Trading Partner Portal: Israel
Israel boasts a highly advanced market economy that consists of a rapidly growing high-tech sector that is supported by a strong venture capital industry. With only a population of 8.88 million, Israel had a gross domestic product (GDP) of $370.58 billion in 2018. World Bank
Israel has one of the largest diamond industries in the world and also possesses a substantive service sector. In addition, Israel also remains a world leader in telecommunications and software development. Its main exports include cut diamonds, high-technology equipment and agricultural products, particularly fruits and vegetables. Israel is highly dependent on foreign imports of coal, petroleum, food and production inputs, especially since access to natural resources are relatively scarce.
Tourism has become a large industry for Israel as a well sought out tourist destination for the country’s religious significance, historical sites and architecture, temperate climate, beaches and unique geography. Despite past security concerns with neighboring countries, Israel attracts millions of tourists annually.
In September 2010, Israel became a member of the Organization for Economic Co-operation and Development (OECD) and has signed several free trade agreements with the United States, European Union, Canada, Mexico, Jordan, Egypt, and Turkey.
In 2018, Israel is set to sign 5 major free trade agreements. The talks are being held with South Korea, Vietnam, India, China, and the Eurasian Customs Union, an economic bloc comprising Russia, Kyrgyzstan, Belarus, Kazakhstan and Armenia. April 2018, Atid EDI.
In 2019, U.S. exports were over $14.3 billion, causing Israel to be the 23rd largest export destination. Main U.S. exports to Israel include miscellaneous manufactured commodities, transportation equipment , computer and electronic products, and chemicals.
Israel – California Trade
In 2019, California exported $1.6 billion to Israel, making it the state’s 20th largest export destination. Miscellaneous manufactured commodities is the largest export category for California, with over $658 million, representing 40.2 percent of all exports to Israel.
Other major export categories to Israel include computer and electronic products, machinery (except electrical), and agricultural products, totaling 20, 8.7, and 7.5 percent of all export commodities respectively. Imports from Israel to California totaled $1.49 billion in 2019. Miscellaneous manufactured commodities and computer and electronic products both made up over 25% of the total, followed by non-electrical machinery and reimports. U.S. Department of Commerce
Foreign Direct Investment
In 2018, U.S. Direct Investment to Israel was documented at $27.14 billion. Foreign Direct Investment from Israel to the U.S. was roughly $38.45 billion. Israeli FDI in the US supports 25,800 jobs and contributed $2 billion to research and development. Israeli FDI also contributed $726 million to expanding US exports. The top industry sectors for Israeli FDI in the US are: software and IT services, plastics, communications, renewable energy, medical devices, and real estate. Select USA
In California, the number eighteen country for FDI through foreign-owned enterprises (FOEs) is Israel. Israeli FOEs in California provide 7,483 jobs through 156 firms amounting to $714 million in wages. The top jobs by sector are: manufacturing, professional/business services, retail trade, financial activities, and wholesale trade (World Trade Center Los Angeles FDI Report, May 2020).
Energy Sector — Alon Oil is an Israeli Energy company which operates several refineries on the U.S. West Coast, including California. Alon markets energy products in Israel. In addition, Zion Oil, although Texas based primarily, is involved in oil exploration in Israel.
High Tech Sector — The Israeli high-tech industry has been developing and reaching new peaks each year, both in technological achievements and in sales. Intel Israel has been in operation since 1974, supporting five locations throughout the country. In addition, IBM also has several locations throughout Israel
According to the U.S.-Israel Business Initiative, Israel is an ever-growing partner for the United States in generating transformative innovation for American companies while creating high-skilled jobs in the US. Nearly half of the world’s top technology companies have bought start-ups or opened research and development centers in Israel. More than 300 foreign companies have established R&D centers in Israel with more on the way.
Deepening the US-Israel Relationship Through Business
The Hill, October 23, 2019
Israel Creates $60 Million of New R&D Funding
Times of Israel, August 15, 2019
Israeli Economy Continues to Expand
Atid EDI, August 21, 2018
International Rankings Salute Israel’s Economy
Times of Israel, January 30, 2018
Israel’s High Tech Development Continues to Shine
Atid EDI, December 21, 2017
Israel’s Amazing World Rankings
It is nothing short of amazing that a small, young country with just over 8 million people in existence for only 69 years can rank so high on so many international comparative indices.
The Times of Israel, April 17, 2017
California Governor Jerry Brown signs anti-BDS bill into law
Newly approved legislation prevents companies that boycott or discriminate against any sovereign country from trading with the state.
Times of Israel, September 25, 2016
Scouting Technology? Follow the Crowd to Israel
By Sherwin Pomerantz, featured in Atid-Edi Ltd, January 27, 2015
California and Israel Sign Pact to Strengthen Economic, Research Ties.
Governor’s Office, March 5, 2014
“Through this agreement, California and Israel will build on their respective strengths in research and technology to confront critical problems we both face, such as water scarcity, cybersecurity and climate change,” said Governor Brown.
Free Trade Agreement
U.S.-Israel Free Trade Agreement
In 1985, President Ronald Reagan signed the U.S.-Israel Free Trade Agreement. It was the first FTA the United States entered into, and has served as a model for many future trade agreements. The FTA eliminates all custom duties between the two countries, and has resulted in a huge increase in the overall volume of bi-national trade to total $38.2 billion in 2014. U.S. exports account for roughly one fourth of all Israeli imports, with a value of over $14 billion. Israeli exports to the United States have also increased since the FTA’s implementation. In 2014, Israeli imports to the United States were $23.1 billion, an increase of over 300 percent since 1985. Israel is the 23rd largest export market for U.S. goods and services.
California exports to Israel were up considerable from $1.2 billion in 2009 to $2.3 billion in 2014, with manufactured goods accounting for the majority of these exports.
USTR Announces Agreement between the U.S. and Israel to Reaffirm Commitment to Expand Bilateral Trade and Investment
Deputy United States Trade Representative Ambassador Miriam Sapiro and Israel’s Director General of the Ministry of Industry, Trade, and Labor, Sharon Kedmi, this week reached agreement on a process to further their shared commitment to expand trade and investment between the United States and Israel. They applauded progress on trade and investment issues since a meeting between Ambassador Kirk and Minister Ben Eliezer in Washington in October 2010, and agreed to a plan that will guide future discussions and develop further as those discussions evolve. They also agreed to redouble their efforts to make further progress ahead of the U.S.-Israel Free Trade Agreement (FTA) Joint Committee meeting, to be held later this fall.
“The Obama Administration places great importance on the relationship between our countries, and we will continue our collaborative efforts to expand trade and investment opportunities for American and Israeli exporters and investors,” said Ambassador Sapiro.
The two sides also agreed to explore ways to realize fully the potential benefits of the U.S.-Israel trade agreement, including through the further liberalization of trade in services and agriculture and the removal of trade-restrictive measures. Ambassador Sapiro and Director General Kedmi also committed to consider cooperation in other areas, including addressing regulatory issues which might be impeding the movement of goods, services and capital between the two countries, in consultation with relevant stakeholders.
Key Country Contacts
- BIRD Foundation – Binational Industrial Research and Development Foundation
- BSF United States – Israel Binational Science Foundation
- BARD – Agricultural Research and Development Fund
- U.S.-Israel Science and Technology Foundation
- Birthright Israel for teens/young adults
- International Universities/Programs
- Sister Cities International