Prime Minister Benjamin Netanyahu has made a strategic decision to act to significantly boost trade and economic ties with Mexico, Chile, Colombia and Peru, all regarded as politically friendly countries that could serve as bridgeheads for increased trade with Latin America.
The measure is also aimed at compensating for the weak economies of Europe, which are still Israel’s biggest trade partner, and to create a new growth engine to complement the government’s efforts to build trade and economic ties with China and the other growth economies of East Asia.
The four countries, which last year formed the free-trade Pacific Alliance, account for about 36% of Latin America's gross domestic product and have strong growth potential. The group has close trade ties with the United States and Canada.
Israel’s trade with South America is so insignificant at present that the Central Bureau of Statistics doesn’t break out the continent in its headline figures, consigning it to the “rest of the world” category. In 2012, Israel had exports of about $2.6 billion to South America and imports of just over $2 billion.
Israel’s leading trade partner in the region is Brazil, by far the continent’s biggest economy. Israeli exports to Brazil are around $1.1 billion a year, with imports of $400 million. Colombia and Mexico are the only other two countries from which Israel imports significantly.
In June, President Shimon Peres signed a free-trade agreement with Colombia after 15 months of negotiations. Six years ago, Israel signed an FTA with the four Mercosur countries - Argentina, Brazil, Paraguay and Uruguay. It has a similar pact with Mexico.
The decision in Jerusalem came after members of the Pacific Alliance broached the idea. Sources say the government believes an enhanced Israeli economic presence would be welcomed in Latin America, which could benefit from Israel’s technological prowess.
The effort is being led by the Director General of the Prime Minister’s Office, Harel Locker. He convened a meeting on the issue last week with participants from seven government ministries and representatives from business, the Bank of Israel and the Israel Export Institute. Locker plans to set up a task force to coordinate cooperation with the Pacific Alliance.