Introduction

Since the very beginning of the existence of modern Israel, the newly-founded state has been
the target of military aggression and constant anti-Semitic propaganda, including the denial of
the existence of such an entity in the Middle East. Among these recurring difficulties, the
establishment and the gradual development of a functioning and competitive economy and
foreign trade relations has not only been a matter of popular well-being, but also a core
prerequisite for the very survival and independence of the state itself. Taking this into
consideration, it is no surprise that that leaders of Israel have always tried to keep strong
relations with Europe. Besides a solid feeling of cultural and historical belonging to the
continent, Israel has recognized the potential of the economic integration among Western
European countries and its significant effect on the Israeli economy very early. Not only did
Israel request the establishment of a diplomatic mission in Brussels among the first countries
in the world in 1958, but it even initiated secret negotiations to inquire about the possibility of
membership in the newly formed European Economic Community. (Pardo, 2013: 901) To
indicate the motivations behind such an effort to become part of the EEC, it is worth quoting
the argument of Simon Peres from 1957: The unification of Europe is a process that is just
beginning; Israel must catch the train before it gets far from its first station, rather than run
after the train as it speeds away (Pardo, 2013: 904)
Despite the early hopes of the Jewish state, however, the train of European
integration has left not only the first, but many more stations without Israel. The country was
never offered a membership in the constantly developing and enlarging EC/EU, but was
treated as a third country to date. The lack of membership, on the other hand, did not hold
back the parties to build up close ties in the field of economic co-operation and trade
liberalization. The central element of this relationship was first the 1975 Agreement between
the EEC and Israel, which established a free trade area, with the abolishment of tariffs on
industrial products and a significant tariff reduction on 85% of the agricultural export from
Israel to the Community. (Allon, 1975) This rather limited and country-specific agreement
was in force up until 2000, when it was finally replaced by a much broader and deeper cooperation in the form of an Association Agreement, in the framework of the European
Neighbourhood Policy and the Euro-Mediterranean Partnership1.
As these two documents have constituted the backbone of the EU/EC-Israel
relationship in the past 40 years and still continue to be the cornerstone of any dialogue, it
would be worth examining what provisions they contained, what areas were covered, and
1

It was re-launched in 2008 under the name Union for the Mediterranean
1

most importantly: what kind of development can we observe between the two agreements.
Therefore, this short paper will focus on the comparison of the mentioned documents,
highlighting the common and the diverging aspects, while shortly referring to the results they
brought about in the trade between Israel and the EC/EU. First, the 1975 Agreement will be
analysed, then the focus will move to the Association Agreement and how it has built on the
previous one. Based on the observations, a concise summary is given about the evolution and
the current state of EU-Israel relations in the last section.
1. Agreement between the European Economic Community and Israel, 1975
Already in 1960, Israeli decision-makers decided to investigate the possibility of an
association agreement with the EEC, as they believed that (without the hope of a full
membership) such an agreement was the only solution that could permanently resolve the
problems imposed by the common tariff system of the Community on Israeli exports.
Unfortunately, the latters efforts to convince the six Member States have failed and only a
limited, three-year trade agreement was signed in 1964. However, following another, fiveyear preferential agreement signed in 1970 with Israel, the Community has come up with a
new Mediterranean approach in 1973 and started negotiations accordingly with the Jewish
state, in order to abolish trade barriers between the two entities almost entirely. (European
Commission, 1993; Heimann, 2015: 86, 105)
The new agreement was signed on 11 May 1975 with the main goal of eliminating all
duties on Israeli industrial goods by 1977 and on European ones by 1989 and establishing cooperation between the contracting parties on a basis of mutual advantage. (EEC-Israel
Agreement, 1975; European Commission, 1993) The document itself is divided into three
main sections, under the titles Trade, Cooperation and General and Final Provisions.
The majority of the provisions can be found under the Trade part of the Agreement, which
essentially constitutes the most important pillar of the entire treaty. Articles 2-17 deal with the
gradual implementation of the free trade area by the tools of negative integration. Firstly, the
Agreement forbids any new customs duties or quantitative restrictions on import and export
alike, while demands the existing ones to be abolished upon the entry into force of the
Agreement. It also compels the parties to refrain from any direct or indirect discrimination
between the products of one contracting party and restriction or distortion of competition by
any fiscal measures and public aid. However, the treaty allows certain level of restriction on
transit goods, justified by public security considerations or human rights protection.
Moreover, in case one of the parties experiences serious disturbances in any sector of the

