U.S. and Israel Hit Impasse in Effort to Phase out Tariffs

The Bush administration has rejected an Israeli formula for both countries to phase our all remaining tariffs on non-military goods, U.S. and Israeli sources have confirmed.

But the United States has agreed to consider an Israeli proposal to eliminate Customs user fees on services provided to goods entering the other’s country, as proposed in trade legislation currently before Congress.

Those decisions were made in Jerusalem two weeks ago at the biannual U.S.-Israeli trade talks set up to monitor the 1985 Free Trade Area agreement. Under the accord, both countries are supposed to lift all tariffs on non-defense goods by Jan. 1, 1995.

Most tariffs on such goods have been lifted. But those on products that either country considers most import-sensitive are not expected to be phased out before 1995.

The United States considers farm products particularly import-sensitive.

An Israeli Embassy official here who at-tended the talks accused the Bust administration of succumbing to pressure from pro-agriculture members of Congress and lobbying groups.

The California Tomato Growers Association, for instance, opposed removing U.S. tariffs on Israeli tomato paste.

U.S. lobbying groups also are concerned about the prospect of duty-free Israeli onions and concentrated orange juice, the Israeli said.

A U.S. official who attended the talks said there was “some merit” to arguments made by U.S. farm lobbyists.

ARAB GROUP MAKES NEW MOVE

At the talks, the main Israeli concern was with U.S. defense procurement laws that favor domestic defense contractors.

Israel also complained about a regulation approved in last year’s trade bill that has led to new marking requirements on Jewelry.

Many of the U.S. concerns were raised in a letter U.S. Trade Representative Carla Hills sent June I to Rep. John Dingell (D-Mich.). chairman of the House Energy and Commerce Committee.

High on the U.S. wish list was a request that Israel fulfill its promise to phase out the Tama, a tax assessed at Customs, bases on prices on the Israeli market.

In another trade development, the American-Arab Anti-Discrimination Committee has asked Hills to reconsider her April decision to continue Israel’s participation in the Generalized System of Preferences program.

The program, in effect since 1975, allows various Israeli goods to enter the United States duty-free.

The ADC sought last fall to have the trade privilege revoked on the grounds that Israel allegedly violated the rights of Palestinian workers, including the right to organize.

But Hills found that Israel met all of the U.S. criteria for receiving the trade privilege. Her decision was approved by the White House.

Reacting to the ADC’s latest move a well-placed administration official said, “We don’t know quite what to do with it. I don’t think the president is going to reverse his decision if that’s what they want.”