The United States-Israel Free Trade Agreement (FTA) entered into force in 1985 and represents the United States’ first FTA. It continues to serve as the foundation for expanding trade and investment between the United States and Israel by reducing barriers and promoting regulatory transparency. In 2019, U.S. goods exports to Israel increased 5.1 percent to $14.4 billion from 2018. Since 1985, when the United States-Israel FTA came into force, U.S. exports to Israel have risen by 538 percent, although in 2019, the United States ran a $5.1 billion bilateral deficit in goods.
Joint Committee Meeting
The United States-Israel Joint Committee (JC) is the central oversight body for the FTA. At its last meeting in February 2016, the JC explored potential new collaborative efforts to increase bilateral trade and investment. During the meeting, the United States and Israel noted progress in addressing a number of specific standards-related and customs impediments to bilateral trade and agreed to continue to support existing dialogues that address these issues.
Standards Dialogue
Israel continues to revise its standards regime aiming to expand significantly the recognition of standards of internationally respected standards bodies, including those of the United States. The 2014 Israeli standards law has facilitated the enhanced importation into Israel of a broad range of U.S. products, adopting over 30 international standards developed by U.S. standards developing organizations. In 2020, the United States and Israel agreed to adopt new procedures making it easier for exporters to gain approvals when claiming duty-free status under the FTA for individual products.
Agreement on Trade in Agricultural Products (ATAP)
At a February 2016 JC meeting, Israel had proposed resuming negotiations on a permanent successor agreement to the current United States-Israel Agreement on Trade in Agricultural Products (ATAP). The current ATAP is the second of two temporary ATAPs that the United States and Israel have negotiated due to a disagreement over interpretation of the FTA that arose after the Uruguay Round was concluded. The first ATAP, negotiated in 1996, allowed for limited preferential tariff treatment. The 2004 successor ATAP achieved modest additional market access for U.S. agricultural products. That ATAP was originally set to remain in effect until the end of 2008, but it has been continued each year since then through a series of one-year extensions. Under the 2004 ATAP, Israel provides the United States less advantageous tariff treatment than the United States provides Israel: the United States provides Israel with duty-free access to 90 percent of agricultural tariff lines, while Israel provides the United States with duty-free access to only 72 percent of agricultural tariff lines. Because of the existing disparities, the United States remains committed to negotiating a balanced permanent successor agreement.
Israel Trade & Investment Summary
U.S. goods and services trade with Israel totaled an estimated $50.6 billion in 2022. Exports were $20.0 billion; imports were $30.6 billion. The U.S. goods and services trade deficit with Israel was $10.7 billion in 2022.
U.S. goods exports to Israel in 2022 were $14.2 billion, up 10.4 percent ($1.3 billion) from 2021 but down 1 percent from 2012. U.S. goods imports from Israel totaled $21.4 billion in 2022, up 14.6 percent ($2.7 billion) from 2021, but down 3 percent from 2012. The U.S. goods trade deficit with Israel was $7.2 billion in 2022, a 24.1 percent increase ($1.4 billion) over 2021.
U.S. exports of services to Israel were an estimated $5.8 billion in 2022, 15.5 percent ($773 million) more than 2021, and 34 percent greater than 2012 levels. U.S. imports of services from Israel were an estimated $9.2 billion in 2022, 21.0 percent ($1.6 billion) more than 2021, and 86 percent greater than 2012 levels. Leading services exports from the U.S. to Israel were in the transportation, travel, and financial services sectors. The United States had a services trade deficit of an estimated $3.5 billion with Israel in 2022, up 31.5 percent from 2021.
U.S. foreign direct investment (FDI) in Israel (stock) was $42.5 billion in 2022, a 2.2 percent decrease from 2021. U.S. direct investment in Israel is led by manufacturing, information services, and professional, scientific, and technical services.
Israel's FDI in the United States (stock) was $10.6 billion in 2022, up 2.1 percent from 2021. Israel's direct investment in the U.S. is led by real estate, depository institutions, and manufacturing.
