Israel’s trade relations with neighboring countries have been shaped by a complex geopolitical landscape. Israel has signed bilateral trade agreements with three of its immediate neighbors: the Palestinian Authority (PA), Egypt, and Jordan. The country’s trade with Middle Eastern markets is already quite significant, with the EU being Israel’s biggest trade partner, accounting for 28.8% of its trade in goods in 2022. However, all Israeli exports to the GCC market are currently indirect, through third countries, sometimes channeled through Jordan or Turkey, but mostly through Dubai.
The legal basis for the EU’s trade relations with Israel is the EU-Israel Association Agreement, which entered into force in June 2000. The agreement aims to provide an appropriate legal and institutional framework for political and economic relations between the EU and Israel. The EU is also among Israel’s main trading partners in the Mediterranean area, with total trade in goods between the EU and Israel in 2022 amounting to €46.8 billion. The EU’s imports from Israel were worth €17.5 billion and were led by machinery and transport (43.5%), chemicals (€3.5 billion, 20.1%), and other manufactured goods (€1.9 billion, 11.1%).
Israel’s trade relations with its Arab neighbors have been complicated by the ongoing conflict in the region. While Israel maintains full diplomatic relations with two of its Arab neighbors, Egypt and Jordan, after signing peace treaties in 1979 and 1994, respectively, the country’s relations with other Arab nations have been more strained. All Israeli exports to the GCC market are currently indirect, through third countries, sometimes channeled through Jordan or Turkey, but mostly through Dubai. The ongoing conflict has also hindered the country’s high-tech industry, with talent leaving the country and uncertainty creating a lack of clarity regarding the situation and future direction.
Israel’s trade relations with neighboring countries have been shaped by a complex geopolitical landscape. The country has signed bilateral trade agreements with three of its immediate neighbors: the Palestinian Authority (PA), Egypt, and Jordan. The EU is also among Israel’s main trading partners in the Mediterranean area. However, the ongoing conflict in the region has complicated Israel’s trade relations with its Arab neighbors, with all Israeli exports to the GCC market currently indirect, through third countries. The conflict has also hindered the country’s high-tech industry, with talent leaving the country and uncertainty creating a lack of clarity regarding the situation and future direction.