economy, becomes the target of dumping or believes that the other contractor has failed to
comply with any points of this Agreement, the document provides the right to use
appropriate measures laid down in Article 16 of the treaty. This specific article is often
referred to in the text, as it contains the possible means that the parties can use in case of
arising difficulties. Before any such measures are taken, however, the Joint Committee
composed of representatives from both sides needs to be informed and consulted about any
disputes and shall be trusted with finding the best possible solution. In case the Joint
Committee is not able to solve the issue in three months and the objected practice or
behaviour of a given party has not ceased, the other contracting side may adopt safeguard
measures that it considers necessary to deal with serious difficulties, particularly
withdrawing tariff concessions or impose an extra charge on imported products. Yet, it is
important, that such measures must always be restricted and proportionately applied only as
long as necessary to remedy the situation. Apart from the regulations concerning trade
between the partners, the Agreement specifies the right of each party to establish a customs
union or another free trade area with any further countries, as long as these contracts do not
alter the provisions in this document, especially those concerning the rules of origin.
The other two sections of the text are shorter than the first one. The second title,
named Cooperation is mainly focused on the possibility of further developing the
relationship between the parties, in any fields that are in their mutual interest. This may
include promoting diversification of trade, transfer of technological knowhow, or encouraging
private investments. Articles 19-30 under the final section of General and Final Provisions
define the composition and the function of the above-mentioned Joint Committee, which will
be responsible for the administration and implementation of the Agreement. The Committee,
which shall meet at least once a year, can make recommendations and decisions, which the
parties have to implement in accordance with their own rules. Following a security and
defence clause which allows the parties to withhold information and limit trade on arms or
war materials when security interests are involved, the last articles of the treaty once again
state the possibility of further cooperation (through the Joint Committee), and deal with the
termination of the Agreement. According to Article 28, either contracting side can denounce
the document by notifying the other party, in which case, the Agreement ceases to apply 12
months after the date of notification. (EEC-Israel Agreement, 1975)
Although Israels main desire, namely a full-board Association Agreement based on
Article 238 of the Treaty of Rome, has not been achieved at that time, the 1975 free trade
agreement was undoubtedly a huge step in the development of relations, especially
3

considering that it was the first such treaty signed with a Mediterranean country. In addition to
the trade provisions, three financial protocols were also concluded with the Agreement, which
allowed Israel to apply for loans at the European Investment Bank over a five year period and
to use the money to finance small- and medium-size enterprises. (European Commission,
1993) With regard to the effects of the 1975 Agreement on Israeli trade, Silber and Berrebi
concluded that Israels exports to the EEC from the 1970s have become less similar to those
of the Spain, Portugal or Greece and more similar to those of developed countries 2. Also, a
growing similarity between the composition of Israeli exports and the EECs import patterns
indicate a clear structural transformation, in which this Agreement has clearly played a role.
(Silber & Berrebi, 1988: 145)
2. Association Agreement between the EC and Israel, 2000
The beginning of the 90s has brought about crucial changes in Europe. The Eastern European
socialist regimes have fallen, the Single Market was officially in place and the newly created
European Union had to decide what kind of politics it wants to pursue towards its neighbours.
By incorporating Spain, Portugal and Greece a decade earlier, the EU came closer to the
Mediterranean area and recognized the importance of keeping a stable relationship with those
states that had no chance to be part of the EU, but still emerged as key factors in building up a
stable neighbourhood in the close proximity of the Union. The policy towards these states was
shaped in the framework of the Barcelona Process, which has established a framework of
bilateral and regional co-operation in political, economic and social/cultural dimensions in
1995. The main elements of the policy were realised in the form of Association Agreements,
which not only aimed at creating a free trade area, but introduced constant political dialogue,
cultural and scientific exchange and access to development funds as well. (EEAS, 2015)
From Israels perspective, the signing of such an Agreement has become a bigger
priority in the 1990s than ever before. As Spain, Portugal and Greece were directly
competing with Israeli agricultural export to the EEC, the accession of these countries to the
Common Market has seriously damaged Israels export opportunities at a time when Israeli
trade deficit vis--vis the EC has already been steadily growing. (Hauswaldt, 2003: 595)
Taking this into consideration, the signing of the Association Agreement between the EU and
Israel on 20 November 1995 was a huge leap in the evolution of their relationship.

Between 1970 and 1982, export of citrus fruits has decreased with almost 50%, while the composition of metal,
machinery and electronic goods has grown from 18% to 44% of all exported industrial products in the given
period. (Silber & Berrebi, 1988: 146)
4

Upon the first sight of the document it becomes clear that the new Agreement, which
entered into force in 2000, is almost three times longer than the one from 1975. Apart from
the number of Articles (30 in the previous one, 85 in the current one), numerous new chapters
indicate that this treaty is way more extensive and covers whole new fields of cooperation
between the parties. Right at the beginning, a very important principle is laid down in Article
2, which states that provisions of the Agreement shall be based on respect for human rights
and democratic principles. As opposed to the 1975 document, which did not refer to any such
conditionality, Article 2 has become a reference point for critiques of Israels settlement
policy and military actions in the occupied territories, providing them leverage in their
demands for EU sanctions against the Jewish state. 3 Under the first short section of Political
dialogue, the levels of co-operation are highlighted, including meetings on ministerial and
senior official levels and between the European Parliament and the Knesset the latter being
a clear development since the 1975 treaty.
The second chapter, named Free movement of goods is de facto the modified and
extended version of Title 1 of the previous agreement, which concerned the establishment of
the free trade area. The new Agreement improves the existing terms of trade in manufactured
and agricultural products and makes it possible to give concessions also to trade in fisheries
products. The procedure of Article 16 from the 1975 Agreement (which sets the rules of
appropriate measures in case of difficulties) can be found now under Article 25. The text of
the articles remains roughly the same, except for the substitution of the Joint Committee with
the newly created Association Committee (see explanation later). The following chapters,
from Title 3 to Title 8 compose the main new elements of the Association Agreement. These
include the right of establishment of firms of one party in the territory of the other, the
liberalization of services, the removal of restrictions on the movement of capital (with
possible restrictions under Article 34), the opening of government procurement markets and
economic dialogue in the forms of regular exchange of information or technical and
regulatory assistance, etc. In respect of competition rules, the Agreement specifies the
prevention of any distortion of competition, stipulates transparency in the area of public aid,
and the adjustment of state monopolies. Article 47 sets provisions for mutual recognition of
standards and the reduction of differences in existing ones. As a whole new issue,
environment protection has also been included under Article 50, which describes waste
management, desertification or prevention of water pollution among the fields of common
3

