The Gospel Hidden in the Arrangements Law
Originally published in Hebrew in "Globes," one of the leading economic newspapers in Israel, in July 2020
The article was written following intensive work by the “Minesweeper” project, aimed at promoting reform in the area of Israeli standards and imports.
[The "Arrangements Law" is a government-sponsored law that includes a basket of economic reforms. It is attached every year or two to the state budget law submitted to the Knesset. Together with the budget, the law expresses the government's economic policy for the coming years.]
The Standards Institute is the main gateway for almost all imports into the State of Israel. Over the years, it has swelled into a regulatory monster of Gargantuan dimensions that weighs down on the Israeli economy • How can we fight bureaucracy? A possible change was suggested with the publication of the draft of the Arrangements Law last week.
The Standards Institute, housed in a rather dull building in Ramat Aviv, is the main gateway for almost all imports into Israel. Many goods, production machines, and materials that arrive in the country must meet local standards whose original purpose was to protect public health and safety. Over the years, the Institute has grown into a regulatory mammoth that bears down on the Israeli economy, contributes to the cost of living, and wastes unnecessarily work days for small businesses in a tangled bureaucratic maze. It is the recently unveiled Arrangements Law, of all things, that contains some positive surprises in this respect.
It is important to understand that the failures of the Institute are costing all us a great deal of cash. The first problem is an excess of standards: toys, sunglasses, and products of every kind being sold in dozens of countries that meet European or American standards are not good enough for the Israeli consumer for some reason, and are subject to unique local standards that make it difficult to import them. Apart from the official standards, there are also “mandatory” standards that have not undergone any kind of formal declaration, but are stashed in hundreds of different laws enacted over the years. A second problem has to with the way in which the products are tested: the Standards Institute is still an inefficient and expensive monopoly in the area of testing.
Simultaneously with the publication of two State Comptroller reports for two consecutive years on the functioning of the Institute, an unusual occurrence in itself, the previous Minister of Economy, Eli Cohen, and the 20th Knesset initiated a number of reforms to improve the Institute's functioning. Shimon Henig, a manufacturer and importer of wooden toys and theater puppets from Haifa, attended one of the debates on the matter in the Economics Committee and described the absurd and disproportionate bureaucratic burden that deny him and many other entrepreneurs the ability to make a living.
The chairman of the workers' committee at the Standards Institute promptly dismissed Henig and exclaimed: "Does he want the State of Israel to open imports freely so that he can buy a house in Savyon?" The accusation by the representative of Institute employees that the small entrepreneur from Haifa wants “to buy a house in Savyon” neatly summarized the contempt of the Institute and its employees for importers and for the citizens’ pockets. But members of Knesset apparently were not impressed, and both reforms were launched. The first demanded that the Standards Institute begin adopting international standards. The second was to do away with the Institute’s monopoly on testing, opening the market to private laboratories.
Unfortunately, both reforms have made little progress. Admittedly, some of the international standards have been adopted, but the Institute and the Ministry of Economy have never submitted a list of standards that they intend to adopt, although they have been required to do so by law. As for the laboratories, only a handful have been opened, and the monopoly of the Institute, whose testing fees have been financing its many employees, has not diminished considerably.
A possible change cropped up last week with the publication of the draft for the Arrangements Law. The law promises two significant changes. The first is to process most imported products by affidavit, which obviates the need for the Standards Institute’s bureaucracy and testing. The goods will be transferred directly from ship to store, with the importer's declaration of compliance with the standards. The second is a section that will force the Ministry of Economy to scrupulously map, on a short schedule, all the standards, including those that are not official but hidden in different and bizarre laws. The mapping must also point out the gap between the Israeli and international standard. This is a major accomplishment, because such a mapping will give the public the means to push for the abolition of outdated and unnecessary standards and the adoption of standards accepted worldwide.
It is difficult to overstate the importance of the section concerning the Standards Institute in the Arrangements Law. The Israeli regulatory burden, resulting from the ossified conservatism of the officials of the Standards Administration and from the protectionism of the workers' committee of Institute employees, even at the cost of harm to the general public, affects each and every one of us. The unnecessary and muddled Israeli standards, and the monopoly of the Institute, wreck expensive working days of small and medium-sized businesses and roll huge costs onto the citizens. Especially now, with an economic crisis the extent of which is not yet known, it is important to make sure that the Knesset withstands the pressure of stakeholders and completes the enactment of the welcome reforms.