Text of the Agreement
(April 22, 1985)
Agreement on the Establishment of a Free Trade Area between
the Government of Israel and the Government of the United States of America
[PREAMBLE]
The Government of Israel and the Government of the
United States of America,
Desiring to promote mutual relations and further
the historic friendship between them;
Determined to strengthen and develop the economic
relations between them for their mutual benefit;
Recognizing that Israel's economy is still in
a process of development, wishing to contribute to the harmonious development
and expansion of world trade;
Wishing to establish bilateral free trade between
the two nations through the removal of trade barriers;
Wishing to promote cooperation in areas which
are of mutual interest;
Have decided to conclude this Agreement:
ARTICLE 1: [ESTABLISHMENT OF A FREE TRADE AREA]
The governments of Israel and the United States of
America (the Parties), consistent with Article XXIV (8) (b) of the General
Agreement on Tariffs and Trade (GATT), establish hereby between them
a Free Trade Area and will in accordance with the provisions of this
Agreement eliminate the duties and other restrictive regulations of
commerce on trade between the two nations in products originating therein.
ARTICLE 2
1. Products of Israel shall, when imported into the
customs territory of the United States, be governed by the provisions
of Annex 1.
2. Products of the United States shall, when imported
into Israel, be governed by the provisions of Annex 2.
3. The rules of origin applicable to this Agreement
are set forth in Annex 3.
4. The commitment with respect to export subsidies
is contained in Annex 4.
5. The Annexes to this Agreement constitute an integral
part thereof.
ARTICLE 3: [RELATIONSHIP TO OTHER AGREEMENTS]
The Parties affirm their respective rights and obligations
with respect to each other under existing bilateral and multilateral
agreements, including the Treaty of Friendship, Commerce and Navigation
between the United States and Israel and the GATT. In the event of an
inconsistency between provisions of this Agreement and such existing
agreements, the provisions of this Agreement shall prevail.
ARTICLE 4: [NEW RESTRICTIONS ON TRADE]
New customs duties on imports or exports or any charge
having equivalent effect and new quantitative restrictions on imports
or exports or any measure having equivalent effect may be introduced
in the trade between the Parties only if permitted by this Agreement
or by the GATT as in effect on the date of entry into force of this
Agreement and as interpreted by the CONTRACTING PARTIES to the GATT
and insofar as not inconsistent with this Agreement.
ARTICLE 5: [RELIEF FROM INJURY CAUSED BY IMPORT COMPETITION]
1. When a product is being imported in such increased
quantities as to be a substantial cause of serious injury or the threat
thereof to domestic producers of like or directly competitive products,
the importing Party shall consult with the other Party in accordance
with Article 18 before taking any action affecting the trade of the
other Party.
2. Neither Party shall take an action which provides
solely for a suspension of the reduction or elimination of any duty
provided for by this Agreement unless the serious injury or threat thereof
which is substantially caused by imports to the domestic producers of
like or directly competitive products results from the reduction or
elimination of a duty provided for by this Agreement.
3. When, in the view of the importing Party, the importation
of a product from the other Party is not a substantial cause of the
serious injury or threat thereof referred to in paragraph 1, the importing
Party may except the product of the other Party from any import relief
that may be imposed with respect to imports of that product from third
countries, taking into account the objective of achieving bilateral
free trade as embodied in this Agreement, the domestic laws and international
obligations of the Parties.
ARTICLE 6: [IMPORT RESTRICTIONS ON AGRICULTURE]
Import restrictions, other than customs duties, including,
but not limited to, quantitative restrictions and fees, based on agricultural
policy considerations may be maintained by the Parties.
ARTICLE 7: [GENERAL AND SECURITY EXCEPTIONS]
Article XX and XXI of the GATT are hereby incorporated
into and made a part of this Agreement.
ARTICLE 8: [SPECIAL EXCEPTION FOR KASHRUTH]
This Agreement shall not preclude the adoption or enforcement
by either Party of measures relating to prohibitions on religious or
ritual grounds provided that they are applied in accordance with the
principle of national treatment.
