Impact Of Export Control Law On The Israeli Economy

Author:Mr Eli Greenbaum
Profession:Yigal Arnon & Co

In refusing to clarify fundamental requirements under the law, Israel chills local economic activity and investment.

Laws regarding export control have strong impact on the Israeli economy, especially the hi-tech industry. Export control law traditionally restricted the export of military equipment and weaponry to problematic states and other entities. However, since countries increasingly seek military advantage through the use of cutting-edge technology, export control law also prohibits the export of certain innovative technologies without government approval. For example, Israeli law prohibits the export of all drone technology and some cyber technology without the proper government approvals. These laws can have a dramatic impact, both on economic activity and on the Israeli innovation ecosystem. For example, it may be difficult for start-up companies to obtain sufficient investment to develop technology in these areas.

Unfortunately, Israeli export control law can be very broad - much broader than the laws of other countries. For example, while other countries may only restrict certain, specific drone technology, Israeli law can restrict the export of almost all drone technology without exception. The wisdom of such expansive regulations is questionable - if customers cannot obtain certain technology from Israel, they will turn to other countries that allow the supply of that technology. In other words, when Israel does not coordinate its export control law with the laws of other countries, the ability of the Israeli economy is damaged without reasonable justification.

Israeli regulators are not unaware of this problem. Indeed, they have begun the process of harmonizing the regulations with international standards. These changes have been delayed because of the extended election season, but the regulators do seem to understand the problem.

However, the solutions proposed by regulators do not seem sufficient. To date, they have proposed limiting the specific items and technology controlled under Israeli law. For instance, going back to the drone example, if existing law controls all drone technology, the proposed changes would limit the controls to the specific technology that is controlled under international agreements.

But, aside from shortening the list of controlled items, Israel also needs to clarify some fundamental principles of export control law. One example - export control laws across the world often restrict the export...

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