Israel and Japan are making substantial progress towards a potential Free Trade Agreement (FTA), marking a significant milestone in international trade relations. After a hiatus of nearly a decade, negotiations were reignited in November 2022 and have gained momentum, signaling a promising future for bilateral economic ties.

According to insiders in the automotive industry, notable advancements in the talks have been made, suggesting that an initial draft of the FTA could be ready by the latter half of 2024. Japan’s heightened determination to establish this trade pact with Israel can be linked to its unease stemming from Israel’s ongoing negotiations for FTAs with South Korea and China, both of which are in advanced stages. The concern revolves around the potential impact of these agreements, along with the elimination of customs duties, on the uninterrupted influx of Japanese imports into Israel.

As a substantial portion of Japanese-brand vehicles sold in Israel are manufactured in Europe and already exempt from customs duties, the primary beneficiaries of the elimination of customs duties would be car manufacturers whose models are primarily made in Japan. Among them are Mazda, Subaru, and Lexus. Certain models from Toyota, Nissan, and Suzuki, produced in Japan, will also benefit from this agreement.

The Israel-Japan FTA holds the promise of strengthening trade relations, boosting economic growth, and creating new opportunities for businesses in both countries. As negotiations advance, the business world will be closely monitoring the unfolding of this significant trade pact in the months to come.