ARTICLE 9: [HEALTH]
1. The Parties shall review their current and future
rules on veterinary and plant health matters to insure that these rules
are applied in a nondiscriminatory manner, and that these rules
do not have the effect of unduly obstructing trade.
2. With reference to the matters in paragraph 1, the
Parties shall consult on any difficulties that may arise in their trade
in agricultural products and shall seek to provide solutions which will
allow trade in agricultural products insofar as they do not endanger
animal and plant health.
3. To insure harmonious development of trade in agricultural
products, the Joint Committee shall establish a working group, in accordance
with subparagraph 3 (b) of Article 17, which shall convene at the request
of either Party to consider matters relating to paragraphs 1 and 2 of
this Article.
ARTICLE 10: [INFANT INDUSTRY]
1. Insofar as its industrialization and development
make protective measures necessary Israel may through December 31, 1990,
after consultation within the Joint Committee, and after that date,
upon agreement within the Joint Committee, introduce, increase or reintroduce
ad valorem customs duties not exceeding 20 percentage points above the
level that would otherwise be in effect. The total value of the products
for which these measures can be applied may not exceed 10% of the total
value of Israel's imports from the United States in 1984.
2. These measures may be taken only if they are necessary
to protect and favor the development of a new processing industry not
already existing in Israel on the date of the entry into force of the
Agreement; they may be applied only with respect to the production of
specific goods.
3. Twentyfour months after introducing, increasing
or reintroducing customs duties, Israel shall reduce the tariffs
by at least 5% per year in respect of imports of the products in question
originating in the United States. The abolition of such duties must
be completed by not later than January 1, 1995.
ARTICLE 11: [BALANCE OF PAYMENTS]
1.
a. A Party may apply temporary trade measures when
it is threatened by, or suffers from, a serious balance of payments
situation. A Party may impose temporary trade measures only to provide
time for macroeconomic adjustment measures to correct its balance of
payments problems to take effect. Temporary trade measures permitted
by this paragraph may not be used to protect individual industries or
sectors.
b. A serious balance of payments situation would be
indicated by one or more of the following: a substantial deterioration
in the trade and current account positions, significant pressure on
the exchange rate, or a substantial fall in net reserves, as projected
either in a decrease of reserves or in an increase of short term debt.
2. Temporary trade measures which may be applied under
paragraph 1 are:
a. an import surcharge in the form of import duties;
b. an import deposit; or
c. quantitative restrictions.
3.
a. Whenever practicable the Parties will prefer the
use of the temporary measures specified in subparagraphs 2 (a) and 2
(b). Quantitative restrictions will be imposed when measures 2(a) and
2(b) would be inadequate in terms of their balance of payments effects.
b. Whenever practicable, the Parties will avoid applying
more than one of the measures specified in paragraph 2 to any single
product at the same time.
4. A temporary trade measure applied under paragraph
1 may remain in force for a period not exceeding 150 days unless extended
by the appropriate legislative body of the Party concerned for a subsequent
period of 150 days. Quantitative restrictions may be extended only for
one additional period of 150 days.
5. Temporary trade measures applied under paragraph
1 will be consistent in duration and effect with the severity of the
balance of payments problem experienced by the Party imposing the measures
and will be progressively relaxed consistent with improvements in that
Party's balance of payments situation.
6. In the event that temporary trade measures are applied
under paragraph 1, consultations will be held between the Parties on
the balance of payments situation, to consider, inter alia, other economic
measures which might be taken to deal with the balance of payments problems
to permit early elimination of the temporary trade measures. Significant
intensification of trade measures may be a cause for consultations between
the Parties.
7. In applying temporary trade measures, the Parties
will accord treatment no less favorable to imports originating in the
other Party than to imports originating in third countries, and will
not impair the relative benefits accorded to the other Party under this
Agreement.
