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ARAB
BOYCOTT
HEARINGS
BEFORE T H E
SUBCOMMITTEE ON INTERNATIONAL FINANCE
OF T H E
COMMITTEE ON
BANKING, HOUSING, AND URBAN AFFAIRS
UNITED STATES SENATE
N I N E T Y - F I F T H
FIRST
C O N G R E S S
SESSION
ON
S. 69
TO A M E N D A N D E X T E N D T H E E X P O R T A D M I N I S T R A T I O N A C T
AND
S. 92
TO A M E N D A N D E X T E N D T H E E X P O R T A D M I N I S T R A T I O N
A C T O F 1969 T O I M P R O V E T H E A D M I N I S T R A T I O N O F
EXPORT
CONTROLS
PURSUANT
TO SUCH
ACT, TO
STRENGTHEN T H E ANTIBOYCOTT PROVISIONS OF SUCH
ACT, A N D F O R O T H E R PURPOSES
F E B R U A R Y 21, 22, A N D 2 8 ; A N D M A R C H 1 5 ; 1977
P r i n t e d f o r t h e use of the
Committee on B a n k i n g , Housing, a n d U r b a n A f f a i r s
U.S. G O V E R N M E N T P R I N T I N G OFFICE
85-654 O
W A S H I N G T O N : 1977
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $5
Stock Number 052-070-04006-8
C O M M I T T E E
O N
B A N K I N G ,
H O U S I N G ,
A N D
W I L L I A M P R O X M I R E , Wisconsin,
K E N N E T H A . M C L E A N , Staff
JEREMIAH S. BUCKLEY, Minority
Director
Staff
C H A R L E S L . MARINACCIO, Special
H O W A R D A . M E N E L L , Assistant
Director
Counsel
Counsel
ON I N T E R N A T I O N A L
A D L A I E. S T E V E N S O N , Illinois,
FINANCE
Chairman
H A R R I S O N A . W I L L I A M S , JR., N e w J e r s e y
H. J O H N H E I N Z III,
A L A N C R A N S T O N , California
J A K E GARN,
D O N A L D W . R I E G L E , JR., M i c h i g a n
A F F A I R S
E D W A R D W. B R O O K E , Massachusetts
J O H N T O W E R , Texas
J A K E GARN, U t a h
H. J O H N H E I N Z I I I , Pennsylvania
R I C H A R D G. L U G A R , Indiana
H A R R I S O N S C H M I T T , New Mexico
J O H N S P A R K M A N , Alabama
H A R R I S O N A. W I L L I A M S , JR., New Jersey
T H O M A S J. M c l N T Y R E , New Hampshire
A L A N CRANSTON, California
A D L A I E. S T E V E N S O N , Illinois
R O B E R T MORGAN, North Carolina
D O N A L D W. R I E G L E , JR., Michigan
P A U L S. SARBANES, Maryland
SUBCOMMITTEE
U R B A N
Chairman
Pennsylvania
Utah
H A R R I S O N S C H M I T T , N e w Mexico
STANLEY J . MARCUSS,
A D R I A N G I L M O R E BRAY, Minority
(II)
Counsel
Professional
Staff
Member
CONTENTS
Page
S. 69
S. 92
5
41
L I S T OF W I T N E S S E S
MONDAY, FEBRUARY
21
W . R . Needham, Black and Veatch International, I n c
George A. Helland, Jr., Petroleum Suppliers Association
Charles W . Stewart, president, Machinery and Allied Products I n s t i t u t e ,
accompanied b y Paul P r a t t
John S. Withers, Associated General Contractors of America
M a x w e l l E. Greenberg, chairman, N a t i o n a l Executive Committee, A n t i D e f a m a t i o n League of B ' N a i B ' r i t h , accompanied b y A l f r e d H . Moses,
chairman of the Domestic Affairs Commission, American Jewish Committee and Philip B a u m American Jewish Congress
C. L . W h i t e h i l l , vice president and general counsel, General M i l l s I n c
TUESDAY, FEBRUARY
FEBRUARY
STATEMENTS
304
318
326
365
366
419
15
AND
446
465
465
DATA
A g r i c u l t u r a l Trade Council, statement received for the record
American Association of P o r t Authorities Inc., resolution endorsing Federal
preemption of State legislation dealing w i t h restrictive trade practices
or boycotts
(Hi)
293
425
Juanita M . Kreps, Secretary, Department of Commerce, accompanied b y
Homer E . Moyer, A c t i n g General Counsel, and C. L. Haslam,
General Counsel Designate
I r v i n g S. Shapiro, chairman, The Business Roundtable
B u r t o n M . Joseph, national chairman, A n t i - D e f a m a t i o n League of B ' n a i
B'rith
ADDITIONAL
222
276
28
Cyrus, R . Vance, Secretary, D e p a r t m e n t of State
TUESDAY, M A R C H
126
152
22
Francis B. Burch, M a r y l a n d attorney general
R o b e r t L . M c N e i l l , executive vice chairman, Emergency C o m m i t t e e for
American Trade, Washington, D . C . ; accompanied b y R a m o n d Garcia__
Jack Carlson, Chamber of Commerce of the U n i t e d States, accompanied
b y John Brewer
Lawrence A. Fox, N a t i o n a l Association of Manufacturers
Gerald H . U l l m a n , general counsel, N a t i o n a l Customs Brokers & F o r warders Association of America, I n c
Gregory H a l p i n , D e p u t y P o r t A d m i n i s t r a t o r of the M a r y l a n d P o r t A d m i n i s t r a t i o n representing the American Association of Port A u t h o r i t i e s .
G i l b e r t M . Weinstein, vice president, I n t e r n a t i o n a l Affairs, N e w Y o r k
Chamber of Commerce and I n d u s t r y
MONDAY,
76
101
490
376
IV
American Consulting Engineers Council, letter received f r o m Bruce C.
Roberts, staff director, I n t e r n a t i o n a l Engineering Committee
American F a r m Bureau Federation, letter f r o m John C. D a t t , director,
Washington office
American Federation of Labor and Congress of I n d u s t r i a l Organizations,
letter and statement received f r o m Andrew J. Biemiller, director,
department of legislation
American I n s t i t u t e of Architects, letter f r o m John M . M c G i n t y , presidentAmerican-Israel Chamber of Commerce and I n d u s t r y , Inc., statement of
M a x Ratner, national chairman
American Jewish Committee, Philadelphia Chapter, statement received for
the record
A n t i - D e f a m a t i o n League of B ' n a i B ' r i t h , j o i n t statement w i t h The Business
Roundtable
A n t i - D e f a m a t i o n League, American Jewish Congress, and American
Jewish Committee, analysis of 836 Arab boycott request reports filed w i t h
the Commerce D e p a r t m e n t since October 7, 1976
Black & Veatch, consulting engineers, paper describing M i d d l e East
business involvement
Business R o u n d t a b l e :
Joint statement w i t h A n t i - D e f a m a t i o n League of B ' n a i B ' r i t h
Letter f r o m I r v i n g S. Shapiro, chairman
Chamber of Commerce of the U n i t e d States, answers t o subsequent w r i t t e n
questions of Senator Proxmire
:
Commerce Department, list of free w o r l d and Polish flag vessels a r r i v i n g i n
Cuba since January 1, 1963
Commission on Economic Coercion and Discrimination, statement b y
Prof. I r w i n Cotler
Congressional Record, remarks of Senator Stevenson on conference committee b i l l i n 94th Congress, including summary of b i l l
Continental Oil Company, letter f r o m E. L . Shafer, senior vice presidentEmergency Committee for American Trade, replies t o questions contained
i n letter f r o m Senator Stevenson
General Motors of Canada L i m i t e d , letter f r o m D . H . McPherson, president
and general manager
Greater San Francisco Chamber of Commerce, statement of policy received
f r o m Donald F l y n n , chairman, trade policy and legislative committee__
Helland, George A., president, Petroleum E q u i p m e n t Suppliers Association, comments on visa prohibitions
Holmes and Warden, attorneys at law, letter f r o m Donald W a r d e n .
I n t e r n a t i o n a l Construction Week, special report on overseas business
efforts
Joint H i g h Technology Industries Group, letter and statement f r o m Peter
F. McCloskey, president of Computer and Business Equipment M a n u facturers Association
Louis Berger I n t e r n a t i o n a l , Inc., letter f r o m Stanley E. Jewkes, senior vice
president
M a c h i n e r y and Allied Products I n s t i t u t e :
R e p r i n t of memorandum t i t l e d '4 M y t h s and Realities of the A r a b
B o y c o t t of Israel"
Supplements to prepared statement
M a r y l a n d Register, reprint of final action on Foreign D i s c r i m i n a t o r y
Boycotts A c t regulations
M o r g a n E q u i p m e n t Co., statement of H a r o l d Morgan, president
N a t i o n a l Association of Manufacturers, answers to subsequent w r i t t e n
questions of Senator Proxmire
N a t i o n a l Association of Wheat Growers, letter f r o m D o n Howe, president
N a t i o n a l Jewish C o m m u n i t y Relations Advisory Council, constituent
organizations
-Page
498
500
504
578
583
506
468
238
84
468
464
356
568
510
230
508
600
535
538
173
542
79
591
81
187
207
296
554
609
580
227
V
Newspaper articles:
A t l a n t a Journal
274
Baltimore Sun
264
Charlotte Observer
270
Chicago D a i l y News
263
Chicago Sun-Times
263
Greensboro D a i l y News
264
Journal of Commerce
216
Kansas C i t y Star
266
Kansas C i t y Times
269
New Y o r k Times
218,266
Oregonian
273
Philadelphia I n q u i r e r
267
St. Louis Globe Democrat
269
Washington Post
.270
N o r t h A t l a n t i c Ports Association Inc., resolution urging enaction of
Federal boycott legislation
417
Petroleum E q u i p m e n t Sappliers Association, exhibits accompanying
statement of George A. H e l l a n d :
Potential impact of Arab b o y c o t t regulations
112
Summary of trends i n export sales of petroleum equipment
113
Summary of export shipments 1955-75
115
Chart of export shipments 1955-75
116
Exports of petroleum equipment—1975—by equipment groups,
T o t a l — 1 5 countries share
117
Dollar value of exports to 14 Arab countries
118
Potential dollar value of exports t o 14 Arab countries 1977-81
119
Refinery Expansion—14 Arab countries, $5 billion i n capital equipment
120
Natural-gas processing plants 1977-81—14 A r a b countries, $5 b i l l i o n
i n capital equipment
121
Petrochemical plants 1977-81-14 Arab countries, $1.5 billion i n
capital equipment
122
Pipeline projects 1977-81—14 Arab countries, $8.2 billion i n capital
equipment
123
Sources and methods
124
San Francisco W o r l d Trade Association and San Francisco Chamber of
Commerce, statement of policy
538
Santa Fe I n t e r n a t i o n a l Corporation, letter f r o m E. L. Shannon, Jr.,
president
546
Smathers, George A., letter on behalf of the American Horse Council
552
State antiboycott legislation:
California
383
Illinois
386
Maryland
391
Massachusetts
402
New Y o r k
406
Ohio
'
412
Winzler & K e l l y , consulting engineers, letter f r o m W i l l i a m J. Birkhofer,
'
98
director of business development
CHARTS
AND
TABLES
Analysis of 836 b o y c o t t request reports filed w i t h Commerce D e p a r t m e n t :
Arab Chamber of Commerce participation
Arab countries of destination
I n t e n t i o n concerning compliance
Kinds of requests and compliances indicated for each k i n d
P a r t i c i p a t i o n t h r o u g h b o y c o t t certification b y U.S. Chambers of
Commerce
Participations b y U.S.-Arab Chambers of Commerce or AmericanArab Chambers of Commerce
259
252
249
250
256
255
VI
Analysis of 836 boycott—Continued
Request for negative certificate of origin only
Requests n o t originating i n an A r a b c o u n t r y
Requests w i t h at least one blacklisting requirement
Types of firms reporting
U.S. Chambers of Commerce p a r t i c i p a t i o n
Exports of petroleum equipment 1975—By equipment groups
Natural-gas processing plants 1977-1981—14 A r a b countries
N u m b e r of restricted trade requests received
Petrochemical projects 1977-1981—14 A r a b countries
Petroleum equipment exports
Petroleum equipment exports 1975—Dollar value of exports t o 14 A r a b
countries
Pipeline projects 1977-1981—14 A r a b countries
Potential dollar value of exports t o 14 A r a b countries, 1977-1981
Potential impact of A r a b b o y c o t t on petroleum equipment related m e t a l
working industry
Refinery expansion—14 A r a b countries
S u m m a r y of export shipments
Visa application forms
Waterborne exports to A r a b mideast f r o m selected U.S. ports (liner service
only)
Pa
^e
257
254
258
253
260
117
121
238
122
116
118
123
119
112
120
115
176
420
ARAB B O Y C O T T
M O N D A Y , F E B R U A R Y 21, 1977
U . S . SENATE,
C O M M I T T E E ON B A N K I N G , H O U S I N G , AND U R B A N A F F A I R S ,
S U B C O M M I T T E E ON I N T E R N A T I O N A L F I N A N C E ,
Washington,,
B.C.
T h e s u b c o m m i t t e e m e t a t 10:05 a.m. i n r o o m 5302, D i r k s e n Senate
Office B u i l d i n g , S e n a t o r A d l a i E . Stevenson, c h a i r m a n o f t h e subcommittee, presiding.
P r e s e n t : Senators P r o x m i r e , W i l l i a m s , Stevenson, a n d Sarbanes.
OPENING STATEMENT OF SENATOR STEVENSON
S e n a t o r STEVENSON. T o d a y w e b e g i n h e a r i n g s o n l e g i s l a t i o n t o a m e n d
t h e E x p o r t A d m i n i s t r a t i o n A c t . T h i s is t h e basic e x p o r t c o n t r o l aut h o r i t y o f t h e U n i t e d States. U n d e r t h i s act, e x p o r t s o f h i g h t e c h n o l o g y
t o u n f r i e n d l y c o u n t r i e s are c o n t r o l l e d . F o o d e x p o r t s are c o n t r o l l e d .
A l l e x p o r t s are c o n t r o l l e d u n d e r t h e a u t h o r i t y o f t h i s act f o r s h o r t
s u p p l y o r i n f l a t i o n a r y reasons. I t is a n a u t h o r i t y w h i c h s h o u l d be, a n d
is, c a r e f u l l y c i r c u m s c r i b e d b y t h e act.
T h e act e x p i r e d l a s t y e a r w h e n l e g i s l a t i o n t o e x t e n d i t w a s b l o c k e d
b y opponents of its antiboycott provisions.
T h e r e are t w o b i l l s b e f o r e t h e s u b c o m m i t t e e : S. 69 a n d S. 92.
[ T h e t e x t o f b i l l s m a y be f o u n d b e g i n n i n g at p. 5.]
S. 69 is i d e n t i c a l t o t h e c o m p r o m i s e reached b y a House-Senate
conference at t h e close o f t h e l a s t Congress. S. 92 is i d e n t i c a l t o S. 69
i n a l l m a t e r i a l respects, b u t i t c o n t a i n s l i m i t e d , possibly s i g n i f i c a n t
differences. W e w i l l e x a m i n e those differences i n these h e a r i n g s .
Since t h e p r o v i s i o n s o f these b i l l s h a v e been t h e subject o f h e a r i n g s
a n d a c t i o n b y b o t h Houses i n t h e past, I expect t h e t e s t i m o n y t o f o c u s
on its controversial antiboycott provisions. T h e controversial nuclear
p r o l i f e r a t i o n p r o v i s i o n s s h o u l d , I believe, be s t r i c k e n f r o m t h e b i l l s ,
p e n d i n g f o r m u l a t i o n o f a d m i n i s t r a t i o n p o l i c y o n t h a t subject.
T h e A r a b boycott intrudes u p o n A m e r i c a n sovereignty. I t interferes w i t h basic h u m a n r i g h t s a n d r e l i g i o u s f r e e d o m . I t i m p e d e s f r e e
c o m p e t i t i o n i n t h e m a r k e t p l a c e a n d s y s t e m a t i c a l l y enlists A m e r i c a n
citizens a g a i n s t t h e i r w i l l i n a w a r w i t h I s r a e l . I t excludes o t h e r A m e r icans f r o m economic o p p o r t u n i t i e s .
S u c h b e h a v i o r c a n n o t be t o l e r a t e d .
L e g i s l a t i o n t o d e a l w i t h f o r e i g n b o y c o t t s was i n t r o d u c e d b y me e a r l y
i n t h e last Congress. Since t h e n i t has generated such pressure a n d
e m o t i o n as c o u l d w a r p o u r v i s i o n a n d end u p i n f l i c t i n g u n i n t e n d e d
h a r m u p o n t h e N a t i o n a n d t h e cause o f peace i n t h e M i d d l e E a s t .
(l)
2
W h i l e w e seek t o p r o t e c t A m e r i c a n s o v e r e i g n t y , w e m u s t r e c o g n i z e
t h e s o v e r e i g n t y o f others. N o t a l l n a t i o n s agree w i t h A m e r i c a ' s f o r e i g n
p o l i c y o b j e c t i v e s . O t h e r s are j e a l o u s , t o o , o f a r i g h t t o p u r s u e t h e i r
o b j e c t i v e s . A l l n a t i o n s , as w e d o , d e f e n d t h e i r s o v e r e i g n t y .
T h e o r i g i n o f t h e A r a b b o y c o t t is a n o l d a n d b i t t e r p o l i t i c a l s t r u g g l e .
N o act o f C o n g r e s s w i l l w i p e o u t t h a t s t r u g g l e o r e n d t h e b o y c o t t .
T h e b o y c o t t w i l l n o t e n d u n t i l peace comes t o t h e M i d d l e E a s t . So, l e t
us n o t s i g n a l i l l w i l l t o f r i e n d s o r t a k e a n y a c t i o n t o e n d t h e b o y c o t t
w h i c h w i l l p e r p e t u a t e i t o r r e t a r d t h e feeble m o v e m e n t t o w a r d peace
i n t h e M i d d l e E a s t . O u r i n t e n t i o n is t o d e f e n d A m e r i c a n s o v e r e i g n t y .
L a s t y e a r , t h e Senate, b y a l a r g e m a r g i n , passed t h e a n t i b o y c o t t
b i l l w h i c h I authored. T h e legislation before the subcommittee today
is t h e p r o d u c t o f t h a t e f f o r t , a n e f f o r t t o w h i c h I r e m a i n d e e p l y c o m m i t t e d . I a m c o n f i d e n t t h a t t h e Congress w i l l act soon a n d a m h o p e f u l
i t w i l l act wisely.
Senator P r o x m i r e .
OPENING STATEMENT OF SENATOR PROXMIRE
S e n a t o r PROXMIRE. T h a n k y o u , M r . C h a i r m a n .
T o d a y we begin hearings on legislation to end the most pernicious
aspects o f t h e A r a b b o y c o t t o f I s r a e l .
T h e C o n g r e s s c o n s i d e r e d such l e g i s l a t i o n l a s t y e a r . W e w e r e p r e p a r e d t o pass a b i l l . U n f o r t u n a t e l y , i n t h e c l o s i n g d a y s o f t h e session,
the p r i o r administration k i l l e d the k i n d of strong, f o r t h r i g h t antib o y c o t t l e g i s l a t i o n w e needed.
