U.S. - Israel Free Trade Agreement
The U.S. – Israel Free Trade Agreement (FTA) took effect on September 1, 1985, and was the FTA signed by the United States with another country. The FTA eliminated duties on manufactured goods as of January 1, 1995. It also allowed the United States and Israel to protect sensitive agricultural sub-sectors with non-tariff barriers, including import bans, quotas, and fees.
The FTA includes a non-binding statement of intent to eliminate barriers to trade in services such as tourism, communications, banking, insurance, management consulting, accounting, law, computer services, and advertising. It also includes an agreement to eliminate all restrictions on government procurement, and calls on Israel to relax its offsets requirements for government agencies other than the Israeli Ministry of Defense.
The U.S. – Israel FTA is outdated by today’s standards because it has detailed obligations only on merchandise trade while the more recent FTAs include detailed obligations on agriculture, services, investment, intellectual property protection, standards, transparency, and rule of law.
Rules of Origin
Articles can qualify by either being wholly grown/produced/manufactured in a party or by substantial transformation with a value-added content.
Apply to any article if:
(a) that article is wholly the growth, product or manufacture of a Party or is a new or different article of commerce that has been grown, produced, or manufactured in a Party;
(b) that article is imported directly from one Party into the other Party; and
(c) the sum of
- (i) the cost or value of the materials produced in the exporting Party, plus
- (ii) the direct costs of processing operations performed in the exporting Party
is not less than 35 percent of the appraised value of the article at the time it is entered into the other Party.
Note, the cost or value of materials which are used in the production of an article in one Party, and which are products of the other Party, may be counted in an amount up to 15 percent of the appraised value of the article. Israel includes West Bank, Gaza Strip, or a Qualifying Industrial zone.
For definition of the above terms, see USTR U.S.-Israel FTA.
In addition to the above rules of origin, there may be other ways to qualify your product:
- Accumulation may allow the producer to reduce the value of the non-originating materials used in the production of the good.
- De Minimis allows the exporter to disregard a very small percentage of non-originating materials the do no meet a tariff shift rule.
- Direct Shipment are goods which must be shipped directly from one FTA party to another FTA party.
- Fungible Goods and Materials refers to goods or materials (components) that are interchangeable for commercial purposes and whose properties are essentially identical.
- Indirect Materials are goods used in the production, testing or inspection of a good but not physically incorporated into the good.
Effective January 10, 2018, U.S. exporters to Israel are no longer required to provide Israeli authorities a hard copy Certificate of Origin (commonly referred to as the “Green Form” or “Form A”). Instead, U.S. exporters or the producers are required to complete and sign the U.S. Origin Invoice Declaration.