Fact Sheet U.S. – Israel Economic Relationship

The First U.S. Free Trade Agreement

The United States-Israel Free Trade Agreement, established in 1985, was the first free trade agreement entered into by the United States.  Since its entry into force, trade between the countries has increased ten-fold to $49 billion in 2016.  The reopening of the Israeli market to U.S. beef in 2016 is a sign of Israeli interest in further opening our trade relations.

Israelis now invest close to $24 billion in the United States, nearly triple what it was a decade earlier.

Start-Up Nation

U.S. firms have been a big part of the
Start-Up Nation story, with U.S. companies establishing two-thirds of the more than 300 foreign-invested research and development centers in Israel.  Israeli firms, meanwhile, represent the second-largest source of foreign listings on the NASDAQ after China – and more than Indian, Japanese, and South Korean firms combined.

Cooperation Agreements

The U.S. and Israeli governments have recently signed, or committed to develop, a variety of cooperation agreements, all at the Cabinet Secretary or head of agency level, including agreements on:

  • civil aviation, promised by the U.S. FAA Administrator;
  • public health and medical science, signed by the U.S. HHS Secretary;
  • energy, including renewable energy, signed by the U.S. Energy Secretary;
  • space cooperation, signed by the U.S. NASA Administrator;
  • transportation cooperation, focused on autonomous vehicles, among other topics, signed by the U.S. Transportation Secretary.

Official Visits

We also see a steady stream of governors, mayors, and other state and local leaders.  As an example, the California State Agriculture Secretary traveled to Israel in mid-2016 to explore cooperation on climate-smart agriculture.   New York City officials inked an agreement on protection of critical water infrastructure.   The list goes on.

Multiple Sectors of Cooperation

The U.S.-Israeli economic and commercial relationship now spans IT, bio-tech, life sciences, health care solutions, energy, pharmaceuticals, food and beverage, defense industries, cyber-security, and aviation, to name just a few sectors.

Critical components of leading American high-tech products are invented and designed in Israel, making these American companies more competitive and more profitable globally.   Cisco, Intel, Motorola, Applied Materials, and HP are just a few examples.

Israel is home to more than 2,500 U.S. firms employing some 72,000 Israelis, according to an estimate by the U.S. Chamber of Commerce. Thousands more jobs are supported indirectly by these employers.

The Massachusetts Example
The New England-Israel Business Council released a study that shows that Israeli-founded businesses have generated about 9,000 jobs in Massachusetts alone, and indirectly support an additional 18,000.
These companies represent nearly four percent of the state’s GDP. And that is just one state.

In Beersheva – less than an hour’s train ride from Tel Aviv –American and Israeli companies are working side-by-side at CyberSpark. It is a fast-growing, world-class, hi-tech office park, adjacent to a top academic institution, Ben-Gurion University of the Negev, and not far from where critical public-sector institutions, such as the IDF’s cyber and intelligence units, will soon be located.  This unique eco-system is rapidly attracting more American companies to take part in developing the defenses that will protect the new economy. 

Cooperation on Water Issues

Water is another area where the United States and Israel are increasingly working together.  After addressing their own century-long water crisis via breakthrough technologies in desalination, recycling, conservation, management and irrigation, Israelis are now working more closely than ever before with Americans—especially in the Southwestern United States—to help us tackle our huge water challenges.

The new reverse osmosis desalination plant in Carlsbad, California, designed by IDE, an Israeli company, is one of the largest and most technologically advanced in that region.

Joint Economic Development Group (JEDG)

In 1985, Israel’s economy was facing multiple challenges: high inflation, large government budget deficits, and slow growth.  The decision by our two governments to create the U.S.-Israel Joint Economic Development Group—the “JEDG,” as we call it—was important for the economic stabilization plan that it produced, which successfully reinvigorated the Israeli economy and put it on a path toward the rapid growth it experienced in the 1990s and beyond.

Research & Development

Three joint U.S.-Israel research & development foundations have been established: The Binational Industrial Research and Development Foundation (BIRD); the Binational Science Foundation (BSF); and the Binational Agricultural Research and Development Foundation (Bard).  Since its inception in 1977, the BIRD Foundation has granted $282 million to 813 projects, which have directly and indirectly generated $8 billion in sales.

In 2009, “BIRD Energy” was established after the U.S.-Israel Energy Cooperation Program was authorized by Congress in the Energy Independence and Security Act of 2007.  “BIRD Energy” was created to promote bilateral cooperation in clean renewable energy technologies.