EU-Israel: The Deepest non-US Relationship

Early Trade Ties and Historical Bonds

Relations trace back to the founding years of the European Economic Community. Israel sought closer links soon after the Treaty of Rome in 1957. In 1964, the two sides signed their first commercial agreement, which reduced tariffs on key Israeli exports like agricultural goods, chemicals, and textiles.

Further progress came in 1970 with a preferential trade agreement, followed by the landmark 1975 accord that created a free trade area for industrial products. This step proved vital after the 1973 Yom Kippur War and oil crisis, when Israel worked to secure economic stability. By 1989, full tariff elimination on industrial goods was achieved, boosting Israeli exports significantly.

These early agreements laid the groundwork for deeper integration. Israel's leaders, including figures like Shimon Peres, saw Europe as a natural partner for economic growth and regional stability. The relationship evolved through challenges, always anchored in practical cooperation that advanced Israel's development as a modern economy.

The Association Agreement

The 1995 EU-Israel Association Agreement, which entered into force in 2000, marked a major milestone. It established a comprehensive framework covering political dialogue, free trade, services, capital movement, and cooperation in science, technology, and more.

This pact created a free trade zone that has flourished. It includes protocols for agriculture, pharmaceuticals, and conformity assessment (ACAA), which allows mutual recognition of standards and eases market access. Additional deals followed, such as the 2010 agriculture and fisheries agreement and the 2013 Open Skies aviation pact, fully effective in 2018, which expanded flights and tourism.

From Israel's perspective, this agreement recognizes its advanced economy and innovation-driven growth. It has enabled balanced economic development, job creation, and integration into European markets while respecting Israel's unique security needs in a tough region.

Trade and Economic Cooperation

The EU remains Israel's largest trading partner, accounting for roughly one-third of Israel's total trade in goods. In 2023-2025 data, total bilateral trade in goods hovered around €42-43 billion annually. The EU takes about 28-30% of Israel's exports and supplies around 33% of its imports.

Key sectors include machinery and transport equipment, chemicals, and manufactured goods. Israeli high-tech exports thrive in Europe, while Israeli consumers and industries benefit from European imports. Services trade adds billions more, with strong flows in tourism and other areas.

This trade supports thousands of jobs on both sides. For Israel, access to the vast EU market has been crucial for export-led growth, helping sustain its economy amid regional uncertainties. Updates to protocols, like those on organic foods and origin rules under the pan-Euro-Mediterranean Convention, continue to enhance efficiency.

Scientific and Innovation Partnership

One of the deepest aspects is research and innovation cooperation. Israel has participated in EU Framework Programs since 1996, achieving remarkable success. In Horizon 2020 (2014-2020), Israeli entities secured around €1.3 billion, with strong performance in health, natural sciences, and engineering.

Under Horizon Europe (2021-2027), Israeli researchers and companies have already won over €1.1 billion between 2021 and 2024. This includes €592 million for 605 academic researchers, €228 million for industry, and standout results in the European Research Council (ERC) grants, where Israel excels.

Israeli participation has led to thousands of joint projects, advancing fields like AI, sustainability, climate solutions, and health. This collaboration brings European funding and expertise to Israel while allowing Israeli innovations to benefit Europe. It underscores Israel's position as a global innovation leader and a valued partner in tackling shared challenges like the green transition and digital economy.

Political Dialogue and Broader Cooperation

Regular political dialogue through the Association Council and subcommittees covers regional stability, security, and global issues. Israel and the EU share interests in counterterrorism, crisis management, and civil protection. The partnership also extends to culture, education, and people-to-people ties, boosted by tourism and academic exchanges.

From Israel's viewpoint, this dialogue provides a platform to explain its security realities and pursue common goals like regional normalization and economic corridors, such as potential links in the India-Middle East-Europe Economic Corridor.

Source:

1. European External Action Service, "The European Union and Israel," Delegation of the European Union to the State of Israel, July 28, 2021, https://www.eeas.europa.eu/israel/european-union-and-israel_en.
2. Karolina Zielińska, "Polityka górą – relacje handlowe Izraela z Unią Europejską," Komentarze OSW, Ośrodek Studiów Wschodnich, August 1, 2023, https://www.osw.waw.pl/pl/publikacje/komentarze-osw/2023-08-01/polityka-gora-relacje-handlowe-izraela-z-unia-europejska.
3. European Commission, Directorate-General for Trade and Economic Security, "EU Trade Relations with Israel," http://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/israel_en.
4. State of Israel, Statement of the State of Israel, Israel-EU Association Council, Brussels, February 24, 2025, https://www.gov.il/BlobFolder/generalpage/israel-eu-association-council-brussels-24-feb-2025/en/English_Documents_ISRAEL-EU-ASSOCIATION-COUNCIL-24FEB2025.pdf.
5. Israel Innovation Authority, "הצלחה ישראלית מדהימה: מעל 1.1 מיליארד אירו הוענקו לחוקרים וחברות ישראליות בתכנית Horizon Europe בין 2021–2024" [Remarkable Israeli success: over 1.1 billion euros awarded to Israeli researchers and companies in the Horizon Europe program, 2021–2024], March 19, 2025, https://innovationisrael.org.il/press_release/horizon-europe2021-4-1-1-milliard-winners/.
6. Adi Nirman, "Israeli Researchers, Companies Secure Over 1.1 Billion Euros in EU Grants," Israel Hayom, March 21, 2025, https://www.israelhayom.com/2025/03/21/israeli-researchers-companies-secure-over-1-1-billion-euros-in-eu-grants/.