California, Israel endorse high-tech trade relations

Israeli start-up firms and California's high-tech industry have been forging business ties and sharing technical expertise for several years now.

Last week, their governments formally offered their blessing.

At a high-tech conference in Santa Clara, Gov. Pete Wilson, a member of his Cabinet and Israeli Minister of Trade and Industry Natan Sharansky joined hands in a pact of the wired superpowers.

While the pact contains no mandates, its promises of future deals and possibly a joint California-Israel commission on research and development aren't far away.

"We are natural partners in high tech," Sharansky said in an interview before the conference. "An agreement made at the government level is not needed, but it's not an absolute world; the government can create problems" down the road if no commitment is given early on.

In a statement, Wilson acknowledged the growing business relationship between California and Israel, adding that the pact "encourages…investment, supports international industrial research and development, and encourages a free exchange of ideas and wisdom between businesses, trade associations and commercial institutions."

Sharansky and California's secretary of trade and commerce, Lee Grissom, signed a memorandum of understanding at the conference to make their pledge official.

The memorandum, unlike a formal agreement, has no policy-making power. It is simply a prelude to negotiations on future trade relations and joint research between California and Israel.

State and industry representatives are slated to begin those negotiations in October at the Prime Minister's Conference on Business and Trade in Israel, according to Rosalie Zalis, a senior policy adviser to the governor.

Last week's pact "was a memorandum of intent to give it teeth that will be worked out in individual committees in October," Zalis said.

Already, the United States enjoys greater trade relations with Israel than with most other countries, she said. Businesses seeking to establish bases in the Jewish state have successfully negotiated their way around paying Israeli pension taxes. They've met little resistance from state and local governments on their requests for roads and other infrastructure required to establish plants in Israel.

Such companies include Hewlett Packard, Applied Materials and the chipmaker Intel.

The governor's office began its relationship with Israel four years ago when it opened a trade office in Jerusalem, Zalis said. Since then, six other U.S. states have followed suit with offices of their own.

The attraction of doing business in Israel is its free-trade agreement with Europe and other capital-rich regions. From their offices in Israel, U.S. businesses have a back door to those markets, she explained.

In Santa Clara, Israel's economic consul, Yishai Laks, said that while the memorandum has little immediate impact, he views it as more than a gentleman's agreement.

"We think it is very important to get acknowledgment from both governments of the unique situation [of Silicon Valley-Israel ties]," Laks said, "and that they are looking to enhance it."

Lori Eppstein

Lori Eppstein is a former staff writer.