Free Trade Helps Canadians Profit in Israel

Over the past 15 years, the Canada Israel Free Trade Agreement (CIFTA) has helped boost Canadian profit margins and reduced or eliminated non-tariff barriers with the Middle East country.

Since the agreement was signed on July 31, 1996, trade between the two countries has more than doubled. In 1996, bilateral goods trade was valued at $507 million; by 2010 it had grown to $1.4 billion.

The CIFTA, which came into force on January 1, 1997, eliminated tariffs on all industrial products manufactured in either of the two countries and some agricultural, agri-food and fisheries products.

The agreement has helped companies like Manitoba-based MicroPilot, which manufactures small autopilots for unmanned aerial and micro-aerial vehicles. The autopilots use advanced technology to guide vehicles without real-time human assistance.

Howard W. Loewen, President and Founder of MicroPilot, says the CIFTA has helped his company in many ways.

“It keeps the price of our products low,” he says. “Higher tariffs obviously make your products more expensive and make the purchase decision more difficult for the buyer.”

The CIFTA has also made trade with Israel easier than it is with countries that have not signed free trade agreements (FTAs) with Canada, adds Loewen.

“It simplifies the whole export process,” he says. “With tariffs there is always a big headache involved in crossing borders.”

For example, Loewen says dealing with merchandise repairs is much easier due to the CIFTA. In countries without FTAs with Canada, customers sometimes have to pay duty twice or even pay fines if they need to return products for repair or replacement.

The CIFTA has also streamlined processes at the border, minimizing delays, he says.

“In regions with complex import restrictions, even getting products through customs can take a long time,” says Loewen.

He also credits the CIFTA with making it easier for MicroPilot to send trained technicians to Israel to support the company's products.

“The ability to send support personnel is key to our ability to sell products into that country. This is a much bigger issue than straight tariffs,” Loewen adds.

MicroPilot has been selling autopilots to Israel for more than 10 years. The country is one of the company's key markets and makes up about five to 10 per cent of its total sales.

For more information, visit the Canada Israel Free Trade Agreement and the Canadian Trade Commissioner Service.