade Agreements Negotiations and Compliance, which will forward your message to the Commerce Department's Designated Monitoring Officer for the Agreement. You can also contact the Designated Monitoring Officer at the following address:

Designated Monitoring Officer -

U.S.-Israel Free Trade Area Agreement

Office of the Near East

U.S. Department of Commerce

14th Street & Constitution Avenue, N.W.

Washington, D.C. 20230

Tel: (202) 482-1860

Fax: (202) 482-0878

The Designated Monitoring Officer can also provide you with useful trade leads and contacts.

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Does this Agreement cover exports to the West Bank and the Gaza Strip?

The U.S.-Israel Free Trade Area Agreement does not cover exports to the West Bank or the Gaza Strip. In an official exchange of letters between U.S. and Palestinian officials, however, the Palestinian Authority agreed to provide reciprocal duty-free treatment for American products entering the West Bank or Gaza Strip.

Import Licensing

All import licensing requirements for consumer and industrial goods have been eliminated under this Agreement. Israel formerly required import licenses for a variety of food products, including cheese and fish, but these are no longer necessary. Food and health products must be registered with the Israeli Ministry of Health, however, before they can be sold in Israel. Product registration normally takes four to six weeks. For information on entry procedures and requirements for food products, exporters can contact the Israeli Ministry of Health at the following address:

Israeli Ministry of Health

Food Control Administration

Government of Israel

12-14 Ha'arba'a Street

Tel Aviv 64739

Israel

Tel: 972-2-563-4781

Fax: 972-3-562-5769

All medical devices and equipment must have a letter of acceptance from the Ministry of Health. The request for the letter of acceptance should be accompanied by one of the following documents: a 510 (k) Pre-Market Approval (PMA), or Investigational Device Exemption (IDE). These documents can be obtained either from the product's manufacturer or directly from the Food and Drug Administration's Center for Devices and Radiological Health/Division of Small Manufacturers (301-443-7491). Exporters can contact the Pharmaceutical Division of the Israeli Ministry of Health for additional registration information at the following address:

Israeli Ministry of Health

Pharmaceutical Division

Medical Device Department

P.O.B. 1176

Jerusalem 91010

Israel

Tel: 972-2-705089

Fax: 972-2-793765

Are Agricultural Products Covered by this Agreement?

Some agricultural products were covered by this Agreement, and in November 1996 the United States and Israel concluded a separate Agreement on Trade in Agricultural Products (for text of the agreement, contact the U.S. Department of Agriculture site). Designed to enhance market access for a number of additional American agricultural products, this Agreement established three categories of product coverage: 1) products free of tariffs; 2) products free of tariffs within certain quotas; and 3) products with preferential tariff rates.

Among the most important American agricultural exports that now enter Israel on a tariff-free, quota basis are: chilled and frozen beef, fresh and processed poultry, apples, grapes, pears, citrus, sunflower seeds, cheese and selected fresh and frozen vegetables. Under the agricultural accord, Israel also committed to the gradual reduction of these quotas.

The Agricultural Agreement expires December 31, 2001. At that time, both governments will review its implementation and seek ways to improve its performance.

Government Procurement

The Agreement enables American suppliers to compete more effectively for Israeli government procurement opportunities. It lowers the minimum value of contracts open to American suppliers and expands coverage to include procurement by the Ministry of Defense of Israel. As a result, American companies have been able to compete on equal terms with Israeli suppliers on contracts (valued at more than $50,000) from government institutions covered under the Agreement's government procurement code. These include central, sub-central, and quasi-governmental agencies. Services and construction are covered in the procurement code. Notices of procurement opportunities are posted in the Jerusalem Post (offsite link) and the Ha'aretz (offsite link) .

The Government of Israel also relaxed its offset requirements on civilian purchases (except for civilian purchases by the Ministry of Defense) for American firms. As a result, offset requirements no longer apply to U.S. companies for contracts under $500,000. Also, the annual procurement from American companies subject to offsets was reduced from 40 to 20 percent.

Trade in Services

The Agreement essentially encourages each trading partner to work towards attaining three objectives: 1) To open their markets to the other country's service industries; 2) To provide the same treatment given to domestic companies; and 3) To make information on laws and regulations affecting services open and readily accessible. The Agreement's provisions on trade in services are not legally binding.

U.S.-Israel Certificate of Origin

All U.S. exports entering Israel must be accompanied by a U.S.-Israel Certificate of Origin signed by the exporter. These certificates can be obtained from the following companies (a minimum order of 100 is required):

UNZ and Company

190 Baldwin Avenue

Jersey City, NJ 07306

Tel: 800-631-3098

Rapid Forms

301 Grove Road

Thorofare, NJ 08086

Tel: 800-257-8354

Single certificates and assistance in filling out the forms may be obtained at any American-Israel Chamber of Commerce office. To find the office nearest you, contact the American-Israel Chamber of Commerce's web site (offsite link).

The certificate is not required for: 1) commercial shipments of goods valued under $50, 2) certain printed matter, 3) shipments of goods with no commercial value, and 4) gifts from individuals valued under $100.

Standards

The Agreement itself does not specifically address or place limits on product standards. Israel tends to apply European standards, and this has become a recurring issue in talks between the United States and Israel. The Standards Institute of Israel is responsible for handling such issues as product standards development, compliance testing, product certification and industry quality assurance systems. Exporters interested in obtaining more information can contact the Israeli Standards Institute at the following address:

Standards Institute of Israel

42 Levanon Street

Tel Aviv 69977

Israel

Tel: 972-3-6465154

Fax: 972-36419683

Most imported food products are subject to metric-system size requirements. Although metric standards are not required for most other product categories, metric standards are preferred by Israeli importers as non-metric standards may negatively affect a product's marketability.

Labeling

Israel has strict labeling requirements. All imports (with the exemption of textiles and cigarettes) are permitted to be labeled in Israel immediately after entry. Labels must be in Hebrew. For further information on the specific labeling requirements for your products, contact the Israeli Ministry of Industry and Trade at the following address:

Israeli Ministry of Industry and Trade

Department of Weights and Measures

30 Agron Street

Jerusalem 94190

Israel

If you are an exporter of food products and want to obtain additional information on labeling, contact the Israeli Ministry of Health at:

Israeli Ministry of Health

Food Inspection Service

12-14 Ha'Arba'a Street

Tel Aviv 61070

Israel

Tel: 972-3-5634782

Fax: 972-3-5619549.

TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.


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