WASHINGTON (Nov. 27)
Clayton Yeuter, the United States Trade Representative, believes that if Israel wants to increase its exports it must find “market niches” for itself as has South Korea and Taiwan.
The challenge for Israeli firms is to “find a niche that’s a profitable one and one in which they can meet the competition, where they’ll not be overwhelmed by the much larger firms that exist in the United States or elsewhere,” he told reporters from the Israeli and U.S. Jewish media at a press conference in his office Wednesday.
Yeuter returned November 20 from Israel where he spent a week discussing the free Trade Agreement between the U.S. and Israel which was signed September 1, 1985. This first annual consultation on the FTA, which will alternate between Jerusalem and Washington, was held with Trade and Industry Minister Ariel Sharon. He also met with other officials, including Premier Yitzhak Shamir and Foreign Minister Shimon Peres.
“Israeli exporters have not been as aggressive as those in certain Asian countries like Korea and Taiwan,” Yeuter said. He said he advised the Israelis that “There’s a competitive world out there. The market isn’t going to come to them. People aren’t going to knock on the doors in Tel Aviv saying ‘please sell me something.’ The Israeli exporters are going to have to be out beating the bushes and knocking on doors in the market places of the world.”
But Yeuter believes Israel can do it. He said that Israel has “sophisticated people, well-educated” and a “skilled labor force.” However, he noted that since Israeli wages are higher than Korea and Taiwan it can not compete in labor intensive products. Instead, it should seek to export “relatively high tech, sophisticated products,” he said.
ELEMENTS IN THE U.S.-ISRAEL AGREEMENT
The U.S.-Israel Free Trade Agreement calls for a series of elimination and reduction of tariffs between the two countries by 1995. Yeuter said it is too early to make an assessment of the agreement’s success but he believes it can have only a positive effect since “once trade barriers are reduced trade expands.”
“Israel will be the greater beneficiary” of the agreement because the smaller trading partner always benefits more, Yeuter said. But he stressed the U.S. also benefits. “To the degree that Israel becomes a larger winner than the United States, that’s fine, as long as we are both winners,” he said.
In 1985, Israel for the first time exported more to the U.S. than it imported. It exported $2.2 billion to the U.S. and imported $1.8 billion. For the first six months of 1986 Israel exported $1.2 billion and imported $896 million.
Yeuter said that the Israelis stressed to him that by opening plants in Israel, American firms would receive the same trade concessions from the European Community that Israeli firms do, thus making it easier for them to compete in Europe.