U.S. Officials Celebrate Nation’s Oldest FTA

On the same day that U.S. officials celebrated the 25th anniversary of its very first free trade agreement, the U.S.-Israel Free Trade Agreement, officials also announced plans to liberalize the agreement even further, according to a press release from U.S. Trade Representative Ron Kirk Tuesday.

Signed into law 25 years ago, the U.S.-Israel Free Trade Agreement has been one of the least talked about trade pacts involving America, but that does not mean it has been any less detrimental to the economy than the North American Free Trade Agreement or the Central American Free Trade Agreement, relatively speaking.

One would think that given its relatively small size, the U.S.-Israel Free Trade would pay dividends from the American perspective. However, that has simply not been the case.

Since the deal was enacted in 1985, it resulted in a trade deficit of $62.65 billion through mid-2008 when adjusted for inflation, according to the Institute for Research: Middle Eastern Policy.

The trade imbalance is not because Israel is more economically efficient than the U.S., but more likely due to the poorly negotiated parameters of the trade pact.

Much like its poorly negotiated successor trade pacts, the U.S.-Israel trade pact provided an uneven playing field that favored Israel producers and service providers.

According to the Institute for Research: Middle Eastern Policy, the negotiations resulted in the lowering of all U.S. tariffs on manufactured goods from Israel. Israel, however, did not reciprocate. Instead, they maintained a floating 20 percent customs duty on any U.S. import of its choosing.

Israel was able to obtain the sweetheart deal in the trade pact by illegally obtaining classified information about the American negotiating position, according to IRmep.

Israel officials were found by the FBI to have in their possession a confidential report from the International Trade Commission to the U.S. Trade Representative, which contained classified information about American corporations along with information about how much the U.S. was willing to give up in negotiations. Illegally armed with that information, Israeli officials got a preferable deal.

Now, instead of fixing the trade pact to reflect the fact that the deal was slanted in the favor or Israel, the U.S. is planning to lower trade barriers between the two countries even further.

“We agreed to reinvigorate our trading relationship and to ensure that the benefits of our economic relationship are further shared and sustainable,” U.S. Trade Representative Ron Kirk and Israel’s Minister of Industry, Trade and Labor Binyamin Ben-Eliezer said in a joint statement. “We asked officials to develop, by the beginning of 2011, a workplan that would address remaining barriers to our bilateral trade that will help us to fully realize the potential gains to both countries from our FTA including, a renewed effort to explore opportunities available under liberalized trade in agriculture and services.”

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