Smaller states like New Hampshire have a good reason to develop business ties. With a population of fewer than seven million – 81 percent of whom are Jewish and much of the remainder Muslim – Israel, the sole democracy in the Middle East, is New Hampshire’s 15th largest trading partner.

And some New Hampshire businesses are looking for that relationship to grow. Last year, the United States and Israel did $23.7 billion in business, up from $3.5 billion in 1985, the year the two nations signed the first free trade agreement by the US.

While that agreement virtually eliminated tariffs on most products, the Israelis imposed other barriers, including new product standards – which favor European companies – and strict government procurement policies, which can make it difficult for Americans and other non-Israelis to bid.

“In reality, it’s difficult to get US-made products into Israel,” Naomi Weigler told a group of New Hampshire businesses at a recent seminar sponsored by the Pease-based New Hampshire International Trade Resource Center and Southern New Hampshire University.

The session was designed to encourage additional trade between the Jewish state and New Hampshire firms. According to the US Census Bureau’s Foreign Trade Division, in 2002, New Hampshire and Israel did $24.2 million in business. The figure climbed to $30.8 million in 2003 and exceeded $38 million in 2004.

In 2004, the single largest product category traded involved the sale of medical/surgical equipment and instruments, followed by industrial machinery, including computers, and electrical machinery was third.

Weigler said New Hampshire companies offering automotive parts, computer software, electronic equipment, defense-related products, medical instrumentation, industrial chemicals, non-prescription drugs and building products, have the best chance of doing business in Israel.

The Israelis are also seeking new and innovative safety and security equipment. Weigler cited three major barriers to trading with Israel, the most significant being technical standards. In 2003, Israeli regulators adopted 169 new standards, which favored European countries and only two that gave an advantage to American firms.

Security concerns also impact trade between the US and Israel. Corporate America values stability, and the Middle East has a reputation for being unstable.

Citing his “bias”, while admitting there are some legitimate security concerns, David Rubin, the former Israeli economic minister to North America and now an independent businessman, told the group, “We still have a security problem. But if you don’t go to the West Bank or other Palestinian areas, you don’t have any higher risk than driving on Route 95.”

“You don’t really see anything unusual” throughout much of Israel, Rubin said of security precautions. What the American public, including the business community, does see is the aftermath of terrorist acts, including blown-up buses, restaurants and shopping malls.

Rubin said pictures of violence are replayed over and over again by the media, giving the world the impression Israel is plagued by terror. That impression does impact business decisions, including the willingness of foreigners to invest there.

Rubin said perhaps the biggest impediment to doing business in the region is the absence of a peace treaty between Israel and its Palestinian neighbors. The former Israeli official said he believes peace is possible in the “longterm.”

Rubin contends Israelis do business differently than Americans, a reality exacerbated by distance. “Israelis tend to be very free spirited. It’s a different mentality than we know here.”

Despite the differences, Rubin said smaller and mid-sized New Hampshire companies will feel welcomed in Israel, where home-grown operations also tend to be small.

“You’ll be working with small companies and you’ll have direct relationships with the owners.”

The BIRD Foundation (Bi-National Israel American Research Foundation) was created to encourage business between the US and Israel. If a New Hampshire company has a product that could sell in Israel, the Israeli government, via the foundation, would pay 50 percent of the development costs.

If the product fails, no matter what the reason, the American entrepreneur owes nothing. The Israelis are also very open to joint venture agreements with American companies, with expertise in marketing, a shortcoming of the Israeli business sector.

“Israel is a very good place to do business,” Rubin told his audience, especially for small and medium companies oriented to high technology.

(Originally appeared in the New Hampshire Union Ledger)