Representatives from Israel and the European Union will meet next week to discuss proposed steps to tighten trade links, including a potential agreement on services trade, a new conflict resolution mechanism, a mutual standards recognition pact and Israeli participation in the EU research and development program.
"The economic and commercial links with Europe are stronger than ever," Industry, Trade and Labor Minister Eli Yishai said following a meeting this week with EU ambassador to Israel, Ramiro Cibrian-Uzal to discuss the proposals.
Yishai said he expects the EU to show "flexibility and understanding" in determining the formula for calculating the amount of Israel's financial participation in the R&D program.
In response, Cibrian-Uzal expressed hope that political conditions would allow the resurrection of an earlier initiative for tri-lateral economic cooperation between the EU, Israel and the Palestinian Authority. Yishai recognized the importance of such a pact, and stressed that it would be considered positively if political circumstances allow it.
The EU is Israel's largest trade partner, accounting for 38.6 percent of the country's imports and receiving 28.7% of Israel's exports in 2005. Imports from the EU totalled $17b., while Israeli exports to the trade block came to $12b., the ministry said, adding that the level of trade was maintained in the first three quarters of 2006.
Separately, the Manufacturers Association of Israel said Tuesday that during the war months of July and August, industrial exports sank 3% in real terms, reflecting a drop of some $4.7b.
The association called on the Bank of Israel to help Israeli exporters compete by cutting the interest rate by at least 0.5 percentage points at the end of the month, and demanded that the government dedicate funds from the 2007 budget to marketing and financing exports.
"With relatively small allocations, it would be possible to increase exports and the number of those employed in industry and in the economy [as a whole]," said association president Shraga Brosh.