Brussels, Belgium
July 7, 2003

The European Commission and Israel initialled an agreement concerning new reciprocal liberalisation
measures in the agricultural sector. On the basis of the outcome of the negotiations, most of the
agricultural trade from both sides will be liberalised (preferential treatment with or without quotas).
Before entering into force, the deal has to be adopted by the EU member states.

Israel has agreed to further liberalise its agricultural imports from the EU, by increasing existing
quotas and by reducing current preferential duties to zero. Liberalisation will cover, among others, the
following products: bovine animals, meat, dairy products (milk, cheese, whey and butter), onions and
garlic, prepared and dried vegetables, apples, pears, rice, sugar, prepared fruit and juices, oils,
preparations for animal food, vinegar and wine.

The EU has granted Israel further concessions for products such as fresh fruit (melons and grapes),
fresh and processed vegetables (tomatoes and processed tomatoes, potatoes, peppers, salads, dried vegetables), processed citrus fruit, juices, turkey and turkey preparations, wine. Regarding flowers, one of the key Israeli export products, the EU agreed to drop the reference price system existing for some flowers and to slightly increase the existing quota for flowers other than roses and carnations.

Israel agreed to reduce by half its quota for preferential exports of orange juice to the EU, on the
basis of the current trend in Israeli export capacity.

In the spirit of the Barcelona Process, aiming at greater progressive liberalisation in agriculture, both
Parties agreed to annually increase all quotas by 3%.

Negotiations started in late 2000 in the framework of Article 11 of the Association Agreement, which
provides for the revision of the agricultural protocols of the Agreement, in order to progressively
establish greater reciprocal liberalisation in agriculture, in line with the Barcelona Process, which aims
at the gradual creation of a Euro-Mediterranean free trade area. According to the outcome of the
negotiations, a new revision for further liberalisation measures should take place in 2007 and enter
into force in 2008.