Israeli Finance Minister Yehoshua Rabinowitz and Secretary of the Treasury William E. Simon signed a joint statement here today aimed at facilitating the promotion of investments in Israel by American companies. They also initialed a treaty on double taxation which, when ratified by Congress, will provide additional inducements for American investors in Israel.
The signings marked the conclusion of two days of negotiations between Simon and Rabinowitz who serve as co-chairmen of the U.S.-Israel Joint Committee for Investment and Trade and senior officials of both countries.
Rabinowitz said, “This is the first time such a comprehensive agreement has been signed by the two countries.” He and other Israeli officials noted that the agreements entered into here and Israel’s agreement with the European Common Market countries signed in Paris last week should be of particular interest to American investors because Israel is now in the position of enjoying “a very unique situation.” They pointed out that the agreement with the Common Market makes Israel part of the EEC area with an annual gross national product of $800 billion.
GOES BEYOND FORD’S STATEMENT
The joint statement signed by Rabinowitz and Simon reaffirmed the policy of their respective governments to oppose restrictive trade practices and boycotts against countries friendly to either, The statement referred to President Ford’s statement of Feb, 26 that religious or ethnic discrimination was totally contrary to the American tradition and has no place in the free commerce of the United States–a direct reference to the Arab boycott and blacklisting of companies doing business with Israel.
Rabinowitz said afterwards that the opposition to boycotts contained in today’s joint statement could have been “stronger” but “we are satisfied with the statement as it is here.” Other Israeli officials said, however, that the Rabinowitz-Simon statement “clearly goes beyond what President Ford has said.”
The treaty on the avoidance of double taxation recognizes Israel’s compulsory loans as creditable taxes for U.S. income tax purposes. The joint statement also noted that Israel has been approved as a supplier of AID (Agency for International Development) financed commodities and services and as a supplier for off-shore procurement of the U.S. Department of Defense.
It was not immediately clear what the latter reference included but it is believed to refer to a procedure developed to assist Israeli producers to sell products and spare parts to U.S. Defense Department suppliers.
AREA OF INVESTMENTS
In addition to the tax treaty, the agreement calls for the following in the area of investments: The Overseas Private Investment Corp., which already provides insurance to U.S. investors in Israel, will extend its guarantees to Israeli development loans and will participate directly in financing U.S. investments in Israel through long-term convertible debentures; the U.S. will arrange top-level management business missions and seminars to explore trade and investment opportunities in Israel; the U.S. will publicize the many advantages Israel offers foreign investors.
The agreement recognizes the special circumstances that characterize Israel’s trade, particularly in food and feed grains and the importance of assuring Israel access to raw materials.
In order to assist foreign investors, the Israeli government has developed a “special business package” to help manufacturers in the investment phase by offering financial leverage and in the operating phase by providing low cost working capital and rebate for indirect taxes. According to the U.S. Internal Revenue Service Code, American investments in Israel enjoy the special Less Developed Country status thereby entitling the company to a higher credit for taxes paid to a foreign country.
PROOF THERE IS NO U.S.-ISRAEL “FREEZE”
Israeli officials here said their country will seek “high technology manufacturers engaged in electronics, instrumentation, fine metals and chemicals. They noted that 23 American companies listed among the 250 largest by Fortune magazine, have manufacturing facilities in Israel. One Israeli official noted that no American company has ever abandoned its facilities in Israel as a result of the Arab boycott and blacklist.
At a press conference later, Israeli Ambassador Simcha Dinitz hailed today’s agreement as a demonstration that there is no “freeze” on relations between Israel and the U.S. “It indicates there is no freeze or stoppage in relations with the U.S. as some might imply” as a result of the American review of its Middle East policy, he said.
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