Cabinet Expected to Remove Major Barrier to Food Imports

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The small number of importers is one reason for the high food prices in Israel.Credit: Ilan Assayag

Almost two years late, the cabinet is next week expected to adopt the Locker committee’s recommendation to remove a major barrier to food imports − the Health Ministry’s convoluted regulatory procedures. This step is part of the overall government policy of reducing regulation.

In the area of imports this step echoes what the Standards Institute has already carried out − a move from complex regulation to business based on a declaration from the importer on meeting the standards and supervision of the market to ensure the truth of this declaration.

In July 2012, the food committee stated that “complex import procedures, including the process of registering an importer and the process of registering imports of food or products, as well as regulation that blocks the possibility of parallel imports in the food sector, are non-customs barriers which reduce the level of competition in Israel.”

The committee also discussed the proper balance between health and cost of living, and decided to adopt practices similar to those used in the United States and Europe.

In October 2012, the cabinet adopted these recommendations and instructed the Health Ministry to establish a team headed by its director general to examine easing the restrictions on parallel imports to Israel, and to present its recommendations within 60 days. The team, which was also meant to include the director general of the Economy Ministry and the budgets director in the Finance Ministry, was never established.

Some government officials blame this on the “trauma from the Remedia affair” in which three infants died and 20 suffered serious harm when improperly formulated infant formula was imported from Germany. This caused the Health Ministry to become scared of any reduction in regulation, said the officials.

As a result, the cabinet gave the job of dealing with parallel imports to Harel Locker, director general of the Prime Minister’s Office.

The current situation protects the exclusivity of food importers for products such as pasta and breakfast cereals, who can set almost any price they like for the supermarkets since they have no competition for the same brand.

The Locker committee found other importers found it difficult to receive information from manufacturers when there were exclusive imports.

For example, a European supplier who is stuck with surplus goods − and who works with an exclusive importer in Israel − was unwilling to provide the necessary paperwork signed by the supplier to another importer in Israel to bring in the goods, so as not to violate its exclusivity deal. Without these forms, such importation was illegal. Now this same supplier can sell to any Israeli importer since such documents will no longer be required by the ministry.

The Locker committee expanded its mandate beyond just exclusive imports. The Health Ministry agreed to cancel the requirements for the various documents for every food product that was not sensitive.

This means that any importer can bring in a wide range of products, including new ones that cannot be found on the shelves in Israel today. The importer must only guarantee the product meets the standards and criteria.

The reforms will allow a significant increase in food imports and at more attractive prices. But the big question remains whether the price to consumers will really drop. Will the importer sell to the retailer at a reduced price − and then will the supermarket chain sell the product at a discount, or keep the difference?

The government has started dealing with lowering customs duties and removing regulatory barriers and has even started to deal with the overconcentration of the big chains. It must continue to do so.

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