תקציר
The United States–Israel Free Trade Area Agreement was the first FTA the United States signed with another country. 02 The shipment moves from the United States to Israel. origin under the United States–Israel FTA.
IMPORTER'S GUIDE · FREE TRADE AGREEMENT · AUGUST 2026
Importing from the United States to Israel: How to Use the FTA in Practice
The 1985 agreement eliminates customs duties on most qualifying U.S.-origin industrial goods. In practice, importers still pay full duties when goods fail the rules-of-origin test, the invoice declaration is missing, or DDP is arranged with a U.S. supplier that cannot complete import clearance in Israel. This guide is an operational playbook, not a news review.
KEY TAKEAWAYS
Duty-free treatment is an operational result, not merely a clause in an agreement
Three cumulative conditions apply under ITA and CBP guidance: U.S. origin under Annex 3, including the 35% threshold; direct importation from the United States to Israel; and a signed origin declaration on the invoice. If any condition is missing, the Israel Tax Authority may apply the MFN tariff. The agreement does not exempt imports from VAT, which has been 18% since January 1, 2025, purchase tax, standards requirements, or import licenses. Goods “shipped from the United States” are not necessarily goods of U.S. origin.
What the Agreement Does — and What It Does Not Cover
The United States–Israel Free Trade Area Agreement was the first FTA the United States signed with another country. It entered into force on September 1, 1985. According to the International Trade Administration, tariffs on industrial goods were eliminated as of January 1, 1995.
This creates a structural advantage over imports from China, with which Israel has no free trade agreement. A qualifying U.S.-origin industrial product may enter at a zero customs rate, while the same tariff classification from China may be subject to the full MFN rate. That difference is what makes the agreement financially valuable, provided that the origin and shipping documents are in order.
The agreement does not eliminate:
- Import VAT. Israeli VAT law applies to imported goods. The rate has been 18% since January 1, 2025, under Government Resolution 1270 and Israel Tax Authority Interpretation Instruction 01/2025.
- Purchase tax on designated categories, such as vehicles, alcohol, tobacco, and other products specified by order.
- Standards, licenses, and government approvals issued by the Standards Institution of Israel, the Ministry of Health, the Ministry of Transport and Road Safety, the Ministry of Environmental Protection, and other authorities, depending on the goods.
- Agriculture and sensitive food products. The agreement retained non-tariff barriers in sensitive sectors, including quotas, levies, and prohibitions. A separate Agreement on Trade in Agricultural Products also applies. Do not assume that cheese, meat, poultry, or fresh produce automatically qualifies for duty-free treatment.
Rules of Origin: The Test That Determines Whether You Pay Zero or MFN
According to the ITA, goods qualify under the agreement only when all three conditions are met:
- The goods are wholly grown, produced, or manufactured in one of the parties, or they are a new and different article of commerce grown, produced, or manufactured in the exporting party through substantial transformation—a change in name, character, or use.
- The goods are imported directly from one party to the other.
- The sum of the cost or value of materials produced in the exporting party and the direct cost of processing there is at least 35% of the appraised value of the goods upon entry into the importing party.
Materials originating in the other party—for example, Israeli components used in a U.S.-made product—may be counted up to 15% of the appraised value. Simple assembly, packaging, sorting, and labeling do not constitute substantial transformation.
U.S. Origin
The product is wholly manufactured in the United States, or it underwent substantial transformation there and meets the minimum 35% U.S. value-content requirement.
Direct Shipment
The shipment moves from the United States to Israel. Transit through a third country is permitted only under customs control and without processing.
Origin Declaration
The manufacturer or exporter must sign an origin declaration on the invoice. The old Green Form is not sufficient. All three gates must open together; failure at any one of them may result in full customs duty at the MFN rate.