A g o o d d e a l has c h a n g e d since t h e c l o s i n g d a y s o f t h e l a s t Congress.
F o r one t h i n g , a n d p e r h a p s m o s t i m p o r t a n t l y , w e h a v e a n e w a d m i n i s t r a t i o n a n d t h e n e w P r e s i d e n t has s p o k e n o u t f o r c e f u l l y a g a i n s t t h e
unreasonable and d i s c r i m i n a t o r y restraints o f t r a d e w h i c h the A r a b
b o y c o t t forces o n A m e r i c a n f i r m s . F o r a n o t h e r t h i n g , t h e p u b l i c is becoming keenly aware of the potential t i m e bomb placed i n o u r m i d s t
b y the A r a b boycott w h e n i t forces A m e r i c a n f i r m s to d i s c r i m i n a t e
against other A m e r i c a n firms. .As a result, State legislators are b e i n g
moved to action.
T h e m o r e t h a n f o u r f o l d increase i n t h e p r i c e o f o i l since t h e 1973
e m b a r g o has g i v e n t h e A r a b o i l p r o d u c i n g states t r e m e n d o u s e c o n o m i c
clout. A r a b purchasers o f A m e r i c a n p r o d u c t s have increased signific a n t l y . F u r t h e r m o r e , t h e A r a b cash f l o w i s so e n o r m o u s t h a t t h e i r
economies c a n n o t absorb a l l t h e goods t h e i r m o n e y c a n b u y . A s a res u l t , t h e y are a w a s h w i t h l i q u i d i t y . T h i s f u r t h e r i n t e n s i f i e s t h e i r
power.
T h e A r a b s h a v e n o t h e s i t a t e d t o use t h e i r c l o u t t o c o n d u c t a n economic w a r against Israel. I n the p r e v a i l i n g circumstances i n the M i d dle East, I do n o t question the a u t h o r i t y o f the A r a b nations to refuse
t o d o business w i t h I s r a e l , even t h o u g h I b e l i e v e t h a t business r e l a t i o n ships over t i m e m i g h t h e l p t o defuse the situation.
B u t I do object t o the A r a b nations using t h e i r power to dictate the
t e r m s o f t r a d e t o A m e r i c a n f i r m s . O u r s is a p l u r a l i s t i c society. W e
believe t h a t q u a l i t y a n d p r i c e s h o u l d be t h e u l t i m a t e a r b i t e r i n t h e
m a r k e t p l a c e b o t h i n o u r d o m e s t i c a n d f o r e i g n commerce. T h e A r a b
b o y c o t t is f u n d a m e n t a l l y d e s t r u c t i v e o f these basic tenets.
A m e r i c a n f i r m s h a v e been r e q u i r e d t o d i s c r i m i n a t e a g a i n s t o t h e r
A m e r i c a n f i r m s because t h e y are o w n e d o r m a n a g e d b y persons o f t h e
3
J e w i s h f a i t h . A m e r i c a n firms h a v e been r e q u i r e d t o r e f r a i n f r o m doi n g business w i t h o t h e r A m e r i c a n a n d f o r e i g n firms because t h e y h a v e
been b l a c k l i s t e d b y t h e A r a b s . A m e r i c a n firms are d i s c o u r a g e d f r o m
d o i n g business w i t h I s r a e l , t h o u g h she is a s t a u n c h a l l y a n d espouses
o u r democratic beliefs.
T h i s s i t u a t i o n is u n t e n a b l e . W e h a v e t h e l a r g e s t e c o n o m y i n t h e
w o r l d . T h e competitiveness o f our products, our technology, and o f
o u r w o r l d p o s i t i o n g i v e s us c l o u t c e r t a i n l y as g r e a t as t h a t o f t h e A r a b
n a t i o n s . W e s h o u l d n o t use t h e a u t h o r i t y o u r o w n economic c l o u t gives
us f o r d e s t r u c t i v e purposes. B u t I a m c o n v i n c e d t h a t one o f t h e m o s t
c o n s t r u c t i v e t h i n g s w e c a n d o as a n a t i o n is t o b r i n g basic e c o n o m i c
sense t o t h e M i d d l e E a s t . W e c a n n o t s i t b a c k a n d l e t t h e A r a b s d i c t a t e
a f r a g m e n t a t i o n o f o u r o w n economic r e l a t i o n s t o serve t h e i r o w n
selfish a n d d e s t r u c t i v e purposes.
T h e p r i n c i p l e s espoused i n t h e b o y c o t t b i l l w h i c h I cosponsored a r e
t i m e l e s s — t h e y are t h e r i g h t ones f o r n o w a n d f o r t h e f u t u r e . I n m y
v i e w , i n s t e a d o f b e i n g f e a r f u l o f A r a b r e t r i b u t i o n , w e s h o u l d use a l l
o f o u r p e r s u a s i v e p o w e r s t o see t o i t t h a t a l l o f o u r t r a d e is c o n d u c t e d
i n accordance w i t h f r e e m a r k e t p r i n c i p l e s .
W e w i l l a l l be b e t t e r o f f — i n c l u d i n g b o t h t h e A r a b s a n d t h e
I s r a e l i s — i f w e pass t h i s l e g i s l a t i o n a n d t h e r e b y p r e v e n t a d i s c r i m i n a t o r y mentality f r o m d i c t a t i n g the terms of our trade.
S e n a t o r STEVENSON. S e n a t o r W i l l i a m s .
OPENING STATEMENT OP SENATOR WILLIAMS
Senator WILLIAMS. T h a n k you. I appreciate t h e call t o hearings
w h i c h c o n t i n u e t h e e n d e a v o r s o f t h e Congress t o p r o v i d e a n e f f e c t i v e l y
r e s p o n s i b l e A m e r i c a n p o s i t i o n i n t h e face o f t h e serious l e g a l , p o l i t i cal, a n d economic m o r a l questions r a i s e d b y t h e A r a b b o y c o t t .
I t ' s n o w c o m m o n k n o w l e d g e t h a t t h e 1973 o i l e m b a r g o p r o v i d e d
.members o f t h e A r a b league w i t h e n o r m o u s p e t r o p o w e r a n d l e v e r a g e
t o e n l a r g e a n d e n f o r c e t h e i r b o y c o t t o f I s r a e l . T h e r e a c h a n d scope o f
t h e A r a b b o y c o t t h a v e been e x t e n d e d f a r b e y o n d t h e M i d d l e E a s t . I t is
n o l o n g e r a d i r e c t a n d p r i m a r y b o y c o t t o f I s r a e l . I t is n o w a n u n f o c u s e d
a n d t r a n s n a t i o n a l assault o n f u n d a m e n t a l A m e r i c a n f r e e d o m s , a n d *
l o n g s t a n d i n g p r e c e p t s o f u n i m p e d e d i n t e r n a t i o n a l commerce.
S p e c i f i c a l l y , t h e b o y c o t t is n o w d i r e c t e d a g a i n s t t h e A m e r i c a n c i t i zens, a n d businesses a n d t o w a r d a l t e r i n g A m e r i c a n p o l i c i e s i n t h e
M i d d l e East.
A m e r i c a n firms d o i n g business w i t h I s r a e l a n d even w i t h J e w i s h
A m e r i c a n s i n t h e U n i t e d S t a t e s become t a r g e t s o f A r a b b l a c k l i s t i n g ,
r e l i g i o u s d i s c r i m i n a t i o n a n d economic r e p r i s a l s .
E v e n worse, o u r G o v e r n m e n t , o u r business, a n d o u r financial i n s t i t u t i o n s h a v e become e n f o r c e r s o f p e r n i c i o u s a n d i l l e g i t i m a t e p r a c tices a g a i n s t a close a l l y , I s r a e l , a n d a g a i n s t f e l l o w A m e r i c a n s .
A g a i n s t t h i s b a c k g r o u n d , new a n d effective antiboycott legislation
m u s t be enacted i n o r d e r t o a c c o m p l i s h several objectives. F i r s t , t h e
basic E x p o r t A d m i n i s t r a t i o n A c t m u s t be s t r e n g t h e n e d t o m a k e i t i l l e g a l f o r A m e r i c a n firms t o engage i n s e c o n d a r y o r t e r t i a r y b o y c o t t s .
H e r e a f t e r , t h e t h r e a t o f r e p r i s a l b y t h e A r a b s c a n n o t be accepted
as a basis f o r p e r m i t t i n g A m e r i c a n firms t o s u b m i t t o o d i o u s t e r m s t h a t
violate the r i g h t s , interests o f other Americans, or abridge t h i s
Nation's sovereign powers.
4
Second, t h e range o f permissible a n d i m p e r m i s s i b l e conduct a l l o w able u n d e r o u r laws m u s t be clearly spelled o u t f o r A m e r i c a n business.
T h i s is i n sharp contrast t o the c u r r e n t confusion, as t o t h e a c t u a l
m e a n i n g o f compliance w i t h t h e f o r e i g n boycott.
I n t u r n , U . S . business must be protected f r o m t h e pressures o f f o r e i g n boycott requests.
T h i r d , A m e r i c a n businessmen m u s t have f r e e d o m o f choice as t o
t h e i r commercial relationships any place i n t h e w o r l d , a n d c e r t a i n l y
at home.
T h e notorious A r a b b l a c k l i s t s h o u l d no l o n g e r d e t e r m i n e w h i c h
s u p p l i e r , subcontractor, customer o r officer an A m e r i c a n f i r m can have
o r use.
T h e t w o b i l l s before the subcommittee t h i s m o r n i n g w o u l d accomp l i s h these objectives, a l t h o u g h i n somewhat d i f f e r e n t ways. A n d t h e y
w i l l do i t w i t h o u t i n f r i n g i n g on the sovereign r i g h t s a n d p r e r o g a t i v e s
o f other countries t o conduct boycotts t h a t c o n f o r m t o g i v e n p r i n c i p l e s
of international law.
T h e r e can be no question t h a t Congress is p r i m e d t o act q u i c k l y a n d
f a v o r a b l y o n effective a n t i b o y c o t t legislations. A l r e a d y t h e b i l l t h a t
Senator P r o x m i r e a n d I have i n t r o d u c e d has a t t r a c t e d 11 cosponsors,
Senators H e i n z , C h u r c h , B a y h , Jackson, M o y n i h a n , Riegel, L e a h y ,
P e l l , C h i l d s , Sarbanes, a n d P a c k w o o d .
A n i d e n t i c a l b i l l i n the House o f Representatives has m a n y , m a n y
sponsors. M o r e o v e r , t h e preelection statements o f P r e s i d e n t C a r t e r a n d
more recently statements o f key Cabinet members, I w o u l d j u d g e ,
make the enactment o f l e g i s l a t i o n near certain.
D u r i n g t h e last Congress, extensive consideration was g i v e n t o legisl a t i v e solutions o f t h e issues raised b y t h e A r a b boycott. R e m e d i a l
l e g i s l a t i o n was passed b y t h e House a n d t h e problems w e faced have
been described by t h e c h a i r m a n o f t h e f u l l committee, Senator P r o x mire.
U n f o r t u n a t e l y , we d i d face pressures at the end o f t h e session,
b u t we are i n a d i f f e r e n t s i t u a t i o n n o w a n d I feel p e r s o n a l l y confident
t h a t w i t h the commencement o f o u r h e a r i n g , the issue o f t h e A m e r i c a n
response t o t h e A r a b boycott w i l l be e x p e d i t i o u s l y resolved w i t h the
enactment o f affirmative, effective, a n d w o r k a b l e legislation.
T h a n k y o u v e r y much.
[Copies o f the b i l l s b e i n g considered f o l l o w : ]
5
95TH C O N G R E S S
1ST SESSION
I N T H E S E N A T E OF T H E U N I T E D
JANUARY
STATES
10,1977
Mr. STEVENSON (for himself and M r . MOYNIIIAN) introduced the following b i l l ;
which was read twice and referred to the Committee on Banking, Housing
and Urban Affairs
A
BILL
To amend and extend the Export Administration A c t .
1
2
Be it enacted by the Senate and House of
tives of the United States of America
3
4
Represents
in Congress assembled,
SHORT T I T L E
SECTION 1. This A c t may be cited as the " E x p o r t A d -
5
ministration Amendments of 1977".
6
T I T L E I—EXPORT
7
ADMINISTRATION
IMPROVEMENTS AND
8
EXTENSION
E X T E N S I O N OF EXPORT A D M I N I S T R A T I O N A C T
9
SEC. 101. Section 14 of the Export Administration A c t
10
of 1969 is amended by striking out "September 30, 1976"
11
and inserting i n lieu thereof "September 30, 1978".
II
6
2
1
A U T H O R I Z A T I O N OF A P P R O P R I A T I O N S
2
SEC. 102. The Export Administration A c t of 1969 is
3
amended by inserting after section 12 the following new sec-
4
tion 13 and redesignating existing sections 13 and 14- as
5
sections 14 and 1.5, respectively:
6
" A U T H O R I Z A T I O N OF A P P R O P R I A T I O N S
7
"SEC. 13. Notwithstanding any other provision of law,
8
no appropriation shall be made under any law to the Depart-
9
ment of Commerce for expenses to carry out the purposes of
10
this A c t for any fiscal year commencing on or after October 1,
11
1977, unless previously and specifically authorized by legis-
12
lation enacted after the enactment of this section.".
13
CONTROL OF EXPORTS FOR N A T I O N A L SECURITY PURPOSES;
14
FOREIGN
15
16
AVAILABILITY
SEC. 103. (a) Section 4 ( b ) of the Export Administration A c t of 1969 is amended—
17
(1) by striking out the third sentence of paragraph
18
(1) ;
19
(2) by striking out paragraphs (2) through (4) ;
20
and
21
(3) by inserting the following new paragraph (2) :
22
" ( 2 ) ( A ) I n administering export controls for national
23
security purposes as prescribed i n section 3 (2) (C) of this
24
A c t , United States policy toward individual countries shall
25
not be determined exclusively on the basis of a country's
7
3
2
Communist or non-Communist status but shall take into ac-
2
count such factors as the country's present and potential re-
3
lationship to the U n i t e d States, its present and potential
4
relationship to countries friendly or hostile to the
5
States, its a b i l i t y and willingness to control retransfers of
§
U n i t e d States exports i n accordance w i t h
7
policy, and such other factors as the President m a y deem ap-
g
propriate. The President shall periodically review
9
States
policy
toward
individual
countries
United
United
to
States
United
determine
1Q
whether such p o l i c y is appropriate i n l i g h t of the factors
22
specified i n the preceding sentence. The results of
22
review, together w i t h the justification for U n i t e d States policy
23
i n l i g h t of such factors, shall be included i n the semiannual
24
report of the Secretary of Commerce required b y section 10
25
of this A c t for the first half of 1977 and in every second such
26
report thereafter.
27
"(B)
such
Rules and regulations under this subsection m a y
28
provide for denial of any request or application for author-
29
i t y to export articles, materials, or supplies, i n c l u d i n g techni-
20
cal data, or any other information, f r o m the U n i t e d States,
22
its territories, and possessions, to any nation or combination
22
of nations threatening the national security of the U n i t e d
23
States if the President determines that their export w o u l d
24
prove detrimental to the national security of the
26
States. T h e President shall not impose export controls for
United
8
2
^
national security purposes on the export from the United
2
States of articles, materials, or supplies, including technical
3
data or other information, which he determines are available
4
without restriction from sources outside the United States
5
in significant quantities and comparable in quality to those
g
produced in the United States, unless the President deter-
7
mines that adequate evidence has been presented to him
g
demonstrating that the absence of such controls would prove
9
detrimental to the national security of the United States.
10
The nature of such evidence shall be included in the semi-
H
annual report required by section 10 of this Act. Where, in
12
accordance with this paragraph, export controls are im-
13
posed for national security purposes notwithstanding foreign
14
availability, the President shall take steps to initiate negoti-
15
ations with the governments of the appropriate foreign countries for the purpose of eliminating such availability.".
17
( b ) ( 1 ) Section 4 (h) of the Export Administration A c t
18
of 1969 is amended by striking out "controlled country" in
the first sentence of paragraph (1) and in the second sen-
20
tence of paragraph (2) and inserting in lieu thereof "coun-
21 try to which exports are restricted for national security
22
purposes".
23
(2) Section 4 ( h ) (2) ( A ) of such Act is amended by
24
striking out "controlled" and inserting in lieu thereof "such';.
25
(3) Section 4 ( h ) (4) of such Act is amended—
9
5
1
2
(A)
by inserting " a n d " at the end of subpara-
graph ( A ) ; and
3
( B ) by striking out the semicolon at the end of
4
subparagraph ( B ) thereof and all that follows the semi-
5
colon and inserting i n lieu thereof a period.
6
(4)
The amendments made by this subsection shall be-
7
come effective upon the expiration of 90 days after the receipt
8
by the Congress of the semiannual report of the Secretary of
9
Commerce required by section 10 of such A c t for the first
10
11
12
half of 1977.
(c) Section 4 ( h ) of such A c t is amended—
(1) i n paragraph (1) —
13
( A ) i n the first sentence by striking out "sig-
14
nificantly increase the military capability of such
15
country" and inserting i n lieu thereof "make a
16
significant contribution to the military potential of
17
such c o u n t r y " ; and
18
( B ) in the second sentence by striking out
19
"significantly
increase the military
capability
of
20
such country" and inserting in lieu thereof "make a
21
significant contribution, which would prove detri-
22
mental to the national security of the United States,
23
to the military potential of such c o u n t r y " ; and
24
(2) i n paragraph (2) ( A ) , by striking out "significantly increase the military capability of such coun-
10
6
2
t r y " a n d i n s e r t i n g i n l i e u thereof " m a k e a
2
contribution,
3 ;
n a t i o n a l security of the U n i t e d States, to t h e
4
p o t e n t i a l of such c o u n t r y or a n y other
5
(d)
which
Section 6 ( b )
would
prove
detrimental
out
7
thereof
g
t i o n a l security or f o r e i g n p o l i c y p u r p o s e s " .
9
"Communist-dominated
SEC. 1 0 4 . Section 4 ( f )
military
striking
lieu
exports are r e s t r i c t e d f o r
na-
FROM C E R T A I N EXPORT
H
the
and inserting i n
E X E M P T I O N FOR C E R T A I N A G R I C U L T U R A L
1()
12
to w h i c h
nation"
to
country".
of such A c t is a m e n d e d b y
Q
"country
significant
COMMODITIES
LIMITATIONS
of the E x p o r t
Administration
A c t of 1 9 6 9 is a m e n d e d —
13
(1)
14
by
redesignating
such
section
as
section
4 ( f ) ( 1 ) ; and
15
(2)
b y a d d i n g at the end thereof the f o l l o w i n g n e w
16
paragraph:
17
"(2)
U p o n a p p r o v a l of the Secretary of C o m m e r c e , i n
13
consultation w i t h the Secretary of A g r i c u l t u r e ,
19
commodities purchased b y or f o r use i n a f o r e i g n c o u n t r y
20
m a y r e m a i n i n the U n i t e d States f o r e x p o r t a t a later date
21
free f r o m a n y q u a n t i t a t i v e l i m i t a t i o n s o n e x p o r t w h i c h m a y
22
be imposed p u r s u a n t to section 3 ( 2 ) ( A )
23
sequent to such a p p r o v a l . T h e Secretary of C o m m e r c e m a y
24
n o t g r a n t a p p r o v a l hereunder unless he receives
25
assurance and, i n c o n j u n c t i o n w i t h the Secretary of
agricultural
of this A c t sub-
adequate
Agri-
11
7
1
culture,
2
exported,
3
result i n a n excessive d r a i n of scarce materials a n d have
4
!
finds
that
that
such
neither
commodities
the
sale
nor
will
eventually
export
thereof
be
will
a serious domestic i n f l a t i o n a r y i m p a c t , t h a t storage of such
5
commodities i n the U n i t e d States w i l l n o t u n d u l y l i m i t the
6
space available f o r storage of domestically o w n e d c o m m o d i -
7
ties, a n d t h a t the purpose of such storage is to establish a
8
reserve of such commodities for later use, n o t i n c l u d i n g resale
9
to or use b y another c o u n t r y . T h e Secretary of C o m m e r c e
10
is authorized to issue such rules a n d regulations as m a y be
11
necessary to i m p l e m e n t this p a r a g r a p h . " .
