ISRAEL-EUROPEAN UNION TRADE AGREEMENT TO BE SIGNED ON MONDAY, NOVEMBER 20,
1995
(Communicated by Foreign Ministry Spokesman)
On Monday, November 20, 1995, in the presence of EU foreign ministers and
Israeli Acting Prime Minister and Foreign Minister Shimon Peres, a new
trade treaty between Israel and the European Union will be signed. The
agreement replaces the 1975 agreement, and includes a number of new
components, which will strengthen ties between Israel and the European
Union. The treaty's purpose, as defined in its text, is to provide a
framework for political dialogue, and to strengthen economic relations
between the EU and Israel.
The agreement is defined as a "Treaty of Association," establishing an
association between Israel and the EU. The agreement is based upon the
principle of reciprocity, giving expression to the special relations
prevailing between Israel and the EU.
Politically, the treaty calls for a regular dialogue at different levels
(ministerial, senior official, and diplomatic), towards the development of
a durable partnership, and to strengthen mutual understanding and
solidarity.
Economically, the accord expands the parameters of the existing free trade
zone by updating rules of origin and making them more flexible, granting
easier access to public and government procurement markets (in the
telecommunications sector), and simplifying trade conditions.
Further, Israel has been accepted as a full member of the EU's Fourth
Framework Research and Development program. The R&D agreement, initialed
on October 31, 1995, determines that Israel can participate in the EU's
R&D committees (without voting privileges). Israel is one of only two
countries, the other being Switzerland, that are not EU members but have
the right to take part in EU R&D projects. The agreement allows Israeli
firms to participate in EU R&D tenders.
With regard to industrial products, the agreement forbids customs duties
from being imposed on imports and exports between Israel and the EU. This
applies also to customs duties of a fiscal nature.
As to agricultural products, the agreement calls for greater
liberalization in agricultural trade with regard to products in which both
sides have an interest. To this end, the necessary measures will be in
place by January 1, 2001. It was also agreed that, within the framework of
the Association Council, the parties will examine each item in an effort
to further ease restrictions.
Beyond the sphere of general trade, the agreement includes possibilities
for phased freedom of movement in financial services, and for cooperation
in many other areas.
The agreement also includes a section concerning the right to establish
and supply services, with both parties agreeing to broaden the scope of
the agreement to allow the other party to establish firms in the other's
territory, as well as the further liberalization of the supply of services
by one party's firms to customers of the other party.
Concerning the movement of capital, payments, public procurements,
competition, and scientific, industrial and commercial rights, it was
decided that:
* There will be no restrictions between the parties on the movement of
capital, nor will there be any discrimination on the basis of nationality,
place of residence, or the place where the funds are to be invested. In
addition, current payments relating to the movement of goods, people,
services, or capital included in the agreement will be free of all
restrictions.
* The parties will take steps to mutually open the government and public
sector procurement markets beyond the scope of the WTO framework.
* With regard to competition, the two parties will forbid the creation of
cartels and other associations that prevent competition. In addition, the
parties will allow full accountability in all matters relating to public
assistance, in order to ensure that the rules of fair competition are
upheld.
* The parties have agreed on appropriate protections of scientific,
industrial and commercial rights, and on the enforcement of these
protections.
* Agreement was reached on scientific and technological cooperation.
Separate agreements will set forth the details of arrangements in this
sphere.
In the context of economic cooperation, the parties agreed that:
* Economic cooperation will take place in sectors related to the parties'
economies or which promote economic growth and/or employment.
* Cooperation will be attained through regular economic dialogue between
the parties that will encompass all spheres of economic policy.
* The primary spheres of economic cooperation are:
1. Regional cooperation
2. Industrial cooperation
3. Agriculture
4. Standards
5. Financial services
6. Duties/Customs
7. Environment
8. Energy
9. Information infrastructure
10. Tourism
11. Correlation of laws
12. Transportation
13. War on drugs and money laundering
14. Immigration
On Israel's request, the agreement also includes new areas of cooperation
in the promotion of culture, education, and audio-visual production.
A full section of the agreement is devoted to social issues. It was
decided to establish a dialogue in all spheres of mutual interest
primarily in such social spheres as unemployment, the rehabilitation of
the disabled, equality of the sexes, working relations, and professional
training. In addition, agreement was reached on social rights for Israelis
within the EU.
Within the framework of the fundamental and general instructions, the
parties agreed to establish an Association Council. The Council will
convene once a year at a ministerial level, as needed, in order to examine
all important issues related to the agreement, as well as all bilateral
and international issues of mutual interest. It was also agreed that an
arbitration mechanism would be created to settle disputes between the
parties.
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Israel-EU Balance of Trade:
In 1994, Israel exports to the EU totalled $4.9 billion, while EU imports
stood at $12.7 billion, creating an Israeli trade deficit with the EU of
$7.8 billion. During the first nine months of 1995, Israeli exports to the
EU amounted to $4.5 billion, with EU imports to Israel of $10.7 billion;
thus bringing Israel's trade deficit with the EU to $6.2 billion, as
compared to a $5.5 billion trade deficit during the same period last year.
Israel's trade deficit with the EU is larger than its trade deficit with
the rest of the world, which consisted of $7.6 billion in 1994.