8. Temporary trade measures specified under subparagraphs
2 (a) and 2 (b) shall apply to all imports, except that certain imports
may be excluded if their exclusion improves the effectiveness of the
measures consistent with the purposes stated in paragraph 1.
Article 11 shall be subject to the procedures of Articles
18 and 19. It is understood that notification for balance of payments
reasons will generally be provided under paragraph 3 of Article 18.
ARTICLE 12: [LICENSING]
1. Neither Party shall impose import licensing requirements
on items exported by the other Party, unless licenses issued under such
requirements are:
a. automatically approved;
b. necessary to administer a quantitative ceiling on
imports justified under this Agreement or under the GATT insofar as
it is not inconsistent with this Agreement; or
c. necessary to administer restrictions in conformity
with this Agreement or under the GATT insofar as it is not inconsistent
with this Agreement.
2. Each Party shall answer within thirty days all reasonable
inquiries from the other Party with regard to criteria employed by its
respective licensing authorities in granting or denying import licenses.
In addition, the Parties recognize the desirability of publication of
such criteria.
3. The Parties shall provide each other with a list
of items subject to licensing requirements which shall specify whether
each item is entitled to automatic or nonautomatic import licensing.
Notification of changes in this list shall be made on a timely basis
and shall include a justification for each addition.
4. If an import license is denied for an item specified
in the list prepared pursuant to paragraph 3 as being entitled to automatic
licensing, then such item shall be considered to be subject to nonautomatic
licensing. Notification and justification for the action shall be provided
within sixty days by the Party which has made such denial.
5. In the administration of automatic and nonautomatic
licensing requirements, the Parties shall adhere to the provisions of
the Agreement on Import Licensing Procedures. For the purposes of this
Agreement the reporting requirements provided in the Agreement on Import
Licensing Procedures between the Contracting Parties of said agreement
shall only apply to the United States and Israel.
ARTICLE 13: [TRADERELATED PERFORMANCE REQUIREMENTS]
Neither Party shall impose, as a condition of establishment,
expansion or maintenance of investments by nationals or companies of
the other Party, requirements to export any amount of production resulting
from such investments or to purchase locallyproduced goods and
services. Moreover, neither Party shall impose requirements on investors
to purchase locallyproduced goods and services as a condition for
receiving any type of governmental incentives.
ARTICLE 14: [INTELLECTUAL PROPERTY]
The Parties reaffirm their obligations under bilateral
and multilateral agreements relating to intellectual property rights,
including industrial property rights, in effect between the Parties.
Accordingly, nationals and companies of each Party shall continue to
be accorded national and most favored nation treatment with respect
to obtaining, maintaining and enforcing patents of invention, with respect
to obtaining and enforcing copyrights, and with respect to rights in
trademarks, service marks, tradenames, trade labels, and industrial
property of all kinds.
ARTICLE 15: [GOVERNMENT PROCUREMENT]
1. The Parties agree to endeavor to eliminate all restrictions
relating to government procurement.
2. The United States shall waive all Buy National restrictions
with respect to government agency purchases of a contract value of $50,000
or more which would be subject to the Agreement on Government Procurement
at the time of entry into force of this Agreement but for the threshold
provided for in Article I(l) (b) of the Agreement on Government Procurement.
3. Israel shall waive all Buy National restrictions
with respect to government agency purchases of a contract value of $50,000
or more which would be subject to the Agreement on Government Procurement
at the time of entry into force of this Agreement but for the threshold
provided for in Article I (1)(b) of the Agreement on Government Procurement
and by the Ministry of Defense subject to exceptions comparable in character
and extent to those included in the United States' entity list of the
Agreement on Government Procurement with regard to the Department of
Defense.
4. In implementing paragraphs 2 and 3 of this Article
the Parties shall apply the provisions of the Agreement on Government
Procurement.
5. Israel shall relax offset requirements on purchases
by government agencies other than the Ministry of Defense.