Included in the 35%
Materials produced in the United States · Direct processing costs incurred in the United States · Israeli materials counted through accumulation, up to 15% of the appraised value
Excluded or Insufficient
Packaging, sorting, marking, or simple assembly · Chinese goods routed through a Los Angeles warehouse · General administrative expenses that are not direct processing costs
COMMON PITFALL
A Los Angeles warehouse does not turn Chinese goods into U.S.-origin goods
The rules of origin examine where a product was manufactured, not the port from which it departed. Goods made in China, Vietnam, or Mexico and merely stored or repacked in the United States do not qualify for preferential treatment, even if the bill of lading begins in Los Angeles. Every item in a shipment must satisfy the origin rule independently.
Direct shipment: The goods must be destined for Israel from the United States. Transit through an intermediate port, such as Piraeus or Port Said, is generally acceptable if the goods remain under customs control and undergo no processing. Ask the carrier for evidence of transshipment status when the route is not direct.
Proof of Origin: Invoice Declaration, Not the Green Form
On May 10, 2017, Israel and the United States amended Annex 3 of the agreement. The Government of Israel ratified the change through Resolution 3120. According to CBP, the change took effect on January 10, 2018, and the transition period ended on June 30, 2018. Since then, Israel has accepted only a U.S. Origin Invoice Declaration, rather than the former Green Form certificate of origin, also known as Form A.
According to the ITA, the U.S. exporter or manufacturer must complete and sign the origin declaration. Israel's Foreign Trade Administration refers importers to the Israeli customs procedure for granting tariff preference under the Israel–United States agreement. Before the goods leave the United States, verify that the supplier:
- Explicitly declares that the goods are of U.S. origin under the United States–Israel FTA.
- Signs on behalf of the manufacturer or exporter, rather than using an unauthorized sales-department signature.
- Identifies the goods in a manner consistent with the commercial invoice, packing list, and bill of lading or air waybill.
- Is prepared to provide supporting records if the Israel Tax Authority opens an origin verification.
Document chain: commercial invoice → invoice origin declaration → bill of lading or AWB for the U.S.–Israel movement → packing list → Israeli import entry claiming preferential treatment.
An incorrect declaration is not merely the supplier's problem. The Israeli importer claims the preference on the import entry and may face customs duties, interest, and penalties if the declaration proves inaccurate. Do not claim preferential treatment for goods whose origin the supplier is unwilling or unable to substantiate.
A Customs Exemption Does Not Eliminate VAT or Purchase Tax
The customs value of goods imported into Israel is determined under valuation rules, usually the transaction value plus freight and insurance to the port—the CIF value. Import VAT applies to that base plus customs duty and purchase tax. Eliminating customs duty therefore also reduces the VAT base, creating an additional saving, but it does not eliminate VAT itself. A registered Israeli business may deduct input VAT subject to law, while purchase tax is generally not recoverable.
| With FTA | Without FTA · 12% MFN Example | |
|---|---|---|
| CIF value | ILS 400,000 | ILS 400,000 |
| Customs duty | ILS 0 | ILS 48,000 |
| 18% VAT | ILS 72,000 on CIF | ILS 80,640 on CIF plus duty |
| Payment at the port | ILS 72,000 | ILS 128,640 |
The difference in this example is ILS 56,640 on a single shipment, before any purchase tax that may apply. The 12% MFN rate is illustrative only. The actual rate must be taken from the Israel Tax Authority's customs tariff based on the correct HS classification.
East Coast FOB vs. West Coast FOB
Under the ICC's Incoterms® 2020 rules, FOB—Free On Board—is intended for sea and inland waterway transport. The seller completes delivery when the goods are on board the vessel at the named port of shipment. “FOB USA” is not a sufficiently defined term. The named port is essential, for example FOB New York, FOB Savannah, or FOB Los Angeles.
The coast of loading affects freight cost, transit time, and transshipment risk, but not FTA eligibility. Origin depends on production, not the port of departure. An imprecise FOB term can nevertheless create hidden costs: a California supplier quoting FOB New York may effectively shift an unpriced cross-country land bridge to the buyer.
