Israel, EU agree on trade concessions

95% of processed foods will be exempted from levies and quotas.

vineyard 88 224 (photo credit: Ariel Jerozolimski)
vineyard 88 224
(photo credit: Ariel Jerozolimski)
Israel and the European Commission have reached a common understanding on mutual tax concessions in the fields of agricultural products, processed food products and fisheries. The agreement is expected to more than double local exports of processed foods and beverages to the European Union. "This is a historic agreement, in particular regarding exports of processed foods and beverages, which until now, enjoyed limited access to the European market because of relatively high levies and limited quotas," Roy Nir, deputy director of the Bilateral Trade Agreements Division at the Industry, Trade and Labor Ministry, told The Jerusalem Post Wednesday. "Once the agreement comes into effect, export trade volumes of processed foods to the EU are expected to more than double." Under the framework of the agreement, 95 percent of processed foods, imported or exported, will be exempted from levies and quotas. Israel exports 75% of its fresh and processed agricultural products to the EU market. The agricultural agreement encompasses about $1 billion in Israeli exports, while European imports total about €500 million. Out of the total agricultural exports to the EU, processed food and beverages account for €150m., compared with €270m. in European imports. "Trade between Israel and the EU has been unbalanced, as limitations on our exports have been higher than those placed on imports from Europe," Nir said. "Now we have hammered out a more balanced deal.We expect implementation of the agreement by the end of the year." Until now, only 70% of processed foods exported to the EU were duty-free compared with 85% of EU imports to Israel. At the same time, duty-free quotas on fresh agricultural exports to the EU have also increased under the agreement, although protective provisions for fresh European products remain fairly broad and less liberalized. "These trade concessions represent a major step forward in the integration of the EU and Israeli markets," the European Commission said in a statement. "For processed agricultural products, a high level of full liberalization of trade for both parties was achieved. Once adopted, the agreement will create new trade opportunities for EU exporters in a range of products that could not previously reach the Israeli market. On the other hand, Israel's major exporting sectors will benefit from further liberalization and better market access." The products, which were lifted from limitations of levies or quotas include juice concentrates, chocolate products, baked goods, coffee, pasta, cookies and marshmallows. "Israeli companies that previously were not competitive enough to enter the EU market because of a 40% tax levy on products will now be able to expand to this important market," Nir said. Under the terms of the agreement, a small percentage of products will be exempted from the concessions because of protective regulation. Among the products, which Israel excluded from the concessions in an effort to protect competition, are sweet corn, tomatoes, ice cream, and some baked goods and dairy products.