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and between 157% and 247% in 2004. These horrendous rates are there to protect not only
small family farms but also moshavim (production cooperatives) and kibbutzim (communes).
Tariff quotas apply to 12 product groups although for most of these products the in-quota
tariff rate is above the MFN applied rate, thus rendering the quota redundant (WTO 2006).
When it is not, there is obviously some scope for lobbying the Ministries of Agriculture and
Rural Development (for agricultural products and fresh food) and Industry, Trade, and Labour
(for processed food) which are the ones in charge of the administration of those quotas. They
apply among others to imports of prunes, walnuts, sweet corn, and concentrated citrus fruit.
Another protection measure for agriculture were variable import levies applied to imports of
basic products like sugar, pasta, sunflower seeds, jams, fruits, wine, cheese and frozen fish
(WTO, 1999). At the end of 1990’s, in accordance with the WTO Agreement on Agriculture,
all variable levies were eliminated. Now, Israel applies tariff quotas to 12 product groups
(nuts, corns, orange juice, sheep and goat milk and cheese). “However, for most of these
products the in-quota tariff rate is above the MFN applied rate, thus rendering the quota
redundant. 52 As a result, these tariff quotas are in general overfilled” (WTO, 2006, p. 63). On
the other hand, note that some of the PTAs signed by Israel with third countries offer the latter
some tariff preferences (generally within a quota). For instance, in 1996 Israel and the US
signed an agricultural trade accord aimed at including the remaining goods not covered by the
1985 FTA agreement. Accordingly, agricultural imports from the USA were entitled to a
preference of 10 percent (USDA, 2005). This implies, of course, devastating trade diversion
against non-preferred countries, such as Argentina.
A second sector deserving particular attention covers food, beverages and tobacco industries.
In 2002, it accounted for about 15% of industrial production; it was the second largest
employer in the industrial sector with more than 16% of industrial employment in 2004. The
sector exhibits an oligopolistic market structure, especially in the case of tobacco products,
soft drinks, fresh juices and wines. According to the political economy models oligopolistic
structure favours the emergence and operation of lobbies. The industries are mostly oriented
towards the domestic market, with exports representing only 6% of production or less. The
52
In principle “in quota” tariff rates should be below MFN rates in order to enable a minimum level of imports
to a protected market.
96