Expanding the US-Israeli economic partnership

‘Now is a good time for Israeli companies to invest in the US. There are also investment opportunities in Israel, particularly in the technology and energy sectors.

Dan Shapiro
The unique, unparalleled relationship between the United States and Israel is anchored by shared values and common strategic interests.
These twin pillars have held strong for decades, have buttressed our relationship throughout challenging periods in Israel’s history, and underlie our common approach to our most pressing challenges – from pursuit of a two-states-for-two-peoples solution to end the Israeli-Palestinian conflict, to ensuring that Iran does not acquire a nuclear weapon.
Under President Obama’s leadership, we have found ways to further deepen our special ties, including by building up what can now be called a third pillar in US-Israel relations: our common prosperity. Our partnership now encompasses robust economic and commercial ties that have created jobs for tens of thousands of Israelis and Americans, and resulted in countless innovations and scientific breakthroughs.
The linkages between our companies, entrepreneurs, traders and investors have contributed to the growth and transformation of many sectors of both Israel and America’s modern knowledge-based economies.
Next year marks the 30th anniversary of both the US-Israel Free Trade Agreement and the establishment of the Joint Economic Development Group (JEDG), our annual economic dialogue. We have achieved so much over the past three decades. Since the trade agreement was signed in 1985, trade between our countries has increased eightfold, and each country has invested over $10 billion in the other’s economy. Nowhere is that investment more evident than in the hi-tech sector, where American companies account for two-thirds of the roughly 300 international research and development centers in Israel, in which critical components of leading American hi-tech products are invented and designed.
In 1985 Israel’s economy was facing multiple challenges: high inflation, large government budget deficits, and slow growth. The creation of the JEDG facilitated the development of an economic stabilization plan that successfully reinvigorated the Israeli economy and put it on the path towards the rapid growth it experienced in the 1990s. As times have changed the JEDG has evolved too and it is now our key coordinating body for a wide range of economic policy issues. The success of Israel’s modern economy has been the envy of the world and Americans are captivated by the story of the “Start-up Nation.”
During his visit to Israel last year, President Obama was impressed by Israeli technology and said if you want to see the future of the world economy, “look at Tel Aviv, home to hundreds of start-ups and research centers.”
But as impressive as the last 30 years of accomplishments have been, I believe we need to look to the future and work together to further strengthen our close economic ties, improve the trade and investment climate, and harness the untapped potential of our economies. For example, the US recovery is leading the globe, and consumer confidence in America is high. Now is a good time for Israeli companies to invest in the US. There are also investment opportunities in Israel, particularly in the technology and energy sectors. American companies are already building natural gas infrastructure and supplying expertise that is helping Israel become more energy independent and creating partnerships that will more closely link Israel to its neighbors.
However, investors have faced regulatory challenges and requirements that are delaying development of significant US investments in natural gas, independent power, and solar energy.
Therefore, we are encouraging Israel to ensure that its regulatory frameworks are transparent and stable so as to create an enabling environment for investment, which would bring greater prosperity to Israel.
We should also work together to eliminate the last remnants of trade restrictions – particularly for agricultural products – cut bureaucratic red tape that hinders trade and investment, and harmonize standards, so doing business between our two countries is efficient and easy. Tariffs, quotas and non-tariff trade barriers are contributing to the high cost of living by hindering greater US exports of agricultural goods to Israel – products that Israelis would like to buy. We believe that removing obstacles to trade gives consumers lower prices and greater product diversity. When you look around the world at large or small markets, the ones that have the greatest choice and lowest prices are invariably those that have opened their markets to full and free trade.
Our two governments are also working to expand the already-close cooperation in the sphere of science and technology research. We are now working toward a new science and technology agreement to further stimulate government, academic and private cooperation on environment, science, technology and health research.
More can be done to find ways to work together to create regional prosperity that is good for Israel and its neighbors.
As we seek to achieve peace between Israelis and Palestinians, and expand peace between Israel and its Arab neighbors, we should look to combine Israeli technological know-how with American company connections in the region to expand regional commercial cooperation. We are already seeing these opportunities develop in the energy sector, but hi-tech, health and water technology are also very promising fields.
Our economic partnership is strong and has produced amazing results over the past 30 years.
If we put our minds to it, we can leverage our success to date into even greater prosperity for Americans and Israelis, as well as help spread that prosperity to the entire region.
• Daniel Shapiro is the US ambassador to Israel.
This essay was written two weeks in advance of The Jerusalem Post Diplomatic Conference.