EAST COAST · FOB
East Coast
Typical ports: New York / New Jersey, Savannah, Norfolk, Charleston
- Departure into the Atlantic Ocean
- Entry into the Mediterranean, directly or by transshipment at a European or Egyptian port
- Discharge at Haifa or Ashdod
The ocean route is generally shorter. It is suitable for FCL, LCL, and heavy cargo.
WEST COAST · FOB
West Coast
Typical ports: Los Angeles, Long Beach, Oakland, Seattle / Tacoma
- Departure into the Pacific Ocean
- Transit through the Panama Canal, then the Atlantic and Mediterranean
- Alternatively, rail transport to the East Coast followed by ocean carriage
The sea route is longer. For suppliers in California or Washington, specify the exact FCA or FOB location rather than “FOB USA.”
- East Coast: Geographically closer to the Mediterranean and often suitable for full containers, project cargo, and suppliers in the eastern and southeastern United States.
- West Coast: Adds a Pacific leg and the Panama Canal, or a transcontinental rail movement. Review spot rates, Panama Canal delays, and berth availability at Los Angeles and Long Beach before confirming FOB.
- For an Israeli importer, FOB named U.S. port plus freight arranged in Israel often provides stronger control over the carrier, cargo insurance, transport document, and origin declaration retained in the customs file.
FOB is a maritime rule and requires a named port of shipment. For air freight, use FCA at the named airport, such as FCA JFK, EWR, ORD, ATL, LAX, or MIA for carriage to TLV.
Air vs. Sea Freight — Do Not Mix Up the Incoterms
Sea freight suits containers, high weight, and non-urgent goods. Air freight suits samples, critical spare parts, high value in a small volume, and short cold-chain shipments. FOB does not apply to air freight; FCA—Free Carrier—at the named airport is the appropriate rule, for example FCA JFK or FCA LAX.
| Consideration | Sea Freight — FOB Port | Air Freight — FCA Airport |
|---|---|---|
| Suitable Incoterm | FOB / FAS / CIF | FCA / CPT / CIP |
| When it works best | Containers, volume, weight | Urgency, high value per kilogram |
| Transport document | Bill of Lading | Air Waybill |
| FTA risk | Transshipment requires proof of customs control | Usually lower on a direct route |
| VAT | Calculated on CIF including ocean freight | Calculated on the value including air freight |
Air freight increases the customs and VAT base because freight charges form part of the value. When the customs rate is zero, the main impact is on VAT and cash flow. Calculate the total landed cost to the warehouse, not only the price per kilogram.
U.S. DDP Pitfalls — Why the Arrangement Often Breaks Down in Israel
DDP—Delivered Duty Paid—places the greatest obligation on the seller. The seller is responsible for transport, import clearance, and taxes up to the named destination. The ITA emphasizes that Incoterms do not replace local law. Israeli clearance requires an importer, normally a registered business that files the import entry. A supplier in Ohio is not automatically an Israeli importer of record.
| Responsibility | EXW | FOB Port | DAP Israel | DDP Israel |
|---|---|---|---|---|
| Export from the United States | Buyer | Seller | Seller | Seller |
| Main carriage to Israel | Buyer | Buyer | Seller | Seller |
| Cargo insurance | Buyer* | Buyer* | As agreed | As agreed |
| Israeli customs clearance | Buyer | Buyer | Buyer | Seller |
| 18% import VAT | Buyer | Buyer | Buyer | Seller** |
| Importer of record in Israel | Buyer | Buyer | Buyer | Seller** |
*Insurance is not mandatory under EXW or FOB unless agreed. **DDP requires the seller to have a practical and lawful means of completing import clearance in Israel.
Recurring problems for importers who purchase on “DDP New York” or “DDP Tel Aviv” terms include:
- No valid importer of record. The seller appoints a local agent as a one-time importer or asks the buyer to sign documents at the last minute. The import entry, tariff-classification responsibility, and FTA preference then sit with an unplanned party.
