Trade Winds Of Change

Q: You were instrumental in negotiating the Israel-Egypt-U.S trade agreement in 2005. How does that work?
A: It extended the benefit of the U.S.-Israel Free Trade Agreement to specific industrial zones in Egypt. It was successful. Since then the exports from Israel to Egypt increased six-fold to nearly $200 million. And Egypt benefits a lot since it allows products produced in the qualifying industrial zones in Egypt — and that incorporate an Israeli component in the product — to enjoy duty-free access in the U.S. market. It has created economic and business collaboration between Israeli and Egyptian companies for the sake of trade with the U.S.

Do you believe it will be affected by the current upheaval in Egypt?
It is still premature to make any judgment because we need to see how things evolve, but thus far I don’t see any negative effect, and the agreement provides economic benefit for both sides. Both sides have an interest to keep it.

You were also involved in Israel’s trade agreements with Turkey. Political relations between the two countries have been strained recently, how has the trade agreement fared?
While there has been political tension between Israel and Turkey in the last year, trade has still increased 5-10 percent. Once there is a real economic incentive for trade, we have seen that regardless of political events the business community takes advantage of the opportunities.

Israel has a peace treaty with two Arab countries — Egypt and Jordan. What is happening with trade between those countries?
It is slightly different. The agreement was signed in 1998. But Jordan also has a free trade agreement with the U.S. Therefore they do not necessarily need to use the agreement with Israel to enjoy duty-free access to the U.S. market.

The U.S.-Israel Free Trade Agreement celebrated its 25th anniversary last year. How has that held up?
This is an old-fashioned type of trade agreement, and it would make sense for both sides to enter into negotiations to update it. It needs to respond to developments in both economies, the global economy and the challenges we face today in a way that will promote trade, investment and technological collaboration between the U.S. and Israel. This is something that is discussed constantly between trade officials from both countries.

What does the trade agreement cover?
It covers mainly trade in goods — industrial and agricultural goods and mortar-trade agreements — trade in services, investments, intellectual property and electronic commerce.

How successful has the agreement been?
Bilateral economic ties with U.S. are stronger than they were 25 years ago. When it was signed in 1985, it was focused on trade. Today, we have reached a much deeper economic relationship because we refer to issues relating to investments, and big multinational companies in the U.S. have opened research and development centers in Israel to tap into the talent available in Israel. They see Israel as a strategic partner for innovation — such companies as Intel, Google, Microsoft and IBM, to name only a few.

There are almost 100 development centers with 100 multinational companies in Israel. They are mainly American companies but not exclusively — SAP is a German software company, for instance. Intel has its biggest research and development center in Israel outside of the U.S., employing 5,000 people. Its Centrino chips was developed in the R&D center in Haifa. They have a bigger facility in Kiryat Gat, located between Tel Aviv and Beersheva, which was recently expanded.

How do both countries benefit from this relationship?
Israel enjoys foreign direct investment from American companies in Israel, and American companies benefit from the technological innovation that they are able to get from Israeli manpower. Israel is not just a market for them but a strategic partner for the development of new products that will then be marketed around the world.