The Light at the End of the Tunnel for Israeli Imports

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The Standards Institution of Israel has been undergoing a slow streamlining process over the past three years that hasn’t kept up with the economy’s needs. Importers view the agency as a major obstacle to imports and to reducing the cost of living. Testers at the institution delay the entry into the market of products, which must wait at length before reaching the laboratories, and charge heavy fees that keep smaller importers out of the game.

For years the institution in practice offered protection from competition for local manufacturers, through product standards that didn’t match international standards. While most standards have been brought into line with global norms, there are still products that “enjoy” a special local standard − a boon to the manufacturer but at a cost to the consumer. As an example, there are complaints that the solar water heaters available to Israeli consumers are inferior to comparable systems in Western countries because the institute, due to pressure from certain Israeli manufacturers, has not changed its standards for solar-powered hot water systems.

The reform that Economy Minister Naftali Bennett is trying to effect, in the spirit of the Trajtenberg Committee recommendations, is apt. It must maintain a delicate balance between protecting public health and safety on one hand and permitting timely importing that will lower prices. It makes no sense for the flow of imports to remain under the thumb of the institution, a monopoly providing 1,000 jobs that probably aren’t all really necessary.

Bennett’s move of notifying the institute this week about carrying out the reform on the basis of directives rather than legislation was meant to circumvent the Knesset Economic Affairs Committee, whose chairman, MK Avishay Braverman ‏(Labor‏), chose to protect the workers even if it means harming the economy. It seems Braverman is trying to draw out the implementation of the reform but Bennett refuses to dance to his tune.

The advantage to implementing the reform through directives is that it can take effect immediately and open up the economy to a flood of imported products already within several months. The drawback is that when Bennett leaves the Economy Ministry his successor might not withstand the pressures, the directives will be canceled and bureaucracy will carry the day once again, to the delight of some of Israel’s industrialists and SII employees.

The standards institution bottleneck, without doubt, needs to be removed. Globalization has already been with us for at least two decades, and it’s high time for the field of standards to adapt itself to this significant economic development. There is no reason a refrigerator approved by a reputable laboratory in Britain, or a product sold in New York after being tested, can’t enter Israel without being examined by the standards institute.

The reform doesn’t exempt products with safety concerns, such as electrical appliances or baby products, from supervision on meeting standards. It merely simplifies the procedures to speed them up.

The intention of carrying out the reform by means of directive is the light at the end of the tunnel for importers. It doesn’t absolve the government from backing up the directives down the line with legislation. In fact, instituting the reform using directives could serve as a sort of pilot program on which to base the fine-tuning of legislative provisions.

It is reasonable to assume that the standards institute employees and the Histadrut labor federation will try to torpedo the reform’s directive-based implementation through strikes, as the Histadrut is accustomed to doing, but they’ll need to take into account the possibility that they’ll be shooting themselves in the foot. A strike could provoke the Economy Ministry into working toward the quick establishment of more professional laboratories and to expedite agreements with more labs overseas so that the institute’s powers would be drastically curtailed immediately. 

Religious Services Minister Naftali Bennett.Credit: Olivier Fitoussi

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