Mexico-Israel Trade

Mexico-Israel Trade

Mexico's trade with Israel has risen in the last few years, but total trade between the two countries still doesn't amount to much. In the case of Mexico, it amounts to less than 1% of its total trade. Last year, Mexico exported to Israel just US$37.9 million worth of goods, two-thirds of that being oil. The rest included electrical equipment, fruits and vegetables, and basic chemicals. On the other hand, Mexico imported from Israel US$172.7 million worth of goods in 1999; primarily electronic equipment, chemicals, and pharmaceutical products.

The Agreement

After two years of negotiations, the agreement was signed on March 6, 2000 and came into effect on July 1. In total, 10 rounds of negotiations were required to conclude the agreement, with the first taking place in April of 1998. The agreement has 11 chapters, which deal amongst other things with market access, rules of origin, customs clearing, emergency measures, competition policy, government procurement, resolution, and WTO rights and obligations. It also provides for the establishment of a commission to monitor the compliance of the agreement and for contingency plans to address any problems that may arise.

The treaty eliminates tariffs in three stages, which before the agreement came into effect averaged on a weighted basis 5.44% on Mexican exports to Israel and 7.54% on Israeli exports to Mexico. The FTA covers 96.6% of agricultural goods currently traded and 100% of industrial goods. Mexico reserved the right to maintain import licenses on petroleum, used machinery, clothes, and automobiles, while Israel has maintained restrictive measures on non-kosher meats. All in all, about 99% of the trade between the two countries is covered in the agreement. However, the agreement does not cover trade in services, an increasingly important part of global trade.

On July 1, 2000 the FTA withdrew all tariffs on about 50% of Mexico's exports to Israel. Mexican exports that now have duty-free entry into Israel are coffee, sugar, concentrated orange juice, beer and tequila. An additional 25% of merchandise goods was accorded duty-free entrance, as long they were below a certain quota, and another 12% of Mexican merchandize exports experienced tariff reduction of anywhere between 25% and 50%. Of what remains, most of that will have tariffs eliminated in 2003 -- these include furniture, shoes, and candles. The rest (about 2% of what is exported today) will have whatever tariffs are applied to them eliminated in 2005.

For Israel, the treaty accorded it duty free access on July 1 to about 72% of its exports to Mexico. For example, Israel's export of flowers, bulbs, and spices are no longer subject to tariffs when entering Mexico. In terms of manufactured good, no tariffs are also now levied on exports of irrigation systems, green houses, medical equipment, and security

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