New regulations announced Monday by the Industry, Trade and Labor Ministry will require that foreign companies that are awarded tenders by government-owned companies must purchase more products produced in Israel as part of the contract.
More than $3 billion in so called "offset" from foreign trade was pumped into the Israeli economy in 2006 due to legislation enacted by the ministry's Industrial Cooperation Authority with this number expected to increase in 2007 as new regulations deriving from the law of tenders take effect.
Under the new regulations, explained Bina Bar-On, director-general of the Authority, foreign companies that are awarded tenders by Israeli government-owned companies must purchase increased percentages of products, depending on the scale and type of the tender awarded, from Israeli businesses.
According to the details of the regulations, a foreign company, if it is Government Procurement Agreement (GPA) country, which is a subset of the World Trade Organization, must make purchases of Israeli products totalling 28% of the total contract if the tender awarded is civilian and 50% if is in the military sector.
If the country awarded the tender is not a member of the GPA, it must make purchases of Israeli manufactured products equaling 35% of the entire contract.
Additionally, under the new legislation, companies that do not conform to the new standards will be placed on an international "black-list," making it very difficult for them to engage in trade.
Last month, Bar-On's office coordinated a three-day conference on the topic of offset from industrial cooperation, at which more than 30 representatives from some 19 countries were present.