The “What’s good for Europe is good for Israel” reform, an amendment to Israeli standards law, passed the Knesset this week in its third hearing after lengthy discussion in committees. The legislation, brought forward by Minister of Economy Nir Barkat, is the last stage in a reform that started under former Minister of Economy Orna Barbivai with the goal of reducing regulation around imports.
The law passed with 22 members of Knesset in support and none against. Additional related proposals passed as well. Barkat called the legislation “the largest economic revolution for the past 40 years.”
The reform, which will roll out in September, will fundamentally change the way Israel handles the quality standards required for imported goods. According to the new legislation, imported goods will not have to be checked for adherence to Israeli standards if the exporter provides a statement that the goods meet European standards. This change means that about 90% of the goods entering Israel will no longer need to be checked.
Israeli standards will also adopt a new principle based on the European system. According to this principle, if an importer whose goods have been found not to meet the standard can prove with lab tests that the goods are in fact acceptable, that importer can receive retroactive approval for the import.
The Concern: European Standards Haven’t Been Examined by Israel in Depth
The current version of the law passed after significant resistance in the Economics Committee to the legislation’s wording. The opposition to the law mostly came from bureaucrats from the Ministry of Economy and other ministries who were concerned about the drastic change to how standards are handled. That’s a result of Barkat’s expressed intent to “get in line with Europe on everything”—in practice, to switch out most of Israeli standards law for European law, which has not been studied in Israel at length. That change has the potential to endanger the Israeli consumer.
The bureaucrats opposing the legislation were concerned that the supervision of imports, which was already weakened in a previous reform earlier this year, doesn’t align with the European model, which imposes significant responsibility on importers alongside robust enforcement. The minister’s response to one such bureaucrat sums up the disagreement: “It’s a matter of risk management. You [bureaucrats] aren’t willing to take any risk.”
During discussions in various committees, more arguments of that sort arose between bureaucrats on one side and the minister of economy and the ministry’s director general on the other. The arguments related to which products would be allowed to enter through the European stream without any discussion and which would be examined by an exceptions committee due to the inherent risk in the difference between European and Israeli standards. In most cases, including those where serious concerns were raised, the ultimate decision was to allow the products to enter according to European regulations.
Of the 10% or so of products that will not enter through European regulations, almost all will be examined by an exceptions committee, and only a minority will be handled outside of the scheme altogether.
The products that are handled by the exceptions committee are expected mostly to be allowed to enter through the European stream. The makeup of the exceptions committee was assigned by Amnon Merhav, outgoing director general of the Ministry of Economy Amnon Merhav, who is interested in allowing as many products as possible to be included in the reform. Indeed, representatives of authorities and bodies subordinate to the Ministries of Finance and Economy have a majority among the members of the committee. An exception is when a minister addresses the committee on an issue related to his office, in which case he receives one additional representative on the committee. But even then, mechanisms have been put in place that make it difficult for other ministers to intervene.
Clashing Regulations From Different Ministries
Other ministries are also concerned about the reform. Some of the products that the Ministry of Economy asked to be included in the reform are usually regulated by standards outside of the authority of the ministry itself. These products are regulated according to standards that other ministries have managed for years.
Take for example dishwashing detergent and laundry detergent. Ministry of Economy Director General Merhav tried with all his might to exclude these products from the exceptions committee. “What’s the difference between Israeli water and European water?” he asked. These products are protected by standards from the Ministry of Water, since Israel is the leading country in the world in the field of wastewater reuse and certain laundry detergents can be poisonous in reused wastewater.
Since the regulations of the Ministry of Economy and the regulations of other ministries have a similar legal standing, the Ministry of Economy is facing an obstacle in its attempt to include all products in its reform without discussion in the exceptions committee. The Ministry of Economy initially proposed a clause that would recognize its own authority to override other ministries’ regulations. That clause was disqualified after the chair of the Economic Affairs Committee, David Bitan, and Committee Ombudsman Itay Atzmon both called it illegal.
Despite the disqualification of the clause, when the law was voted on in the committee, lawmakers Ze’ev Elkin of the centrist National Unity Party and Moshe Passal of Likud submitted a comment demanding that Minister Barkat be given that authority. Bitan said that he was personally in favor of the idea but that it was legally problematic and asked them to withdraw it.
At this point, the representative of the budget department at the Treasury intervened. He told the lawmakers that if they agreed to pass the law as is, that clause could be included in the omnibus Arrangements Law if necessary. They agreed and withdrew their reservation.
In the vast majority of the debates in the committee on the topic, Knesset members from the opposition did not participate, and no one voted against the sections of the law.
