International trade has been a hot topic in the wake of a jarring few weeks of American tariffs and Canadian counter-measures. At a time of uncertainty for many sectors, it is worth highlighting a bright spot on the trade front: the recent upgrading of the Canada-Israel Free Trade Agreement (CIFTA).
Our growing economic ties with the only liberal democracy in the Middle East are a model for how Canadians can better tap into key markets that otherwise fall under the radar. Many readers would be surprised to learn that Israel was the first country outside North America with which Canada signed a free trade agreement. Since that accord came into force under the Chretien government in 1997, bilateral trade between Canada and Israel has tripled to more than $1.7 Billion and fueled job growth in key Canadian sectors.
Negotiations to modernize CIFTA began under the Harper government and continued under the Trudeau government, demonstrating the non-partisan nature of the Canada-Israel trade file. The new and improved CIFTA will benefit Canadian producers by shrinking and ending tariffs on agricultural and fisheries goods. The upgraded deal also includes new provisions on gender, labour rights, and environmental stewardship, as well as corporate social responsibility and small- and medium-sized enterprises.
Having spent significant time in Israel, and as the head of a Canadian company that has shipped lumber to Israel for many years, I have seen firsthand that this is a market that should not be overlooked. I have been impressed time and again by Israeli business culture. Israelis have a high level of informality, open-mindedness, adaptation, and creativity that far surpasses the business climate in most other countries.
Most importantly, the geopolitical realities of Israel have taught them that failure is not an option, and this lesson permeates their society from the defense to the business communities.
When it comes to risk-taking, Israeli entrepreneurs are famed for their refusal to be governed by fear of failure. When an idea or product proves to be a dud, Israelis take this as a sign to go back to the drawing board rather than to fold up shop. The result? An innovation sector that boasts the highest number of start-ups per capita on the planet.
This is where the opportunity rests for Canadians. As the Government of Canada prioritizes technology “superclusters” that unite businesses and researchers, the possibilities for partnerships with Israelis are virtually limitless.
While the volume in trade may be comparatively small, Israel is a market with a highly educated workforce and a unique edge in key sectors, including medical technology, aeronautics, cyber security, and an array of high-tech fields. Having earned the moniker “Start-Up Nation,” Israel is now home to the world’s highest concentration of tech companies outside of Silicon Valley. Virtually every industry giant — from Google and Facebook to Apple and Intel — has a significant R&D centre in Israel. This should not be unexpected for a country with some of the world’s highest per capita rates of engineers, PhDs, and scientific papers.
Major Canadian firms have taken note. Last June, for example, TMX Group Ltd. (which operates the TSX) appointed an executive solely dedicated to expanding its presence in Israel, with the goal of increasing the number of Israeli companies on the Toronto Stock Exchange. A few months later, TD Canada opened a cyber security office in Tel Aviv. This follows on years of growing tech ties between Canadian and Israeli industry leaders, such as BlackBerry’s 2015 acquisition of Israeli-American start-up WatchDox, a deal said to be worth $100 Million.
Expanded commercial ties parallel growing cooperation between Canadians and Israelis at various levels. Most of Canada’s top universities now have formal partnerships with Israeli universities and research centres. Israeli schools are world leaders in commercializing research through Technology Transfer Organizations (TTO), which provide academics a pathway and financing to turn ideas in the lab into products on the market. Observers note that this is a significant factor in the success of Israel’s tech sector. Canadian researchers and entrepreneurs would be wise to explore how we could integrate this approach into our own innovation sector.
The upgrading of Canada-Israel free trade is an example of how, in an increasingly knowledge-based economy, we must be creative in seeing opportunities beyond our largest trading partners. Following a week of difficult trade developments, and in an environment where, as an example, we can ship Canadian lumber duty free to Israel but not the United States, expanded trade with Israel is a good news story that Canadian leaders, entrepreneurs, and workers can celebrate.