12
CONGRESSIONAL REVIEW OF EXPORT CONTROLS ON
13
14
AGRICULTURAL
SEC. 105. Section 4 ( f )
COMMODITIES
of the E x p o r t
Administration
15
A c t of 1 9 6 9 , as amended b y section 104 of this A c t , is f u r -
16
ther amended b y a d d i n g at the end thereof the f o l l o w i n g n e w
17
paragraph:
18
"(8)
I f the a u t h o r i t y conferred b y this section is exer-
19
cised to p r o h i b i t or c u r t a i l the e x p o r t a t i o n of a n y a g r i c u l -
20
t u r a l c o m m o d i t y i n order to effectuate the policies set f o r t h
21
i n clause ( B ) of p a r a g r a p h ( 2 ) of section 3 of this A c t , the
22
President shall i m m e d i a t e l y r e p o r t such p r o h i b i t i o n or cur-
23
t a i l m e n t to the Congress, setting f o r t h the reasons therefor
24
i n detail. I f the Congress, w i t h i n 3 0 days after the date of its
25
receipt of such r e p o r t , adopts a concurrent resolution disap-
12
8
1
proving such prohibition or curtailment, then such prohibi-
2
tion or curtailment shall cease to be effective w i t h the adop-
3
tion of such resolution. I n the computation of such 30-day
4
period, there shall be excluded the days on which either
5
House is not in session because of an adjournment of more
6
than 3 days to a day certain or because of an adjournment
7
of the Congress sine die.".
8
PERIOD FOR A C T I O N O N EXPORT L I C E N S E
9
10
APPLICATIONS
SEC. 106. Section 4 (G) of the Export Administration
A c t of 1969 is amended to read as follows:
11
" ( g ) (1) I t is the intent of Congress that any export
12
license application required under this A c t shall be approved
13
or disapproved within 90 days of its receipt. Upon the ex-
14
piration of the 90-day period beginning on the date of its
15
receipt, any export license application required under this
16
A c t which has not been approved or disapproved shall be
17
deemed to be approved and the license shall be issued unless
18
the Secretary of Commerce or other official exercising au-
19
thority under this A c t finds that additional time is required
20
and notifies the applicant in writing of the specific circum-
21
stances requiring such additional time and the estimated date
22
when the decision w i l l be made.
23
" ( 2 ) ( A ) W i t h respect to any export license applica-
24
tion not finally approved or disapproved within 90 days of
25
its receipt as provided in paragraph (1) of this subsection,
13
9
1
the applicant shall, to the m a x i m u m extent consistent w i t h
2
the national security of the U n i t e d States, be specifically in-
3
formed i n w r i t i n g of questions raised and negative considera-
4
tions or recommendations made b y any agency or depart-
5
m e n t of the Government w i t h respect to such license appli-
6
cation, and shall be accorded an o p p o r t u n i t y to respond to
7
such questions, considerations, or recommendations i n w r i t -
8
i n g p r i o r to final approval or disapproval b y the Secretary
9
of Commerce or other official exercising a u t h o r i t y under this
10
A c t . I n m a k i n g such final approval or disapproval, the Sec-
11
r e t a r y of Commerce or other official exercising a u t h o r i t y
12
under this A c t shall take f u l l y into account the applicant's
13
response.
14
"(B)
W h e n e v e r the Secretary determines that i t is
15
necessary to refer an export license application to a n y m u l t i -
16
lateral r e v i e w process for approval, he shall first, if the ap-
17
plicant so requests, provide the applicant w i t h an oppor-
18
t u n i t y to r e v i e w any documentation to be submitted to such
19
process for the purpose of describing the export i n question,
20
i n order to determine whether such documentation accurately
21
describes the proposed export.
22
" ( 3 ) I n any denial of an export license application, the
23
applicant shall be informed i n w r i t i n g of the specific statutory
24
basis for such denial.".
14
10
2
EXPORTS OF TECHNICAL INFORMATION
2
SEC. 107. Section 4 of the E x p o r t A d m i n i s t r a t i o n
3
of 1 9 6 9 is amended b y a d d i n g at the end thereof the f o l l o w -
4
i n g n e w subsection ( j ) :
r}
Act
" ( j ) ( 1 ) A n y person ( i n c l u d i n g a n y college, u n i v e r s i t y ,
^
or other educational i n s t i t u t i o n )
w h o enters i n t o a n y con-
•rj
tract, protocol, agreement, or other understanding for,
g
w h i c h m a y result in, the transfer f r o m the U n i t e d States of
9
technical data or other i n f o r m a t i o n to a n y c o u n t r y to w h i c h
2Q
exports are restricted f o r n a t i o n a l security or f o r e i g n p o l i c y
12
purposes shall f u r n i s h to the Secretary of C o m m e r c e such
12
documents and i n f o r m a t i o n w i t h respect to such agreement
13
as the Secretary shall b y r e g u l a t i o n require i n order to enable
14
h i m to m o n i t o r the effects of such transfers on the n a t i o n a l
15
security and f o r e i g n p o l i c y of the U n i t e d States.
or
16
" ( 2 ) T h e Secretary of Commerce shall conduct a study
17
of the p r o b l e m of the export, b y publications or a n y o t h e r
18
means of public dissemination, of technical data or
19
i n f o r m a t i o n f r o m the U n i t e d States, the e x p o r t
20
m i g h t p r o v e d e t r i m e n t a l to the n a t i o n a l security of f o r e i g n
21
p o l i c y of the U n i t e d States. N o t later t h a n 6 m o n t h s after
22
the enactment of this subsection, the Secretary shall r e p o r t
23
to the Congress his assessment of the i m p a c t of the e x p o r t
24
of such technical data or other i n f o r m a t i o n b y such means
25
on the n a t i o n a l security and f o r e i g n p o l i c y of the
of
other
which
United
15
11
2
States a n d his recommendations for m o n i t o r i n g such exports
2
w i t h o u t i m p a i r i n g freedom of speech, freedom of press, or the
3
freedom of scientific exchange. Such r e p o r t m a y be included
4
i n the semiannual report required b y section 10 of this A c t . " .
CERTAIN PETROLEUM EXPORTS
o
Q
SEC. 108. Section 4 of the E x p o r t A d m i n i s t r a t i o n A c t
7
of 1969, as amended b y section 107 of this A c t , is f u r t h e r
3
amended b y a d d i n g at the end thereof the f o l l o w i n g n e w
9
subsection ( k ) :
20
" (k)
Petroleum
products
refined
in
United
States
21
F o r e i g n - T r a d e Zones, or i n the U n i t e d States T e r r i t o r y of
12
Guam, f r o m f o r e i g n crude o i l shall be excluded f r o m a n y
13
quantitative restrictions imposed pursuant to section
14
(A)
of this A c t , except that, if the Secretary of Commerce
25
finds
t h a t a p r o d u c t is i n short supply, the Secretary of C o m -
26
merce m a y
17
necessary to l i m i t e x p o r t s . " .
18
issue such rules and regulations
3(2)
as m a y
be
EXPORT OF HORSES
19
SEC. 109. Section 4 of the E x p o r t A d m i n i s t r a t i o n A c t
20
of 1 9 6 9 , as amended b y sections 107 and 108 of this A c t ,
21
is f u r t h e r amended b y a d d i n g at the end thereof the f o l l o w -
22
i n g n e w subsection (1) :
23
" (1) ( 1 )
N o t w i t h s t a n d i n g a n y other p r o v i s i o n of this
24
A c t , no horse m a y be exported b y sea f r o m the
25
States, its territories and possessions, unless such horse is
United
16
IS
1
part of a consignment of horses with respect to which a
2
waiver has been granted under paragraph (2) of this sub-
3
section.
4
" (2) The Secretary of Commerce, in consultation w i t h
5
the Secretary of Agriculture, may issue rules and regula-
6
tions providing for the granting of waivers permitting the
7
export by sea of a specified consignment of horses, if the
8
Secretary of Commerce, in consultation with the Secretary
9
of Agri culture, determines that no horse in that consignment
10
is being exported for purposes of slaughter.".
11
T E C H N I C A L ADVISORY
COMMITTEES
12
SEC. 110. (a) Section 5 ( c ) (1) of the Export Admin-
13
istration Act of 1969 is amended by striking out " t w o " in
14
the last sentence thereof and inserting in lieu thereof "four".
15
^b) The second sentence of section 5 ( c ) (2) of such
16
Act is amended to read as follows: "Such committees, where
they have expertise in such matters, shall be consulted with
I8
respect to questions involving ( A ) technical matters, (B)
19' worldwide availability and actual utilization of production
20
technology, (C) licensing procedures which affect the level
of export controls applicable to any articles, materials, and
22
supplies, including technical data or other information, and
(D) exports subject to multilateral controls in which the
24
United States participates including proposed revisions of
25
any such multilateral controls.".
17
13
1
.(c) Section 5 ( c ) (2) of such Act is further amended
2
by striking out the third sentence and inserting in lieu thereof
3
the following: "The Secretary shall include in each semi-
4
annual report required by section 10 of this A c t an account-
5
ing of the consultations undertaken pursuant to this para-
6
graph, the use made of the advice rendered by the tech-
7
nical advisory committees pursuant to this paragraph, and
8
the contributions of the technical advisory committees to
9
carrying out the policies of this Act.".
10
11
12
13
14
15
P E N A L T I E S FOR VIOLATIONS
SEC. 111. (a) Section 6 ( a ) of the Export Administration Act of 1969 is amended—
(1) in the first sentence, by striking out "$10,000"
and inserting in lieu thereof "$25,000"; and
(2)
in the second sentence, by
striking
out
16
"$20,000" and inserting in lieu thereof "$50,000".
17
(b) Section 6 ( b ) of such Act is amended by striking
18 out "$20,000" and inserting in lieu thereof "$50,000".
19
20
21
(c) Section 6 ( c ) of such Act is amended by striking
out "$1,000" and inserting in lieu thereof "$10,000".
(d) Section 6 ( d ) of such Act is amended by adding at
22 the end thereof the following new sentence: " I n addition,
23
the payment of any penalty imposed under subsection (c)
24 may be deferred or suspended in whole or in part for a
25
period of time no longer than any probation period (which
18
14
^
may exceed one year)
that may be imposed upon such
person. Such a deferral or suspension shall not operate as
o
a bar to the collection of the penalty in the event that the
^
conditions of the suspension, deferral, or probation are not
e
fulfilled.".
5
A V A I L A B I L I T Y OF I N F O R M A T I O N TO CONGRESS
6
^
SEC. 112. (a) Section 7 (c) of the Export Administration Act of 1969 is amended by adding at the end thereof the
following new sentence: "Nothing in this Act shall be con-
^
strued as authorizing the withholding of information from
^
Congress, and any information obtained under this Act,
including any report or license application required under
^
section 4 ( b )
^
under section 4 (j) (1), shall be made available upon request
^
to any committee of Congress or any subcommittee thereof.".
^
(b) Section 4 (c) (1) of such Act is amended by insert-
yj
and any document or information required
ing immediately before the period at the end of the last sentence thereof "and in the last sentence of section 7 (c) of this
19
Act".
S I M P L I F I C A T I O N OF EXPORT R E G U L A T I O N S A N D L I S T S
SEC. 113. Section 7 of the Export Administration Act
00
^
-of 1969 is amended by adding at the end thereof the following new subsection (e) :
" ( e ) The Secretary of Commerce, in consultation with
So
appropriate United States Government departments and
19
15
1
agencies and with appropriate technical advisory committees
2
established under section 5 (c), shall review the rules and
3
regulations issued under this Act and the lists of articles, ma-
4 terials, and supplies which are subject to export controls in
5 order to determine how compliance with the provisions of
6
this Act can be facilitated by simplifying such rules and
7
regulations, by simplifying or clarifying such lists, or by any
8
other means. Not later than 1 year after the enactment of
9
this subsection, the Secretary of Commerce shall report to
10
Congress on the actions taken on the basis of such review to
11 simplify such rules and regulations. Such report may be in*
12
eluded in the semiannual report required by section 10 of
13 this A c t . " .
14
15
TERRORISM
SEC. 114. Section 3 of the Export Administration Act
1G of 1969 is amended by adding at the end thereof the fol17
lowing:
18
" (8) I t is the policy of the United States to use export
19
controls to encourage other countries to take immediate
20
steps to prevent the use of their territory or resources to aid,
21 encourage, or give sanctuary to those persons involved in
22
directing, supporting, or participating in acts of international
23
terrorism. To achieve this objective, the President shall make
24
every reasonable effort to secure the removal or reduction
25
of such assistance to international terrorists through inter-
20
16
1
national cooperation and agreement before resorting to the
2
imposition of export controls.".
3
4
SEMIANNUAL
SEC. 115.
(a)
REPORTS
Section 10 of the Export Adminis-
5
tration Act of 1969 is amended by adding at the end thereof
6
the following new subsection (c) :
7
8
" ( c ) Each semiannual report shall include an accounting of—
9
"(1)
any organizational and procedural changes
10
instituted, any reviews undertaken, and any means used
11
to keep the business sector of the Nation informed,
12
pursuant to section 4 ( a ) of this A c t ;
13
14
" (2) any changes in the exercise of the authorities of section 4 ( b ) of this A c t ;
15
16
" ( 3 ) any delegations of authroity under section
4 ( e ) of this A c t ;
17
18
" ( 4 ) the disposition of export license applications
pursuant to sections 4 (g) and (h) of this A c t ;
19
" (5) the effects on the national security and for-
20
eign policy of the United States of transfers from the
21
United States of technical data or other information
22
which are reported to the Secretary of Commerce pur-
23
suant to section 4 ( j )
of this A c t ;
24
" (6) consultations undertaken with technical ad-
25
visory committees pursuant to section 5 (c) of this A c t ;
21
14
1
"(7)
violations of the provisions of this Act and
2
penalties imposed pursuant to section 6 of this A c t ;
3
and
4
" ( 8 ) a description of actions taken by the Presi-
5
dent and the Secretary of Commerce to effect the pol-
6
icies set forth in section 3 (5) of this Act.".
7
8
9
10
11
12
13
14
(b) (1) The section heading of such section 10 is
amended by striking out "QUARTERLY".
(2) Subsection (b) of such section is amended—
( A ) by striking out "quarterly" each time it appears; and
(B) by striking out "second" in the first sentence
of paragraph ( 1 ) .
SPECIAL REPORT ON M U L T I L A T E R A L EXPORT CONTROLS
15
SEC. 116. Not later than 12 months after the enactment
16
of this section, the President shall submit to the Congress a
17 special report on multilateral export controls in which the
18
United States participates pursuant to the Export Admin-
19 istration Act of 1969 and pursuant to the Mutual Defense
20 Assistance Control Act of 1951. The purpose of such spe21 cial report shall be to assess the effectiveness of such multi22 lateral export controls and to formulate specific proposals
23
for increasing the effectiveness of such controls. That special
24
report shall include—
25
(1) the current list of commodities controlled for
22
14
1
export by agreement of the group known as the Coordi-
2
nating Committee of the Consultative Group (hereafter
3
in this section referred to as the "Committee") and an
4
analysis of the process of reviewing such list and of the
5
changes which result from such review;
6
7
(2) data on and analysis of requests for exceptions
to such list;
8
(3) a description and an analysis of the process
9
by which decisions are made by the Committee on
10
whether or not to grant such requests ;
11
12
(4)
an analysis of the uniformity of interpreter
tion and enforcement by the participating countries
of the export controls agreed to by the Committee
(including controls over the reexport of such commodities from countries not participating in the Committee),
16
and information on each case where such participating
countries have acted contrary to the United States inter-
im
pretation of the policy of the Committee, including
19
United States representations to such countries and the
20
response of such countries;
21
22
(5) an analysis of the problem of exports of advanced technology by countries not participating in the
Committee, including such exports by subsidiaries or
—
affiliates of United States businesses in such countries;
(6) ai* analysis of tl^e effectiveness of any prq^
23
14
1
cedures employed in cases in which an exception for
2
a listed commodity is granted by the Committee, to de-
3
termine whether there has been compliance with any
4
conditions on the use of the excepted commodity which
5
were a basis for the exception; and
6
(7)
detailed
recommendations
for
improving,
7
through formalization or other means, the effectiveness
8
of multilateral export controls, including specific recom-
9
mendations for the development of more precise criteria
10
and procedures for collective export decisions and for the
11
development of more detailed and formal enforcement
12
mechanisms to assure more uniform interpretation of and
13
compliance with such criteria, procedures and decisions
14
by all countries participating in such multilateral export
15
controls.
16
REVIEW OF U N I L A T E R A L A N D M U L T I L A T E R A L
17
18
EXPORT
CONTROL L I S T S
SEC. 117. The Secretary of Commerce, in cooperation
19 with appropriate United States Government departments
20 and agencies and the appropriate technical advisory commit21 tees established pursuant to the Export Administration A c t
22
of 1969, shall undertake an investigation to determine
23
whether United States unilateral controls or multilateral con-
24
trols in which the United States participates should be re-
25
moved, modified or added with respect to particular articles,
24
14
1
materials, and supplies, including technical data and other
2
information, in order to protect the national security of the
3
United States. Such investigation shall take into account
4
such factors as the availability of such articles, materials, and
5
supplies from other nations and the degree to which the
<5 availability of the same from the United States or from any
7
country with which the United States participates in multi-
8
lateral controls would make a significant contribution to the
9
military potential of any country threatening or potentially
10
threatening the national security of the United States. The
11 results of such investigation shall be reported to the Congress
12
not later than 12 months after enactment of this Act.
13
14
15
S U N S H I N E I N GOVERNMENT
SEC. 118. (a) Each officer or employee of the Department of Commerce who—
16
17
(1) performs any function or duty under this Act
or the Export Administration Act of 1969; and
18
(2) has any known financial interest in any person
19
subject to such Acts, or in any person who obtains any
20
license, enters into any agreement, or otherwise receives
21
any benefit under such Acts;
22 shall, beginning on February 1, 1977, annually file w i t h
23
the Secretary of Commerce a written statement concerning
24 all such interests held by such officer or employee during the
25
14
1
preceding calendar year. Such statement shall be available
2
to the public.