- VAT becomes trapped with the seller. Import VAT paid in the name of a foreign supplier that is not a registered Israeli dealer is generally not recoverable by the Israeli buyer. The buyer pays an “all-inclusive” price but loses the input VAT deduction.
- The origin declaration disappears. When a foreign seller or third-party broker controls the customs file, the FTA preference may not be claimed, or it may be claimed without a valid declaration. The buyer may end up paying both the DDP price and MFN duty.
- Standards and licenses remain the importer's concern. DDP does not transfer an Israeli food importer's registration obligations to the Ministry of Health.
OPERATIONAL RECOMMENDATION
DAP or FOB—not DDP—unless the seller has an Israeli entity
If the supplier has no registered Israeli company capable of acting as importer and recovering VAT, avoid DDP. DAP to an Israeli port or the buyer's warehouse leaves import clearance with the buyer, who can submit the origin declaration, recover eligible VAT, and control tariff classification. FOB at a named U.S. port is preferable when the buyer also wants control over the ocean carrier.
FDA or CPSC Approval Is Not an Israeli Import Permit
Importers sometimes confuse U.S. regulation with Israeli regulation. FDA and CPSC requirements govern the U.S. market. When goods are imported into Israel, the competent authority is Israeli. U.S. documents may support evidence of quality and compliance at origin, but they do not replace an Israeli import entry, mandatory standard, or importer registration.
What to Request from the U.S. Supplier
- Food: Request the facility's FDA Food Facility Registration number. For Israel, the importer must be registered with the National Food Service at the Ministry of Health. Sensitive food requires prior approval, while ordinary food may follow an online importer-declaration route.
- Consumer products: Request a General Certificate of Conformity under Section 14(a) of the CPSA and 16 CFR Part 1110. Children's products require a Children's Product Certificate. Neither document replaces an Israeli standard or the Free Import Order.
- Medical devices, pharmaceuticals, and cosmetics: FDA authorization for the U.S. market is not an Israeli import license. The Israeli Ministry of Health determines the applicable registration and import route.
- Meat, poultry, and eggs: USDA-FSIS supervision applies in the United States, while Israeli veterinary services govern the import side. Agricultural arrangements and quotas apply separately from the industrial tariff reductions.
STANDARDS REFORM
“What is good for Europe” does not mean “what is good for the FDA”
Israel's import reform aligns selected product regulations with European requirements. FDA approval or a UL mark does not automatically place a product on the European compliance route. For every SKU, check the Free Import Order, any mandatory Israeli standard, the importer-declaration route, or an applicable European route. Only then should the FDA or CPSC file be added as supporting documentation.
Checklist Before Placing the Supplier Order
Seven Mistakes That Can Trigger Full Customs Duty
- Relying on a marketing claim of “Made in USA” without a signed origin declaration that complies with the agreement.
- Importing Asian-made goods through a U.S. warehouse and treating them as U.S.-origin goods.
- Agreeing to DDP and later discovering that the VAT was paid in the supplier's name and cannot be recovered.
- Writing “FOB USA” without a named port and then paying for an unexpected West-to-East Coast land bridge.
- Using FOB for air freight instead of FCA.
- Claiming tariff preference on the import entry without retaining a valid declaration in the customs file.
- Assuming that FDA approval eliminates Israeli standards or Ministry of Health registration requirements.