As an example, a letter of 23 MEPs to Catherine Ashton in March 2013 can be mentioned. The letter is
avaliable here: http://www.eccpalestine.org/wp-content/uploads/2013/03/LetterToHRVP-EU-IsraelAssociationAgreement-2013.03.11.pdf
5

work. An important feature of Title 8, named Social matters, is the co-ordination of social
security regimes of Israeli workers who are legally employed in EU Member States,
especially concerning their pension and medical care. Article 66 states, however, that
arrangements done to this end should not affect the rights and obligations resulting from
bilateral agreements where more favourable conditions apply for Israeli citizens than those
that the Agreement stipulates.
The last chapter is once again a modified version of the General and Final
Provisions part of the 1975 treaty. Here, the redefined institutional structure of the
Agreement is specified, whereby the Joint Committee is replaced by two institutions. The first
one is the Association Council, which inherited the same rights of the Joint Committee, and is
responsible for implementing the procedure of Article 25 and making decisions or
recommendations. It is composed of representatives from both parties and is chaired, in turn,
by a member of the Council of the European Union and a member of the government of
Israel. The new body established is the Association Committee, whose responsibility is the
implementation of the Agreement. The Association Council may delegate any powers to the
Committee, which then makes decisions (but no recommendations). Unlike the Association
Council, the Committee is chaired by the Presidency of the Council of EU (not just any
members of the Council) and by a representative of the government of Israel. In addition to
these institutions, a new way of conflict settlement is available to the parties, in the form of
arbitration. Article 75 stipulates that in case the Association Council is not able to settle a
dispute, both parties and the Council may appoint an arbitrator, whose decisions are taken by
majority vote. The final provisions of the Agreement specify that the document is concluded
for an unlimited period. Each party may denounce the Agreement, the same way as in the
1975 treaty, with one difference: instead of 12 months, the document will cease to apply in 6
months after the date of notification. (EU-Mediterranean Agreement, 2000)
3. Conclusion
Having analysed the two main agreements from 1975 and 2000, we can clearly observe a
huge development in the relations of the EC/EU and Israel. As opposed to the 1975 treaty
whose purpose was the creation of a free trade area on industrial, and to a lesser extent, on
agricultural products, the new Association Agreement within the framework of the Barcelona
Process was the basis of a more extensive co-operation, not exclusively focusing on trade
relations, but incorporating several other fields from the areas of politics, social issues,
environmental protection and education. Thanks to the Agreement, representatives of Israel

and the EU have multiple levels of political dialogue, which have undoubtedly contributed to
later developments in the form of new treaties. For example, the EU and Israel signed an
agreement in 2009 concerning reciprocal liberalisation measures on agricultural products,
processed agricultural products and fish and fishery products. Other documents established
co-operation in scientific research (within the Horizon 2020 programme) or an Agreement on
Conformity Assessment and Acceptance of industrial products as well. (EEAS, 2015b) It is
worth mentioning that the foundations of joint work on these areas were first and foremost
laid down in the Association Agreement. Based on the growing number of treaties between
the EU and Israel, I believe that the success of the 2000 Agreement is uncontested in this
respect.
What about the volume of trade between the two partners? According to the latest
statistics, the EU is Israels largest import and export market and accounts for about a third of
Israel's total trade. Moreover, Israel ranks as the 27th biggest trading partner of the EU
globally. (European Commission, 2014) While trade in goods is definitely booming between
the two markets, trade in services has remained rather stagnant in recent years. (EEAS,
2015b) Therefore, it becomes visible that despite the explicit efforts of the Association
Agreement to liberalize the services sector, these provisions have not been put into effect
entirely. (Munin, 2010: 1) In this respect, further improvements are needed in the future.
The main obstacle, however, does not concern economic and trade matters. The ongoing political difficulty that the Arab-Israeli conflict has been generating for several decades
has seriously hindered and is still stopping effective co-operation in certain layers of politics.
The growing pressure from the side of the European Union to stop the settlement policy and
the emergence of movements in Member States that initiated a boycott on Israeli products
could further hamper any upgrade of the current relations to higher levels. In such a
conflicting environment, the Association Agreement between the two parties will, most
probably, remain the only basis and limits of relations in forthcoming years.

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