3
(b) The Secretary of Commerce shall—
4
5
(1) within 90 days after the date of enactment of
this Act—
6
( A ) define the term "known financial inter-
7
est" for purposes of subsection (a) of this section;
8
and
9
(B)
establish the methods by which the re-
10
quirement to file written statements specified in sub-
11
section (a) of this section will be monitored and
12
enforced, including appropriate provisions for the
13
filing
by such officers and employees of such state-
ly
ments and the review by the Secretary of such
15
statements; and
(2) report to the Congress on June* 1 of each calendar year with respect to such disclosures and the actions taken in regard thereto during the preceding
^
20
calendar year.
(c) I n the rules prescribed under subsection (b)
of
21
this section, the Secretary may identify specific positions
22
within the Department of Commerce which are of a nonregulatory or nonpolicymaking nature and provide that of-
26
22
1 ficers or employees occupying such positions shall be exempt
2
from the requirements of this section.
3
(d) A n y officer or employee who is subject to, and
4
knowingly violates, this section or any regulation issued
5
hereunder, shall be fined not more than $2,500 or im-
6
prisoned not more than 1 year, or both.
7
8
T I T L E ' I I — F O R E I G N BOYCOTTS
PROHIBITION
ON C O M P L I A N C E
WITH
FOREIGN
BOYCOTTS
9
SEC. 201. (a) The Export Administration Act of 1969
10
is amended by redesignating section 4A as section 4B and
11
by inserting after section 4 the following new section:
12
" F O R E I G N BOYCOTTS
13
"SEC. 4 A . (a) (1) For the purpose of implementing
14
tlie policies set forth in section 3 ( 5 )
15
President shall issue rules and regulations prohibiting any
16
United States person from taking any of the following actions
l^
with intent to comply with, further, or support any boycott
18
fostered or imposed by a foreign country against a country
(A)
and ( B ) , the
which is friendly to the United States and which is not itself
20
the object of any form of embargo by the United States:
21
" (A)
Refraining from doing business with or in
22
the boycotted country, with any business concern orga-
23
nized under the laws of the boycotted country, or with
24
any national or resident of the boycotted country, pur-
25
suant to an agreement with, a requirement of, or a,
27
23
1
request from or on behalf of the boycotting country.
2
The mere absence of a business relationship with or in
3
the boycotted country, with any business concern orga-
4
nized under the laws of the boycotted country, or with
5
any national or resident of the boycotted country, does
6
not indicate the existence of the intent required to
7
establish a violation of rules and regulations issued
8
to carry out this subparagraph.
9
" ( B ) Refraining from doing business with any per-
10
son (other than the boycotted country, any business con-
11
cern organized under the laws of the boycotted country,
12
or any national or resident of the boycotted country).
13
The mere absence of a business relationship with a per-
14
son does not indicate the presence of the intent required
15
to establish a violation of rules and regulations issued to
16
carry out this subparagraph.
17
" ( C ) Refraining from employing or otherwise dis-
18
criminating against any United States person oil the
19
basis of race, religion, nationality, or national origin.
20
"(D)
Furnishing information with respect to the
21
race, religion, nationality, or national origin of any other
22
United States person.
23
"(E)
Furnishing information about whether any
24
person has, has had, or proposes to have any business
25
relationship
8 5 - 6 5 4 O - 77 - 3
(including a relationship by way of sale,
28
24
1
purchase, legal or commercial representation, shipping
2
or other transport, insurance, investment, or supply)
3
with or in the boycotted country, with any business con-
4
cern organized under the laws of the boycotted country,
5
with any national or resident of the boycotted country,
6
or with any other person which is known or believed
7
to be restricted from having any business relationship
8
with or in the boycotting country.
9
"(2)
Rules and regulations issued pursuant to para-
10 graph (1) shall provide exceptions for—
11
"(A)
compliance
with
requirements
(i)
pro-
12
hibiting the import of goods from the boycotted coun-
13
try or of goods produced by any business concern
14
organized under the laws of the boycotted country or
15
by nationals or residents of the boycotted country, or
16
(ii)
17
cotting country on a carrier of the boycotted country
18
or by a route other than that prescribed by the boy-
19
cotting country or the recipient of the shipment;
20
prohibiting the shipment of goods to the boy-
"(B)
compliance with import and shipping docu-
21
ment requirements w i t h respect to country of origin,
22
the name of the carrier and route of shipment, and
23
the name of the supplier of the shipment;
24
" (C) compliance with export requirements of the
25
boycotting country relating to transshipments of ex-
29
25
1
ported goods to the boycotted country, to any business
2
concern organized under the laws of the boycotted
3
country, or to any national or resident of the boycotted
4
country;
5
" (D)
compliance by an individual with the im-
6
migration or passport requirements of any country; or
7
" (E) the refusal of a United States person to pay,
8
honor, advise, confirm, process, or otherwise implement
9
a letter of credit in the event of the failure of the
10
beneficiary of the letter to comply with the conditions
11
or requirements of the letter, other than conditions or
12
requirements compliance with which is prohibited by
13
rules and regulations issued pursuant to paragraph (1)
14
which conditions or requirements shall be null and void.
15
"(3)
Nothing in this subsection may be construed to
16
supersede or limit the operation of the antitrust laws of the
17
United States.
18
" (4) Rules and regulations pursuant to this subsection
19
and section 11 (2) shall be issued and become effective not
20 later than 90 days after the date of enactment of this section,
21 except that rules and regulations issued pursuant to this sub22
section shall apply to actions taken pursuant to contracts
23
or other agreements in effect on such date of enactment only
24
after the expiration of 90 days following the date such rules
25
and regulations become effective.
30
26
2
" (b) (1) I n addition to the rules and regulations issued
2
pursuant to subsection (a) of this section, rules and regula-
3
tions issued under section 4 ( b ) of this Act shall implement
4
the policies set forth in section 3 ( 5 ) .
5
" ( 2 ) Such rules and regulations shall require that any
g
United States person receiving a request for the furnishing
rj
of information, the entering into or implementing of agree-
3
ments, or the taking of any other action referred to in sec-
9
tion 3 ( 5 ) shall report that fact to the Secretary of Com-
20 merce, together with such other information concerning such
11 request as the Secretary may require for such action as he
12
may deem appropriate for carrying out the policies of that
13
section. Such person shall also report to the Secretary of
14
Commerce whether he intends to comply and whether he
15
has complied with such request. A n y report filed pursuant
16
to this paragraph after the date of enactment of this section
17
shall be made available promptly for public inspection and
18
C0
Pying> except that information regarding the quantity,
29 description, and value of any articles, materials, and sup20 plies, including technical data and other information, to
21 which such report relates may be kept confidential if the
22
Secretary determines that disclosure thereof would place the
23
United States person involved at a competitive disadvantage.
24
The Secretary of Commerce shall periodically transmit sum-
25
maries of the information contained in such reports to the
31
14
2
Secretary of State for such action as the Secretary of State,
2
in consultation with the Secretary of Commerce, may deem
3
appropriate for carrying out the policies set forth in section
4
3 (5) of this Act.".
5
q
(b) Section 4 (b) (1) of such Act is amended by striking out the next to the last sentence.
7
(c) Section 7 ( c ) of such Act is amended by striking
g
out " N o " and inserting in lieu thereof "Except as otherwise
9 provided by the third sentence of section 4 A ( b ) (2) and
10 by section 6 (c) (2) (C) of this Act, no".
H
32
S T A T E M E N T OF P O L I C Y
SEC. 202. (a) Section 3 (5) ( A ) of the Export Admin-
33 istration Act of 1969 is amended by inserting immediately
14 after "United States" the following: "or against any United
15
16
States person".
(b) Section 3 (5) (B) of such Act is amended to read
17 as follows: " ( B )
to encourage and, in specified cases, to
18 require United States persons engaged in the export of
39 articles, materials, supplies, or information to refuse to take
20
actions, including furnishing information or entering into or
21 implementing agreements, which have the effect of further22 ing or supporting the restrictive trade practices or boycotts
23
fostered or imposed by any foreign country against a country
24 friendly to the United States or against any United States
25
person,".
32
14
1
ENFORCEMENT
2
3
SEC. 203. (a) Section 6 ( c ) of the Export Administration Act of 1969 is amended—
4
(A)
by redesignating such section as section 6
5
(c) (1) ; and
6
(B)
by adding at the end thereof the following
7
new paragraph:
8
" ( 2 ) (A)
9
The authority of this A c t to suspend or
revoke the authority of any United States person to export
10 articles, materials, supplies, or technical data or other in11 formation, from the United States, its territories or posses12
sions, may be used with respect to any violation of the rules
13 and regulations issued pursuant to section 4 A ( a )
14
15
of this
Act.
" (B) A n y sanction
(including any civil penalty or
16 any suspension or revocation of authority to export)
im-
17 posed under this A c t for a violation of the rules and regula18
tions issued pursuant to section 4 A (a) of this Act may be
19 imposed only after notice and opportunity for an agency
20 hearing on the record in accordance with sections 554
21 through 557 of title 5, United States Code.
22
" ( C ) A n y charging letter or other document initiating
23
proceedings for the imposition of sanctions for violations of
33
14
1
the rules and regulations issued pursuant to section 4 A (a)
2
of this Act shall be made available for public inspection and
3
copying.".
4
(b) Section 8 of such Act is amended by striking out
5
" T h e " and inserting in lieu thereof "Except as provided in
C section 6(c) ( 2 ) , the".
7
8
DEFINITIONS
SEC. 204. Section 11 of the Export Administration Act
9
of 1969 is amended to read as follows:
10
"DEFINITIONS
11
"SEC. 11. AS used in this Act—
12
" ( 1 ) the term 'person' includes the singular and
13
the plural and any individual, partnership, corporation,
or other form of association, including any government
15
or agency thereof; and
16
" ( 2 ) the term 'United States person' includes any
17
United States resident or national, any domestic con-
18
cern (including any subsidiary or affiliate of any foreign
19
concern with respect to its activities in the United
States), and any foreign subsidiary or affiliate of any
21
domestic concern which is controlled in fact by such
domestic concern, as determined under regulations of
23
the President.".
34
14
!
TITLE
III—EXPORTS
AND
2
3
OF N U C L E A R
MATERIAL
TECHNOLOGY
NUCLEAR
EXPORTS
4
SEC. 301. The Export Administration Act of 1969 is
5
amended by adding at the end thereof the following new sec-
6
tion:
7
"NUCLEAR
EXPORTS
8
"SEC. 16. (a) (1) The Congress finds that the export
9
by the United States of nuclear material, equipment, and
10
devices, if not properly regulated, could allow countries to
11 come unacceptably close to a nuclear weapon capability,
12
thereby adversely affecting international stability, the foreign
13 policy objectives of the United States, and undermining the
14
principle of nuclear nonproliferation agreed to by the United
15
States as a signatory to the Treaty on the Non-Proliferation
16
of Nuclear Weapons.
17
" ( 2 ) The Congress finds that nuclear export activities
18 which enable countries to possess strategically significant
19
quantities of unirradiated, readily fissionable material are
20
inherently unsafe.
21
" ( 3 ) I t is, therefore, the purpose of this section to
22 implement the policies stated in paragraphs ( ! )
23
and (2)
of section 3 of this Act by regulating the export of nuclear
24 material, equipment, and devices which could prove detri-
35
14
1
mental to United States national security and foreign policy
2
objectives.
3
" ( b ) (1) No agreement for cooperation providing for
4
the export of any nuclear material, equipment, or devices for
5
civil uses may be entered into with any foreign country,
6
group of countries, or international organization, and no
7
amendment to or renewal of any such agreement may be
8
agreed to, unless—
9
" ( A ) the provisions of the agreement concerning
10
the reprocessing of special nuclear material supplied by
11
the United States will apply equally to all special nuclear
12
material produced through the use of any nuclear reactor
13
transferred under such agreement; and
^
" ( B ) the recipient country, group of countries, or
^
international organization, has agreed to permit the
^
International Atomic Energy Agency to report to the
United States, upon a request by the United States, on
the status of all inventories of plutoniurn, uranium 233,
^
and highly enriched uranium possessed by that country,
group of countries, or international organization and
21
subject to International Atomic Energy Agency safe-
oo
guards.
23
" ( 2 ) (A) The Secretary of State shall undertake con-
24
sultations with all parties to agreements for cooperation
36
32
1
existing on the date of enactment of this section in order
2
to seek inclusion in such agreements of the provisions de-
3
scribed in paragraph (1) ( A )
4
section.
5
"(B)
and (1) (B)
of this sub-
The Secretary of State shall seek to acquire,
6
from any party to an agreement for cooperation who is
7
not a nuclear-weapons State (as defined in article I X (3)
8
of the Treaty on the Non-Proliferation of Nuclear Weap-
9
ons), periodic reports on the status of all inventories of
10 plutonium, U-233, and highly enriched uranium possessed
11 by that party which are not subject to International Atomic
12 Energy Agency safeguards.
13
" ( 3 ) ( A ) No license may be issued for the export of
14
any nuclear material, equipment, or devices pursuant to an
15
agreement for cooperation unless the recipient country,
16 group of countries, or international organization, has agreed
17
that the material, equipment, and devices subject to that
18 agreement w i l l not be used for any nuclear explosive device,
19 regardless of how the device itself is intended to be used.
20
" ( B ) Subparagraph ( A ) of this paragraph shall take
21
effect at the end of the 1-year period beginning on the date
22
of enactment of this section.
23
" (4) I n any case in which a party to any agreement
24
for cooperation seeks to reprocess special nuclear material
25
produced through the use of any nuclear material, equipment,
37
14
1
or devices supplied by the United States, the Secretary of
2
State may only determine that safeguards can be applied
3
effectively to such reprocessing if he finds that the reliable
4
detection of any diversion and the timely warning to the
or
United States of such diversion will occur well in advance
g
of the time at which that party could transform strategic
rj
quantities of diverted nuclear material into explosive nuclear
g
devices.".
9
20
I N T E R N A T I O N A L A G R E E M E N T ON N U C L E A R EXPORTS
SEC. 302. (a) I t is the sense of the Congress that the
22 President should actively seek, and by the earliest possible
22
date secure, an agreement or other arrangement under
23
which—
24
( A ) nuclear exporting nations will not transfer to
25
any other nation any equipment, material, or tech-
26
nology designed or prepared for, or which would mate*
27
rially
assist the establishment of, national
uranium
2g
enrichment, nuclear fuels reprocessing, or heavy water
29
production facilities until and while alternatives to such
20
national facilities are explored and pursued;
22
(B) nuclear exporting nations will not transfer any
22
nuclear equipment, material, or technology to any other
23
nation that has not agreed to implement safeguards pro-
24
mulgated by the International Atomic Energy Agency;
25
(C)
minimum
physical security
standards
are
38
14
1
established to prevent the unauthorized diversion of
2
nuclear equipment, materials, and technology;
3
(D) arrangements are established for effective and
4
prompt responses in the event of violations of any inter-
5
national agreement to control the use of nuclear mate-
6
rials and technology;
7
(E) nuclear exporting nations, in cooperation with
8
nuclear importing nations, pursue the concept of multi-
9
national facilities for the purpose of meeting the world's
10
nuclear fuel needs while reducing the risks associated
11
with the spread of national facilities for fuel reprocessing,
12
fabrication, and enrichment; and
13
( F ) nuclear exporting nations establish arrangements for appropriate response, including the suspen-
15
sion of transfers of nuclear equipment, material, or tech-
16
nology, to any non-nuclear weapons country which has
^
detonated a nuclear explosive device or which has clearly
demonstrated the intention to embark upon a nuclear
19
weapons program.
20 Within 1 year after the date of enactment of this Act,
21 the President shall report to the Congress on the progress
22 made toward the achievement of international agreement
23
or other arrangements on the matters specified in this
24
section.
39
14
2
(b) For purposes of this section, the term "nuclear
2
exporting nations" means the United States, the United
3
Kingdom, France, the Federal Republic of Germany, Can-
4
ada, Japan, the Union of Soviet Socialist Republics, and
5
such other countries as the President may determine.
6
7
EXPORTS
OF
NUCLEAR
SEC. 303. Section 4 ( j )
TECHNOLOGY
of the Export Administration
g
Act of 1969, as added by section 107 of this Act, is amended
9
by adding at the end thereof the following new paragraph:
10
" (3) The President shall conduct an in-depth study of
H
whether, or the extent to which, the education and training
12
of foreign nationals within the United States in nuclear engi-
13 neering and related fields contributes to the proliferation of
14
explosive nuclear devices or the development of a capability
15
of producing explosive nuclear devices. Not later than the end
16
of the 6-month period beginning on the date of enactment of
17 this paragraph, the President shall submit to the Congress a
18
detailed report containing the findings and conclusions of such
19
study. Such report shall analyze the direct and indirect contri-
20
bution of such education and training to nuclear proliferation.".
21
NUCLEAR
POWERPLANTS
22
SEC. 304. None of the funds authorized by the Foreign
23
Assistance Act of 1961 may be used to finance the constrac-
24
tion of, the operation or maintenance of, or the supply of
40
14
1
fuel for, any nuclear powerplant under an agreement for
2
cooperation between the United States and any other
3
country.
41
95TH C O N G R E S S
1ST SESSION
O
O
X
I N T H E S E N A T E OP T H E U N I T E D
JANUARY
STATES
10,1977
M r . WILLIAMS ( f o r himself and M r . PROXMIRE) introduced the following b i l l ;
which was read twice and referred to the Committee on Banking, Housi n g and Urban Affairs
A BILL
To amend and extend the Export Administration Act of 1969
to improve the administration of export controls pursuant
to such Act, to strengthen the antiboycott provisions of
such Act, and for other purposes.
1
Be it enacted by the Senate and House of Eepresenta-
2
tives of the United States of America in Congress assembled,
3
SHORT T I T L E
4
SECTION 1. This Act may be cited as the "Export Ad-
r
<> ministration and Eoreign Boycott Amendments Act of 1977".
ir
42
2
1
TITLE I - E X P O R T
2
ADMINISTRATION
IMPROVEMENTS A N D EXTENSION
3
EXTENSION
OF EXPORT A D M I N I S T R A T I O N
ACT
4
SEC. 101. Section 14 of the Export Administration Act
5
of 1969 is amended by striking out "September 30, 1976"
6
and inserting in lieu thereof "September 30, 1978".
7
8
9
10
A U T H O R I Z A T I O N OF APPROPRIATIONS
SEC. 102. The Export Administration Act of 1969 is
amended b y
i n s e r t i n g after section
12 the f o l l o w i n g
new
section 13 and redesignating existing sections 13 and 14 as
11 sections 14 and 15, respectively:
12
'
13
"AUTHORIZATION
OF
APPROPRIATIONS
"SEC. 13. Notwithstanding any other provision of law,
no appropriation shall be made under any law to the De-
^
partment of Commerce for expenses to carry out the purposes
of this Act for any fiscal year commencing on or after October 1, 1977, unless previously and specifically authorized by
legislation enacted after the enactment of this section.".
