Israel’s Ministry of Economy Signs Agreement for Cooperation with Latin America and the Caribbean’s Inter-American Development Bank

Foreign Trade Administration Ministry of Economy

Chief Scientist at the Israeli Ministry of Economy Avi Hasson signed an agreement for cooperation with the Inter-American Development Bank (IDB) recently. The agreement will open new business opportunities for Israeli companies in Latin America and the Caribbean Islands.

The Inter-American Development Bank is the largest investment authority in Latin America and the Caribbean Islands. There are 48 member states in the bank, including Israel. The bank funds projects in Latin America and the Caribbean Islands to the tune of $12 billion annually.

The agreement was signed in line with the government’s policy to strengthen trade relations with Latin American countries. The government authorized the Chief Scientist to sign the agreement with IDB, realizing that this institution will open opportunities for Israeli companies on the continent.

Several weeks ago the Office of the Chief Scientist at the Israeli Ministry of Economy, MATIMOP (the international branch of the Office of the Chief Scientist on R&D) and the Foreign Trade Administration hosted a delegation of senior officials from the bank, who made a first visit to Israel to discuss with the chief scientist opportunities for involving Israeli companies in projects funded by the bank.

Among the concepts discussed: Establishing a joint $5 million fund for subsidizing innovative projects involving Israeli companies in Latin America, assistance from the bank in making Israeli technologies accessible to organizations in Latin American and Caribbean countries, helping Israeli companies get involved in development programs that are funded by the bank and funding industrial R&D cooperation with a joint budget from the bank and the Latin American countries with which the Chief Scientist has signed bilateral agreements.

The new agreement constitutes a significant step toward upgrading the Chief Scientist at MATIMOP’s activity in the Americas, a process which started two years ago. Cooperation programs with the Americas are run with the assistance and coordination of the Foreign Trade Administration at the Israeli Ministry of Economy, the trade attach├ęs in Latin American countries, the Foreign Ministry and embassies, and of course, local partners in the various countries in which activities take place.

The Chief Scientist at the Israeli Ministry of Economy has recently announced that a program for subsidizing the adaptation of products to all Latin American countries will be expanded; the program gives Israeli companies the possibility to receive grants from the Chief Scientist for the purpose of adapting existing products to the demands of the Latin American market (including establishing pilot programs, adaptation to local regulations, reducing manufacturing costs etc.)

Israeli Ministry of Economy data shows that Israeli exports to Latin America in 2014 stood at $2.53 billion (excluding diamonds). The field of machines and mechanical devices was leading the export branch with 39.7% of all exports, followed by chemicals (20.1%), then plastics and rubber (6.3%). Brazil is Israel’s main export destination in Latin America: In 2014 exports reached $915 million, totaling 36.1% of all Israeli exports to this region. Mexico, Costa Rica, Colombia and Chile are the next most significant export destinations after Brazil.

Israel’s network of trade agreements with Latin America

Mercosur (South American Joint Market)

Israel’s trade agreement with countries which are members of the South American joint market (Mercosur) went into effect on 1 June 2010 (Brazil, Uruguay, Paraguay), and on 9 September 2011 with Argentina. Israel is the only country outside Latin America that enjoys a free trade agreement with Mercosur states. Since the agreement became effective, two conferences took place where senior officials from both sides participated and discussed increasing trade. Another conference is expected this year.

Mexico

On 1 July 2000 a free trade agreement between Israel and Mexico entered into effect. The agreement promises fair competition for Israeli exporters, mainly against competing exporters from the US, who enjoy free access to the Mexican market due to the NAFTA (North American Free Trade Agreement, involving the US, Canada and Mexico).

Inter alia, the agreement between Israel and Mexico regulates competition and the rules for resolving disputes. A joint commission was established to oversee the implementation and promotion of the agreement and joint committees of experts were established on source regulations, customs procedures and other issues pertaining to bilateral trade. A joint conference is expected to take place this year.

Colombia

Negotiations between Israel and Colombia on free bilateral trade were concluded in September 2013 and confirmed shortly thereafter by the Israeli government. An agreement is now pending approval by the Colombian government and will then enter into effect.

Panama
A negotiation on free trade between the two countries is currently underway. In July, the third round of talks is expected to take place in Israel. Another (fourth) round will take place before the agreement is finalized.

/ Club News

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