Opportunity for good business
We can talk about the gradual normalisation of economic cooperation between Poland and Israel from 1986 on. The Interest Section of the Polish People’s Republic in Tel Aviv was established in 1987. Direct navigational connection was established between Poland and Israel in 1988 and flight connections in 1989. In 1990 full diplomatic relations with Israel were re-established on the Ambassadorial level. In the 1990’s twelve detailed agreements were signed regulating bilateral economic relations, including such fundamental issues as double taxation, bilateral investment protection and the lifting of visa requirements. The further important broadening of the formal and legal basis of these relations took place at the time of Poland’s accession to the European Union (1 May 2004) and the acceptance of the regulations contained in Israel’s treaty of accession with EU.

Polish-Israeli trade turnover
Between 1967-1975 trade with Israel was practically nonexistent, after 1975 trade turnover from companies through other countries was merely USD1.5-2.5 million annually, while there was a quick increase in Polish-Israeli trade from 1986.
Of course, statistics demonstrate a clear correlation between this turnover and the pace of increase of the Polish GDP. The slump in 2000-2003 and then from 2004 a marked increase in exports (by 84%, 31% in 2005 and 46% in 2006). There is a similar pattern with imports – a drop of 10% was noted in 2001, and in 2002 imports decreased by a further several percent, then in 2003 there was a noticeable small increase. In 2004 imports grew by 30%, in 2005 by 21.6%, and in 2006 by 38%.
In 2001-2003 imports were almost double that of exports. Also, between 2004 to 2006 the trade balance was in deficit.
After eleven months of 2007 bilateral turnover totalled USD502.08 million, where exports made up USD195.48 million (an increase of 29.4% in comparison with the same period in 2006) and imports USD306.6 million (an increase of 28.5% for the same period).

What do we trade?
In 2006 (preliminary data) the most important groups of exported goods according to size were: mechanical and electrical devices (23.5%), base metals and products made from them (22.6%), processed food (15.3%), pulp from wood or from other fibrous materials (11.2%), products of the chemical and related industries (6.2%), vehicles, aircraft, marine craft (3.8%), plastics and plastics products (3.7%).
In 2006 (preliminary data) the most important groups of imported goods according to size were: mechanical and electrical devices (26.7%), products of the chemical and related industries (23.9%), arms and ammunition (11.6%), processed food (10.2%), base metals and products made from them (7.5%), plastics and plastics products (6.9%), textiles and textile articles (4.5%).

Competitiveness of Polish export
According to Israeli importers Polish export competitiveness has sunk since Poland’s accession to the EU. Also, some Polish exporters are noticing that competition on the Israeli market is becoming stronger. A range of factors is quoted among the reasons for this situation:
– since Poland entered the European Union, the UE market has become more attractive to Polish exporters (transport issues, short delivery deadlines, quick money turnover);
– the Polish złoty (PLN) strengthened in relation to the American dollar and the Euro;
– price competition from the former CIS countries has become stronger (especially on the food products and less processed food product market).
– the maintenance of restrictions on the Israeli market, notably import bans of some goods or the kosher stipulation. Although Israeli importers are becoming more willing to cooperate in regard to certifications, often covering the necessary costs, and Israeli procedures and customs and entry requirements are the same as or similar to European standards.

Prospects for further cooperation
Israel is a country with practically no sources of basic energy and mineral resources, nor many semi-finished products needed for industrial production. Most imported raw materials and semi-products are available in Poland. There are many Polish raw materials and semi-products which are already exported to Israel, although in unsatisfactory quantities. Similarly there are many products that could be exported to Israel but their exporters for a variety of reasons are not interested.
Furthermore, there are potential export opportunities for products and goods that have not been introduced on the Israeli market or were exported earlier but discontinued, such as: copper rod, vehicle components (buses), building machinery, power meters, components for the defence industry, etc.
Opportunities for industrial and scientific and technical cooperation are mainly in the areas where Israeli products and technical solutions represent the highest world technological standards, for example IT, electronics, computer printing, pharmacy, production of modern medical equipment and the defence industry. Poland’s entry to the European Union has encouraged those who appreciated Polish economic opportunities resulting from direct and unlimited access to the wealthy European markets and a huge investment programme supported by EU funds. Several hundred billion euros to be invested in the next six years will revolutionize Polish transport and communication infrastructure, commence a huge revitalisation of the environment in this part of Europe, and give it a new form of civilisation. This will also be the biggest business area in Europe in the coming years.
These opportunities are being carefully observed both by business as well as economic promotional agencies in both countries. In 2008 alone there are plans to organise trade missions from the water industry sector to Israel (06-11.03.2008), a Telco mission from Israel to Poland (June 2008), build sector mission from Israel to Poland, a Polish mission to the Biomed trade fair in Israel (27-29.05.2008) and a banking and finance sector mission from Israel to Poland.
Involvement of Polish and Israeli companies in joint ventures is quickly increasing. There are several dozen joint-venture companies with Israeli capital registered in Poland. They are usually small companies, whose Israeli share did not exceed USD 1 million, that is why they are not recorded in the Polish Information and Foreign Investment Agency (PAIiIZ) statistics. They mainly deal in trade, telecommunication and IT, construction, processing, food industry, tourism and gastronomy. According to PAIiIZ data Israeli investments in Poland total about USD70.4 million.
However, in many cases Israeli investment is not direct, but comes through their interests in international consortia, hence they fall into the international capital category. The economic Division and the Division of Trade Promotion and Investment in the Embassy of the Republic of Poland in Tel Aviv estimate that their joint Israeli capital investment in Poland could amount to about USD2 billion.
(Source: information from Ministry of Economy,
Republic of Poland)