Israel Rejects U.s Request to Lower Import Duties on Prefab Houses

Israel has rejected a U.S. request to lower import duties on urgently needed prefabricated homes being sent to Israel for Soviet immigrants.

At the biannual U.S. Israeli trade talks in Jerusalem last week, Bush administration officials asked Israel to eliminate its 10- to 12-percent import duties on the prefab homes.

But Israel refused, on the basis that “trade has always been based on reciprocity and the concessions should be reciprocal,” said an Israeli Embassy official.

Instead, Israel proposed that the United States reciprocate by dropping a customs user fee on all Israeli imports, which amounts to one-sixth of one percent of the product’s value. The Israeli official said the U.S. user fee violates the 1967 General Agreements on Tariffs and Trade, a treaty that set rules for world trade.

The United States rejected Israel’s proposal on the basis that there “should be a unilateral elimination” by Israel of its housing tariffs, said a U.S. trade official.

“What we want is very reasonable, given the support that we have given Israel over the years,” the official argued, alluding to the recent $400 million in housing loan guarantees for Israel, which were agreed to by Congress in the spring to build new housing for Soviet emigres.

But while Israel “appreciates” all of the various measures of U.S. support, it opposes unilateral trade concessions because “otherwise we have no basis for any trade negotiation,” the Israeli official explained.

The official also rejected a recent appeal by Rep. Lawrence Smith (D-Fla.), a staunchly pro-Israel lawmaker, who personally asked Israeli leaders to buy U.S.-made prefabricated homes as a way to show “return gratitude.”

The biannual trade talks are held to monitor the 1985 U.S.-Israeli Free Trade Area agreement under which both countries are to phase out all tariffs on non-defense goods by Jan. 1, 1995.

The last of these will be lifted on products considered by either country to be most potentially competitive with domestically made counterparts. They include the U.S.-manufactured prefabricated homes.

Israel expects to import more than $100 million worth of homes from the United States, according to the Israeli official, who predicted that the duty would not deter U.S. builders from selling the homes to Israel.