Free Trade Area Between U.S. and Israel Would Benefit Both Countries, Senate Panel is Told

Friends of Israel testified before the Senate Finance Committee today as it began hearings on the proposed Free Trade Area (FTA) between the United States and Israel, an element of the joint military and economic cooperation agreements reached by the two countries last fall.

First to appear were Elmer Winter, chairman of the Committee for Economic Growth of Israel and a former president of the American Jewish Committee; and Thomas Dine, executive director of the American-Israel Public Affairs Committee (AIPAC). Both stressed Israel’s urgent economic needs and the benefits that would accrue to the U.S. and Israel.

The FTA was agreed on in principle when Israeli Premier Yitzhak Shamir met with President Reagan and other Administration officials in Washington last November. Details are being worked out at a series of meetings between American and Israeli representatives. The first of the meetings was held here last month and, according to Doral Cooper of the Office of the U.S. Trade Representative, it “pretty much set up the parameters of the agreement.”

Many details are yet to be worked out. Another joint meeting will be held in Israel on February 13 and Ambassador William Brock, the U.S. Trade Representative, will meet with the Israeli Minister of Trade, Gideon Patt, on February 29. The FTA must be approved by both houses of Congress before it can be implemented.

STRESSES NEW OPPORTUNITIES

Winter, in his testimony today, said the proposed FTA would open new export opportunities for American manufacturers and new research and development opportunities for American companies in Israel. He stressed that increased exports of American-made products will be generated because of lower Israeli tariffs and “this will mean increased U.S. jobs and an increased share of the market in Israel for American-made products.”

He also noted that because Israel already enjoys duty-free access to the European Economic Community (EEC), American companies with manufacturing facilities in Israel can sell their products competitively in Europe. Winter stressed that the FTA will provide Israel an opportunity to reduce its balance of payments deficit with the U.S. and assist Israel to become financially independent of the U.S. in the future.

“We believe it is in the best interests of the United States and Israel that Israel work to a point where it will be able to stand on her own two feet. This will gradually reduce the funds that the United States government commits annually to assist Israel to meet her economic needs,” Winter said.

He also suggested that the FTA will be a first step toward the future development of a Middle East Common Market and “may well provide the incentive for some Arab countries and Israel to meet and resolve their political differences.”

OUTLINES BENEFITS TO THE U.S.

Dine noted that Israel is “staggering under the burden of financing its defense as it tries to maintain a military balance with an enormous coalition of adversaries who have almost as many aircraft and tanks as NATO.” Israel, he said, must devote onethird of its resources to defense, compared to six percent by the U.S.

An FTA would benefit the U.S. as well, Dine said. He observed that the U.S. is Israel’s largest trading partner with 23 percent of Israeli exports going to the U.S. and 25 percent of its imports coming from the U.S. Israel imports more than $1.7 billion in civilian goods from the U.S. which creates about 50,000 American jobs, Dine said.

He stressed that “the threat to American industry would be minimal” if an FTA is created. “Israel is unlikely to flood the American market because it is not a cheap labor enclave.” He added that Israeli agricultural exports would not hurt American farmers because the U.S. exports nearly eight times as much as it imports from Israel in agricultural products.

Cooper, at a press conference here last week sponsored by the AJCommittee, called the U.S.-Israeli agreement in principle “a very major decision for both sides, and especially for the United States which has not done something like this before.”

Cooper, who has been the U.S. negotiator in developing the proposed FTA with Israel, said the agreement is expected to be comprehensive in terms of product coverage and various non-tariff barriers. “We are hopeful that services and investment can be included to get the truest, broadest free trade areas between the two countries,” she said.

She, like Winter, referred to Israel’s relationship with the EEC and noted, “From an economic point of view, U.S. exporters are facing an increasing disadvantage vis-a-vis EEC exporters, and this was one very important incentive for moving forward with the agreement.”

Cooper added: “We have been consulting with our private sector advisors telling them what we are doing and seeking their advice … The reception has been very good … We have a lot of work to do in terms of notifying the public and getting their input, but we are very excited about this new trend … After thorough consultations on the Hill, we hope we can finalize the agreement as soon as possible.”