The Israel-EU Trade Association Agreement
(November 20, 1995)
Background
The Association
Agreement between Israel and the European
Union was signed in the presence of
the Foreign Minister of Israel and the
Foreign Ministers of the EU on November
20, 1995.
The preamble to the Agreement
includes a declaration that the European
Union, the member states and Israel are interested
in promoting the integration of Israel's
economy into the European economy. The Agreement
underwent a ratification process between
1996-2000, and entered into force on June
1, 2000.
The political section of
the Agreement institutionalizes the existing
political dialogue and extends it to other
areas of dialogue. To date, political dialogue
at ministerial level was usually conducted
several times a year, often within the framework
of forums of foreign ministers. These contacts
took place on an ad hoc basis, and were not
anchored in a formal agreement. The Association
Agreement determines that regular meetings
will take place once a year at several working
levels, from the most senior ministerial
level to that of officials.
The commercial section
of the Agreement regulates the flow of trade
in manufactured and agricultural products
(in 1999, the mutual volume of trade totaled
$22 billion). The Agreement maintains the
free trade area established in 1975, and
improves the terms of trade in manufactured
and agricultural products. This section deals
also with an easing of the terms of trade
with regard to procedures and tariffs.
A new element in the Agreement
is the section dealing with liberalization
of the services and capital market and the
right of establishment of firms. This section
anticipates the future formulation of bilateral
trade rules, based upon international developments
within the WTO framework.
The section on cooperation
deals with a wide range of fields, including
law, internal security, environment, education
and infrastructure. Most of the areas of
cooperation are new and reflect the mutual
aspiration to expand the application of the
primarily trade-related agreement of 1975
to economic and other areas as well.
The Agreement created formal
structures such as the Association Council,
headed on the Israeli side by the Foreign
Minister, which is to meet once a year. Also
set up was the Association Committee, headed
by the Director General of the Ministry of
Foreign Affairs. In addition, sub-committees
at expert level have been set up for the
discussion of professional matters, such
as the opening of negotiations on economic
issues (mutual recognition and accumulation).
The Association Agreement also establishes
mechanisms for its effective and ongoing
implementation, including mechanisms for
the prevention of disagreements.
The
Convening of the Association Council
On June 13, 2000 the Association
Council between the European Union and Israel
held its first meeting in Luxembourg, headed
by Foreign Minister Levy and the Foreign
Ministers of the EU, marking the entry into
force of the Association Agreement between
Israel and the EU. Foreign Minister Levy
addressed the Association Council, and referred
in his speech to Israel's wish to enhance
its ties with Europe in all spheres.
The Advantages
of the Association Agreement for the State
of Israel
The Association Agreement
provides Israel with many advantages in its
relations with the EU, both in the political
sphere (establishment of an institutionalized
political dialogue at the most senior levels)
and in the economic sphere, as a result of
the liberalization of the possibilities of
trade, and particularly Israeli exports to
Europe. Within the framework of the Agreement,
Israel will be able to continue improving
its economic status in relation to Europe,
particularly in the field of new technologies
in which it specializes.
Political
Contacts during the Association Council
Meeting
In the course of the meeting
of the Association Council, Foreign Minister
Levy held political meetings with the following
leaders: the President-in- Office of the
EU Council, Portuguese Foreign Minister Jaime
Gama; EU High Representative for Common Foreign
and Security Policy, Javier Solana; the EU
Commissioner for External Policy, Chris Patten;
and the President of Malta, Prof. Guido de
Marco. Regional and bilateral issues were
discussed in the meetings. The Foreign Minister
also held a press conference together with
Foreign Minister Gama and EU Commissioner
Patten.
Signing
of the Framework Agreement with the European
Investment Bank
The European Investment
Bank, one of the European Union institutions,
was founded in 1958, and is located in Luxembourg.
It provides credits and guarantees for the
funding of up to fifty percent of investment
in projects which the EU seeks to promote
in domains such as infrastructures, energy,
industry, services and agriculture.
The EIB was established
for non-profit purposes, and its budgetary
resources are derived from the funds of EU
member states, on the basis of each state's
GNP. In 1999, the funds at the disposal of
the Bank totaled EUR 100 billion. Overall,
the loans and guarantees granted by the EIB
do not exceed 250 percent of its equity.
The EIB
- General Activity
Most of the activity of
the European Investment Bank is within the
EU, although it also contributes to EU development
policy. Thus, in the early 1990's, the Bank
began to grant loans and credit to the countries
of Central and Eastern Europe. In addition,
within the context of the Mediterranean policy
of the EU, the Bank reached financial framework
agreements to provide credit to twelve of
the Mediterranean countries participating
in the Barcelona Process.
Bank
Activity in the Mediterranean Context
The Barcelona Process does
not have direct budgets for projects in the
domain of infrastructures, and the EIB therefore
acts as a European "tool"
in this sphere. In the last five years, the
Bank has channeled more than EUR 3.3 billion
to the Mediterranean countries. In 1999 alone,
the EIB signed agreements for a total sum
of EUR 802 million with the Mediterranean
states.
The European Investment
Bank began its activity in the Mediterranean
region in the mid 1970's. Israel and the
EIB signed the initial financial protocols
at that time, and the Framework Agreement
just signed constitutes a continuation of
these protocols.
The Agreement
- The Israeli Context
On June 13, Foreign Minister
Levy and the President of the EIB, Philippe
Maystadt, signed a Framework Agreement, enabling
the European Investment Bank to grant loans
for Israeli projects related to the Barcelona
Process, including infrastructure and environmental
projects. The Agreement thus institutionalized
the ties between Israel and the Bank.
Recently, the Israel Electric
Company expressed interest in receiving loans
from the EIB for a project involving the
conversion of utilities to gas. A loan totaling
EUR 22 million for the Israel Airport Authority
is also in the pipeline (from funds that
were allocated but not utilized, in an earlier
financial protocol). In the past, the Bank
has provided assistance in the financing
of a drainage project in Nahal Soreq.
Sources: Israeli
Ministry of Foreign Affairs |