Country profile: Israel
Why Israel matters
- The Israeli economy is strong and continues to expand, with 3.3% growth expected in 2019.
- Two-way merchandise trade between Canada and Israel was valued at more than $1.9 billion in 2018.
- Two-way services trade was valued at $757 million in 2017.
- Science and technology are significant drivers of the Israeli economy. Canada, Ontario and Québec maintain active science, and innovation agreements with Israel, providing more than $13 million in annual funding for research and technology commercialization activities.
- Israel ranks 20th globally on the World Economic Forum’s Global Competitiveness Index (2018).
- Foreign multinational corporations, including Canadian firms, have established some 350 research and development centres in Israel, seeking to leverage the country’s highly skilled workforce and innovation strengths to advance their business objectives.
Modernized Canada-Israel Free Trade Agreement
- Canada and Israel agreed to multiple changes to the existing Canada-Israel Free Trade Agreement (CIFTA) to expand commercial opportunities for both countries.
- The modernized CIFTA includes chapters on gender and trade and on small and medium-sized enterprises (SMEs), as well as new provisions on corporate social responsibility and on labour and environmental protections.
- The modernized CIFTA signals Canada’s commitment to a progressive trade agenda, one that ensures that the benefits and opportunities that flow from trade and investment are more widely shared by Canadians.
Canada-Israel trade snapshot
Canada’s Top Exports to Israel (2016-18 average)
2016-18 average ($CAD) Aircraft and parts $90,700,000 Industrial machinery $51,700,000 Precious stones and metals $51,200,000 Electrical and electronic equipment $42,400,000 Scientific and precision instruments $30,300,000
Key facts and figures
- Canadian merchandise exports to Israel: $459.4 million (2016-2018 average)
- Canadian merchandise imports from Israel: $1.3 billion (2016-2018 average)
- Canadian service exports to Israel: $406 million (2017)
- Canadian service imports from Israel: $351 million (2017)
- In 2018, Canada welcomed 68,053 visitors from Israel.
- In 2016, approximately 99,000 Canadians travelled to Israel.
Canada’s top merchandise imports from Israel (2016-2018 average)
- Industrial machinery: $191 million
- Electrical and electronic equipment: $162 million
- Scientific and precision instruments: $135.6 million
- Pharmaceutical products: $121 million
- Precious stones and metals: $110.4 million
Canada’s service imports from Israel (2017)
- Commercial services: $214 million
- Travel: $83 million
- Transportation and government services: $55 million
Canada’s top merchandise exports to Israel (2016-2018 average)
- Aircraft and parts: $90.7 million
- Industrial machinery: $51.7 million
- Precious stones and metals: $51.2 million
- Electrical and electronic equipment: $42.4million
- Scientific and precision instruments: $30.3 million
Canada’s service exports to Israel (2017)
- Commercial services: $230 million
- Travel: $114 million
- Transportation and government services: $63 million
How CIFTA helps Canada-Israel trade and investment
- Once the modernized CIFTA is in force, nearly all Canadian agriculture, agri-food, and fish and seafood exports to Israel will also benefit from preferential tariff treatment. The current level of exports receiving preferential tariffs treatment is 90%.
- New provisions address non-tariff barriers and establish mechanisms under which Canada and Israel can cooperate to address and seek to resolve unjustified non-tariff barriers that may arise.
- Aerospace and defence
- Israel is home to one of the ten largest defence manufacturing industries in the world, supported by an annual defence budget of USD 18 billion.
- Sales and partnership opportunities exist for Canadian firms in areas such as aircraft engines, advanced materials and manufacturing, special mission aircraft, remote sensing and detection (including sonar and lidar), ground systems, space robotics and sensors, satellite antennas and payloads, cybersecurity, and UAV components.
- Agriculture and agri-food
- Israel is a small but sophisticated food market, with a limited number of major companies that provide significant choice to an increasingly health-conscious consumer market.
- In addition to commodities such as grain and pulses, sales opportunities exist in a variety of areas, including health and natural food products, dairy and meat alternatives, high-quality fish and seafood (including lobster and scallops) and frozen products, including ready-to-cook and ready-to-eat meals, vegetables and fruits (including berries).
- Clean technologies
- Sustainable energy and effective water management are key priorities for Israel, given the country’s population density, lack of resources including fresh water, and challenging climate. Sales and partnership opportunities are available to Canadian firms active in number of cleantech areas, including solar, energy storage, biofuels, water disinfection, leak detection and wastewater reuse (including membrane filtration and ultraviolet disinfection systems). The Israeli cleantech sector has grown through a pervasive focus on research and development.
- Israel is home to a number of universities recognized for the quality of their research and teaching, particularly in science, technology, engineering and math.
- Israeli post-secondary institutions are increasing their focus on internationalization, providing fertile ground for institution-to-institution agreements that support joint research and faculty or student exchange in a wide variety of areas. Currently, Canadian and Israeli universities have signed approximately 60 such agreements.
- Increased recruitment of graduate-level students represents an important education marketing opportunity for Canadian universities. In 2018, Canada welcomed 715 students from Israel. Given that the majority of Israeli citizens undertake two-three years of military service, Canadian institutions are likely to be less successful recruiting secondary school students, as in other markets.
- Information and communications technologies (ICT)
- As a global technology powerhouse, the Israeli technology ecosystem is home to a vibrant start-up culture, close cooperation between government, academia and business, significant foreign direct investment, and a large venture capital industry.
- ICT represents one of the most important sectors for sales, technology partnerships and investment between Canada and Israel. Given the breadth of the market, opportunities exist in a large number of technology areas including cloud computing, artificial intelligence and big data, fintech, IoT, 5G technology, autonomous vehicles, and enterprise software.
- Health and life sciences
- The Israeli health and life sciences ecosystem is home to some 1,500 companies. Nearly 60% of these are medical devices firms, with the balance roughly split between pharmaceutical and digital health companies.
- The industry is characterized by strong cooperation between industry and academia, a thriving start-up culture, substantial private investment in research and development and an interest in international cooperation.
- Partnership opportunities exist for Canadian firms in a variety of areas, including digital health (including artificial intelligence), neuroscience, and complementing medical device technology.
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