Gov. Rick Perry announced on Tuesday the establishment of the Texas-Israel Chamber of Commerce, an agency meant to foster economic exchange and academic collaboration between the two.
Perry also said he has asked the directors of the Employees Retirement System and Teachers Retirement System to divest their funds from companies doing business with Iran. The governor said Texans will not condone Iran's support of terrorism.
"I personally believe that any company that does business with Iran is actively assisting those who seek to harm American men and women who are serving in the Middle East and funds terror attacks on our allies in the region," Perry said.
"And so, today, as we usher in a new era of relations between Texas and Israel, we speak of a grand vision of a world where terror is defeated by kinship, economic partnerships create new opportunity and people are free to work and live in peace," he added.
Iranian President Mahmoud Ahmadinejad has previously called for the destruction of Israel - an American ally in the Middle East.
Texas is Israel's third largest U.S. trading partner, and the newly formed chamber is the first such statewide agency partnering with another country, the governor's office said.
"Israel has a highly educated work force and is the site of valuable academic research. That has led 14 U.S. states to create formal programs to promote economic ties with the Middle Eastern country," said Asher Yarden, Israel's consul general in the Southwest.
"Israel's technology industry was created to sustain homeland security and defense," Yarden said.
"That could benefit Texas, which, like Israel, shares concerns about the security of its border," Perry said during his visit to an engineering and research lab at the University of Texas at Dallas - which conducts research in audiology, computer science, nanotechnology, space science and telecommunications.
The Texas-Israel Chamber of Commerce - created by the governor's office and the Israel-American Chamber of Commerce - will be based in the Dallas suburb of Richardson.
"Trade between Israel and Texas has grown quickly, particularly in the telecom, defense, biomedical and computer software and hardware fields," said Russell Levine, the new chamber's chief executive.