Economy of Israel - External Trade

External Trade

For 2006, Israeli exports grew by 11%, to just over $29 billion; the hi-tech sector accounted for $14 billion, a 20% increase from the previous year.

The United States is Israel's largest trading partner; two-way trade totaled some $24.5 billion in 2010, up from $12.7 billion in 1997. The principal U.S. exports to Israel include computers, integrated circuits, aircraft parts and other defense equipment, wheat, and automobiles. Israel's chief exports to the U.S. include cut diamonds, jewelry, integrated circuits, printing machinery, and telecommunications equipment. The two countries signed a free trade agreement (FTA) in 1985 that progressively eliminated tariffs on most goods traded between the two countries over the following ten years. An agricultural trade accord was signed in November 1996, which addressed the remaining goods not covered in the FTA. Some non-tariff barriers and tariffs on goods remain, however. Israel also has trade and cooperation agreements in place with the European Union and Canada, and is seeking to conclude such agreements with a number of other countries, including Turkey, Jordan and several countries in Eastern Europe.

In regional terms, the European Union is the top destination for Israeli exports. In the four-month period between October 2011 and January 2012, Israel exported goods totalling $5 billion to the EU – amounting to 35% of Israel's overall exports. During the same period, Israeli exports to the Far East came to $3.1 billion.

Until 1995, Israel's trade with the Arab world was minimal due to the Arab League boycott, which was begun against the Jewish community of Palestine in 1945. Arab nations not only refused to have direct trade with Israel (the primary boycott), but they also refused to do business with any corporation that operated in Israel (secondary boycott), or any corporation that did business with a corporation that did business with Israel (tertiary boycott).

Israel is one of the world's major exporters of military equipment, accounting for 10% of the world total in 2007. Three Israeli companies were listed on the 2010 Stockholm International Peace Research Institute index of the world's top 100 arms-producing and military service companies: Elbit Systems, Israel Aerospace Industries and RAFAEL.