House Adopts Compromise Boycott Legislation Designed to Soften Its Impact on Boycotting Nations

The House International Relations Committee today adopted by a voice vote “compromise” legislation related to the Arab boycott that includes a “unilateral selection” clause designed to soften its impact on the boycotting countries and American companies doing business with them.

The clause, sought by business interests and endorsed by the White House, allows a boycotting country to select goods and components of products and subcontractors that make them for any reason as long as it does not say that selection has a boycott purpose.

The Senate Banking Committee yesterday postponed its decision on the nature of a “unilateral selection” clause after Sen. Paul Sarbanes (D.Md.) declared that if an amendment proposed by Sen. Harrison Schmitt (R.NM) were adopted, “you might as well tear up this bill.”

The House version places the burden on the company to determine whether the boycotting company’s selection constitutes a boycotting purpose. The Senate version as presented by Sen. Adlai Stevenson (D.III.) provides for the boycotting company to select specific products such as tires on a tractor but not unidentified components inherently in the product such as the tractor’s valves. The Schmitt amendment would allow a company in an Arab land to make its own selection of products.

ELEMENTS OF HOUSE MEASURE

The House legislation permits “negative” certificates of origin to continue for one year after enactment of the measure which is part of the Export Administration Act. After that it will be outlawed. The Administration reportedly wanted the negative certificates to continue on the grounds that the Arab states themselves are moving towards the “positive” certificates.

The differences are principally psychological. Congressional specialists said. The practical result is the same. Negative certificates, they said, were the most commonly visible instrument of the Arab boycott since a company had to specify that an article was not made in Israel. Under the positive certificate, a company specifies only where it is made.

In presenting the substitute language for the informal group of five Congressmen who worked on the compromise, Rep. Lee Hamilton (D.Ind.), chairman of the committee’s Middle East sub-committee, said it is a “workable compromise” that resulted from intensive discussions with the White House and State and Commerce Departments.

“It tries to minimize confrontations at home and abroad,” Hamilton said. He acknowledged “competing interests will prevent many groups from not fully endorsing a reasonable accommodation among groups with conflicting interests.” He pointed out the bill “categorically prohibits any American person from discriminating” against persons or firms on the basis of race, religion or national origin.

It also prohibits general boycotts by U.S. firms of “friendly countries and blacklisted persons,” Hamilton said. In the latter connection, he noted that a “disturbing feature of the Arab boycott is the attempt to force U.S. companies to direct their business away from Israel and blacklisted firms.”

OTHER CONDITIONS CITED

With Hamilton in the informal group were Reps. Benjamin Rosenthal, Jonathan Bingham and Stephen Solarz, all Democrats of New York, and Charles Whalen (R. Ohio). In his presentation to the committee, Whalen said the unilateral selection provision prohibits “the use of such selection in an instance where the U.S. person has actual knowledge that the sole purpose of the selection was to implement a boycott.”

Whalen also pointed out a second provision is “a broadening of Presidential authority to grant exemptions from the anti-boycott statute’s prohibition so as to include permission to comply with laws of boycotting countries.” He said the latter provision is aimed “at avoiding the imposition of U.S. legal requirements on U.S. residents abroad resulting in those residents contravening local laws and being kicked out or punished.”

After the House vote, the Congressional specialists pointed out to the Jewish Telegraphic Agency that the original legislation last autumn did not permit unilateral selection of components or the naming of subcontractors by boycotting countries. The present bill, one said, represents a “considerable watering down.” Another said the unilateral selection “constitutes in effect a fairly substantial loophole” for the Arab countries.