Although the US, and to a lesser extent, Europe, will likely remain the main target markets of Israeli exporters, the government is working hard to open new markets in places where Israeli companies have traditionally not had a large presence.
Included in that category are Latin and South America, with Israel hoping to leverage its relationship with members of the Pacific Alliance and other economic blocs to expand trade with that region of the world.
Last week, a dozen members of an official Ministry of Economy delegation visited Panama City to meet with colleagues regarding the formation of a free trade agreement between Israel and Panama. Twelve working groups discussed access to markets, customs, services and investments, intellectual property, protection of flora and fauna, trade obstacles, institutional issues and conflict resolution.
Two more rounds of talks are expected before the negotiations are completed.
Panama — associated mostly with bananas in the minds of most Israelis — actually has a very well-developed services sector. Much of this arena revolves around one of the country’s biggest economic assets — the Panama Canal, still one of the most important links between the Orient and the East coast of the United States, as well as Europe.
Administration of the canal — which Panama took over from the US in 1977 — has led to the development of a large software and technology industry, with big data used to make the passage from East to West cheaper and more efficient than alternate routes, such as overland trucking routes.
Insurance, medical and health, banking and financial technology, and tourism are all outgrowths of the canal business as well.
As Israel has a strongly developed software sector that provides solutions in just those areas, said Ohad Cohen, director of the Foreign Trade Administration in the Economy Ministry, an FTA with Panama “will forge new opportunities for Israeli companies and give them a competitive edge against foreign companies.”
One Israeli company that would likely benefit from such an agreement is Freightos, which is determined to bring shipping into the 21st century. By utilizing big data, advanced software routines, and cloud technology, CEO Zvi Schreiber hopes that his company will modernize shipping to the point where companies or individuals will be able to find the pertinent ship set to sail from the port in which their cargo is located, to the destination port.
In addition, there will be automated price quotes for shipping, insurance, lading, and anything else involved in moving goods from point A to point B.
According to Schreiber, “Shipping today is very inefficient. Unlike with air travel, for example — where passengers can get quotes on multiple airlines and order tickets within a matter of minutes — it takes days to get a price quote on shipping cargo. Agents are the go-between to locate ships, determine routes, figure out pricing, etc.”
Using cloud technology and big data automation techniques, Freightos provides a Software-as-a-Service platform for the freight forwarder to manage their rates and automate their routing and pricing.
Data on ship location and availability comes from an online source called Linescape, and the system adds weather data, price schedules, and other information that are components of a shipping quote. The system is also compatible with the Excel files and PDFs currently in use, enabling them to be accurately updated to provide accurate quotes as needed.
Besides the canal, Panama has an advanced manufacturing and agricultural industry, and is a candidate to join the Pacific Alliance, which currently includes Mexico, Colombia, Peru, and Chile. The combined GDP of the Pacific Alliance nations is approximately $3 trillion and constitutes 40% of Latin America’s GDP; if they were a single nation, the Alliance countries would form the world’s sixth-largest economy, according to the World Bank.
Israeli officials who have been working on deals with Latin American countries believe that there is a great demand for Israeli technology and expertise, in a wide variety of fields.
Israel has observer status within this group and already has deals with some members of the Alliance, such as a recently signed cooperation agreement with Mexico for industrial R&D. Under the deal, Israeli and Mexican companies will receive assistance in funding joint projects in several areas of research and development, including water management, desert agriculture, pharma and medical devices, electronics and communications.
Israel also has an FTA with Mexico.
To enhance relations with the Alliance even further, Israel is also negotiating an FTA with Peru. A Declaration of Interest has already been signed, Peruvian officials noted.
In an interview with Peru’s Andina news agency, Israel’s ambassador to Peru Ehud Eitam said that “the Peruvian market is increasingly drawing the attention of entrepreneurs and the Israeli government, thanks to its large growth in recent years.” As a largely agricultural country, Israel, said Eitam, could be very helpful to the country’s economy, especially in its efforts to maximize water use.
It’s all part of Israel’s strategy of opening new markets for Israeli exporters, said Cohen. While trade with the developed world remains strong, there’s no reason Israeli companies should limit themselves to the US, Europe, or even China.
“We continue to strengthen Israel’s economic ties with countries around the world, with an emphasis on developing economies with great potential for growth,” Cohen explained. “In this case, we are expanding Israel’s economic footprint in Latin America, in accordance with our policy of expanding export horizons for the Israeli industry and service sectors.”