Timely boost for Israel

Date: 12/10/1995

By Elizabeth Wise

THE European Union is set to lay another building block this month in its plans for Middle East peace with the signature of an extensive association accord with Israel.

At first glance, the accord appears to be merely a package of trade concessions. But those concessions, together with similar ones planned for Israel's neighbours, comprise what could be a major step towards regional peace.

The Union aims to conclude association accords with the dozen North African and Middle Eastern states facing the Union from the southern shore of the Mediterranean Sea. If, as expected, the association accord with Israel is signed by EU foreign ministers when they meet on 30 October, it will be the second such accord signed after the one with Tunisia. The Union is currently negotiating an agreement with Morocco and beginning talks with Jordan.

The package for Israel will give added flexibility to the way the country produces goods and substantially increase markets for its farm produce.

But it also opens Europe's markets to products made mainly in Israel or in neighbouring states. Through new “rules of origin”, Israel will be able to buy parts from Jordan, for instance, and still sell a product duty-free to Europe. That, the EU hopes, will encourage Middle Eastern states to get together in manufacturing and exporting and developing common economic interests.

Another part of the Union's strategy for the Mediterranean is to dismantle trade barriers between the states to encourage intra-regional trade and investment. The more the states become economically linked, Union officials say, the more difficult it will be to return to war.

“Cooperation between the Arab states is a declared policy of the European Union,” said a Commission official close to the negotiations with Israel .

Officials prefer not to acknowledge that Israel's accord is substantially different from those envisioned for other Mediterranean states. But Israel is poised to win trade and other benefits that place it above most non-European trading partners and nearly on a par with Norway.

“They are much closer to benefits the states of the European Economic Area (EEA) get,” the official continued.

In addition to the accord, the Commission is working on giving Israel a benefit that even EEA states do not have. Through tailor-made legislation which will bar future association accord partners from the same privilege, Israel will participate fully in EU research projects. The tiny country spends a large percentage of its budget on research and is a world leader in the field.

“Israel is a real partner in research,” the Commission official said, adding that opening meetings to the country “is not a concession for us”.

The Union is also exploring another area hitherto reserved for Europeans: allowing Israeli citizens working in the Union to keep receiving their social security benefits if they move from one member state to another.

“This accord is very like the EEA accords,” said the Commission official. “There is a rapprochement of legislation and norms.”

He admitted that Israel will have a status different from that of North African states because “there is no problem of Israeli immigration into the EU”. Israeli citizens will not, however, benefit from the right to free circulation within the Union enjoyed by citizens of the EEA states Iceland, Liechtenstein and Norway.

Israel's industrial products have entered the EU duty-free for nearly 20 years and the two-way trade has been free since 1989 for products entirely of Israeli origin.

With the current accord, Israel will also win trade concessions for its agricultural produce. The EU has raised import quotas and extended the import season for a five-page list of farm goods. Israel sought those concessions to help reduce what it estimates was a 5.7-billion-ecu trade deficit with the Union last year.

Israel also seeks access to Europe's telecommunications and audiovisual markets, especially to European public procurement contracts. Talks underway now could give both sides access to telecom contracts in the other's market, say Commission officials.

As a member of the General Agreement on Tariffs and Trade (GATT), Israeli companies have most-favoured-nation status when establishing companies in Europe and providing services. The Commission says EU-Israel talks aim to go further, giving Israeli firms the same status as Europeans in the Union and vice versa.

When it is signed, the association agreement will also upgrade political dialogue between the EU and Israel.