U.S. Accounts for Quarter of Israel's Exports, With 7% Increase Expected This Year

America has been Israel’s largest trading partner for decades; in 2012, total trade between the two countries was $19.4 billion, excluding diamonds.

Israeli exports to the United States are expected to increase 7% this year, according to a report issued by the Israel Export Institute in advance of U.S. President Barack Obama’s arrival Wednesday.

Even leaving aside foreign aid, America has been Israel’s largest trading partner for decades. Last year the United States accounted for 24% of Israel’s export business, and the Israel Export Institute is forecasting a 7% increase in Israeli exports to the United States this year.

In 2012, total trade between the two countries − American imports and Israeli exports, excluding diamonds − was $19.4 billion, up about 3% over 2011. In 2011 that figure stood at $18.8 billion, about 7% higher than in 2010.

During Obama’s first four year-term, from 2009 through 2012, Israeli exports to the United States − excluding pharmaceuticals and electronic components − increased from $5.9 billion a year to $7 billion annually. ‏(It’s important to factor out pharmaceuticals and electronic components so that the figures aren’t skewed by the Israeli drug-giant Teva Pharmaceutical Industries or Intel’s computer-chip manufacturing presence here.‏)

Last year Israel had a $2.1 billion trade surplus with the United States. Israel imported $8.7 billion, 16% more than in 2011. It exported $10.8 billion to American customers, excluding diamonds, 6% less than the previous year. If the decline in drug exports is factored out, then exports to the United States can actually be said to have increased by 3%.

Due to the importance of trade with the United States, the financial crisis that began there in 2008 − which hit the Americans harder than it did Israelis − prompted concern at the time over the future of Israel’s exports bound for the United States. The government cautioned exporters against over-reliance on the American market, recommending that Israeli companies maintain a diversified export strategy, including business with Europe, East Asia and South America.

Some industries looked for new markets, but others acknowledged that it would be difficult to shift their export activity so rapidly.

Israel’s export activity stabilized, however, after it became clear that the many European markets were as badly hurt by the global economic crisis as the United States, and after the U.S. market started showing signs of recovery.

In 2009, figures for Israel’s exports to the United States were disproportionately influenced by $2.4 billion in electronic components, most of them from U.S.-based Intel. Pharmaceutical exports, with Teva as the most important player, in fact declined by 17% last year.

Notable increases in imports from the United States last year included machinery and electrical equipment, chemicals and refinery products, motor vehicles, aeronautical and naval equipment, and mineral products.

Among the Israeli sectors that reported increased sales to the United States were the chemical and refinery industries, medical and surgical instruments manufacturing, rubber and plastic products, engines and electric equipment, and textiles and clothing.

Israeli manufacturers of communications equipment and metals were among those that reported declines in exports bound to American customers.

The export of electronic components remained stable last year at $330 million, after several years of sharp declines.

Avi Rokach