Frequently Asked Questions
Glossary of Import Terms
The following terms are used throughout the guide in the context of imports from the United States to Israel:
| Term | Full Name | Meaning in This Guide |
|---|---|---|
| FTA | Free Trade Agreement | The 1985 United States–Israel agreement that provides tariff preference for qualifying originating goods |
| MFN | Most-Favored-Nation Tariff | The standard customs rate applied when FTA preference is unavailable |
| Rules of origin | Origin qualification rules | The tests determining whether a product qualifies as U.S.-origin for preferential treatment |
| Substantial transformation | Change in name, character, or use | The level of manufacturing required to create a new and different article of commerce |
| Invoice declaration | U.S. Origin Invoice Declaration | The origin statement used for the agreement since 2018 |
| Form A / Green Form | Former certificate of origin | An obsolete form that Israel no longer accepts for this preference |
| HS / HTS | Harmonized System / Harmonized Tariff Schedule | The classification system; Israeli national tariff digits determine the local rate |
| CIF | Cost, Insurance and Freight | A value including freight and insurance, commonly relevant to customs and VAT calculation |
| FOB | Free On Board | A maritime rule requiring a named port of shipment |
| FCA | Free Carrier | The rule generally suitable for delivery to an air carrier at a named airport |
| EXW | Ex Works | The buyer assumes most transport and export obligations from the seller's premises |
| DAP | Delivered at Place | The seller brings the goods to Israel, while import clearance remains with the buyer |
| DDP | Delivered Duty Paid | The seller is expected to handle import clearance and taxes in Israel, which is often impractical without a local entity |
| B/L | Bill of Lading | The main transport document for ocean freight |
| AWB | Air Waybill | The transport document used for air freight |
| FCL / LCL | Full Container Load / Less than Container Load | An exclusive container compared with consolidated container cargo |
| Transshipment | Transfer through an intermediate port | A transfer that must preserve customs control for direct-shipment purposes |
| Importer of record | Registered importing party | The party responsible for filing the import entry in Israel |
| Import entry | Customs declaration | The declaration filed to release imported goods in Israel |
| VAT | Value Added Tax | 18% on imports, even when customs duty is zero |
| Purchase tax | Category-specific indirect tax | A tax imposed on products specified by Israeli law or order |
| Incoterms® | International Commercial Terms | ICC rules allocating delivery tasks, costs, and risks |
| FDA | U.S. Food and Drug Administration | A U.S. regulator whose documents do not constitute Israeli import approval |
| CPSC | U.S. Consumer Product Safety Commission | The U.S. product-safety authority; its certificates do not replace Israeli standards |
| GCC | General Certificate of Conformity | A U.S. manufacturer or importer's certification of compliance with applicable consumer-product rules |
| USDA / FSIS | U.S. Department of Agriculture / Food Safety and Inspection Service | U.S. oversight of meat, poultry, and egg products intended for export |
Sources
This article relies exclusively on institutional sources, including government and regulatory publications, together with the ICC Incoterms® rules as summarized by the U.S. Department of Commerce. It is not legal advice, a customs assessment, or a substitute for checking the current Israeli tariff with the Israel Tax Authority and a licensed customs broker. Procedures change; verify the requirements before shipment.
- Office of the United States Trade Representative (USTR). U.S.–Israel Free Trade Agreement. ustr.gov
- U.S. International Trade Administration (ITA / trade.gov). U.S.–Israel Free Trade Agreement — Rules of Origin and Invoice Declaration. trade.gov
- U.S. Customs and Border Protection (CBP). Israel Free Trade Agreement (ILFTA) — Certificate of Origin Phase-Out. cbp.gov
- Foreign Trade Administration, Israeli Ministry of Economy and Industry. Israel–United States Free Trade Area Agreement. gov.il (PDF)
- Government of Israel. Resolution 3120: Ratification of the Amendment to Annex 3, May 10, 2017. gov.il
- U.S. Department of Commerce / ICC. Know Your Incoterms — Incoterms® 2020. trade.gov
- Government of Israel. Resolution 1270: Increase of VAT to 18% from January 1, 2025. gov.il
- Israel Tax Authority. Interpretation Instruction 01/2025 — Increase of VAT from 17% to 18%. gov.il (PDF)
- U.S. Food and Drug Administration. Import Program. fda.gov
- U.S. Food and Drug Administration. Importing Food Products into the United States. fda.gov
- U.S. Consumer Product Safety Commission. General Certificate of Conformity. cpsc.gov
- Israeli Ministry of Health. Food Importer Registration and the National Food Service. health.gov.il
- Israel Tax Authority. Value Added Tax — Importation of Goods. gov.il