1 9
CONTROL OF EXPORTS FOR N A T I O N A L SECURITY PURPOSES;
2 0
FOREIGN A V A I L A B I L I T Y
21
22
SEC. 103. (a) Section 4 ( b ) of the Export Administration Act of 1969 is amended—
(1)
2 4
graph
by
(1);
striking
out
the
third
sentence
of
para-
43
3
-I
2
(2) by striking out paragraphs (2) through (4) ;
and
o
(3) by inserting the following new
paragraph
4
(2) :
5
" (2) ( A ) I n administering export controls for national
q
security purposes as prescribed in section 3 ( 2 ) ( 0 ) of this
rf Act, United States policy toward individual countries shall
g
not be determined exclusively on the basis of a country's
9
Communist or non-Communist status but shall take into
10 account such factors as the country's present and potential
11 relationship to the United States, its present and potential
12 relationship to countries friendly or hostile to the United
13 States, its ability and willingness to control retransfers of
14 United States exports in accordance with United States pol15 icy, and such other factors as the President may deem ap16 propriate. The President shall periodically review United
17 States policy toward individual
countries
to
determine
18 whether such policy is appropriate in light of the factors
19 specified in the preceding sentence. The results of such re20 view, together with the justification for United States policy
21 in light of such factors, shall be included in the semiannual
22 report of the Secretary of Commerce required by section 10
23
of this Act for the first half of 1977 and in every second such
24 report thereafter.
8 5 - 6 5 4 O - 77 - 4
44
4
1
" ( B ) Rules and regulations under this subsection may
2
provide for denial of any request or application for authority
3
to export articles, materials, or supplies, including technical
4
data, or any other information, from the United States, its
5
territories and possessions, to any nation or combination of
6
nations threatening the national security of the United States
7
if the President determines that their export would prove
8
detrimental to the national security of the United States.
9
The President shall not impose export controls for national
10
security purposes on the export from the United States of
11 articles, materials, or supplies, including technical data or
12
other information, which he determines are available without
13
restriction from sources outside the United States in signifi-
14
cant quantities and comparable in quality to those produced
15
in the United States, unless the President determines that
16
adequate evidence has been presented to him demonstrating
17
that the absence of such controls would prove detrimental to
18
the national security of the United States. The nature of
19
such evidence shall be included in the semiannual report re-
20
quired by section 10 of this Act. Where, in accordance with
21 this paragraph, export controls are imposed for national
22
security purposes notwithstanding foreign availability, the
23
President shall take steps to initiate negotiations with the
24
governments of the appropriate foreign countries for the pur-
25
pose of eliminating such availability."
45
j
(b) (1)
Section 4 ( h )
of the Export Administration
2
Act of 1969 is amended by striking out "controlled country"
3
in the first sentence of paragraph (1) and in the second
4
sentence of paragraph
5
"country to which exports are restricted for national security
6
purposes".
(2)
and inserting in lieu thereof
7
(2) Section 4 ( h ) (2) ( A ) of such Act is amended by
8
striking out "controlled" and inserting in lieu thereof "such".
9
10
11
(3) Section 4 ( h ) (4) of such Act is amended—
( A ) by inserting "and" at the end of subparagraph
( A ) ; and
12
(B) by striking out the semicolon at the end of
13
subparagraph (B) thereof and all that follows the semi-
14
colon and inserting in lieu thereof a period.
15
(4) The amendments made by this subsection shall be-
16 come effective upon the expiration of ninety days after the
17 receipt by the Congress of the semiannual report of the Sec18
retary of Commerce required by section 10 of such Act for
19
the first half of 1977.
20
21
(c) Section 4 (h) of such Act is amended—
(1) in paragraph (1) —
22
( A ) in the first sentence by striking out "sig-
23
nificantly increase the military capability of such
24
country" and inserting in lieu thereof "make a sig-
24
46
1
nificant contribution to the military potential ol such
2
country"; and
3
(B)
in the second sentence by striking out
4
"significantly increase the military capability of
5
such country" and inserting in lieu thereof "make
6
a significant contribution, which would prove detri-
7
mental to the national security of the United States,
8
to the military potential of such country"; and
9
(2) in paragraph (2) ( A ) , by striking out "signifi-
10
cantly increase the military capability of such country"
11
and inserting in lieu thereof "make a significant contri-
12
bution, which would prove detrimental to the national
13
security of the United States, to the military potential of
14
such country or any other country".
15
(d) Section 6 ( b ) of such Act is amended by striking
out "Communist-dominated nation" and inserting in lieu
thereof "country to which exports are restricted for national
18
security or foreign policy purposes".
1 9
EXEMPTION
20
21
22
2
SEC. 104. Section 4 ( f )
COMMODITIES
LIMITATIONS
of the Export Administration
Act of 1969 is amended—
(1) by redesignating such section as section 4 ( f )
(1) ; and
25
26
AGRICULTURAL
FROM C E R T A I N EXPORT
3
24
FOR C E R T A I N
(2) by adding at the end thereof the following
new paragraph:
24
47
1
" ( 2 ) Upon approval of the Secretary of Commerce, in
2
consultation with the Secretary of Agriculture, agricultural
3
commodities purchased by or for use in a foreign country
4
may remain in the United States for export at a later date
5
free from any quantitative limitations on export which may
6
be imposed pursuant to section 3 (2) ( A ) of this Act sub-
7
sequent to such approval. The Secretary of Commerce may
8
not grant approval hereunder unless he receives adequate
9
assurance and, in conjunction with the Secretary of Agri-
10
culture, finds that such commodities will eventually be ex-
H
ported, that neither the sale nor export thereof w i l l result
12
in an excessive drain of scarce materials and have a serious
13
domestic inflationary impact, that storage of such commodi-
14
ties in the United States will not unduly limit the space avail-
15
able for storage of domestically owned commodities, and that
16
the purpose of such storage is to establish a reserve of such
17
commodities for later use, not including resale to or use by
18
another country. The Secretary of Commerce is authorized to
19
issue such rules and regulations as may be necessary to imple-
20
ment this paragraph.".
21
CONGRESSIONAL REVIEW OF EXPORT CONTROLS ON
22
A G R I C U L T U R A L COMMODITIES
23
SEC. 105. Section 4 ( f )
of the Export Administration
24 Act of 1969, as amended by section 104 of this Act, is
25
further amended by adding at the end thereof the following
26
new paragraph;
48
14
j
" ( 3 ) I f the authority conferred by this section is exer-
2
cised to prohibit or curtail the exportation of any agricul-
3
tural commodity in order to effectuate the policies set forth
4
in clause (B) of paragraph (2) of section 3 of this Act,
5
the President shall immediately report such prohibition or
6
curtailment to the Congress, setting forth the reasons there-
7
for in detail. I f the Congress, within 30 days after the date
8
of its receipt of such report, adopts a concurrent resolution
9
disapproving such prohibition or curtailment, then such pro-
10 hibition or curtailment shall cease to be effective with the
11 adoption of such resolution. I n the computation of such 3012
day period, there shall be excluded the days on which either
13
House is not in session because of an adjournment of more
14
than 3 days to a day certain or because of an adjournment
15
of the Congress sine die.".
16
PERIOD FOR A C T I O N ON EXPORT L I C E N S E
17
APPLICATIONS
SEC. 106. Section 4 ( g ) of the Export Administration
18 Act of 1969 is amended to read as follows:
19
"(g)
(1) I t is the intent of Congress that any export
20 license application required under this Act shall be ap21 proved or disapproved within 90 days of its receipt. Upon
22
the expiration of the 90-day period beginning on the date
23
of its receipt, any export license application required under
24
this Act which has not been approved or disapproved shall
25
be deemed to be approved and the license shall be issued
49
9
1
unless the Secretary, of Commerce or other official exercising
2
authority under this Act finds that additional time is re-
3
quired and notifies the applicant in writing of the specific
4
circumstances requiring such additional time and the esti-
5
mated date when the decision will be made.
6
" ( 2 ) ( A ) W i t h respect to any export license applica-
7
tion not finally approved or disapproved within 90 days of
8
its receipt as provided in paragraph (1) of this subsection,
9
the applicant shall, to the maximum extent consistent with
10
the national security of the United States, be specifically
11
informed in writing of questions raised and negative consid-
12 .erations or recommendations made by any agency or depart13
ment of the Government with respect to such license appli-
14
cation, and shall be accorded an oportunity to respond to such
15
questions, considerations, or recommendations in writing
prior to final approval or disapproval by the Secretary of
17
Commerce or other official exercising authority under this
18
Act. I n making such final approval or disapproval, the Secre-
19
tary of Commerce or other official exercising authority under
20
this Act shall take fully into account the applicant's response,.
21
"(B)
Whenever the Secretary determines that i t is
22
necessary to refer an export license application to any multi-
23
lateral review process for approval, he shall first, if the appli-
24
cant so requests, provide the applicant with an opportunity
25
to review any documentation to be submitted to such process
50
10
2
for the purpose of describing the export in question, in order
2
to determine whether such documentation accurately de-
3
scribes the proposed export.
4
" (3) I n any denial of an export license application, the
5
applicant shall be informed in writing of the specific statu-
6
tory basis for such denial.".
Y
8
g
20
EXPORTS OF T E C H N I C A L
INFORMATION
SEC, 107. Section 4 of the Export Administration Act
of 1969 is amended by adding at the end thereof the following new subsection (j) :
22
" (j) (1) A n y person (including any college, university,
22
or other educational institution) who enters into any con-
23
tract, protocol, agreement, or other understanding for, or
14 which may result in, the transfer from the United States of
15
technical data or other information to any country to which
16
exports are restricted for national security or foreign policy
17 purposes shall furnish to the Secretary of Commerce such
18
documents and information with respect to such agreement
19
as the Secretary shall by regulation require in order to en-
20
able him to monitor the effects of such transfers on the
21 national security and foreign policy of the United States.
22
" (2) The Secretary of Commerce shall conduct a study
23
of the problem of the export, by publications or any other
24 means of public dissemination, of technical data or other
51
14
1
information from the United States, the export of which
2
might prove detrimental to the national security or foreign
3 ' policy of the United States. Not later than 6 months after
4
the enactment of this subsection, the Secretary shall report
5
to the Congress his assessment of the impact of the export
6
of such technical data or other information by such means
7
ori the national security and foreign policy of the United
8
States and his recommendations for monitoring such exports
9
without impairing freedom of speech, freedom of press, or the
10 freedom of scientific exchange. Such report may be included
11 in the semiannual report required by section 10 of this Act.".
12
C E R T A I N P E T R O L E U M EXPORTS
13
SEC. 108. Section 4 of the Export Administration Act of
14
1969, as amended by section 107 of this Act, is further
1® amended by adding at the end thereof the following new sub16
section (k) :
" (k) Petroleum products refined in United States For-
18
eign-Trade Zones, or in the United States Territory of Guam,
19 from foreign crude oil shall be excluded from any quanti20 tative restrictions imposed pursuant to section 3 ( 2 ) ( A ) of
21 this Act, except that, if the Secretary of Commerce finds that
a product is in short supply, the Secretary of Commerce may
23 issue such rules and regulations as may be necessary to limit
24
exports.".
52
14
1
EXPORT OF HORSES
2
SEC. 109. Section 4 of the Export Administration A c t
3
of 1969, as amended by sections 107 and 108 of this Act,
4
is further amended by adding at the end thereof the follow-
5
ing new subsection (1) :
6
"(1) (1) Notwithstanding any other provision of this
7
Act, no horse may be exported by sea from the United
8
States, its territories and possessions, unless such horse is part
9
of a consignment of horses with repect to which a waiver has
10 been granted under paragraph (2) of this subsection.
11
" (2) The Secretary of Commerce, in consultation with
12
the Secretary of Agriculture, may issue rules and regulations
13 providing for the granting of waivers permitting the export
14 by sea of a specified consignment of horses, if the Secretary
15
of Commerce, in consultation with the Secretary of Agricul-
16
ture, determines that no horse in that consignment is being
17 exported for purposes of slaughter.".
18
TECHNICAL ADVISORY COMMITTEES
19
SEC. 110. (a) Section 5(c) (1) of the Export Adminis-
20
tfation Act of 1969 is amended by striking out " t w o " in
21 the last sentence thereof and inserting in lieu thereof "four".
22
(b) The second sentence of section 5(c) (2) of such
23
Act is amended to read as follows: "Such committees, where
24
they have expertise in such matters, shall be consulted with
25
respect to questions involving ( A ) technical matters, (B)
53
14
1
worldwide availability and actual utilization of production
2
technology, (C) licensing procedures which affect the level
3
of export controls applicable to any articles, materials, and
4
supplies, including technical data or other information, and
5
(D) exports subject to multilateral controls in which the
6 United States participates including proposed revisions of
7
8
any such multilateral controls.".
(c) Section 5(c) (2) of such Act is further amended
9 by striking out the third sentence and inserting in lieu
10 thereof the following: "The Secretary shall include in each
11 semiannual report required by section 10 of this Act an
12 accounting of the consultations undertaken pursuant to this
13 paragraph, the use made of the advice rendered by the tech14 nical advisory committees pursuant to this paragraph, arid
15
the contributions of the technical advisory committtees to
16 carrying out the policies of this Act.".
17
18
PENALTIES FOR VIOLATIONS
SEC. 111. (a) Section 6(a)
of the Export Admin-
19 istration Act of 1969 is amended—
20
21
22
(1) in the first sentence, by stinking out "$10,000"
and inserting in lieu thereof "$25,000"; and
(2) in
the
second sentence,
by
striking
out
23
"$20,000" and inserting in lieu thereof "$50,000". <
24
(b) Section 6(b) of such Act is amended by striking
25 out "$20,000" and inserting in lieu thereof "$50,000".
54
14
1
2
(c) Section 6(c) of such Act is amended by striking
out "$1,000" and inserting in lieu thereof "$10,000":
3
(d) Section 6 (d) of such Act is amended by adding at
4
the end thereof the following new sentence: " I n addition,
5
the payment of any penalty imposed under subsection (c)
6
may be deferred or suspended in whole or in part lor a
7
period of time no longer than any probation period (which
8
may exceed one year)
9
person. Such a deferral or suspension shall not operate as
10
a bar to the collection of the penalty in the event that the
11
conditions of the suspension, deferral, or probation are not
12
fulfilled.".
13
AVAILABILITY
that may be imposed upon such
OF I N F O R M A T I O N
TO CONGRESS ,
^
SEC. 112. (a) Section 7 (c) of the Export AdmiriJstra-
^
tion Act of 1969 is amended by adding at the end thereof the
following new sentence : "Nothing in this Act shall be con-
^
strued as authorizing the withholding of information from
^
Congress, and any documents or information obtained under
19
this Act, including any report or license application required
^
under section 4 (b) and any information required under sec-
21
tion 4 (j) ( 1 ) , shall be made available upon request to any
^
committee of Congress or any subcommittee thereof.".
23
^
(b) Section 4 ( c ) ( i )
of such Act is amended by in-
sorting immediately before the period at the end of the last
sentence thereof "and in the iast sentence of seotion 7 (c) of
26
this A c t " .
55
14
1
2
SIMPLIFICATION
OF
EXPORT
REGULATIONS
AND
LISTS
SEC. 113. Section 7 of the Export Administration Act
'6 of 1969 is amended by adding at the end thereof the fol-
4
5
lowing new subsection (e) :
" ( e ) The Secretary of Commerce, in consultation with
6 appropriate United States Government departments and
7
agencies and with appropriate technical advisory commit-
8
tees established under section 5 ( c ) , shall review the rules
9
and regulations issued under this Act and the lists of articles,
10 materials, and supplies which are subject to export controls
11 in order to determine how compliance with the provisions of
12
this Act can be facilitated by simplifying such rules and
13 regulations, by simplifying or clarifying such lists, or by any
14 other means. Not later than one year after the enactment
15
of this subsection, the Secretary of Commerce shall report to
16
Congress on the actions taken on the basis of such review
17 to simplify such rules and regulations. Such report may be
18 included in the semiannual report required by section 10 of
19 this Act.".
20
TERRORISM
21
SEC. 114. Section 3 of the Export Administration Act
22
of 1969 is amended by adding at the end thereof the follow-
23
ing:
24
" (8) I t is the policy of the United States to use export
25
controls to encourage other countries to take immediate steps
56
16
1
to prevent the use of their territory or resources to aid,
2
encourage, or give sanctuary to those persons involved i n
3
directing, supporting, or participating in acts of international
4
terrorism. To achieve this objective, the President shall make
5
every reasonable effort to secure the removal or reduction of
6
such assistance to international terrorists through interna-
7
tional cooperation and agreement before resorting to the
8
imposition of export controls.".
9
10
S E M I A N N U A L REPORTS
SEC. 115. (a) Section 10 of the Export Administration
11 Act of 1969 is amended by adding at the end thereof the
12
13
14
following new subsection (c) :
" ( c ) Each semiannual report shall include an accounting of—
15
" (1) any organizational and procedural changes in-
16
stituted, any reviews undertaken, and any means used
17
to keep the business sector of the Nation informed, pur-
18
suant to section 4 (a) of this A c t ;
19
20
" (2) any changes in the exercise of the authorities
of section 4 ( b ) of this A c t ;
21
22
"(3)
4 ( e ) of this A c t ;
23
24
any delegations of authority under section
" (4) the disposition of export license applications
pursuant to sections 4 (g) and (h) of this A c t ;
25
"(5)
the effects on the national security and for-
57
14
2
eign policy of the United States of transfers from the
2
United States of technical data or other information
3
which are reported to the Secretary of Commerce pur-
4
suant to section 4 (j) of this A c t ;
5
(j
7
8
9
"(6)
consultations undertaken with technical ad-
visory committees pursuant to section 5 ( c ) of this A c t ;
"(7)
violations of the provisions of this Act and
penalties imposed pursuant to section 6 of this A c t ; and
"(8)
a description of actions taken by the Presi-
10
dent and the Secretary of Commerce to effect the poli-
11
cies set forth in section 3 (5) of this Act.".
12
(b) (1)
The section heading of such section 10 is
13 aniended by striking out "QUARTERLY".
14
15
16
17
18
19
(2) Subsection (b) of such section is amended—
( A ) by striking out "quarterly" each time it appears; and
(B) by striking out "second" in the first sentence
of paragraph ( 1 ) .
S P E C I A L REPORT ON M U L T I L A T E R A L
EXPORT
CONTROLS
20
SEC. 116. Not later than 12 months after the enactment
21
of this section, the President shall submit to the Congress a
22
special report on multilateral export controls in which the
23
United States participates pursuant to the Export Adminis-
24
tration Act of 1969 and pursuant to the Mutual Defense
58
18
1
Assistance Control Act of 1951. The purpose of such special
2
report shall be to assess the effectiveness of such multilateral
;}
export controls and to formulate specific proposals for in-
4
creasing the effectiveness of such controls. That special report
5
shall include—
G
(1) the current list of commodities controlled for
7
export bj^ agreement of the group known as the Coordi-
8
nating Committee of the Consultative Group (hereafter
9
in this section referred to as the "Committee") and an
10
analysis of the process of reviewing such list and of the
11
changes which result from such review;
12
13
(2)
data on and analysis of requests for excep-
tions to such list;
14
(3) a description and an analysis of the process
15
by which decisions are made by the Committee on
1 (;
whether or not to grant such requests;
IT
(4) an analysis of the uniformity of interpretation
18
and enforcement by
19
the
export
controls
the participating
agreed to
by
the
countries
of
Committee
20
(including controls over the re-export of such commodi-
21
ties from countries not participating in the Committee),
22
and information on each case where such participating
23
countries have acted contrary to the United States in-
59
19
1
terpretation of the policy of the Committee, including
2
United States representations to such countries ancl the
3
response of such countries;
4
(5) an analysis of the problem of exports of ad-
5
vanced technology by countries not participating in the
6
Committee, including such exports by subsidiaries or
7
affiliates of United States businesses in such countries;
8
(6)
an analysis of the effectiveness of any pro-
9
cedures employed, in cases in which an exception for
10
a listed commodity is granted by the Committee, to de-
ll
termine whether there has been compliance w i t h any
12
conditions on the use of the excepted commodity which
13
were a basis for the exception; and
14
(7)
detailed
recommendations
for
improving,
15
through formalization or other means, the effectiveness
1(3
of multilateral export controls, including specific recom-
17
mendations for the development of more precise criteria
18
and procedures for collective export decisions and for the
19
development of more detailed and formal enforcement
20
mechanisms to assure more uniform interpretation of and
21
compliance with such criteria, procedures, and decisions
22
by all countries participating in such multilateral export
23
controls.