6. The provisions of this Article with respect to offset
requirements and to purchases by government agencies other than Israel's
Ministry of Defense and the United States Department of Defense shall
be effective one year from the date of entry into force of this Agreement.
The provisions of this Article with respect to purchases by Israel's
Ministry of Defense and the United States Department of Defense shall
be effective one year from the entry into force of this Agreement or
one year from the completion by Israel of a list of the exceptions referred
to in paragraph 3, whichever is later.
7. The Parties agree to consider promptly further trade
liberalizing measures in regard to both government procurement and offset
requirements in the context of the Joint Committee established by this
Agreement. In particular it is agreed that should the entity coverage
of the Agreement on Government Procurement be expanded, priority consideration
will be given to expanding this Agreement to apply to those purchases.
ARTICLE 16: [TRADE IN SERVICES]
The Parties recognize the importance of trade in services
and the need to maintain an open system of services exports which would
minimize restrictions on the flow of services between the two nations.
To this end, the Parties agree to develop means for cooperation on trade
in services pursuant to the provisions of a Declaration to be made by
the Parties.
ARTICLE 17: [JOINT COMMITTEE]
1. A Joint Committee is hereby established to supervise
the proper implementation of this Agreement and to review the trade
relationship between the Parties.
2. The functions of the Joint Committee shall include,
inter alia:
a. reviewing the general functioning of this Agreement;
b. holding consultations with respect to any matter
affecting the operation and the interpretation of this Agreement, as
provided in Article 18;
c. reviewing the results of this Agreement, the experience
gained during its functioning, and the objectives defined therein, and
considering ways of improving trade relations between the Parties, including
possible improvements in this Agreement. The adoption of any amendments
shall be subject to the domestic legal requirements of both Parties;
d. reviewing the Declaration on Trade in Services.
3.
a. The Joint Committee shall be composed of representatives
of the Parties and shall be headed by the United States Trade Representative
and Israel's Minister of Industry and Trade or their designees.
b. The Joint Committee may establish working groups
and delegate its powers to them.
4. Each party shall preside in turn over the Joint
Committee, which shall convene at least once a year in regular session
in order to review the general functioning of the Agreement. Special
meetings of the Joint Committee shall also be convened within 21 days
at the request of either Party. Regular sessions of the Joint Committee
shall be held alternately in the two countries. The Joint Committee
shall establish its own rules of procedure.
ARTICLE 18: [NOTICE AND CONSULTATION]
1.
a. Before either Party takes any trade measure with
respect to products traded between the Parties, it shall provide prior
written notice to the other Party as far in advance as may be practicable.
The notice shall include a description of the circum stances leading
to the proposed action.
b. Before either Party commits itself to take any action,
unilaterally or by agreement, which would reduce the barriers to trade
applicable to third countries, including those with whom that Party
intends to enter into a customs union, free trade area, arrangement
for frontier trade or those to whom that Party int ends unilaterally
to grant trade concessions, it shall provide prior written notice to
the other Party as far in advance as may be practicable.
2. If the Party affected by the proposed measure referred
to in paragraph 1 requests consultations with regard to such measures
the Party proposing the measure shall afford adequate opportunity for
consultations regarding the proposed measures.
3. In special circumstances, where delay or prior notice
would cause damage which would be difficult to remedy, action may be
taken without prior notice or consultation, provided that notice and
an opportunity to consult in accordance with paragraphs 1 and 2 are
provided as soon thereafter as practicable.
