Israeli Aluminum Exporters Give Up on U.S. Tariff Exemption

Jerusalem dissuaded from pressing Washington for break due to limit on exports in return

File photo: An aluminium factory.
Bloomberg

The Israeli government won’t fight for an exemption for Israeli exporters on the aluminum tariff that the U.S. government levied in March, according to Israeli diplomatic sources.

The sources said the government looked into the issue and found that the countries the United States exempted from the tariff were the ones that made commitments to limit their exports to the United States. Officials in the Economy and Industry Ministry said Israel’s policy is to refrain from imposing limitations on exporters, even if the price is tariffs.

Israeli aluminum exports are valued at just $25 million annually, and Israeli exporters are already paying the tariff. Still, many in the industry had the feeling that the government would act to win them an exemption as other governments have done. While officials in Jerusalem did explore the possibility of exempting Israel from the tariff, it seems the discussions were halted in light of the conditions the United States insisted on in talks with other countries.

Meanwhile, contacts between Israel and the U.S. are continuing on expanding the bilateral free trade area agreement to include fresh agricultural products and food. The FTA, signed in 1985, gradually eliminated tariffs on industrial products. The talks have lasted a year, and officials hope to wrap them up by 2020, as the plethora of trade agreements being renegotiated at the initiative of U.S. President Donald Trump are making it hard for the Americans to focus on the deal with Israel.

Trade in agricultural products between Israel and the United States is managed under levy order, easing trade with reduced tariffs and duty-free quotas, that are renewed every two years without change. Last year, the countries discussed mutual breaks on agricultural products that would be permanently added to the general trade agreement.

It emerged in the discussions that the Americans were interested in lowering the tariffs and the quotas for export to Israel of fruits including apples, pears and cherries, as well as almonds, walnuts and processed foods such as oils.

Israel is interested in similar breaks for other products, mainly ice cream for the kosher market. The changes are expected to be asymmetrical, with the Americans getting most of the breaks, to balance the 1985 agreement that favored Israel.