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From Garlic to Roses to Clothes, Fear Expressed About Competition if Israel Given Free Trade Status

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Opponents to the proposed United States-Israel free trade area (FTA) joined forces on Capitol Hill last week in two days of testimony before the subcommitttee on trade of the House Ways and Means Committee to voice their fears that such an agreement might disrupt American markets and create unemployment and displacement through competition from Israeli duty-free products.

These were the final set of hearings before the House subcommittee chaired by Rep. Sam Gibbons (D. Fla.). Last month the Senate Finance Committee headed by Sen. Robert Dole (R. Kans.) approved a free trade area bill.

Representatives of Florida citrus growers, American fruit and vegetable growers, California tomatoe packers, onion and garlic growers of Nevada, rose growers, and textile and apparel manufacturers were among those who expressed doubts that the FTA would be beneficial to the U.S. as well as Israel.

Robert Keeney, vice president, government relations, United Fruit and Vegetable Association, stated that United "opposes the FTA as long as trade sensitive fresh fruit and vegetables are included in the agreement." He added, "We are of the opinion that duty free status for all Israeli fruits and vegetables could adversely affect several segments of our industry without providing a significant opportunity for increased trade for our products in Israel."

ISRAELI AGRICULTURAL EXPORTS CITED

Keeney predictd that there will be "no significant opportunity for the U.S. fresh fruit and vegetable industry to market its products in Israel. Last year one metric ton of fresh produce in the form of beans was exported to Israel at a value of only $775. On the other hand, we imported from Israel in 1983 about 1,600 metric tons valued at approximately $1.5 million."

He cited as one reason for this lack of trade, Israel’s self-sufficient horticultural production which it has to export to world markets. During 1981-82, Israel exported 66 percent of its celery, 35 percent of its melons, 46 percent of its oranges, 28 percent of its grapefruit, 41 percent of its lemons, 82 percent of its avocados, and 21 percent of its carrots.

Three members of Congress from Western states expressed their fears that removing tariffs from Israeli products that have been subsidized by the Israeli government such as olives, tomatoes, onions, and garlic, would result in unfair competition to U.S. products. The recent large increase in the importing of Israeli tomato products to the U.S. was cited as a threat to the U.S. tomato growing and processing industry.

Rep. William Thomas (R. Cal.) voiced his concern that other countries such as Mexico, Brazil, and Chile would also want to obtain similar FTA agreements. Gibbons said his committee will visit Israel and investigate the question of Israeli subsidies before this bill is voted upon.

BENEFITS TO U.S. STRESSED

Representatives of American Jewish organizations sought to allay the fears of the trade representatives and Congressmen by pointing out the more positive aspects the FTA would create. Alfred Moses, chairman, National Executive Council, American Jewish Committee, stated, "The AJC is convinced that the passage of this bill and the actual implementation of the agreement will be of benefit both to the United States and Israel for the following reasons: "The proposed FTA will open new export opportunities for U.S. manufacturers; proviede Israel with an opportunity to reduce her balance of payments deficit to the U.S.; open new research and development opportunities for U.S. companies in Israel; provide new opportunities for U.S. companies operating their plants in Israel to sell their products in Europe."

Moses contended that the FTA will not adversely affect U.S. jobs. On the contrary, he maintained that the FTA will add jobs for Americans by increasing opportunities for the export of U.S. products to Israel. "U.S. manufactures will be able to sell more products — employing more workers in the U.S. — as a result of sales in EEC countries of Israeli products containing U.S. origin materials, " Moses stated.

He added, "There will be an expansion of products made in the U.S. using new technologies developed as a result of R and D work in Israel."

Moses concluded, "Israel is not a low labor-cost country. The Israeli-made products that will benefit from the proposed FTA will be in the high technology field and will not impact the smoke stack industries here at home that are still experiencing the downward effects of the recent recession."

"By establishing a free trade area, we will be taking a step toward strengthening a key ally in the Middle East, helping a developing democratic nation become more economically independent, strengthening U.S.-Israeli relations, and helping the U.S. economy," Moses stressed.

HELP U.S. MEET EEC COMPETION

E. Jay Finkel, a Washington attorney, spoke to the subcommittee on behalf of the Zionist Organization of America, saying, "ZOA believes such an arrangement to be a logical and desirable extension of one of the United States’ most important international relationships."

One of the economic advantages to the U.S. would be that the FTA would prevent the U.S. from "being disadvantaged vis-a-vis common market suppliers. Roughly 40-45 percent of the U.S. exports to Israel are now subject to Israeli import duties which average slightly over ten percent, "Finkel said.

"Since 1975, however, Israel has been phasing in a free trade area arrangement with the EEC. That phase-in is approaching completion with respect to manufacturers, so that in the near future, EEC exporters will face no tariff barriers in Israel," Finkel explained. "Unless the U.S. enters into a comparable free trade area arrangement, U.S. exporters of goods to Israel who are otherwise as efficient as their EEC counterparts will nevertheless suffer because they will be facing an Israeli tariff, " he added.

Finkel pointed out that increased two-way trade within a U.S.-Israel FTA will inevitably open further possiblities for U.S. companies to join with Israel companies in profitable joint ventures. Opening new opportunities in third markets. "Because Israel would occupy a unique position as the common member of both free trade areas — the U.S. and the EEC — U.S. access to European markets could be enhanced, "Finkel emphasized.

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