Uncertainty over the Carter Administration’s position on aspects of the anti-Arab boycott legislation proposed in Congress was largely dissipated today after Secretary of State Cyrus Vance testified for the second consecutive day on new laws to block Arab attempts against free trade by Americans with Israel.
In his testimony yesterday before the Senate Banking subcommittee on international trade, Vance declined to define Administration objections to the bill and pressed for a new measure which Administration experts would help to write. Today, however, he agreed to the legislation as prepared in identical bills in both houses with some modifications that were received with little or no objection from the members of the House Committee on International Relations.
The chief change suggested by Vance concerned the extraterritorial provision that deals with binding American companies’ subsidiaries abroad to the same restrictions that would govern the parent concern in the U.S. His other announced modifications were mainly technical. The most important related to the kind and amount of information a company would be required to provide to the Department of Commerce which controls exports.
ISSUE OF FOREIGN SUBSIDIARIES
As Vance was telling Rep. Behjamin Rosenthal (D.NY) the “specific recommendations” he desired in the House bill proposed by Rep. Jonathan Bingham (D.NY), Rosenthal interjected “So far, you are in pretty good agreement” and “so far no problems.” On the extraterritorial matter, however, Rosenthal said “we disagree” but “we lawyers can work it out.” Vance and Rosenthal are both lawyers.
Rosenthal said that the extraterritorial provision has among its-purposes to prevent depriving Americans of jobs by contracts given to overseas plants. When Rep. Charles Whalen (R.Ohio) said he saw a possibility of foreign subsidiaries being used “in a manner intended to circumvent the law,” Vance testified that if a subsidiary is “merely a conduit to avoid the law that situation should be prohibited.”
Vance also told Whalen, who is concerned about enforcement of this aspect, that “intent” on the use of a subsidiary “is one of the most difficult aspects of this legislation.” Vance said he tended to agree with Bingham that companies should be prohibited from providing the Arabs with information about their dealings with Israel. But Vance said he wanted “to think about” a prohibition provision. Bingham had pointed out “the boycott law will be of no use” if the Arabs knew about details of business with Israel.
ASSURANCES ON ARAB REACTIONS
Vance also testified that Saudi Arabia “is not seeking in any way” to use its boycott against race or religion and described that position as “a very constructive step.” Rep. Stephen Solarz (D.NY), who said the Administration now agrees 95 percent with the Bingham bill, asked Vance whether he agreed with the statement of former U.S. Ambassador Richard Nolte and Saudi Arabian Oil Minister Sheikh Yamani and Others that the anti-boycott legislation would be an impediment to Mideast peace negotiations.
“The answer is no.” Vance replied. The Arab governments, the Secretary added, “won’t be happy with it” but if the legislation were adopted “along the lines we discussed this morning it would be understood by the Arabs” and “not impede” prospects for a settlement.
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