85-654 O -
77-5
60
20
1
REVIEW
2
OF
UNILATERAL
AND
CONTROL
MULTILATERAL
EXPORT
LISTS
3
SEC. 117. The Secretary of Commerce, in cooperation
4
with appropriate United States Government departments
5
and agencies and the appropriate technical advisory com-
6
mittees established pursuant to the Export Administration
7
Act of 1969, shall undertake an investigation to determine
8
whether United States unilateral controls or multilateral con-
9
trols in which the United States participates should be re-
10 moved, modified, or added with respect to particular articles,
11 materials, and supplies, including technical data and other
12
information, in order to protect the national security of the
13
United States. Such investigation shall take into account
14
such factors as the availability of such articles, materials, and
15
supplies from other nations and the degree to which the
16
availability of the same from the United States or from any
17
country with which the United States participates in multi-
18 lateral- controls would make a significant contribution to the
19 military potential of any country threatening or potentially
20
threatening the national security of the United States. The
21 results of such investigation shall be reported to the Congress
22 not later than twelve months after enactment of this Act.
23
SUNSHINE I N
24
25
GOVERNMENT
SEC. 118. (a) Each officer or employee of the Department of Commerce who—
61
14
1
2
(1) performs any function or duty under this Act
or the Export Administration Act of 1969; and
3
(2) has any known financial interest in any person
4
subject to such Acts, or in any person who obtains any
5
license, enters into any agreement, or otherwise receives
6
any benefit under such Acts;
7
shall, beginning on Februaiy 1, 1977, annually file with
8
the Secretary of Commerce a written statement concerning
9
all such interests held by such officer or employee during
10
the preceding calendar year. Such statement shall be avail-
11 able to the public.
12
13
14
(b) The Secretary of Commerce shall—
(1)
within ninety days after the date of enaet-
ment of this Act—
15
(A)
define the term "known financial inter-
im
est" for purposes of subsection (a) of this section;
17
and
18
(B)
establish the methods by which the re-
19
quirement to file written statements specified in
20
subsection (a) of this section will be monitored
21
and enforced, including appropriate provisions for
22
the filing by such officers and employees of such
23
statements and the review by the Secretary of
24
such statements; and
25
(2) report to the Congress on June 1 of each calen-
62
14
1
dar year with respect to such disclosures and the actions
2
taken in regard thereto during the preceding calendar
year.
4
(c) I n the rales prescribed under subsection (b) of
5
this section, the Secretary may identify specific positions
6
within the Department of Commerce which are of a nonreg-
7
ulatory or nonpolicymaking nature and provide that officers
8
or employees occupying such positions shall be exempt from
9
the requirements of this section.
10
(d) A n y officer or employee who is subject to, and
11 knowingly violates, this section or any regulation issued here12 under, shall be fined not more than $2,500 or imprisoned not
13 more than one year, or both.
14
15
TITLE II—FOREIGN
BOYCOTTS
P R O H I B I T I O N ON C O M P L I A N C E W I T H FOREIGN
BOYCOTTS
16
SEC. 201. (a) The Export Administration A c t of 1969
17
is amended by redesignating section 4 A as section 4B and
18
by inserting after section 4 the following new section:
19
" F O R E I G N BOYCOTTS
20
"SEC. 4A. (a) (1) For the purpose of implementing
21 the policies set forth in section 3 ( 5 )
(A)
and ( B ) , the
22
President shall issue rules and regulations prohibiting any
23
United States person from taking or agreeing to take any of
24
the following actions to comply with, further, or support any
25
boycott fostered or imposed by a foreign country against a
63
23
1
country which is friendly to the United States and which is
2
not itself the object of any form of embargo by the United
3
States:
4
"(A.)
Refraining from doing business with or in
j
the boycotted country, with any business concern orga-
6
nized under the laws of the boycotted country, or with
7
any national or resident of the boycotted country, pur-
8
suant to an agreement with, a requirement of, or a
9
request from or on behalf of the boycotting country. The
10
absence of a business relationship with or in the boy-
11
cotted country, with any business concern organized
12
under the laws of the boycotted country, or with any
13
national or resident of the boycotted country, does not
11
alone establish a violation of rules and regulations issued
to carry out this subparagraph.
16
"(B)
.
Refraining from doing business with any per-
; son (other than the boycotted country, any business
concert organized uhder the laws of the boycotted Conn-
ie
try, ot any national or resident of the boycotted country).
absence of a business relationship with a
person does not alone establish a violation of rules and
:23 \
te^ulatt^tis' issued' to- carry out this subparagraph.
" ( Q ) £ efraiiiilig from employing or otherwise dis• " CriiHinating against any ifnited States person on the
25
basis of race, religion, nationality, or national' origin.
64
14
1
"(D)
Furnishing information with respect to the
2
race, religion, nationality, or national origin of any other
3
United States person.
4
" (E) Furnishing information about whether any
5
person has, has had, or proposes to have any business
6
relationship (including a relationship by way of sale,
7
purchase, legal or commercial representation, shipping
8
or other transport, insurance, investment, or supply)
9
with or in the boycotted country, with any business
10
concern organized under the laws of the boycotted coun-
11
try, with any national or resident of the boycotted coun-
12
try, or with any other person which is known or believed
13
to be restricted from having any business relationship
14
with or in the boycotting country.
15
"(2)
16
Eules and regulations issued pursuant to para-
graph (1) shall provide exceptions for—
17
" ( A ) compliance with requirements (i) prohibiting
18
the import of goods from the boycotted country or of
19
goods produced by any business concern organized under
20
the laws of the boycotted country or by nationals or
21
residents of the boycotted country, or (ii) prohibiting
22
the shipment of goods to the boycotting country on a
23
carrier of the boycotted country or by a route other than
24
that prescribed by the boycotting country or the recipi-
25
ent of the shipment;
65
25
1
"(B)
compliance with import and shipping docu-
2
ment requirements with respect to a positive designation
3
of country of origin, the name of the carrier and route
4
of shipment, and the name of the supplier of the ship-
5
ment;
6
" ( C ) compliance with export requirements of the
7
boycotting country relating to transshipments of ex-
8
ported goods to the boycotted country, to any business
9
concern organized under the laws of the boycotted coun-
10
try, or to any national or resident of the boycotted
11
country; or
12
" ( D ) the refusal of a United States person to pay,
13
honor, advise, confirm, process, or otherwise implement
14
a letter of credit in the event of the failure of the bene-
15
ficiary
of the letter to comply with the conditions or
16
requirements of the letter, other than conditions or
17
requirements compliance with which is prohibited by
18
#
rules and regulations issued pursuant to paragraph (1)
19
which conditions or requirements shall be null and void.
20
"(3)
Nothing in this subsection may be construed to
21 supersede or limit the operation of the antitrust laws of the
22 United States.
23
" ( 4 ) Rules and regulations pursuant to this subsection
24 and section 11 (2) shall be issued and become effective not
66
14
1
except that rules and regulations issued pursuant to this sub-
2 section shall apply to actions taken pursuant to contracts
3
or other agreements in effect on such date of enactment only
4 aftei4 the expiration of 90 days following the date such rules
5
6
and regulations become effective.
" (b) (1) I n addition to the rules and regulations issued
7 pursilant to subsection (a) 6f this section, rules and regulag
tions issued under section 4 (b) of this Act shall implement
g
the policies set forth in section 3 ( 5 ) .
10
" (2) Such niles and Regulations shall require that any
H
United States person receiving a request for the furnishing
12
of information, th6 entering into or implementing of agrefcn
13 mentSj or the taking of any other action deferred to in sec^
14
tion 3 ( 5 ) shall REPORT that feiet to the Secretary of COI*H
15 merce, together with such other information conceiving such
1G request as the Secretary may requite for such action as he
17 may deem appropriate for carrying out the policies of that
IB
section. Such person shall also report to the Secretary of
Commerce Whether he intends to comply and Whether he
20 has complied with such request. A n y report filled "pursuant
21 to this paragraph after the' date of enactment of this section
22
shall be made available promptly for pubHe iMpfeetio^ and
23
copying, except that information tegarding the quantity,
24
description, and Value of any articles, tnatefi&fe, arid sujh
25
plies, including technical data afid otter infoiiriatiott, to
67
27
1
which such report relates may be kept confidential if the
2
Secretary determines that disclosure thereof would place
3
the United States person involved at a competitive disad-
4
vantage. The Secretary of Commerce shall periodically trans-
5
mit summaries of the information contained in such reports to
6
the Secretary of State for such action as the Secretary of
7
State, in consultation with the Secretary of Commerce, may
8
deem appropriate for carrying out the policies set forth in
9
section 3 (5) of this Act.".
10
(b) Section 4 ( b ) (1)
of such Act is amended by
11 striking out the next to the last sentence.
12
(c) Section 7 (c) of such Act is amended by striking
13
out " N o " and inserting in lieu thereof "Except as other-
14 wise provided by the third sentence of section 4 A ( b ) (2)
15
and by section 6(c) (2) (C) of this Act, no".
16
17
S T A T E M E N T OF POLICY
SEC. 202. (a) Section 3 ( 5 ) ( A ) of the Export Admin-
18 istration Act of 1969 is amended by inserting immediately
19
after "United States" the following: "or against any United
20
States person".
21
22
23
(b) Section 3 (5) (B) of such Act is amended to read
as follows:
"(B)
to encourage and, in specified cases, to re-
24
quire United States persons engaged in the export of
25
articles, materials, supplies, or information to refuse to
68
14
1
take actions, including furnishing information or enter-
2
ing into or implementing agreements, which have the
3
effect of furthering or supporting the restrictive trade
4
practices or boycotts fostered or imposed by any foreign
5
country against a country friendly to the United States
6
or against any United States person,".
7
8
9
ENFORCEMENT
SEC. 203. (a) Section 6 (c) of the Export Administration Act of 1969 is amended—
10
(A)
11
(c) ( 1 ) ; and
12
13
by redesignating such section as section 6
(B) by adding at the end thereof the following new
paragraph:
" ( 2 ) ( A ) The authority of this Act to suspend or revoke the authority of any United States person to export
articles, materials, supplies, or technical data or other information, from the United States, its territories or possessions,
may be used with respect to any violation of the rules and
regulations issued pursuant to section 4 A (a) of this Act.
20
" (B) Any sanction (including any civil penalty or any
21 suspension or revocation of authority to export) imposed
22
under this Act for a violation of the rules and regulations
23
issued pursuant to section 4 A (a) of this Act may be imposed
24
only after notice and opportunity for an agency hearing on
69
14
1
the record in accordance with sections 554 through 557 of
2
title 5, United States Code.
3
" ( C ) A n y charging letter or other document initiating
4
proceedings for the imposition of sanctions for violations of
5
the rules and regulations issued pursuant to section 4A (a)
6
of this Act shall be made available for public inspection and
7
copying.".
8
(b) Section 8 of such Act is amended by striking out
9
" T h e " and inserting in lieu thereof "Except as provided in
10
section 6 ( c ) ( 2 ) , the".
11
12
DEFINITIONS
SEC. 204. Section 11 of the Export Administration Act
13
of 1969 is amended to read as follows:
14
"DEFINITIONS
15
16
"SEC. 11. AS used in this Act—
"(1)
tho term 'person' includes the singular and
the plural and any individual, partnership, corporation,
or other form of association, including any government
19
20
or agency thereof; and
"(2)
the term U n i t e d States person' includes any
21
United States resident or national, any domestic concern
22
(including any subsidiary or affiliate of any foreign
23
concern with respect to its activities in the United
24
States), and any foreign subsidiary or affiliate of any
70
30
1
domestic concern which is controlled in fact by such
2
domestic concern, as determined under regulations of the
3
President.".
4
TITLE
5
III—EXPORTS
AND
6
OF N U C L E A R
MATERIAL
TECHNOLOGY
NUCLEAR
EXPORTS
7
SEC. 301. The Export Administration Act of 1969 is
8
amended by adding at the end thereof the following new sec-
9
tion:
10
"NUCLEAR
EXPORTS
11
"SEC. 16. (a) (1) The Congress finds that the export
12
by the United States of nuclear material, equipment, and
13
devices, if not properly regulated, could allow countries to
14
come unacceptably close to a nuclear weapon capability,
15
thereby adversely affecting international stability, the foreign
16 policy objectives of the United States, and undermining the
17 principle of nuclear nonproliferation agreed to by the United
18
States as a signatory to the Treaty on the Non-Proliferation
19 of Nuclear Weapons.
20
" ( 2 ) The Congress finds that nuclear export activities
21 which enable countries to possess strategically significant
22
quantities of unirradiated, readily fissionable material are
23
inherently unsafe.
24
25
"(3)
I t is, therefore, the purpose of this section to
implement the policies stated in paragraphs (1) and (2)
71
31
1
of section 3 of this Act by regulating the export of nuclear
2
material, equipment, and devices which could prove detri-
3
mental to United States national security and foreign policy
4
objectives.
5
" ( b ) (1) No agreement for cooperation providing for
6
the export of any nuclear material, equipment, or devices
7
for civil uses may be entered into with any foreign country,
8
group ot countries, or international organization, and no
9 amendment to or renewal of any such agreement may be
10 agreed to, unless—
11
" (A)
the provisions of the agreement concerning
12
the reprocessing of special nuclear material supplied by
13
the United States will apply equally to all special nuclear
14
material produced through the use of any nuclear reactor
15
transferred under such agreement; and
16
" ( B ) ^ e recipient country, group of countries, or
17
international organization, has agreed to permit the
18
International Atomic Energy Agency to report to the
19
United States, upon a request by the United States, on
20
the status of all inventories of plutonium, uranium 233,
21
and highly enriched uranium possessed by that country,
22
group of countries, or international organization and sub-
23
ject to International Atomic Energy Agency safeguards.
24
" ( 2 ) ( A ) The Secretary of State shall undertake con-
25
sultations with all parties to agreements for cooperation
72
32
1
existing on the date of enactment of this section in order to
2
seek inclusion in such agreements of the provisions described
3
in paragraph (1) ( A ) and (1) (B) of this subsection.
4
" (B) The Secretary of State shall seek to acquire, from
5
any party to an agreement for cooperation who is not
6
a nuclear-weapons State (as defined in article I X (3)
7
the Treaty on the Non-Proliferation of Nuclear Weapons),
8
periodic reports on the status of all inventories of plutonium,
9
U-233, and highly enriched uranium possessed by that party
10
which are not subject to International Atomic
11
Agency safeguards.
of
Energy
12
" ( 3 ) ( A ) No license may be issued for the export of
13
any nuclear material, equipment, or devices pursuant to an
14
agreement for cooperation unless the recipient country, group
15
of countries, or international organization, has agreed that
16
the material, equipment, and devices subject to that agree-
17
ment will not be used for any nuclear explosive device,
18
regardless of how the device itself is intended to be used.
19
"(B)
Subparagraph ( A ) of this paragraph shall take
20
effect at the end of the one-year period beginning on the
21
date of enactment of this section.
22
" (4) I n any case in which a party to any agreement
23
for cooperation seeks to reprocess special nuclear material
24
produced through the use of any nuclear material, equipment,
25
or devices supplied by the United States, the Secretary of
73
33
1
State may only determine that safeguards can be applied
2
effectively to such reprocessing if he finds that the reliable
3
detection of any diversion and the timely warning to the
4
United States of such diversion will occur well in advance
5
of the time at which that party could transform strategic
6
quantities of diverted nuclear material into explosive nuclear
7
devices.".
8
9
INTERNATIONAL
AGREEMENT
ON N U C L E A R
EXPORTS
SEC. 302. (a) I t is the sense of the Congress that the
10 President should actively seek, and by the earliest possible
11 date secure, an agreement or other arrangement under
12
which—
13
( A ) nuclear exporting nations will not transfer to
14
any other nation any equipment, material, or technology
15
designed or prepared for, or which would materially
16
assist the establishment of, national uranium enrichment,
17
nuclear fuels reprocessing, or heavy water production
18
facilities until and while alternatives to such national
19
facilities are explored and pursued;
20
(B) nuclear exporting nations will not transfer any
21
nuclear equipment, material, or technology to any other
22
nation that has not agreed to implement safeguards
23
promulgated
24
Agency;
25
by
the
International
Atomic
Energy
(C) minimum physical security standards are estab-
74
34
1
lished to prevent the unauthorized diversion of nuclear
2
equipment, materials, and technology;
3
(D) arrangements are established for effective and
4
prompt responses in the event of violations of any inter-
5
national agreement to control the use of nuclear ma-
6
terials and technology;
7
(E) nuclear exporting nations, in cooperation with
8
nuclear importing nations, pursue the concept of multi-
9
national facilities for the purpose of meeting the world's
10
nuclear fuel needs while reducing the risks associated
11
with the spread of national facilities for fuel reprocessing,
12
fabrication, and enrichment; and
13
(E)
nuclear exporting nations establish arrange-
14
ments for appropriate response, including the suspen-
15
sion of transfers of nuclear equipment, material, or tech-
16
nology, to any nonnuclear weapons country, which has
17
detonated a nuclear explosive device or which has clear-
13
ly demonstrated the intention to embark upon a nuclear
19
weapons program.
Within one year after the date of enactment of this Act,
21 the President shall report to the Congress on the progress
22 made toward the achievement of international agreement
23 or other arrangements on the matters specified in this
24
section.
25
(b)
26
For purposes of this section, the term "nuclear
exporting nations" means the United States, the United
75
35
1
Kingdom, France, the Federal Republic of Germany, Can-
2 ada, Japan, the Union of Soviet Socialist Republics, and
3
such other countries as the President may determine.
EXPORTS OF N U C L E A R
4
SEC. 303. Section 4 ( j )
5
TECHNOLOGY
of the Export Administration
6 Act of 1969, as added by section 107 of this Act, is amended
7
by adding at the end thereof the following new paragraph:
"(3)
8
9
10
The President shall conduct an in-depth study
of whether, or the extent to which, the education and training of foreign nationals within the United States in nuclear
11 engineering and related fields contributes to the prolifera12
tion of explosive nuclear devices or the development of a
13
capability of producing explosive nuclear devices. Not later
14
than the end of the 6-month period beginning on the date of
15
enactment of this paragraph, the President shall submit
16
to the Congress a detailed report containing the findings and
17
conclusions of such study. Such report shall analyze the
18
direct and indirect contribution of such education and train-
19
ing to nuclear proliferation.".
t
20
NUCLEAR
POWERPLANTS
21
SEC. 304. None of the funds authorized by the Foreign
22
Assistance Act of 1961 may be used to finance the construc-
23
tion of, the operation or maintenance of, or the supply of fuel
24
for, any nuclear powerplant under an agreement for coopera-
25
tion between the United States and any other country.
