--- title: "The 1985 U.S.-Israel Free Trade Agreement" description: "The agreement, the first U.S. free-trade agreement, entered into force in 1985 and phased out tariffs on originating goods. U.S. goods exports to Israel reached $14.8 billion in 2024; imports were $22.2 billion." url: "https://hasbara.co.il/resources/us-israel-strategic-partnership-history-and-future/the-1985-us-israel-free-trade-agreement-establishing-the-economic-pillar" type: "resource-page" locale: "en" categories: ["US-Israel Strategic Partnership: History and Future"] --- # The 1985 U.S.-Israel Free Trade Agreement *The agreement, the first U.S. free-trade agreement, entered into force in 1985 and phased out tariffs on originating goods. U.S. goods exports to Israel reached $14.8 billion in 2024; imports were $22.2 billion.* The United States-Israel Free Trade Agreement created a bilateral free-trade area and became the first free-trade agreement entered into by the United States. It entered into force on August 19, 1985. Its tariff schedule phased out duties over time, with elimination on non-agricultural products completed by January 1, 1995. The agreement reduced trade barriers; it did not by itself cause Israel’s later growth in technology or exports. ## What the agreement set up Article 1 establishes a free-trade area and commits both governments to eliminate duties and other restrictive trade regulations on originating products according to the agreement’s terms. The [agreement text](https://ustr.gov/sites/default/files/files/agreements/FTA/israel/Israel%20FTA.pdf) sets out rules of origin and product-specific implementation. The [USTR agreement chronology](https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs/free-trade-agreements) records the 1985 entry into force and the 1995 completion of the tariff phaseout for non-agricultural goods. Agricultural trade required additional arrangements. The countries signed an Agreement on Trade in Agricultural Products in 1996 and negotiated a successor in 2004 after disputes over how the original FTA applied to agriculture. The current arrangement has been extended through yearly agreements. These agricultural agreements are separate instruments; Qualifying Industrial Zones in Egypt and Jordan are separate U.S. trade programs, not amendments to this FTA. ## Trade today, measured in goods According to the Office of the U.S. Trade Representative, U.S. goods exports to Israel were $14.8 billion in 2024 and U.S. goods imports from Israel were $22.2 billion. The same USTR page reports that U.S. exports to Israel had risen 473.4 percent since 1985, measured in current dollars. In 2024 the United States recorded a $7.4 billion deficit in goods trade with Israel. These statistics cover goods and should not be presented as a measure of all services, investment or total economic activity. The FTA’s Joint Committee is its central oversight body. At its most recent meeting listed by USTR, in May 2023, the committee discussed standards-related and customs barriers and collaborative steps to increase trade and investment. The official account documents that meeting; it does not impose an annual meeting schedule. ## What changed and what did not The agreement provided a durable framework for tariff reduction and trade discussions. Its subsequent record includes expanding two-way commerce and continuing negotiations over agricultural access and technical barriers. Those facts support describing the FTA as a foundation for trade, while avoiding the unsupported claim that a single agreement produced Israel’s high-tech economy. For the defense and research sides of the relationship, see [the aid framework](https://hasbara.co.il/resources/us-israel-strategic-partnership-history-and-future/us-israel-aid-qme-and-the-ten-year-agreements) and [the binational research programs](https://hasbara.co.il/resources/us-israel-strategic-partnership-history-and-future/us-israel-binational-research-programs). ## Pages - [How the U.S.-Israel Partnership Developed](/resources/us-israel-strategic-partnership-history-and-future/operation-nickel-grass-the-1973-airlift-and-strategic-bond.md) - [U.S. Aid, QME and the Ten-Year Agreements](/resources/us-israel-strategic-partnership-history-and-future/ensuring-israel-s-qualitative-military-edge-through-10-year-mous.md) - [U.S.-Israel Missile Defense Cooperation](/resources/us-israel-strategic-partnership-history-and-future/us-israel-missile-defense-from-patriot-to-iron-dome.md) - [Israel in CENTCOM and the Abraham Accords](/resources/us-israel-strategic-partnership-history-and-future/israel-s-shift-to-centcom-a-paradigm-change-in-military-integration.md) - [U.S.-Israel Intelligence Cooperation](/resources/us-israel-strategic-partnership-history-and-future/us-israel-intelligence-sharing-and-joint-counter-terrorism-operations.md) - [U.S.-Israel Binational Research Programs](/resources/us-israel-strategic-partnership-history-and-future/us-israel-binational-foundations-driving-decades-of-scientific-innovation.md) - [U.S.-Israel Cybersecurity Cooperation](/resources/us-israel-strategic-partnership-history-and-future/us-israel-strategic-partnership-the-future-of-cyber-defense.md) ## Sources - [ustr.gov](https://ustr.gov/sites/default/files/files/agreements/FTA/israel/Israel%20FTA.pdf) - [ustr.gov](https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs/free-trade-agreements) - [ustr.gov](https://ustr.gov/trade-agreements/free-trade-agreements/israel-fta)