arab league boycott appendix

7/27/2019 Arab League Boycott Appendix

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THE ARAB LEAGUE(Boycott of Israel)

FOREIGN TRADE BARRIERS 1

THE ARAB LEAGUE ( Boycott of Israel)The Arab League boycott of the state of Israel isan impedimen t to U.S. trade and investment in the

Middle East and North Africa. Arab Leaguemembers include the Pal estinian Autho rity and thefollowing states: Algeria, Bahrain, Comoros,Djibo uti, Egypt, Iraq, Jordan, Kuwait, Lebanon,Libya, Mauritania, Morocco, Oman, Qatar, SaudiArabia, Somalia, Sudan, Syria, Tunisia, the UnitedArab Emirates (UAE), and Yemen. However, notall Arab Le ague members participate in theboyc ott.

The pr imary aspect of the boycott prohibits theimportation of I sraeli-origin goods and servicesinto boycotting countries. The secondary andtertiary aspects of the boycott discriminate against

U.S. and oth er foreign firms that do business withboth Israel and b oycotting countries and directlyaffect U.S. exports to the region. The secondaryboycott prohibits any entity in Arab Leaguemembers from engaging in business with U.S. orother foreign firms that contribute to Israelsmilitary or economic development. The tertiaryboycott prohibits business dealings wi th U.S. andother firms that do business with blacklistedcompanies. Such firms are placed on a blacklistmaintained by the Damascus-based CentralBoycott Office (CBO), a specialized bureau of theArab League. The CBO uses a variety of means todetermine compliance wi th the boycott, including

analyzing information obtained throughquestionnaires sent out to third-country individualsand firms. If the CBO suspects that a firm hasengaged in proscribed activities, it mayrecommend that the Israel Boycott Offices of themember states add the firm to each member statesblack list. Boycot t offices of Arab League s ta tesare supposed to meet in Damascus twice a year toconsider adding foreign firms to, or removingthem from, the blacklist.

As a result of the ongoing violence in Israel andthe occupied territories that began in late 2000,there have been calls to reactivate the Arab League

boycott against Israel, includ ing resolutionsadopted at the October 2000 Cairo Arab Sum mit.During and following the Summ it, Syria proposedthat the boycott be reinstated and that a study beconducted to determine how best to implement it.As a result of these regional developments, theCentral Boycott Office held an official regionalmeeting in Damascus in October 2001, the firstsuch meeting since April 1993. Nineteen of the

Arab Leagues 22 m ember states participated inthe October CBO meeting, with only Egypt,Jordan and Mauritania absent. However, the

October meeting reportedly did not result in theaddition or removal of foreign firms from the

blacklist, instead focusing on internal structuralissues in line with the Arab Leagues call for arevitalization of the CBO and the boycott. Themost recent meeting, in October 2002, producedno change.

While the legal structure of the boycott in the ArabLeague remains unchanged, its enforcement varieswidely from country to country. Some membergovernments of the Arab League have consistentlymaintained that only the Arab League as a wholecan revoke the boycott. Other member

governments support national discretion onadherence to the boycott, and a number of stateshave taken steps to dismantle their adherence tosome aspects of it. More specifically, Egypt hasnot enforced any aspect of the boycott since 1980,pursu ant to its 1979 Treaty of Peace with Israel.Jordan formally terminated its adherence to allaspects of the boycott effective August 16, 19 95,when legislation implementing its Treaty of Peacewith Israel was enacted. The Palestinian Authorityagreed not to enforce the boycott in a 1995 letterto then-U.S. Trade Re presentative Kantor.

The Gulf Cooperation Council countries (Bahrain,

Kuwait, Oman, Qatar, Saudi Arabia, and theUnited Arab Emirates) announced in September1994 their non-adherence to the secondary andtertiary aspects of the boycott. Bahrain isofficially committed to enforcing the primaryaspect of the Arab League Boycott of Israel, butenforcement is inconsistent. Occasionally,outdated tender documents require enforcement ofthe Arab League Boycott (including the secondaryand tertiary aspects not enforced since 1994), butsuch instances are usually quickly remedied uponrequest. Kuwait has taken concrete steps to revisecommercial documentation to eliminate all directreferences to the boycott of Israel. Kuw ait still

applies a primary boycott of goods and servicesproduced in Israel. In 1996, both Oman and Qatarended boycott enforcement and establishedreciprocal trade arrangements with Israel.However, in Octo ber 2000, Oman closed its trademission in Israel and required the closure of theIsraeli trade mission in Muscat. Omani customspro cesse s Israeli or igin ship ments en tering withIsraeli customs documentation. Likewise, Israeli


