News Analysis: New Accord Will Expand Israel’s Economic Ties to European Union

The European Union’s green light for a long-awaited trade accord with Israel portends a new era of closer economic integration between the Jewish state and Europe.

The accord will provide for expanded free trade between Israel and the 15 nations comprising the European economic bloc.

Israel hopes that the new accord will help lessen Israel’s trade imbalance with the European Union, which amounts to some $7.5 billion dollars annually.

The new accord, which has been hailed by Israel as an “important milestone in relations between Israel and Europe,” is scheduled to be signed in October after both parties complete the drafting of the final details. E.U. nations gave the go-ahead for the final stages last week.

The agreement will then be brought for approval before the European Parliament in Strasbourg, France, and to the parliaments of the E.U. member states for final ratification.

The new pact replaces a 1975 trade and cooperation accord between Israel and what was then known as the Common Market.

Negotiations on an updated accord between the two sides began in January 1994, after Israel and the Palestine Liberation Organization signed their peace accords in September 1993.

Spain, which now holds the six-month rotating presidency of the European Union, played an important role in accelerating the conclusion of the accord with Israel. The pact had been scheduled to be concluded months ago.

“Spain wants to give a strong impetus to the relations between the E.U. and the Middle East,” said one diplomatic source. “It’s one of their priorities.”

The most significant — and controversial — part of the new association agreement is the special status given Israel to participate in the European Union’s scientific and technological research and development projects.

According to diplomatic sources here, this special status was granted to Israel in recognition of Israel’s advanced capability in the area of research and development.

When the accord is ratified, Israel will become the first non-E.U. member to get special observer status within the European Union’s Research and Development Committee.

Israel will be able to participate in all debates within this committee but will have no voting rights.

To assuage Belgian, Dutch and Portuguese reluctance to allow Israel to participate in the committee, the E.U. members decided that it would meet alone if a discussion focused on Israel.

While agreeing to allow Israel to participate in committee sessions, E.U. officials have stressed that his will not be a precedent for other non-E.U. countries — Switzerland in particular — that want to receive the same treatment.

The new accord also envisions the expansion of free trade between Israel and the European Union, a move that would enable the Jewish state to export larger quantities of agricultural produce to Europe.

For this provision, Israel had to make concessions, especially to Spain, by agreeing to reduce its export quota of oranges to the European Union from 300,000 tons to 200,000 tons.

Spain, along with other E.U. states, had feared the competition of increased Israeli agricultural exports.

Before the agreement was reached, Israel also had to agree to give better access to Israeli markets for E.U. exports of cheese, frozen meat and apples.

“We had to make painful compromises in the agricultural field,” an Israeli Embassy spokesman here said.

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