Is Another Free Trade Zone for Diamonds in the Works?

Israel’s Ministry of Economy and Industry, together with the Tax Authority, will coordinate a government team that will examine the establishment of a free trade zone for diamonds in Israel’s diamond exchange complex.

The goal is “to compete on equal terms with the major global trade centers in the industry,” according to the ministry’s managing director Dr Ron Malka.

For the past 25 years, the Israeli diamond industry has been struggling with competition from other centers — so far, unsuccessfully.

Partially, this has to do with the cost of labor. Some blame shrinking financing, although this was less of an issue. The most acute problem was the industry’s failure to evolve and reinvent itself when required.

Will a free trade zone resolve the problem? Maybe. Looking at Dubai, that free zone mainly serves as a stop between productive centers, be it mining or manufacturing. Truly little value is added there, although value is left there.

Is this what Israel wants to become, an in-between station? A free trade zone strengthened with supportive services such as tenders? And really, isn’t this what others have already done?

A free trade zone is something to put in place to support other — planned and ready to execute — activities. Just what planned and ready-to-execute activities does Israel have in store? Hopefully, a free trade zone is just one of several initiatives waiting to be launched.

Israel has the know-how, facilities, tech wizardry, and even the financing to reinvent itself. Now, it also needs to display its will and fortitude.