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FOREIGN TRADE BARRIERS2

immigration stamps in third country passports arenot an issue. Telecommunications links and mailflow normally. However, Omani firms have shied

from carrying any identifiably Israeli consumerproducts. Qatar does not practice the ArabBoycott, but some government d ocuments stillinclude outdated boycott language. Saudi Arabiaenforces only the primary level of the ArabLeague boycott on Israeli products. If a foreigncompany is found to have imported an Israeli-made product, or a product with even minimalIsraeli content, the Saudis will ban th at companyfrom exporting to the Kingdom. Usual practicehas been that the Saudi government will removeits ban after the company agrees to stop shippingfurther Israeli products. In 2002, according topress repor ts, Saudi Arabia banned five American

companies for violating the primary boycott.While the UAE no longer enforces the secondaryand tertiary aspects of the boycott, occasionalgovernment contracts continue to contain proforma provisions requiring a contractual obligationto observe all regulations and instructionsenforced from time to time by the League of ArabStates regarding the boycott of Israel especiallythose related to blacklisted companies, ships, andpersons. Indeed, in a recen t case, involving adelayed high-profile contract between anAmerican firm and a local government agency,UAE gove rnment authorities instructed the AbuDhabi Emirate, in writing, to exempt the U.S. firm

from the provisions of the boycott clause.

In the run-up to the November 2000 Summit of theOrganization of Islamic Conferences (OIC),Oman, M orocco, and Tun isia closed their Israelitrade offices or missions to protest the Israeliresponse to the Palestinian intifada that began inSeptember. There have also been grass-rootscampaigns in some Arab countries to boycott U.S.companies and products to protest the U.S.response to Israeli actions during the intifada. InTunisia these campaigns are generally led by laborunions who distribute lists of U.S. products toboyc ott. These lists are frequently p ublished in

opposition newspaper, but not in officialgovernment publications. There has been noindication of official government support for thesecampaigns, and the impact appears to have beenlimited and temporary.

Other Arab League members that have stoppedenforcing the boycott include: Mauritania,Morocco, and Tunisia, which have recognized

Israel through e stablishment o f limited diplomaticrelations; Yemen, which formally renouncedobservance of the secondary and tertiary aspects of

the boycott in 19 95; and Algeria, which stilladheres in principle but not in pra ctice to theboyc ott. In Leba non , the p rimary boycott isgenerally enforced, b ut Lebanese officialsselectively enforce the secondary and tertiaryboycotts . Dj ibouti does n ot current ly enforce anyaspects of the boycott, and there are no knownrestrictions on commerce with Israel. Forexample, in the local import codification manualused by customs officials, Israel is given an importcode nu mber just like every other country, and thecomment section does not mention a boycott.While Djibouti certainly has very little direct tradewith Israel, it is probable that some cargo

transiting the seaport originated or passed throughIsrael. However, no problems have ever beenreported concerning the boycott. Although theDjiboutian government supp orts the Palestinians,and has recently made great efforts to identify withother Arab causes, there has, so far, never beenany mention of the bo ycott.

While the boycott is no longer a significant issuein most Arab League countries, it remains asubstantive impediment to doing business in thosecountries which still rigidly impose its terms. Inthis respect, Syria continues to be the strictestadherent of the primary and secondary boycotts.

Although it allows goods to be imported with apos itive, rather tha n n egative, cou ntry of origincertificate, Syria strictly monitors and controlsentry into its ports by ships that have made calls inIsrael. Syria often requires certifications ofcommercial activity in Israel by companiesseeking to register trademarks or acquire imp ortlicenses; anecdotal information suggests thatenforcement of this requirement may haveincreased in 2001, partly as a result of accusationsof Israel related business activity made by localrepresentatives of foreign firms who seek todisadvantage their rivals. Syria maintains its ownblacklis t of firms for the boycott, separate from the

outdated Arab Le ague Boycott Office list.However, even Syria has restrained and limited itsenforcement of the tertiary boycott. Along withreports of increased issuances by the Syriangovernment of Boycott related questionnaires toforeign firms during 2001, several U.S. and otherWestern firms were reportedly removed fromSyrias own b lacklist.


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FOREIGN TRADE BARRIERS 3

Under U .S. antiboycott legislation enacted in1978, U .S. firms are prohibited from providingcertain information about business relationships in

response to a boycott request and are required toreport receipt of any such requests to the U.S.Department of Comm erces O ffice of AntiboycottCompliance. U.S. a ntiboycott laws also prohibitU.S. persons from taking certain other actions,including refusal to do business with a blacklistedcompany. Boycott compliance requests mostoften reflect obsolete references in procurement orimport documents, or a reluctance to make overtchanges in document templates, rather thanofficial policy. Although there have beenexceptions, requ ests that foreign firms complywith se condary and tertiary boycott certificationsare typically withdrawn when challenged.

However, the fact that the de jure status of theboycott and U.S. law remain unchan ged , makesthe boycott a continuing problem for firms thatmay have to rep ort boycott-related requests.Where enforced, the boycott serves as a ban orzero quota on the products of a blacklisted firm.While it is u nevenly applied, the boycott results ineconomic harm to U .S. firms in terms of lost sales,foregone opportunities, and distortion ofinvestment de cisions that are difficult to qu antifyaccurately. The United States continues to opposethe boycott. Embassies and visiting officials raisethe boycott with c ountry officials, n oting thepersistence of prohibited boycott requests and the

impact on both U.S. firms and on the countriesability to expand trade and investment.

arab league boycott appendix

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