How the US Could Help Israel, the Palestinians and American Exports

By George Moses

As the United States moves, however cautiously, to improve its relations with the Arab world, it's time to revisit one of the most tendentious elements of that relationship—the Arab League boycott of Israel, undertaken on behalf of and for the support of the Palestinians. Of principal concern to US companies are the secondary and tertiary elements of the boycott, which prohibit trade with non-Arab companies doing business with Israel, and with their suppliers, respectively. They create the largest of the problems facing Americans seeking to do business in the Middle East. These obstructions run counter to stated American policies of promoting the freest possible trading arrangements around the world. They also increase the US net balance of payments deficit by limiting our ability to trade with the countries of the Middle East.

The decision by such companies to "go overseas is not lightly made.

The problems presented by the secondary and tertiary elements of the Arab boycott are most apparent to the smaller companies which conduct the bulk of US export trade. The decision by such companies to "go overseas" is not lightly made. From management's point of view, such companies already have a large US market. From experience, they know that going into foreign territory means meeting new problems which they cannot anticipate and for which they cannot plan. Overcoming such problems requires a great deal of management attention to carry out projects whose payoffs are years in the future.

Caught in the Middle

All that most American executives know about doing business in the Middle East is that if they get caught between the Arabs, the Israelis and the US government, their companies are subject to heavy fines. Mix into the decision process the scare stories of trying to do Western-style business with slow pay (or no pay) Middle Eastern clients, and you see why a decision to get involved in Middle East trade is treated by many US executives like a round of a very unpopular game, "you bet your company!"

Events, nevertheless, may have brought us to the time where, with one stroke, the US government can progress toward two major objectives: advancing the Middle East peace process and improving the business climate for US companies in a key market.

The time may be ripe for the United States to explore with the Arab League a formal lifting of the secondary and tertiary elements of the boycott. In return, the US could sponsor Palestinian admission to the General Agreement on Trade and Tariffs (GATT).

If these two steps proceeded together, they could bring about a unique result in the often zero-sum game of Middle East trade and politics. Everybody would win.

Who Wins What

Israel would win relief from a boycott about which it has complained bitterly from the time it was instituted. If the Israelis are right about the damage the boycott is doing, this proposal will bring relief to an economy which badly needs it.

The Palestinians would win admission to the major trading agreement of the world, which would bring them more fully into the mainstream of nations and better equip them to realize their own economic and political agenda. They would also eliminate a political weapon which anti-Palestinian interests have been using in the United States to great effect. The other Arab states would win a much more efficient and productive economic relationship with the United States.

The United States would gain a reduction of tensions in the region, a step toward rapprochement between Israelis and Palestinians, and the dismantling of a major impediment to successful trading relationships in the Middle East. The US would also be able to eliminate an anomaly within our own major trade promotion organ, the Department of Commerce. The anomaly is a section within that Department employing 30 people and spending $1.25 million per year of US taxpayer funds in order to make trade for American companies in the Arab worldas difficult as it possibly can. These saved resources could then be turned to productive trade promotion purposes.

About the only losers that come readily to mind are America's competitors for markets in the Middle East. The last thing the Japanese and Europeans want to see is a stronger, more competitive American presence in the area. As world economic slowdown looms and the competition for healthy markets becomes more intense, don't expect the other producing nations not to take advantage of any opening the US government is crazy enough to leave.

Questions to Be Resolved

Admittedly, this is not a simple proposal. A number of questions can be raised, such as the format for admitting to GATT what amounts to a government in exile. Such difficulties are not insurmountable, however, provided the will to resolve them exists.

Israel ought to be interested for the sake of its own economy. To the degree that it is not, one is entitled to question whether real damage is being done to the Israeli economy by the secondary and tertiary boycotts, or whether they actually bring to Israel more political gain than economic loss.

The Palestinians ought to be interested as an extension of their efforts to participate more fully in world political organizations and for the obvious economic benefits. To the degree to which they are not, one is entitled to question their marriage to what may well be an empty boycott in preference to the prospect of real gain.

And the United States should be interested for the obvious trade and political benefits such an action would bring. To the extent that it is not, one is entitled to wonder whose interests are being served by a policy that resists progress.

Expanding the Dialogue

In his remarks to the convention of the American-Arab Anti-Discrimination Committee (ADC) in Washington in March,Congressman Lee Hamilton (D-IN) called for expanding the Tunis dialogue between the US and the Palestinians. This boycott-lifting proposal could be the first truly substantive matter to be taken up at the "dialogue" center in Tunis. If nothing else, the serious discussion of economic issues affecting the Palestinians cannot help but advance the relationship between the Palestinian and American leadership.

And if this effort results in expanding economic ties between the United States and all of the countries of the Middle East, everyone involved will benefit.

George Moses, a former president of the National Association of Arab Americans, is a legislative consultant based in Washington, DC.