-654
-77-6
76
Senator S T E V E N S O N . I n the interest of saving time, we w i l l organize
the witnesses i n panels i n this hearing at least where it's possible to
do so.
O u r first witnesses w i l l comprise a panel. They are W . R. Needham
of the American Consulting Engineers Council; George A . H e l l a n d ,
president, Petroleum Equipment Suppliers Association; Charles W .
Stewart, president of the Machinery and A l l i e d Products I n s t i t u t e ;
and J o h n S. Withers, of the Associated General Contractors of
America.
Gentlemen, I w i l l be asking a l l the witnesses to please, i f you can, to
summarize your statements. The f u l l statements w i l l be entered into
the record. I f you keep the summaries down to about 5 minutes, i t
would be a great help to us.
I w o u l d appreciate i t i f you could do that.
O u r first witness is M r . Needham.
STATEMENTS OF W. R. NEEDHAM, BLACK & VEATCH INTERNATIONAL, INC., KANSAS CITY, MO.; GEORGE A. HELLAND, PETROLEUM SUPPLIERS ASSOCIATION; CHARLES W. STEWART,
PRESIDENT, MACHINERY AND ALLIED PRODUCTS INSTITUTE,
ACCOMPANIED BY PAUL PRATT; AND JOHN S. WITHERS, ASSOCIATED GENERAL CONTRACTORS OF AMERICA
M r . N E E D H A M . Good morning, M r . Chairman. M y name is W i l l i a m R. Needham, vice president of Black & Veatch International.
B l a c k & Veatch is a f i r m of international consultants engaged i n engineering, architecture, management, and planning.
Rather than take the committee's time to discuss details of the w o r k
of i n d i v i d u a l firms i n the M i d d l e East, I would ask that those w r i t t e n
materials provided to the committee be included i n the record of the
proceeding.
[The complete statement and an additional letter f o l l o w : ]
77
A Statement
Vice
Mr.
President
of
Missouri,
a large
in
of
take
the
record
firms
ing
Engineers
the
over
ability
the Arab
concern
citizens
religion,
color,
Israel
is
not
United
we a l s o
is
of
the
of
City,
engaged
of
ask
Rather
the
that
included
is
to
work
those
in
the
proposed
at
for
the
profession
or
that
on a c c e p t e d
different
from p o l i c i e s
States
America.
of
origin
firms.
con-
legislation
to
to work
on
in
America's
protection
on t h e
as o f
international
from
of
basis
all
of
paramount
the Arab b o y c o t t
pursued
concern
rights.
the
discrimination
national
recognize
based
views
Consult-
and
continue
adhering
human
of
y o u my p e r s o n a l
anti-boycott
time
individual
against
sex
same
American
citizens
to
to
members
and p u b l i c
on U.S.
convey
other
the
Congressional
boycotts
morning
while
American
of
would
along w i t h
the American businessman
The e n g i n e e r i n g
However,
details
I
Committee
shares
foreign
this
states
traditional
Kansas
Committee be
International,
impact
of
East,
am V i c e
and p l a n n i n g .
discussing
the
Engineering
of
here
the
to
of
I
consultants
management
time
the Middle
Council,
impact
My p u r p o s e
Needham.
International
international
provided
& Veatch
International
cern
in
R.
Inc.
proceedings.
the
the
of
William
architecture,
these
Black
over
firm
materials
of
& Veatch
Committee's
individual
written
my name i s
Black
engineering,
than
W i l l i a m R. Needham
Black & Veatch I n t e r n a t i o n a l ,
President,
Chairman,
by
time
importance.
against
practices
to
race,
the
State
and as
time
by
such
the
78
- 2 -
Of g r e a t e r
concern to
o v e r a l l need f o r
It
is
only
interests
the engineering profession
a political
of
the United States,
The a n t i - b o y c o t t
addresses but
a small part
at
this
by t h e Arab
that
implying
in
can s u p p l y
the Arab s t a t e s
assumption.
that
provisions
I
of
will
be
perceived
the imbalance
their
policy
assure you t h a t
is
of
the
they
is
only
need,
Congress
toward
this
and m a t e r i a l s
some o f
new
East.
Israel.
not
which are
and m a n u f a c t u r i n g
c a n a l s o be a c q u i r e d f r o m W e s t e r n E u r o p e ,
that
following
already
and h i s
the United States
t o change
The s e r v i c e s
The f a c t
the
Carter
indication
through American e n g i n e e r i n g
Bloc nations.
has
confrontational
a c t i o n by the U n i t e d States
engineer,
the
Committee
the Arab n a t i o n s w i t h what
legislative
As a p r o f e s s i o n a l
this
exacerbate
the Middle
stated
new
President
The a n t i - b o y c o t t
Ribicoff
that
can f o r c e
provided
To i n t e r j e c t
l e a d e r s .as a n o t h e r
Senator
and
the
protected.
time would only
American f o r e i g n p o l i c y
Israel
that
the o v e r a l l problem t h a t
t a s k now c o n f r o n t i n g
Administration.
correct
of
settlement
the
East.
s i n c e P a l e s t i n e was e s t a b l i s h e d
t h e e n d o f W o r l d War I .
legislation
be
the Middle
the State of
p r o p o s a l now b e f o r e
c o n f r o n t e d peace makers
country
in
through a negotiated p o l i t i c a l
i n d i v i d u a l Arab States w i l l
dificult
settlement
is
Japan and t h e
the Middle Eastern
a
being
firms
Communist
nations
p r e f e r American technology
and p r o d u c t s
does n o t mean t h a t
they
would continue
t h e Congress
enacts
which
t o do so i f
t h e A r a b s v i e w as i n t e r f e r e n c e w i t h
their
own
legislation
sovereignty.
79
INTERNATIONAL
CONSTRUCTION WEEK
American
firms
gird
for tougher
competition
February
SPECIAL
abroad
American f i r m s w i l l be working h a r d e r to
l a n d new c o n s t r u c t i o n business abroad i n
1977.
Success w i l l come much h a r d e r .
Not because they h a v e n ' t c o m p e t i t i v e knowhow,
or c a n ' t d e l i v e r <an s c h e d u l e .
The American
government has put severe r e s t r a i n t s on
t h e i r c o m p e t i t i v e c a p a b i l i t y i n the i n t e r n a t i o n a l market, r a i s i n g t h e i r operating
costs through tougher t a x a t i o n , and by
r e g u l a t i o n s aimed a t d e f e a t i n g the A r a b s '
economic b o y c o t t of I s r a e l .
I t risks
s h u t t i n g o f f much o f the b i g g e s t s i n g l e
e x p o r t market f o r A m e r i c a ' s c o n s t r u c t i o n
industry.
And tougher a n t i - A r a b Boycott
r u l e s a r e now b e f o r e the Congress, which
opens t h r e e days o f h e a r i n g s i n Washington,
DC, n e x t week.
due
\A,
1977
REPORT
to their
government's
regulations
Even w i t h o u t any f u r t h e r t i g h t e n i n g o f opport u n i t i e s a b r o a d , many American e n g i n e e r s and
c o n s t r u c t i o n men w i l l be l e a v i n g jobs abroad
because t h e i r companies, t o remain cost
c o m p e t i t i v e , must r e p l a c e them w i l h l o c a l
personnel.
And many American f i r m s p l a n
t o s e t up new o f f i c e s abroad, i n e f f e c t
r e d u c i n g jobs i n the USA. Thus, t h e s t r u c t u r e o f the American overseas c o n s t r u c t i o n
i n d u s t r y w i l l be undergoing major changes.
These changes w i l l be a m p l i f i e d i f the
a n t i - A r a b Boycott r e g u l a t i o n s a r e made more
s t r i n g e n t by Washington or by the i n d i v i d u a l
states.
and down to 64% of c o n s u l t i n g e n g i n e e r s .
More o f t h e i r work w i l l be handled abroad.
Three out o f 10 f i r m s r e p o r t plans t o set
up new e n t e r p r i s e s abroad t h i s year t o
handle overseas p r o j e c t s .
T h i s i s the
r e s u l t of u n f a v o r a b l e t a x law changes, plus
the Arab B o y c o t t .
N e a r l y h a l f o f the 26
l a r g e e n g i n e e r - c o n s t r u c t o r companies p l a n
t o add a t l e a s t one new e n t e r p r i s e abroad
t h i s y e a r — f o u r out of f i v e a l r e a d y had
a t l e a s t one e n t e r p r i s e o p e r a t i n g abroad
last year.
The e n g i n e e r - c o n s t r u c t o r s favor
e s t a b l i s h i n g a permanent j o i n t v e n t u r e
w i t h a l o c a l c o n t r a c t o r as p a r t n e r .
Only
two p l a n t o set up wholly-owned s u b s i d i a r i e s
S i x o f the 23 l a r g e g e n e r a l c o n t r a c t o r s
a l s o p l a n to set up a new e n t e r p r i s e abroad.
They favor wholly-owned s u b s i d i a r i e s .
So
do m a n u f a c t u r e r s , w i t h four of 11 p l a n n i n g
new s u b s i d i a r i e s (two would a l s o set up
a permanent j o i n t v e n t u r e w i t h a l o c a l f i r m )
Design f i r m s , 25% o t which p l a n to set up
new e n t e r p r i s e s abroad t h i s y e a r , favor a
j o i n t v e n t u r e w i t h a l o c a l f i r m ; A/E and
c o n s u l t i n g e n g i n e e r f i r m s look m a i n l y to
the M i d e a s t , where 17 p l a n t o set up j o i n t
v e n t u r e s t h i s y e a r , and L a t i n America, obj e c t i v e of 8 firms.
Most o f the c o n t r a c t o r s
had a t l e a s t one o f f i c e abroad and most o f
those o f f i c e s a r e expected to expand t h e i r
a c t i v i t y i n 1977.
I n a survey o f the i n t e r n a t i o n a l business
e x p e c t a t i o n s o f the American c o n s t r u c t i o n
i n d u s t r y , E n g i n e e r i n g News-Record w i l l r e p o r t t h i s week t h a t companies remain conv i n c e d they must s t a y a c t i v e abroad, where
t h e Arab o i l c o u n t r i e s a r e keys t o o f f s e t t i n g
s l a c k c o n s t r u c t i o n business a t home, and t r a d e
p a r t n e r s the USA needs t o a v o i d b i g i n t e r n a t i o n a l trade d e f i c i t s .
Nine out o f t e n of
167 l e a d i n g e n g i n e e r - c o n s t r u c t o r , c o n t r a c t o r , A / E , c o n s u l t i n g e n g i n e e r , equipment
and b u i l d i n g m a t e r i a l s m a n u f a c t u r e r s t e l l
ENR's survey they w i l l seek new business
abroad i n 1977, d e s p i t e the handicaps o f
l o s t t a x b e n e f i t s and the Arab Boycott
regulations.
Three out of four w i l l seek
i t i n Arab c o u n t r i e s .
The p r o p o r t i o n
l o o k i n g f o r Arab gold i s h i g h e s t among cont r a c t o r s ( 8 7 % ) , d i p p i n g t o 79% of the A / E ' s
E n g i n e e r - c o n s t r u c t o r s and c o n t r a c t o r s a r e
less buoyant than design f i r m s over t h e i r
o u t l o o k f o r business abroad.
One-third
see revenues d r o p p i n g ; o n l y 25% see a r i s e .
Among design f i r m s , 38% see revenues on
the r i s e and o n l y 17% look f o r a d r o p , o t h e r
p r e d i c t i n g no change from 1976.
None o f
the 11 m a n u f a c t u r e r s sees a drop i n revenues
but o n l y a few see any gain.^
Americans have no monopoly abroad these days
They a r e deeply concerned about competing
e f f e c t i v e l y a g a i n s t the e v e r - i n c r e a s i n g
number o f f o r e i g n f i r m s .
Much of t h e i r
concern grows out o f the loss o f t a x b e n e f i t
w r i t t e n i n t o the Tax Reform Act of 1976.
Probably i t s h a r d e s t blow was t o s h a r p l y
i n c r e a s e income taxes on e x p a t r i a t e s s e r v i n g
abroad a t l e a s t 18 months, and to make the
i n c r e a s e r e t r o a c t i v e to January 1 , 1976.
80
To keep e x p a t r i a t e s a b r o a d , many c o n t r a c t i n g
and d e s i g n f i r m s w i l l have t o make up f o r
the e x t r a t a x e s , including the r e t r o a c t i v e
b i t e f o r a l l 1976 ( v e r y c o s t l y s i n c e i t
can amount t o s e v e r a l thousand d o l l a r s p e r
e x p a t r i a t e employee).
Seven o u t o f t e n o f
t h e e n g i n e e r - c o n s t r u c t o r s and f o u r o u t o f
t e n general c o n t r a c t o r s expect to help t h e i r
A m e r i c a n e x p a t r i a t e s pay t h e heavy e x t r a t a x
f o r 1976 due now.
About o n e - t h i r d o f t h e
d e s i g n f i r m s i n the survey w i l l a l s o h e l p
t h e i r e x p a t r i a t e s , as w i l l 5 o f t h e 11 manufacturers.
About 102 w i l l pay a l l t h e e x t r a
t a x due f r o m e x p a t r i a t e e m p l o y e e s , and 20%
o f t h e e n g i n e e r - c o n s t r u c t o r s w i l l pay t h e
whole b i l l .
O p e r a t i n g costs o f American f i r m s w i l l r i s e
n o t o n l y because t h e y have t o pay e x p a t r i a t e s
more t o s t a y a b r o a d , b u t t h e y ' l l l o s e p r o d u c t i v i t y by h a v i n g t o h i r e more f o r e i g n n a t i o n a l s t o r e p l a c e American e x p a t r i a t e s ,
and w i l l pay more income t a x a t home.
This
w i l l d r a i n c o m p e t i t i v e s t r e n g t h f r o m Ameri c a n c o n t r a c t i n g and d e s i g n f i r m s a t a t i m e
when t h e i r f o r e i g n c o u n t e r p a r t s i n i n d u s t r i a l i z e d c o u n t r i e s r e c e i v e more a i d t h e n e v e r ,
f r o m governments a n x i o u s t o expand e x p o r t
earnings.
The i i r o a c t o f h i g h e r c o s t s w i l l
be g r e a t enough r
e l i m i n a t e American f i r m s
as c o m p e t i t o r s fo
some t y p e s o f work i n •
some c o u n t r i e s ,
"i'u-it's t h e o p i n i o n o f 17
m a j o r e n g i n e e r - c o a t . r u c t o r s and g e n e r a l
c o n t r a c t o r s , as w e l , as 3 1 l e a d i n g d e s i g n
firms.
One o u t o f f o u r c o n t r a c t o r s s u r v e y e d
i s concerned t h a t e x i s t i n g U . S . l e g i s l a t i o n
w i l l e i t h e i r p r e v e n t or a t l e a s t make i t
d i f f i c u l t f o r h i s company t o c o n t i n u e t o
develop the Mideast market.
Contractors
a r e much more w o r r i e d over p r o s p e c t i v e
amendments t o t h e E x p o r t A d m i n i s t r a t i o n Act
c o v e r i n g t h e Arab B o y c o t t .
H a l f o f them
b e l i e v e t h a t these a d d i t i o n a l r e s t r i c t i o n s
would c e r t a i n l y p r o h i b i t s a l e s growth,
p e r h a p s f o r c e them out o f t h e Arab m a r k e t .
D e s i g n f i r m s have s i m i l a r f e a r s , though
t h e i r concern i s less widespread.
About 30%
o f t h e A / E and c o n s u l t i n g e n g i n e e r f i r m s a r e
f e a r f u l o f t h e r e s u l t s o f t h e proposed new
amendments.
T h e i r exposure t o p o t e n t i a l loss
o f b u s i n e s s due t o t h e a n t i - A r a b B o y c o t t
r e g u l a t i o n s has been l e s s t h a n t h a t o f c o n t r a c t o r s , b u t s t i l l n o t h i n g t o shake o f f
lightly.
C o n t r a c t o r s a r e more c o n s e r v a t i v e t h a n a r e
design firms i n appraising the outlook for
new b u s i n e s s a b r o a d i n 1 9 7 7 , p r o b a b l y because
Arab B o y c o t t r e g u l a t i o n s have a f f e c t e d c o n t r a c t o r s more f r e q u e n t l y t h a n d e s i g n e r s .
N e a r l y o n e - t h i r d of the e n g i n e e r - c o n s t r u c -
t o r s and a b o u t o n e - q u a r t e r o f t h e g e n e m >
c o n t r a c t o r s r e p o r t they l o s t out i n the
c o m p e t i t i o n f o r new work i n A r a b c o u n t r i V
d u r i n g t h e p a s t y e a r due t o t h e p r o b l e m s
a r i s i n g from the Arab Boycott o f I s r a e l .
When one j o b i s l o s t i n t h e M i d e a s t , i t
u s u a l l y means t h e l o s s o f t e n s o f m i l l i o n ,
i f n o t hundreds o f m i l l i o n s o f c o n t r a c t
dollars.
M o r e o v e r , such work i n t h e M i d e ;
i s n ' t l o s t to other Americans, i t ' s usual!
l o s t t o c o n t r a c t o r s f r o m J a p a n , K o r e a , W.
Germany, Y u g o s l a v i a , o r some o t h e r c o u n t r y
t h a n t h e USA.
I n t h e p a s t y e a r , 22% o f t h
107 d e s i g n f i r m s r e p o r t i n g say t h e y l o s t c
i n o b t a i n i n g p r o s p e c t i v e c o n t r a c t s due t o
the boycott problem.
As i n t h e c a s e o f
c o n s t r u c t i o n c o n t r a c t s , d e s i g n commissions
a r e l a r g e i n t h e A r a b s t a t e s , s i n c e most
o f the p r o j e c t s are l a r g e - s c a l e , basic i n f r a s t r u c t u r e , such as p o r t s , o t h e r t r a n s p c :
t a t i o n , p o w e r p l a n t s , h o s p i t a l s and u n i v e r sities.
The A r a b B o y c o t t r a i s e s a b i g p r o b l e m f o r
m a n u f a c t u r e r s — and o t h e r s when t h e y want
to obtain financing.
T h a t ' s because A m e r i can banks w o n ' t a c c e p t a bank l e t t e r o f
c r e d i t which mentions the Arab B o y c o t t .
T h i s can be a t o u g h p r o b l e m f a c i n g s m a l l
manufacturers wanting t o enter the export
market.
" I t ' s becoming e x t r e m e l y d i f f i c u l t
t o e x p o r t c o n s t r u c t i o n e q u i p m e n t , " says the
i n t e r n a t i o n a l s a l e s manager f o r a l a r g e
manufacturer o f road paving machinery, " I f
i t g e t s any w o r s e , t h e y ' l l shut us o u t completely.
I n t h e M i d e a s t , y o u d o n ' t see
A m e r i c a n c o n s t r u c t i o n equipment p r e d o m i n a ting.
I n s t e a d , i t ' s European or Japanese
equipment t h a t ' s common." W i t h an e x p o r t
market o f over $300 m i l l i o n a n n u a l l y t o t h e
14 A r a b s t a t e s (10% o f A m e r i c a n c o n s t r u c t s
equipment e x p o r t s ) t h e c o n s t r u c t i o n machine
industry i s highly vulnerable to the a n t i Arab boycott problem.
