New York Congressman Warns of Trade Threat to Israel

An Israel basically strong and economically vital, but needing quick action from its friends and supporters in the United States to help with its potential “Achilles heel” — export trade — was described here yesterday by a New York Congressman just back from Israel.

Rep. Bill Green, a Republican, hailed Israeli efforts, especially in high-tech, to increase the country’s exports, but warned of a little-recognized danger to that export drive: U.S. legislation which has long allowed most Israeli exports to enter this country duty-free is about to expire. Only quick action before Congress’ scheduled adjournment October 4 will be able to save the legislation, Green said.

The lawmaker, who went to Israel with colleagues of the House Trade Subcommittee, said he found little awareness of what the cutoff in the favoring trade law would mean even among Israelis. Called the Generalized System of Preference (GSP), it applies to less developed countries (Israel was classified as one) and gives their exports preferential treatment in U.S. markets. The GSP legislation expires December 31.

SAYS LEGISLATION BLOCKED BY AFL-CIO

Green said that Trade Subcommittee members told him that renewal of the GSP legislation is being blocked by adamant opposition from the AFL-CIO. “Even if GSP is renewed, it will almost certainly eliminate coverage of countries with relatively high per capita incomes, like South Korea and Taiwan, and therefore, also Israel, whose per capita income is higher than that of Asian countries at which the AFL-CIO is taking aim,” Green said.

He urged that friends of Israel in the U.S. urge Senators and Representative to extend the GSP and that any phase-out of higher per capita countries match the phase-in of the U.S.-Israel free trade area. He noted that the U.S. has a favorable balance of trade with Israel, so it is in the U.S. interest to continue good trade relations with its ally.

ISSUE OF FREE TRADE AREA LEGISLATION

The New York Congressman said that proposed free trade area legislation which would gradually dismantle all tariff walls between the two countries is probably not feasible as an immediate answer. The free trade legislation requires basically non-government-subsidized industry, and Israel has special problems in this area, especially in terms of its defense.

“It is clear from our discussions with Israeli government, business and labor leaders that a free trade arrangement would have to be phased in to avoid damage to the Israeli economy,” Green said.

The legislator said that with agricultural hi-tech probably gone as far as it can in Israel, the “niche” sought by Israel is notably in export of industrial technology. The American market is vital in this drive, he said. At the same time, trade barriers must be kept down to benefit U.S. exports to Israel, he said.