Trading Partner Portal: Israel
Interview Series Featuring California’s Key Trading Partners – Featuring Shlomi Kofman, Consul General of Israel in San Francisco:
Similarities Foster Bilateral Partnerships, Advances in Health, Agriculture, Water
CalChamber, October 23, 2020
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 9.05 million, Israel had a gross domestic product (GDP) of $394.6 billion in 2019. 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 2020, U.S. exports were over $10.18 billion, causing Israel to be the 26th largest export destination. Main U.S. exports to Israel include miscellaneous manufactured commodities, computer and electronic products, transportation equipment , and chemicals. The U.S. imported $15.27 billion from Israel in 2020. Miscellaneous manufactured commodities made up 29.1% of the total, followed by chemicals at 18.8%, and computer and electronic products at 16.9%.
Israel – California Trade
In 2020, California exported $1.3 billion to Israel, making it the state’s 25th largest export destination. Miscellaneous manufactured commodities is the largest export category for California, with over $367 million, representing 26.5 percent of all exports to Israel.
Other major export categories to Israel include computer and electronic products, machinery (except electrical), and special classification provisions, totaling 24.5, 10.7, and 7.5 percent of all export commodities respectively. Imports from Israel to California totaled $1.26 billion in 2020. Computer and electronic products and miscellaneous manufactured commodities made up 31.6% and 195 of the total, respectively. This was followed by non-electrical machinery and reimports. U.S. Department of Commerce
Foreign Direct Investment
In 2019, U.S. Direct Investment to Israel was documented at $28.54 billion. Foreign Direct Investment from Israel to the U.S. was roughly $36.6 billion. Israeli FDI in the US supports 27,000 jobs and contributed $749 million to research and development. Israeli FDI also contributed $958 million to expanding US exports. The top industry sectors for Israeli FDI in the US are: software and IT services, communications, plastics, medical devices, industrial equipment, and renewable energy,. Select USA
In California, the twentieth largest source of FDI through foreign-owned enterprises (FOEs) is Israel. In 2020, Israeli FOEs in California provided 6,248 jobs through 140 firms amounting to $615 million in wages. The top jobs by sector are: manufacturing, retail trade, professional/business services, financial activities, and information (World Trade Center Los Angeles FDI Report, June 2021).
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.
Silicon Valley to Silicon Wadi: California’s Economic Ties with Israel
Bay Area Economic Institute, October 2021
Strengthening U.S.-Israel Relationship: 4 Ideas for the Biden Administration and Israeli Government
U.S. Chamber, June 24, 2021
Israeli Firefighters Land in San Francisco to Help Battle Wildfires
The Jewish News of Northern California, August 30, 2020
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.
(Per the Federation of Israeli Chambers Joint Partnership and the Dubai Chamber, 2020) The “Abraham Accords” created a historic opportunity for Bi –literal cooperation between the countries, which led to the signing of a strategic partnership agreement between the Dubai Chamber of Commerce and The Federation of Israeli Chambers of Commerce, early this September. Under the agreement, the parties open up to the business sectors in both countries in order to increase and expand business connections, promote mutual trade and encourage investments.
Press Release: Dubai Chamber of Commerce and Industry and the Federation of the Israeli chambers of Commerce launch their first joint economic study
Dubai Chamber and the Federation of Israeli Chambers, November 23, 2020
The economic works are an integral continuation of this cooperation that was forged between the two chambers and is now paving the way for future investments and trade.
1. Joint Economic Paper prepared with the Dubai Chamber of Commerce – Click here to read the document
The economic research work outlines the potential inherent in the collaboration between the business sector in Dubai and the business sector in Israel.
The work is divided into four chapters:
- Economic overview of each country, Corporate Tax, Major Trade Industries and more.
- Trade opportunities between the two countries: Export and Import.
- Investment opportunities with a focus on: High-Tech, Jewelry and Gemstone Manufacturing, Agriculture, Finance, Tourism, Logistics and Maritime Transportation.
- Proposals for the development of business relations between the countries, such as negotiations on Import Tariffs, producing business networking events, identifying business opportunities and more.
2. Research Paper on the Emeriti Business Economy – Click here to read the document
A research paper that drew a basic road map of the Emeriti economy that includes: Key Emeriti stakeholders and the main driving forces in the economy and business culture in the Emirates. The paper includes:
- An overview of the Emirati economy and its main characteristics, such as the public and business sector and shifting to knowledge and innovation-based economy.
- Review and analysis of Emirati foreign trade, including Exports and Imports of goods, Services and Free Trade Zones.
- Mapping key opportunities for Israeli companies such as exports of Goods and Services to the Emirati Market; cooperation in the fields of Economics, Industry, and R&D; Free Trade Areas as a platform for export; and Israel as a platform for developing Emirati foreign trade with Western markets.
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