Israel reduces barriers to cheese imports

TEL AVIV Wed Aug 3, 2011 5:27am EDT

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TEL AVIV Aug 3 (Reuters) - Israel will reduce barriers to imports of hard cheese, its finance minister said on Wednesday, a first step to opening the dairy market after a boycott of cottage cheese over high prices sparked a wave of social unrest.

"The opening of the dairy products market to imports will stimulate competition and lead to a reduction in prices for the end consumer," Finance Minister Yuval Steinitz said in a statement after signing an order.

"The measure will contribute to the welfare of consumers and the Israeli economy."

According to the order, the level of customs duties on imports of hard cheese will gradually be lowered to 20 percent from 70 percent by 2016. In addition, the tax will be lowered to 20 percent in 2011 on a quota of 1,500 tonnes -- which will gradually rise to 7,500 tonnes by 2015.

The ministry said hard cheeses account for 20 percent of the domestic dairy industry's production.

The move is aimed at easing protesters concerns about the high price of food and other basic products in Israel and follows Sunday's cancellation of a planned five percent price hike on petrol.

Protests against the high cost of living in Israel began in June with a Facebook-mobilised price boycott of cottage cheese, an Israeli food staple, after which students pitched tents in Tel Aviv to air grievances over rapidly rising apartment rents.

The protests culminated in marches by some 100,000 demonstrators on Saturday, the resignation of a top finance ministry official and questions from leading commentators over Prime Minister Benjamin Netanyahu's ability to ride out a revolt by the middle class, which carries a heavy tax burden. (Reporting by Tova Cohen; editing by Elizabeth Piper)

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