Ford Declares Israel Eligible for Generalized System of Preferences

American firms seeking to locate industrial plants abroad will find the advantages offered by Israel virtually unmatched by any other country as a result of an Executive Order by President Ford, effective today, the Government of Israel Investment Authority announced here. The Presidential order makes Israel one of the few selected countries eligible for the Generalized System of Preferences. This means that more than 2700 products manufactured in Israel can now be imported into the U.S. duty-free, the Investment Authority said.

The advantages that would accrue to an American company locating an industrial site in Israel include, according to the Investment Authority, duty-free access to many U.S. markets; duty-free access to the European Common Market; a preferential tax position, including higher foreign tax credits; and protection from double taxation. The duty-free status applies to many metal products, fine chemicals, electrical and electronic products, computers and medical instruments. Textile and semi-finished goods are excluded under the agreement.

GSP IS A RECIPROCAL AGREEMENT

The GSP is a reciprocal agreement. Israel as agreed to reduce import tariffs on over 130 U.S. made items, the Investment Authority said. The Authority quoted a senior Israeli government official as saying that products manufactured in Israel by American firms “will be able to reach Europe and the United States as if they were manufactured in the domestic markets duty free.”

“At the same time, manufacturers will be able to take advantage of U.S. tax breaks not granted to operations in either the U.S. or the EEC. Together with Israel’s low costs, high technical skills and generous financial incentives, these tax breaks will make it more advantageous from a ‘cost of “doing business’ standpoint to locate in Israel than in either the Common Market or the U.S.” the official said.

Israel bases this claim on its admission to the European. Common Market as an associate member last July with an initial 60 percent reduction in customs duties on all industrial exports to EEC countries; the U.S.-Israel Tax Treaty of November 20, 1975 which, subject to Congressional approval, will protect American firms investing in Israel from double taxation; and the Israel government’s recent raising of existing grants for research and development to match, dollar-for-dollar, the investing company’s investment in research and development,

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