U.S. products can be shipped to Israel and sold tax-free following a 1985 free-trade accord.An Israel-based trade agency founded by four Americans in 1991 is smoothing the way for U.S. goods to enter the highly competitive Israeli market, helping to boost industry and job creation back home in the United States.
The Jerusalem-based company, known as ATID-EDI, now represents 10 U.S. states and four regional chambers of commerce. It uses its knowledge and experience in the market to determine if there is a demand for U.S. products in Israel and the Middle East. The company follows up by creating relationships between U.S. manufacturers and Israeli regional partners and distributors to help the companies get a piece of the American export trade to Israel, which totaled a hefty $6.924 billion in 2001.
“Handholding and walking the Americans through the process” is how Seth Vogelman, ATID-EDI’s executive director, describes his company’s task.
“We’re much more intimate with the market than the U.S. companies,” said Vogelman, who is originally from New York and has lived in Israel for 20 years. “We’re basically a matchmaker. We make the ‘shidduch’ and hope the two sides get married.”
At its founding, ATID-EDI only represented the trade interests of companies in California. But, today, it has added Delaware, Georgia, Illinois, Indiana, Missouri, New Mexico, Oklahoma, Pennsylvania and Wisconsin to its client base with seven employees in its Jerusalem offices.
Since the ATID-EDI office in California opened in 1993, more than 80 small- to medium-sized California companies have successfully entered the Israeli market, according to Vogelman. In addition, five Israeli companies have used ATID-EDI’s contacts to begin operations in California that have resulted in 200 new jobs.
ATID-EDI also enabled a pay telephone company in Georgia to sign an agreement in Israel that will net $1 million in annual sales and a Georgia-based industrial cutting fluids company was matched with a distributor in Israel, in examples of recent deals.
American companies have advantages and disadvantages in the Israeli market versus their leading competitors in Europe. On the plus side, U.S. goods command a 10 to 15 percent premium on average in Israel because of their perceived high quality. On the minus side, Americans are seen in Israel as being very rigid on price and are handicapped by high transportation costs because of the long distance between the two countries.
Price flexibility is essential in exporting to Israel. However, if a U.S. company is willing to knock its price down 5 percent or so, it’s likely an Israeli company will take the product because Israelis appreciate the quality of American goods and services.
“There is a strong market in Israel for U.S. exports,” Vogelman said, “But it
has an asterisk – it needs to be qualified.”
There is a free trade accord between the United States and Israel that was established in 1985, he said. As a result, any U.S.-made product can be sold in Israel tax-free.
But trade conditions have declined in certain areas. The Israeli market for processed foods was opened up to other competitors in 1997. Thus, while U.S. frozen food once found an eager market in Israel, that’s now changed.
“There’s still a market for American processed foods, but the competition today is much stiffer,” Vogelman said.
One positive area for U.S. exporters these days is in organic agriculture. Israel has a healthy organic foods industry and there are plenty of American companies that service that industry, especially in the area of enzymes and bacteria that kill bugs, but are harmless to humans. Another area of demand in Israel where U.S. manufacturers are strong is for meat and animal husbandry supplies, in particular frozen animal semen and embryos.
“These products can be ‘Fed-Exed’ and that’s far cheaper than putting livestock on boats,” Vogelman said.
Americans are in a good position to beat the Europeans in this area due to concerns about meat imports from Europe with the Mad Cow disease and Foot and Mouth disease outbreaks there.
Environmental products are also a strong potential market for U.S. exporters. While Israel is developing rules for imports in this area, ATID-EDI is busy outreaching to U.S. companies that sell everything from recycling machines to environmentally friendly cleaning products.
“Once legislation passes, we’ll be ready to match companies up,” Vogelman said.
ATID-EDI is also involved with the Palestinian market, but trade activity there has dropped off drastically in the past 20 months of violence. Vogelman, who speaks Arabic, established several major contacts with U.S. and Palestinian companies prior to the outbreak of the conflict, most of which are now on hold.
In addition, the poor Israeli economy, the high-tech downturn, and the perception that Israeli business is under siege because of the conflict have slowed the growth of U.S. imports.
Many of the companies ATID-EDI deals with have been under the impression everyone in Israel is under fire, wearing flak jackets and helmets and living in bunkers, he said.
“The states’ offices and the companies tell us they are amazed we
are still making deals, providing links and producing trade leads,” Vogelman said.
ATID -EDI receives no funding or support from the Israeli government because the company promotes imports rather than exports.
ATID-EDI also works closely with the U.S. Department of Commerce, which also offers a service to help people export to the region.
“We see each other as colleagues, not competitors,” Vogelman said.