Steinitz, Simhon compromise to removal import duties

‘Israel in general, communications industry in particular reaping dividends of investments in education, infrastructure, R&D,’ says Simhon.

311_Yuval Steinitz (photo credit: Tamar Matsafi)
311_Yuval Steinitz
(photo credit: Tamar Matsafi)
Industry, Trade and Labor Minister Shalom Simhon and Finance Minister Yuval Steinitz have reached an agreement on the gradual removal of import duties that they will submit at the next weekly cabinet meeting, Simhon confirmed on Thursday.
Simhon, speaking at the Calcalist and Israel Export Institute’s Mobile 2012 conference, said import duties would be lowered gradually over the next two years, before eventually being removed completely.
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The Trajtenberg Report on Socioeconomic Change, which was approved by the cabinet three weeks ago, recommended the two-stage removal of all import duties (with some exceptions, such as vehicles) by January 2013.
Simhon said delaying such a move would “enable manufacturers to deal with importation.”
Manufacturing groups have argued that the timetable set down by Trajtenberg does not give them enough time to prepare for exposure to importation, and that the consequent closure of factories would force them to layoff workers.
The two ministers – who had been at loggerheads over the issue all week – reached an agreement late Wednesday night, Simhon said, adding that their respective offices were working hard to complete the draft in time for the cabinet meeting on Sunday.
Simhon said he and Steinitz also agreed to increase the budget of the Office of the Chief Scientist in the Industry, Trade and Labor Ministry.
Chief Scientist Avi Hasson warned Monday that Israel’s comparative advantage in industrial innovation will dry up in a decade if his office’s research and development budget is not expanded.
Addressing the mobile industry conference, Simhon said Israel had understood for a long time the benefits of investing heavily in research & development. He added that this was the reason Israel had been ranked No. 1 in the world for R&D investment proportionate to gross national product, and that Israeli industry had enjoyed such success.
The ministry’s chief scientist invests around 25 to 30 percent of his annual budget in communications technologies, and in 2010 these investments reached more than NIS 400 million, Simhon said.
“The State of Israel in general and its communications industry in particular are reaping the dividends of past investments in education, infrastructure and especially research and development.
In order to safeguard and strengthen Israel’s comparative advantage we must continue to invest in our future,” he said.
“Unfortunately, state investment in R&D has eroded over the past decade to the extent that it puts Israel’s continued technological advantage at risk; and all this at the same time as other nations have adopted the Israeli model and increased state investment in R&D.”
Although he did not divulge details of the deal to increase the chief scientist’s budget, Simhon told the conference he approached the Finance Ministry this week with a demand to expand the budget to allow 500 requests for NIS 1.7 billion worth of research and development funding to be heard.
According to the Industry, Trade and Labor Ministry, the R&D budget is around NIS 450m. short of where it should be.
Meanwhile, 280 Israeli organizations were recognized this week for their contribution to industrial and academic research by ISERD – an inter-ministerial directorate that aims to promote joint ventures between Israel and the European Union within the EU’s R&D Framework Program.
The researchers were named at an event hosted by Hasson, Science and Technology Minister Daniel Hershkowitz, EU Ambassador to Israel Andrew Stanley, and ISERD General Manager Marcel Shaton.