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The agricultural trade agreement between Israel and the European Union was initialed yesterday, after negotiations that have continued for two years. The agreement provides for the exemption of 95% of processed food items from limitations of levies or quotas. Quotas on fresh agricultural exports to the EU have also increased under the agreement, although protective provisions for fresh European produce remains relatively broad.

The agricultural agreement applies to about $1 billion in Israeli exports, and European imports totaling about 500 million Euro. The EU market constitutes a very large slice (75%) of Israel's total fresh and processed agricultural products exports. Out of all agro exports to the EU, processed food and beverages account for 160 million, and the remaining are mainly fresh products, and a small scale export of fish.

Knowledgeable sources say that lifting of limitations is likely to increase exports of processed foods by hundreds of percent, since industrialists had reported a potential market for at least twice prevailing levels before the negotiations began.

Meirav Gonen who heads the international agreements unit of the Ministry Industry, Trade and Labor department of foreign trade, called the agreement a historical one, and very important for the agricultural produce sector.

"To date, trade has been unbalanced, and the limitations on our exports have exceeded those placed on imports from Europe," said Gonen. "We have now reached a more equitable agreement, and food exports are expected to grow substantially."

The products released from quotas include fresh salads like hummus, juice concentrates, chocolate products, baked goods, coffee, processed garlic, pasta, cookies and marshmallows. Well established companies like Strauss, Osem-Tivol, Dorot and Carmit, as well as food companies that have not exported to date because of quotas and taxes, will benefit.

Among the products that will not be able to enjoy the newly available exposure to the European market are turkey cold cuts and sausages. On the other hand, Israel maintained protective regulation on corn and some bakery goods, so that companies like Sunfrost and manufacturers of canned corn will continue to enjoy market relatively free of competition.