Jerusalem, 18 July 1995

DRAFT OF ISRAEL-EU TRADE AGREEMENT APPROVED

(Communicated by the Foreign Ministry Spokesman)

Last night, July 17, 1995, the European Union’s Council of Ministers approved the draft of a trade agreement between Israel and the European Union. The new agreement is scheduled be signed in October 1995, after both parties complete the drafting of the final details. Following its approval by the European Parliament, the agreement will be brought for approval before the parliaments of the EU member states.

Foreign Minister Shimon Peres said that the importance of the decision transcends the economic sphere. It is an important milestone in relations between Israel and Europe, further proof of Europe’s recognition of its special and preferential relations with Israel. The decision paves the way for a comprehensive agreement on matters of trade, research and development, and financial services between Israel and Europe. The Israeli economy has taken a great step forward towards integration and closer ties with one of the three main blocs in the new international economic order that has been emerged in recent years.

The agreement primarily the sections dealing with government procurement, and with research and development will facilitate increased cooperation between the private sectors of both Israel and the European Union, and will decrease Israel’s negative balance of trade with the EU (which is approaching an annual total of $8 billion).

The negotiations were conducted by Foreign Ministry Deputy Director-General for Economic Affairs Oded Eran and Mordechai Drori, Israel’s ambassador to the EU Institutions in Brussels in cooperation with the Ministries of Industry and Trade, Agriculture, and Science.

The agreement’s major components are as follows:

* Expansion of the free trade area: This will enable the export of larger quantities of agricultural produce in fields which the agricultural sector has developed over the past few years in an effort to overcome the problem of water shortage, primarily flowers, peelable fruits and grapes. Israel agreed to reduce its export quota of oranges to EU countries from 300,000 to 200,000 tons.

* General updating of the original document: The tremendous change in Israeli industry, which has moved largely to advanced technology products, required the updating of the original agreement with regard to rules of origin and adjustment to new trade patterns. This will improve the ability of Israeli industry to compete in European markets.

* Government procurement: Negotiations will be conducted on the opening of the government procurement market under preferred terms primarily in the field of telecommunications.

* Research and development: In recognition of Israel’s special status and its advanced capability in the area of R&D, the EU agreed to include Israel in committees administering European Union research and development projects. Israel will not have voting rights.