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House Committee Report on Boycott Practices Says Commerce Department ‘actually Serves to Encourage’

A House subcommittee that has been investigating for 18 months Arab boycott practices against American companies trading with Israel, said today in an extensive report signed by 15 of its 16 members that the Department of Commerce “actually serves to encourage” the practices and recommended specific legislation to deter them.

The report by the subcommittee on oversight and investigations led by Rep. John Moss (D.Cal.) concluded that “at least $4.5 billion worth of U.S. sales and proposed sales to Arab countries in 1974 and 1975 were subject to boycott requests.” It estimated that American exporters “complied with at least 90 percent” of all boycott requests “contained in boycott-affected sales documents reported to the Department the last two years.”

The Department, the report also charged, encouraged the boycott “implicitly by condoning activity declared against national policy or simply by looking the other way while these practices grew.”

CITES 10 YEARS OF SHAME

At a news conference at which the approximately 30,000-word report was made public, Moss; Rep. James Scheuer (D.NY), who requested the subcommittee’s investigation in March 1975; and Rep. Henry Waxman (D.Cal.) blamed former Commerce Secretary Rogers C.B. Morton and the Commerce Department’s policy since 1965 as being chiefly responsible for what Scheuer called “a record of 10 years of shame.”

The Export-Administration Act, passed in 1965, calls for reports from American companies subjected to demands by Arab countries against trading with Israel or with companies that trade with Israel or those owned or administered by Jews. Morton had refused to make the reports public on the grounds of confidentiality, but made them available in September, 1975, when the House Committee on Interstate and Foreign Commerce, parent body of the subcommittee, adopted a contempt citation against him. Morton resigned as Secretary last February.

‘A DAMNING CHRONICLE OF EVASION’

In a supplementary report, six of the subcommittee members said “the investigation has opened the wall of secrecy which has surrounded much of the Arab boycott.” But it declared that “strikingly absent” from it “and obscured even today by Commerce Department policy, is the answer to the question of how many businesses have changed their business practices in order to comply with the boycott’s restrictions and have in effect become tools in the Arabs’ economic warfare against the State of Israel.”

Nevertheless the six members said “despite this inevitable shortcoming, this report is a assaulting chronicle of evasion and subversion by several Administrations and, to a lesser extent, by the business community of the clear Congressional mandate opposing boycotts and restrictive trade practices.” The six signers were Reps. Moss, Waxman, Scheuer, Anthony Toby Moffett (D.Conn.), Richard Ottinger (D.NY) and Andrew Maguire (D.NJ).

Rep. James M. Collins (D.Texas), the subcommittee’s lone dissenter from the report, declared he holds “no brief” for the boycott but contended that “the answer to the problems” it has caused “cannot be ameliorated by the restrictive legislation that is being considered by the House and the Senate at this time nor by the legislative recommendations” in the report.

MIDEAST PEACE IS ULTIMATE ANSWER

Legislation adopted by a Senate-House conference for the tax reform bill would deny tax benefits to American companies that engage in a boycott. Proposals for the Export-Administration Act, adopted by the Senate and awaiting House action, would compel public disclosure of all Arab boycott demands on American companies and impose penalties of up to $10,000 for each failure to do so.

Collins contended at the briefing that “the ultimate answer” to the boycott problem lies in “a just and lasting peace in the Middle East.” Saying that “we consider the Middle East the frontier of this country and we mean to keep the peace there,” Collins added the subcommittee’s recommendations if adopted into law would “aggravate the successful and peaceful relationship” the United States has with the Arab countries.

At the Commerce Department: Communications Director Horace Webb, a chief assistant to Commerce Secretary Elliott Richardson, Morton’s successor, said that the Department has not yet received a copy of the report.

VETO WOULD BE OUTRAGEOUS

Asked by a reporter about the possibility of a veto by President Ford of the pending legislation, on economic and diplomatic grounds, Moss said that a veto “would not only be political dynamite but morally outrageous,” adding that “I would feel very strongly” on the moral grounds. Moss said that the Commerce Department’s handling of the boycott has not “improved sufficiently” although he said it is “not as bad” as under Morton.

Responding to Collins’ point that the U.S. is increasingly dependent on Arab oil, Moss said the U.S. “doesn’t have to stand in fear of it” or of a loss of trade with the Arab states. “Certainly we want to get away from depending on foreign oil,” he said. “But in the meantime, we should not have to pay blackmail. Nobody is pushing the Arab nations to come into the American market. They are coming by their own will and will continue to come.”

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