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U.S. Statement on the Trade Policy Review of Israel
October 30, 2012

WTO Trade Policy Review of Israel
Statement delivered by Ambassador Michael Punke
U.S. Permanent Representative to the WTO
October 30, 2012

Thank you, Chair.

The United States is pleased to welcome Mr. Ohad Cohen, Deputy Director General for Foreign Trade and Director of the Foreign Trade Administration, and the delegation from Israel here today for Israel’s fourth Trade Policy Review (TPR).  The United States would like to thank the WTO Secretariat and the Israeli Government for the informative reports provided to Members prior to this meeting.  We also thank the discussant, Ambassador Kwok Fook Seng (Singapore), for his valuable contribution to this review.

During Israel’s last TPR in 2006, the Secretariat report noted that Israel’s various programs of economic reform had succeeded in fostering impressive economic growth, while keeping inflation in check, reducing public debt, and strengthening Israel’s current account.  However, the report also highlighted a number of areas in which additional efforts were needed to sustain economic growth and contribute to a better allocation of resources in the economy.  These areas include more privatization, and reducing the gap between bound and applied tariffs.  The report also highlighted the remaining restrictions on trade, including a high level of tariff protection in Israel’s agricultural sector, a concern expressed by a number of Members during the 2006 TPR.

Today we are pleased to have the chance to review developments in these areas and others, and to discuss Israel’s economic performance since the 2006 TPR.

Economic growth in Israel has been impressive since the previous review, providing evidence of the success of the government’s reform efforts.  Despite the downturn Israel shared with much of the world in 2008-09, growth rebounded to nearly five percent in 2010 and again in 2011.  Inflation has remained low, well under three percent in recent years.  One key change in Israel’s trade and investment posture noted in the Secretariat’s report is the pronounced shift in Israel’s commercial engagement toward countries in the Asian regions, and concurrent decline in trade with FTA partners.

Our bilateral 2011 data demonstrate how important bilateral trade and investment are to both of our economies.  In 2011, Israel was our 26th largest trading partner for goods and services, with $40 billion in total trade.  U.S. goods and services exports to Israel were $15 billion and our imports from Israel were $25 billion.  The United States has continued to support Israel’s efforts to boost economic growth through increased trade, and remains actively committed to bilateral cooperation under the U.S.-Israel Free Trade Agreement – an agreement that dates back twenty-seven years.

The United States is a significant investor in Israel, with the stock of U.S. foreign direct investment valued at about $9.6 billion in 2011.  Our mutual trade and investment have generated increased employment opportunities in both countries.

Despite the positive aspects of the record described in the Secretariat’s report, however, there are areas where we believe Israel could make further improvements.  Continuing progress in eliminating trade restrictions and increasing transparency would benefit Israel’s economy by improving efficiency and raising productivity to support sustained economic growth.  We urge Israel to redouble its efforts to open its market to world trade, particularly in agriculture, and to ensure world class intellectual property protection – all of this would greatly increase the competitiveness of the Israeli economy and lower the costs of living borne by the Israeli citizen.  The United States offers our questions and comments on the Israeli trade regime in a constructive spirit and we would like to thank the Government of Israel in advance for considering and responding to them.

The United States notes some continued concerns with aspects of Israel’s import prohibitions, licensing, and associated practices.  We would also welcome having a better understanding of actions taken to address trade remedies, including legislative amendments to the Trade Levies Law and provisions governing antidumping and countervailing duties.  We urge Israel to examine closely its measures and practices to ensure that they are in line with Israel’s WTO commitments, including the Agreement on Import Licensing Procedures.  In addition, we urge Israel to ensure prompt and full notification to WTO members of any steps Israel intends to take to modify measures affecting imports, including the use of standards, technical regulations and conformity assessments. The United States stands ready to work with Israel to address these concerns.

We would like to recognize Israel’s continued efforts to strengthen intellectual property protection, and in particular its recent efforts to enhance data protection and establish reasonable royalties.  Nonetheless, we observe that some concerns on intellectual property remain.  While the Secretariat’s report highlights continued constructive steps taken by Israel in the area of intellectual property rights enforcement, we believe that further comprehensive, coordinated and sustained efforts in this area are necessary to ensure the protection of intellectual property in Israel.  We would be interested in an update on any legislative, judicial or enforcement steps the Israeli Government anticipates in this area.

Although we note Israel’s sensitivities concerning agriculture, the significant and growing costs to the Israeli consumer of the use of licensing procedures to implement WTO and preferential tariff quotas on agricultural products should encourage Israel to re-examine its policies in this regard.  We would also encourage Israel to review the use of tax incentives and grants to those manufacturers with strong export capacity.

The United States welcomes Israel’s continued support and commitment to the WTO’s work and to trade liberalization through a rules-based multilateral trading system.  We also applaud Israel’s active support for services liberalization.

The United States appreciates the opportunity to participate in this review.  We look forward to continuing our work with Israel and our trading partners to strengthen the global economy, allowing trade and investment opportunities to expand.

Thank you.