Government Seeks to Abolish Most Duties by 2017

The Manufacturers Association and other business groups object to cuts in duties, saying they were worried many companies wouldn't survive the change.

Most customs duties will be gradually reduced to nothing by 2017 if the cabinet approves the recommendations by Finance Minister Yuval Steinitz and Industry, Trade and Labor Minister Shalom Simhon. The original recommendations of the Trajtenberg Committee on socioeconomic change were to remove most customs duties by 2013.

The Manufacturers Association and other business groups object strongly to the cuts in duties, saying they were worried that many companies would not survive the change and many workers would lose their jobs. The two ministers met in a bid to address the industrialists' concerns.

Shalom Simhon Yuval Steinitz
Tomer Appelbaum

Customs on items not made in Israel and raw materials for industry will be canceled next year, said sources involved in the discussions. Other goods will see duties reduced gradually, though customs duties on cars are not expected to be lowered. Customs on agricultural products were not included in the deal and are being discussed by a separate committee.

The Industry and Trade Ministry will attempt to open trade negotiations with a number of countries such as China, India and South Korea on mutually reducing duties and increasing trade. But it is likely that such deals will not be implemented quickly and most products will see a 10% drop in duties in 2013 and a further 15% in 2014. In 2015, the finance minister will be able to decide whether to continue reducing customs.

The original Trajtenberg recommendations were for a 50% reduction next year and the rest the year after.

The cabinet will not debate the recommendation limit the use of anti-dumping measures, due to manufacturers objections.