While the IUS-FTA requires that goods undergo real change[2], the agreement unfortunately offers no further indication of the meaning or extent of „substantial change.“ This leaves a thin line between transshipped across the United States on the way to Israel and transformation into a new and autonomous product in the United States. However, Israeli jurisprudence welcomed this rule, but did not establish any concrete judicial audits. It took the position that a property is considered substantially transformed if it were subjected to a process of transformation based on creative and original thinking that required the use of specific materials and machinery – even if it was not fundamentally transformed into a whole other good. The U.S.-Israel Free Trade Agreement (FTA) came into force in 1985 and is the first U.S. free trade agreement. It continues to serve as the basis for the expansion of trade and investment between the United States and Israel by removing barriers and promoting regulatory transparency. In 2017, exports of U.S. goods to Israel decreased by 4.9% compared to 2016, reaching $12.5 billion. Since 1985, when the U.S.-Israel Free Trade Agreement came into force, U.S.

exports to Israel have increased by 456%, although the United States has experienced a bilateral deficit of $9.4 billion in 2017. 1. When an imported product in quantities high enough to constitute a major cause of serious harm or threat to domestic producers of similar or directly competitive products, the importing party consults with the other contracting party in accordance with Article 18 before taking action affecting the other party`s trade. 3. In order to ensure a harmonious development of agricultural trade, the Joint Committee, in accordance with Article 17, paragraph 3, paragraph b), sets up a working group which, at the request of one of the contracting parties, is responsible for examining the issues relating to paragraphs 1 and 2 of this article. The parties reaffirm their respective rights and obligations with respect to other existing bilateral and multilateral agreements, including the Friendship, Trade and Navigation Treaty between the United States and Israel and the GATT. If there is disagreement between the provisions of this agreement and the existing agreements, the provisions of this agreement are given priority. 11.

The parties advise from time to time on the interpretation of these provisions and on the practical problems that may arise in order to avoid unnecessary interference with trade that is inconsistent with the objectives of this agreement. B. Before a party commits to unilaterally or by mutual agreement measures to reduce trade barriers for third countries, including those with which that party intends to adopt a customs union, a free trade area, a border trade regime or those to which that party intends to unilaterally grant trade concessions, it notifies in advance , if possible, the other party in writing to the other party. Signed in 1985 by the United States and Israel, the Free Trade Agreement (FTA) offers American products the opportunity to compete on an equal footing with European products, all of which have free access to Israeli domestic markets. Israel was the first country to enter into a free trade agreement with the United States and the free trade agreement served as a model for future agreements between the United States and Canada, Jordan and Mexico. 1. a. Where a dispute arises over the interpretation of this agreement or if one party considers that the other party has fulfilled its obligations under this agreement, the dispute resolution mechanism described in this section may refer to the dispute resolution mechanism described in this section. In addition, the dispute resolution mechanism can also be used where one party considers that the actions taken by the other party, including the breach of the schedule and subsidies, significantly distort the commercial benefits conferred by this agreement or significantly compromise the fundamental objectives of this agreement.