Israel, Argentina to Complete Mercosur FTA

With an FTA agreement between Israel and Argentina going into effect, Israeli firms will be able to export tax-free to MERCOSUR countries.

Tags: economy Israel
David Lev ,

Mercosure zone
Mercosure zone

A free trade agreement between Israel and Argentina is set to come into effect on September 9, the Industry, Trade and Labor Ministry announced Tuesday. The arrangement between Israel and Argentina completes the free trade deal Israel signed with the Mercosur bloc, consisting of Brazil, Uruguay, and Paraguay. Argentina, which is part of the bloc, did not initially approve the agreement, which officially went into effect on January 1, 2010. With Argentina finally signing the agreement, Israel can now freely trade with the bloc with no restrictions.

With the deal, Israeli companies will be able to more easily reach some 250 million people, with a combined gross national product of $2.8 trillion. The bloc includes Brazil, which currently has one of the ten strongest economies of any nation.

In 2010, Israeli companies did $1.8 billion of business with Mercosur countries, but only about $130 million with Argentina, because of high tariffs on Israeli goods there. With the expiration of the tariffs prescribed by the free trade agreement, Israeli officials are very optimistic that trade with the bloc will increase substantially.

It should be noted that Israel is the only country outside of Latin America to have such an agreement with the Mercosur countries.

Deputy Director of the Industry, Trade and Labor Ministry Boaz Hirsch told reporters Tuesday that the agreement would “give Israeli companies a unique opportunity to reach markets in Latin America. This agreement is also important in that it increases ties between Israel and the countries in the bloc,” he said.

Israel, Hirsch added, has had a long tradition as a trailblazer in free trade agreements. Nearly 65% of Israel's exports are to countries with which it has free trade agreements. Israel was the first country to sign an FTA with the United States, and was the first country to have one with both the U.S. and European Union. The FTA with Israel is Mercosur's first; the Mercosur bloc is the fifth largest market in the world, said Hirsch, and numerous countries have tried to negotiate deals with the bloc, but have so far failed.