ARTICLE 19: [DISPUTE SETTLEMENTS]
1.
a. Whenever a dispute arises concerning the interpretation
of this Agreement, or whenever a Party considers that the other Party
has filed to carry out its obligations under this Agreement, the dispute
settlement mechanism described in this Article may be invoked. In addition,
the dispute settlement mechanism may also be invoked if one Party considers
that measures taken by the other Party, including a violation of the
Annex an subsidies, severely distort the balance of trade benefits accorded
by this Agreement or substantially undermine fundamental objectives
of this Agreement. This paragraph shall not apply to the imposition
of antidumping or countervailing duties.
b. When a dispute arises, the Parties shall make every
attempt to arrive at a mutually agreeable resolution through consultations.
c. If the Parties fail to resolve the dispute through
consultations, either Party may refer the matter to the Joint Committee,
which shall be convened and shall endeavor to resolve the dispute.
d. If a dispute referred to the Joint Committee has
not been resolved within a period of sixty days after the dispute was
referred to it, or within such longer period as the Joint Committee
has agreed upon, either Party may refer the matter to a conciliation
panel. The conciliation panel shall be composed of three members: each
Party shall appoint, within fifteen days of the date of referral, one
member, and the two appointees shall choose, within fortyfive days
of the date of referral, a third who will serve as the chairman. The
panel shall establish its own rules of procedure.
e. The panel shall endeavor to resolve the dispute
through agreement of the Parties. If the panel fails to reach such a
resolution, it shall, within three months after the first member is
appointed, present to the Parties a report containing findings of fact,
its determination as to whether either Party has failed to carry out
its obligations under the Agreement or whether a measure taken by either
Party severely distorts the balance of trade benefits accorded by this
Agreement or substantially undermines the fundamental objectives of
this Agreement, and a proposal on the settlement of the dispute. The
report of the panel shall be nonbinding.
f. If the conciliation panel under this Agreement or
any other applicable international dispute settlement mechanism has
been invoked by either Party with respect to any matter, the mechanism
invoked shall have exclusive jurisdiction over that matter.
2. After a dispute has been referred to a panel and
the panel has presented its report the affected Party shall be entitled
so to take any appropriate measure.
ARTICLE 20: [SPECIFIC DUTIES]
1. In the event that the value of the currency of the
United States of America, measured in Special Drawing Rights of the
International monetary Fund, decreases by more than twenty percent#,
specific duties and charges imposed by the United States of America
and expressed in the currency of the United States of America may be
increased by no more than the amount needed to maintain the value of
the specific duty in accordance with Annex 11 measured in Special Drawing
Rights. The first such adjustment shall be calculated from the last
adjustment prior to January 1, 1985. Subsequent adjustments shall be
calculated from the date of the most recent increase in specific duties.
2. In the event that the value of the currency of Israel,
measured against the currency of the United states of America, decreases
by more than twenty percent, specific duties and charges imposed by
Israel and expressed in the currency of Israel may be increased by no
more than the amount needed to maintain the value of the specific duty
in accordance with Annex 2, measured against the currency of the United
States of America. The first such adjustment shall be calculated from
the last adjustment prior to January 11, 1985. Subsequent adjustments
shall be calculated from the date of the most recent increase in specific
duties.
ARTICLE 21: [NOMENCLATURE CHANGES]
In the event that either Party changes its tariff schedules,
it shall so notify the other Party. In the case of a change other than
a major revision that change shall not adversely affect the tariffs
applicable to any product as set forth in Annexes 1 and 2 of this Agreement.
In the case of a major revision the balance of tariff concessions set
forth in Annexes 1 and 2 shall be preserved. The Joint Committee shall
modify the tariff nomenclature of the relevant annexes to conform to
such change.
ARTICLE 22: [ENTRY INTO FORCE]
1. The entry into force of this Agreement will be subject
to the completion of necessary domestic legal procedures by each Party.
2. This Agreement shall enter into force on the date
on which both parties have provided written notification to each other
that such procedures have been completed with paragraph 2.
3. Either Party may terminate this Agreement by written
notification to the other Party. This Agreement shall expire twelve
months after the date of such notification.
* * *
In Witness Whereof, the respective representatives,
having been duly authorized, have signed this Agreement.
Done in duplicate, in the Hebrew and English languages,
both equally authentic, at Washington, D.C., this twenty second day
of April 1985, which corresponds to this first day of Iyar, 5745.
Ariel Sharon
FOR THE GOVERNMENT OF ISRAEL
William E. Burk
FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA
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