Directorate-General for Trade

Israel

Israel is one of the biggest EU trading partners in the Euromed area, with total trade with the EU amounting to more than €25.7 billion in 2007. The EU is Israel's largest market for exports and its second largest source of imports after the US. Israel displays a trade deficit vis-à-vis the EU, which has stabilised in recent years at about €4 billion.

Israel is part of the Euro-Mediterranean Partnership, which involves extending free trade across the Mediterranean region through a network of bilateral agreements between the EU and individual Mediterranean partners, with the ultimate aim of creating a Euro-Mediterranean Free Trade Area by 2010.

Israel is ranked as the EU's 25th major trade partner

Trade in goods

• EU good exports to Israel 2007: €14 billion
• EU goods imports from Israel 2007: €11.3 billion

In 2007 Israel's main exports to the EU consisted of electrical machinery and electrical equipment (12%), precious stones (16%), chemical products (17%) and vegetable products (10%). Israel’s major imports from the EU were in the same main categories, i.e. machinery and electrical equipment (17%), precious stones (20%), chemicals (14%), as well as in transport equipments (9%).

Trade in services

Israel is primarily a service economy. Services account for over 60% of its GDP. In 2005 services trade almost reached €5 billion, growing at about 10% per year in recent years, and displaying a small surplus for the EU. The EU mainly exports to Israel travel (29%) and transport services (28%), whereas it mainly imports from Israel business services (27%) and travel services (27%).

Foreign Direct Investment

Since the mid 1990s, Israel has benefited from rising, albeit at times irregular, foreign direct investment's inflows from the world, particularly in the telecommunications, electronics, and medical equipment, software, Internet and semiconductors sectors. In 2005 the total amount of FDI inflow exceeded $5.6 billions, accounting for 26% of the national's GDP.

More statistics on Israel

The European Neighbourhood Plan framework and financial assistance

EU-Israel co-operation is an important part of the European Neighbourhood Policy. The Neighbourhood policy supports political and economic cooperation between Israel and the EU and is the framework for financial assistance from the EU to Israel. The European Neighbourhood Policy Instrument - ENPI - will be endowed with €11.9 billion for 2007-2013. In the framework of the ENPI, as of 2007 Israel has been allocated a bilateral allocation of €2 million per year for the implementation of the ENP Action Plan, primarily for technical and institutional cooperation. For the period 2007-2010 the funds allocated by the EU's National Indicative Programme (NIP) to Israel amounted to €14million. The Israeli NIP for 2007-2010 will focus on supporting regulatory approximation of Israeli legislation to EU legislation with a view to facilitating trade and cooperation.

South-South integration

One of the key goals of the EU is encouraging more regional trade among the countries of the Southern Mediterranean rim, which has the lowest intraregional trade levels of any region in the world. EU trade Commissioner Peter Mandelson agreed in May 2005 with his Israeli and Palestinian counterparts to set up a trilateral working group to improve trade relations between the three parties. Two meetings of the working group have taken place up to late 2005, when activities were suspended for political reasons.

Israel's trade relations with Jordan were strengthened in 2005, when the 1995 trade and economic co-operation agreement between the parties was substantially upgraded by including the Pan-Euro-Mediterranean protocol of cumulation of origin. This protocol has also been included in the FTAs that Israel has concluded with the EFTA countries in 2005 and with Turkey in 2006. It is expected to boost opportunities for economic operators for the trade in certain goods, notably textiles, and to promote further regional integration.