China and Israel wrapped up their fifth round of free trade agreement (FTA) negotiations this past January. The negotiations began in 2016. Prime Minister Netanyahu has pushed for reaching a final agreement in 2019. The goal of this final accord is a win-win outcome, but how would that look?
The Middle Kingdom is a mammoth of economic might. Israel, for its part, punches above its weight class to be sure, but China is a heavyweight. The Chinese are quite aware that firms around the world relish the opportunity of trading with them. This has been true for centuries and China is keen on leveraging this fact. Consequently, the majority of China’s FTAs with developed countries have been slightly lopsided to their own benefit. In most cases, Chinese exports receive a higher tariff elimination rate than the counterpart’s exports and these eliminations often apply immediately whereas the counterpart often has to wait a period of years for all of the tariff eliminations to go into effect. The rationale given is that various Chinese industries are still developing and need time to adjust to competition from advanced countries.