Study: Arab Boycott Costs Millions in Lost Revenues for U.S. Businesses

The Arab boycott of Israel has cost U.S. businesses hundreds of millions of dollars and made trade in the Middle East difficult, according to an International Trade Commission study released last month.

“In terms of diverted resources and longevity, the Arab League boycott of Israel is one of the most significant international sanctions of modern times,” according to the study, “Effects of the Arab League Boycott of Israel on U.S. Businesses.”

The study “underlines the critical importance of ending the Arab League boycott in its entirety,” U.S. Trade Representative Mickey Kantor said in a statement.

Kantor ordered the study in November 1993 to gauge the boycott’s effect on U.S. businesses and to serve as ammunition if sanctions against Arab League countries become necessary, officials said.

Kantor noted that some Arab nations – including Saudi Arabia and the other Gulf Cooperation Council countries – have relaxed the boycott.

But Kantor said in a statement that he hoped that the study’s findings, coupled with the progress in the peace process, would spur the Clinton administration to “aggressively pursue the dismantling of the remaining aspects of the boycott.”

The commission asked a random sampling of 603 U.S. firms for a general assessment of the boycott’s effect on their sales, costs, profits and investments.

The firms that were surveyed export goods or services and have some knowledge of the boycott or U.S. anti-boycott law.

Some 416 firms – about 72.5 percent – responded.

The study calculated losses to U.S. companies that either lose business in the Arab world because they export to Israel or, conversely, lose potential business in Israel because they do business in the Arab world.

The losses totaled some $410 million.

The study also found that companies spent an additional $160 million in 1993 to comply with U.S. anti-boycott laws, the study found.

The boycott also affects American companies’ abilities to obtain and finalize business contracts in the region and compete with other countries, according to the study.

Also, U.S. companies doing business in Arab League countries have a hard time competing for business with foreign competitors who do not face anti-boycott regulations, the study said.

The 46-year old boycott also has “a chilling effect” on Israel’s business relations with other countries, costing that economy $2 billion annually, the study said.

The boycott also reduces Israel’s investment potential by 15 to 20 percent annually.

Jewish observers say although the significance of the study’s results is hard to measure, they welcome the high priority senior Clinton administration officials have given to ending the boycott.

“The study keeps pressure on the issue,” said Rep. Charles Schumer (D-N.Y.), co-chair of the Congressional Task Force to End the Arab Boycott. “Now the Arabs can see that the U.S. is tracking the boycott’s impact.”

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