The advantages of free-trade agreements with Asia

Last week, the Foreign Ministry inaugurated its first “Asia-Pacific Day.” Within the framework of the occasion, Foreign Minister Ashkenazi signed a series of bilateral agreements with Asian countries, and hosted ambassadors from 11 Asian-Pacific states, based in Israel. The rationale behind these agreements was to create more jobs for the Israeli economy, lower the cost of living, assist exporters, and expand foreign direct investment and inbound tourism.

Asia is the central driving force behind the world’s economic growth, and experts believe that it will play a key role in extricating humanity from the deep economic crisis it is currently embroiled in, as it did in 2008. This is largely due to its tremendous amount of foreign exchange reserves, its growth, and its effective management of coronavirus, as well as its trade connections and industry investments with Europe and the United States. Today, over 50 percent of the world’s GNP is in Asia, and according to estimates from the World Economic Forum, Asia will represent 60% of global economic growth by 2030.

One of the key issues on our agenda vis a vis the Asian economies is free trade agreements. They will effectively lower the cost of those ever-popular commodities from the East, such as electronics, computers, cars, and more. As such, they will also assist in lowering the cost of living in Israel.

One of the key forces driving economic growth is the expansion of export. Trade agreements will put an end to custom taxes in destination countries and help Israeli exporters compete as equals with their counterparts in the United States and Europe. If we are able to successfully agree upon and sign a free trade agreement with South Korea in the coming weeks, it will represent a dramatic breakthrough in our relations with Asia. Professional teams from the Ministries of Economy and Foreign Affairs are also currently in the advanced stages of negotiations with Vietnam and China. We hope that the agreement with Korea will bring about a speedy conclusion to our negotiations with the second-largest economy in the world, and a country that enjoys some of the world’s fastest and most dramatic economic growth.

In his visit to India in 2018, Prime Minister Netanyahu offered his counterpart, Narendra Modi, a special trade agreement for a series of products important to both countries, and over the past several months, negotiations with India have been established. Beginning additional negotiations on a free trade zone with Japan is also of strategic importance to Israel, and we are working to advance this possibility as well.

Israel has doubled its number of embassies in Asia since 1992 (from 10 to 19), and with the establishment of relations in 1992, trade with China jumped from $50 million to $15 billion today. Trade with India similarly grew from $200 million in 1995 to close to $5 billion. Over 70 Japanese companies have opened offices in Israel, and Japanese foreign direct investments have grown by 35 times in the past five years alone.

The strengthening of ties between Israel and the Gulf may also serve to catalyze trade and economic relations with Asia. We already witnessed the first indications of this when Air India flights from Delhi to Israel began flying over Gulf states, saving hours of flight time and bolstering tourism and business. Normalization between Israel and the Gulf states may also have an additional implication: major energy and investment companies in Asia will begin investing in the Israeli economy now that it is clear that the “Arab boycott” is a thing of the past, and that business can be done here without fear of the damage it may inflict on relations with clients in the Persian Gulf — as implausible as this fear may have been.

We call on Asian countries, the most important and fastest growing economies in the world, to sign free trade agreements with Israel at the earliest possible juncture. Israel boasts exceptional capacities in tech and innovation, elite technologies in the fields of cybersecurity, innovation, agriculture, medicine and science, as well an easygoing business environment and a liberal economy. Together, these qualities combine to form an attractive opportunity to relieve exporters on both sides and to substantially expand our trade volume.