Americans a b r o a d w i l l l i k e l y be r e p l a c e d i n
l a r g e numbers t h i s y e a r , as c o n t r a c t o r s and
design firms turn to l o c a l people t o hold
l a b o r c o s t s down.
Over o n e - h a l f o f t h e
e n g i n e e r - c o n s t r u c t o r s and g e n e r a l c o n t r a c t o r s w i l l c u t back on A m e r i c a n e x p a t r i a t e s — c u t b a c k s t h a t w i l l r u n f r o m 20%
t o 75%.
About 20% o f t h e A / E f i r m s and
42% o f t h e c o n s u l t i n g e n g i n e e r s w i l l c u t
back on A m e r i c a n e x p a t r i a t e s , t h e s l a s h e s
r u n n i n g from 10% t o 100%.
On t h e o t h e r
hand t h e r e w i l l be l a r g e i n c r e a s e s i n h i r i n g
of foreign personnel.
A few e n g i n e e r s
and c o n t r a c t o r s say t h e y w i l l c u t back
s t a f f s i n t h e USA, as a r e s u l t o f t h e Tax
Reform A c t ' s i m p a c t on t h e i r b u s i n e s s .
81
LOUIS UI4KGISK INTERNATIONAL, INC.
Architects - Engineers - Economists - Planners
100 MALSTEO STREET, east OBANGE. N. J. 07019
TELEPHONE «?0M 678-'960
TELEX: 110-152
CABLE: BERGERENG
N°.
3029/February
2 , 1977
S e n a t o r H a r r i s o n A. W i l l i a m s , J r .
United States Senate
R u s s e l l B u i l d i n g , Room 352
Washington, D. C. 20510
Dear
Senator
Williams:
Boycott
Regulations
I w i s h t o t h a n k you on b e h a l f o f D r . L o u i s B e r g e r , our P r e s i d e n t ,
f o r your l e t t e r o f January 2 7 , 1977, responding t o h i s l e t t e r o f
J a n u a r y 1 5 , 1 9 7 7 , on t h e s u b j e c t o f t h e e f f e c t o f t h e Tax Reform
Act o f 1976 on American f i r m s w o r k i n g o v e r s e a s .
I w o u l d now a d d r e s s
you on a n o t h e r s u b j e c t o f g r e a t c o n c e r n t o A m e r i c a n c o n s u l t a n t s
w o r k i n g i n t h e i n t e r n a t i o n a l f i e l d , t h a t o f t h e i m p e n d i n g new l e g i s l a t i o n r e l a t i n g t o f o r e i g n B o y c o t t s , n a m e l y t h e b i l l t o amend t h e
Export Administration Act, T i t l e I I — F o r e i g n Boycotts.
U n i t e d S t a t e r ; C o m m i t : i n / / , E n g i n e e r s liavc c a r v e d o u t a s m a l l n i c h e
i n the overseas market w i t h g r e a t d i f f i c u l t y , competing' with f o r e i g n
c o n s u l t a n t s who a r e f r e q u e n t l y s u b s i d i z e d by t h e i r g o v e r n m e n t s .
The U n i t e d S t a t e s c o n s u l t a n t s h a v e c a r r i e d t h e A m e r i c a n f l a g i n t o
t h e d e v e l o p i n g c o u n t r i e s , g e n e r a t i n g g o o d w i l l and b r i n g i n g t r a d e
back t o t h e U n i t e d S t a t e s i n t h e s p e c i f y i n g o f American technology
and e q u i p m e n t .
T h i s i s p a r t i c u l a r l y t r u e o f t h e Arab w o r l d where
development has been a c c e l e r a t i n g a t a phenomenal r a t e d u r i n g t h e
p a s t few y e a r s .
Our f i r m , w h i c h i s b a s e d i n New J e r s e y , i s p r e s e n t l y w o r k i n g i n s i x
Arab c o u n t r i e s .
D u r i n g t h e p a s t two y e a r s , i t has s p e c i f i e d t h e
u s e o f $ 1 0 m i l l i o n w o r t h o f U . S . e q u i p m e n t i n one c o u n t r y a l o n e ,
a n d i s l i k e l y t o s p e c i f y t h e use o f .some $50 m i l l i o n w o r t h o f
e q u i p m e n t on a l l i t s p r e s e n t c o n t r a c t s .
These c o n t r a c t s a l s o i n v o l v e
t h e employment o f more t h a n 4 0 A m e r i c a n s — h i g h l y s k i l l e d e n g i n e e r s ,
e c o n o m i s t s , p l a n n e r s , e t c . — o v e r s e a s w i t h a s u p p o r t i n g s t a f f o f some
3 0 p e r s o n s i n New J e r s e y .
We f e e l t h a t t h e A r a b B o y c o t t o f I s r a e l c a n o n l y be w i t h d r a w n t h r o u g h
n e g o t i a t i o n s a t d i p l o m a t i c l e v e l s and n o t by t h e p r o p o s e d now l e g i s lation.
I t s h o u l d be c l e a r t h a t t o p r o h i b i t U . S . f i r m s from a g r e e i n g
t o p a r t i c i p a t e o r c o o p e r a t e w i t h t h e Arab B o y c o t t , where t h i s i s a
c o n d i t i o n o f a c o n t r a c t , w i l l n o t r e s u l t i n t h e Arabs b e i n g coerced
i n t o a c c e p t i n g U.."». 1'l.rrnr. n o n - e o m p I l a n c e w i t h b o y c o t t , r e q u e s t : ; ,
r a t h e r i t w i l l r e s u l t i n work w h i c h w o u l d have b e e n a w a r d e d t o I ) . : ; .
f i r m s b e i n g a w a r d e d t o E u r o p e a n f i r m s w i t h e q u a l q u a l i f i c a t i o n s who
82
LOUIS BEKGER INTERNATIONAL, INC.
S e n a t o r H a r r i s o n A.
P a g e Two
F e b r u a r y 2 , 1977
Williams,
Jr.
a r e n o t l e g a l l y p r o h i b i t e d from such c o m p l i a n c e .
The e f f e c t o f
e n a c t i n g t h e p r e s e n t s t a t u t e may go b e y o n d t h a t t o u n f o r s e e n
impacts.
At t h e p r e s e n t t i m e , U . S . f i r m s o p e r a t i n g i n t h e A r a b
w o r l d f r e q u e n t l y a r e not c o m p e l l e d t o a g r e e t o comply w i t h o r
p a r t i c i p a t e i n b o y c o t t s as p a r t o f t h e i r c o n t r a c t a g r e e m e n t s .
In
f a c t , o u r f i r m h a s j u s t s i g n e d a c o n t r a c t i n an A r a b c o u n t r y
w h i c h d o e s n o t r e q u i r e us t o p a r t i c i p a t e i n o r c o o p e r a t e w i t h t h e
Arab b o y c o t t o f I s r a e l .
S h o u l d t h e new s t a t u t e be e n a c t e d ,
it
i s p o s s i b l e t h a t t h e r e a c t i o n I n t h e A r a b w o r l d w i l l be s t r o n g a n d
may h a v e a b a c k l a s h e f f e c t r e s u l t i n g i n a l l c o n s u l t a n t s w o r k i n g
i n t h e A r a b w o r l d b e i n g made t o s i g n s u c h c l a u s e s o r be r e j e c t e d .
T h u s , w h e r e we a r e now f r e q u e n t l y a b l e t o a v o i d a g r e e i n g t o a n y
a n t i - b o y c o t t c l a u s e t h r o u g h n e g o t i a t i o n s , t h a t a l t e r n a t i v e may
be f o r e c l o s e d i n t h e f u t u r e .
In a d d i t i o n , the p o s i t i v e
political
and d i p l o m a t i c r e l a t i o n s t h a t a r e d e v e l o p i n g and have d e v e l o p e d
due t o t h e I n f l u e n c e o f U . S . f i r m s and p o l i t i c a l i n f l u e n c e i n t h e
M i d d l e East a p p e a r t o have p e r m i t t e d U . S . n e g o t i a t o r s t o p l a y a
p o s i t i v e r o l e i n the p r o j e c t e d settlement of the Middle East
problem.
To e n a c t t h i s l e g i s l a t i o n may h a v e a n e g a t i v e i m p a c t
on any p r o p o s e d s e t t l e m e n t and t h e U . S . r o l e t h e r e i n .
P r e s e n t s t a t u t e s a l r e a d y p r o v i d e p o n a L t l e : . t o firm::, s u c h a s o u r s
i n t e r m s o f t a x d i s a d v a n t a g e s w i t h r o r / u ' c i t o DISC bono f i t s arid
f o r e i g n t a x c r e d i t s as r e f l e c t e d i n t h e Tax R e f o r m A c t o f 1 9 7 6 .
In a d d i t i o n , they provide for public disclosure of requests to
p a r t i c i p a t e or c o o p e r a t e w i t h b o y c o t t a c t i v i t i e s and t h e f i r m s
p r o j e c t e d a c t i o n i n r e s { . o n s e t h e r e t o , p r o v i d i n g a d e t e r r e n t by
means o f p u b l i c p r e s s u r e n o t t o c o m p l y w i t h s u c h r e q u e s t s .
Yet
e v e n w i t h t h e p e n a l t i e s o f t h e p r e s e n t s t a t u t e s , i t s h o u l d be
c l e a r t h a t t h e f i r m s d o i n g b u s i n e s s w i t h t h e Arab c o u n t r i e s
s h o u l d n o t be p e n a l i z e d t o a g r e a t e r e x t e n t t h a n t h e y a r e now
since the b o y c o t t issue i s a p o l i t i c a l one.
P u n i t i v e a c t i o n ar,n t n : ; t U . S . f i r m : ; d o m r , b u s i n e s s i n t h i n a r e a
by a t t e m p t i n g t o c o e r c e t h e A r a b c o u n t r i e s t o s t o p t h e b o y c o t t ,
would o n l y have t h e e f f e c t o f d e n y i n g U . S . f i r m s b u s i n e s s o p p o r t u n i t i e s , e x p o r t s , e t c . i n t h e A r a b w o r l d , w h i c h w o u l d be t a k e n
by o t h e r f o r e i g n f i r m s and would have t h e n e g a t i v e e f f e c t o f
r e d u c i n g U . S . e m p l o y m e n t ( j o b s o v e r s e a s and a d m i n i s t r a t i v e s u p p o r t
i n t h e U . S . i n c l u d i n g New J e r s e y ) r e d u c i n g t h e e x p o r t o f U . S .
goods a n d s e r v i c e s o v e r s e a s , and r e d u c e t h e t a x e s p a y a b l e by s u c h
f i r m s to the s t a t e s i n t h e U.S. in which they arc i n c o r p o r a t e d
and pay t a x e s .
83
LOUIS BEKGER INTERNATIONAL, INC.
S e n a t o r H a r r i s o n A.
Page T h r e e
F e b r u a r y 2 , 1977
Williams,
Jr.
We t r u s t t h a t y o u and y o u r f e l l o w members o f t h e S u b c o m m i t t e e
on I n t e r n a t i o n a l F i n a n c e w i l l b e a r t h e f o r e g o i n g p o i n t s i n mind
d u r i n g t h e h e a r i n g s on S . 6 9 and S . 9 2 .
Very
sincerely
yours,
LOUIS BERGER INTERNATIONAL,
SEJrmdv
Stc
S e n i o r V i c e •'President
INC.
84
M I D D L E EAST BUSINESS I N V O L V E M E N T
BLACK & V E A T C H
CONSULTING
ENGINEERS
Black & Veatch, Consulting Engineers of Kansas City, Missouri, is a partnership
that has been registered in Missouri for more than sixty (60) years. Based on its
annual volume of business in recent years it has been ranked consistently by the
Engineering News Record as one of the top ten engineering firms in the United
States. As of February 1, 1977, the firm employed over 2,500 persons, more than
2,300 of whom live and work in the Greater Kansas City Area, either in Missouri or
Kansas.
In 1961 Black & Veatch (B&V) formed Black & Veatch International (BVI), a
wholly-owned subsidiary corporation, to develop and manage work performed for
clients outside the
United States. Since that time BVI has furnished engineering
services to the public and private sector in 26 countries. Business handled by B V I
has grown to the point that today its fees represent approximately 25 percent of
the total Black & Veatch volume. Of this, the largest segment comes from work
being conducted for clients in Saudi Arabia, Egypt, Jordan and Iran.
By far the biggest client of BVI has been the Government of Saudi Arabia.
Under a contract with the A R A M C O Services Company of Houston, Texas, BVI has
been involved since late 1974 in preparing studies and designing facilities for a large
electric
power
system
in
the
Eastern
Provinces
of
Saudi
Arabia.
Among
the
assignments given to BVI to date have been the preparation of the complete design
of:
Nine (9) electric generation units (72MW each) for two (2) power plants;
Twelve (12) new 230 kV and two (2) 115 kV substations;
Additions to three (3) 115 kV and three (3) 6 9 kV substations;
325 miles of 230 kV transmission lines;
15 miles of 115 kV transmission lines and
8 miles of 6 9 kV transmission lines.
(See photo of initial stages of construction)
To
meet the study and design requirements BVI formed a new group, the
A R A M C O Services Division. Today, over 225 persons are employed full-time in the
85
firm's Kansas City offices on this work. (See photos showing some of the personnel
and portions of the over 35,000 square feet of office space currently devoted to
this work.) The total billings from this contract through December 31, 1976, were
$12,535,000.
The Special Projects Division of Black & Veatch which handles all work the
firm
does for
U.S. Government Agencies, has a contract with
the Middle
East
Division of the U.S. Army Corps of Engineers for design and construction program
technical reviews for numerous facilities for the Royal Saudi Department of Defense.
To date this has netted approximately $2,011,000 in fees for some 714 man/months
of labor by the Kansas City staff. (See Project List.)
Black & Veatch International is currently engaged in two major studies for the
Government
of
Iran. The first is an environmental
impact study
requiring
175
man/months of effort with a fee of approximately one million dollars. The second is
a preliminary study which will be prepared for $75,000. Subsequent, more valuable,
work is expected to stem from the initial study.
Another
newly signed contract calls for 98 man/months and approximately
$800,000 in fees to prepare a master plan on grains, tallows, oils and fats for the
Government of Egypt.
In summary, some 640 of the over 2,500 persons employed by Black & Veatch
in Kansas City during 1976 were supported by fees for work being done on projects
related to Middle East countries. This represented a payroll of $5,705,000. Taxes on
these salaries were as follows:
Federal Income Tax
Missouri & Kansas Income Tax
School Taxes
Sales Taxes
Total
$1,426,000
250,000
125,000
75,000
$1,876,000
9U
1)1
•93
EXPERIENCE I N SAUDI A R A B I A
Black & Veatch International was engaged by Aramco Services Company in November, 1974
to provide engineering services for a series of power generation, transmission and distribution
projects described at the end of this section.
Black & Veatch Special Projects Division, working through the Middle East Division of the
U.S. Corps of Engineers is currently conducting design and construction program technical
reviews of work in progress in Saudi Arabia. The following is a partial listing of work
underway:
Saudi Naval Expansion Program Federal Specifications — AE Instructions for Raw Data
Input Form
Tabuk Armor School Air Conditioning — Final Review
Mobilization Camp, Jubail, COP 7 — Estimate Review
VIP Lounge, Jubail, COP 6 — Estimating Assistance
Mobilization Camp Expansion, Jeddah — Estimating Assistance
King Abdulaziz Military Academy Family Housing, Site Development and Mobilization
Camp Housing — Concept Review
King Abdulazia Military Academy Training Range Center at Riyadh — Concept Review
King Abdulaziz Military Academy Support/Service Zone at Riyadh — Concept Review
Ministerial Residence at Tabuk Prefinal Review
Tabuk Power, Review
Firing Ranges Phase II, Khashm-AI-an, Estimating Assistance
Area Commanders Headquarters, Tabuk & Khamis Mushayt, Estimating Assistance and
H V A C Review
Field Artillery Center-School, Khamis Mushayt Master Plan
King Khalid Military City Construction Schedule
Library and Museum, Riyadh, Standardization List
Armor School Heating & Air Conditioning at Tabuk — Prefinal Review
Four Bedroom Executive Villa at Tabuk - Final Review
MO DA Medical Center at Al Kharj - Concept Review
94
Taif General Hospital at Taif — Concept Review
Airborne & Physical Training School at Tabuk — Prefinal Review
Tabuk Airborne Training School — Review
Engineering Assistance — Riyadh Officer's Club
Engineering Assistance — Tabuk Power Plant Expansion
Computerized Saudi Oriented Guide Specifications
Computerized Saudi Estimating Program
Saudi Naval Bases at Jubial, Jeddah & Riyadh Headquarters — Review
Tabuk V.I.P. Housing and Gate House - Review
Value Engineering Study for Saudi Naval Base at Jubail.
In conjunction with all projects underway in Saudi Arabia Black & Veatch personnel regularly
participate
in country with the client, contractor, supplier and other members of the
construction team.
95
HOUSING COMPLEXES
Black & Veatch has been engaged in the development and design of housing facilities since
1950, principally military and dependent housing for the U.S. Department of Defense. Most
recently Black & Veatch has been engaged by the Middle East Division of the U.S. Corps of
Engineering to perform design and construction program technical reviews for Family housing
as well as other facilities in Saudi Arabia. A listing of housing complexes and related facilities
recently undertaken follows:
Facility
Location
Activity
Mobilization Camp
Jubail
Estimate Review
VIP Lounge
Jubail
Estimating
Mobilization Camp
Jeddah
Estimating
King Abdulaziz Military
Riyadh
Concept Review
Academy Family Housing
Executive Villa
Tabuk
Final Review
Medical Center
A! Khary
Concept Review
General Hospital
Taif
Concept Review
VIP Housing Complex
Tabuk
Technical Review
King Abdulaziz Military
Riyadh
Concept Review
Various Location
Preliminary Review
Tabuk
Prefinal Review
Academy Community
Support Facility
Standard Workers
Community
Ministerial Residence
96
POWER G E N E R A T I O N ,
TRANSMISSION AND
DISTRIBUTION
SAUDI ARABIA
Black & Veatch
SAUDI
International
ARABIA
In N o v e m b e r
1974, B l a c k & Veatch International
was
r e q u e s t e d by A r a m c o S e r v i c e s C o m p a n y to
undertake
a s e r i e s of s t u d i e s i n c o n n e c t i o n w i t h t h e
expansion
of t h e e l e c t r i c power g r i d for t h e E a s t e r n P r o v i n c e of
Saudi
By
Arabia.
the
end
projects
of
of
for
May
ASC,
distribution
1975,
BVI
including
voltages
for
had
an
use
completed
economic
in S a u d i
r e p o r t on s i t i n g a n d a r r a n g e m e n t of t h r e e
four
analysis
Arabia;
t u r b i n e g e n e r a t i n g u n i t s ; a n d t w o r e p o r t s on t h e
sign
of
ten
electric
transmission
de-
substations
a p p r o x i m a t e l y 2 8 0 m i l e s of 2 3 0 k V t r a n s m i s s i o n
Subsequently,
a
combustion
and
lines.
the firm began the d e t a i l e d design
of
t h e f a c i l i t i e s c o v e r e d in t h e s e r e p o r t s a n d t h e p r e p a r a t i o n of t h e m a t e r i a l s r e q u i s i t i o n s for t h e e q u i p m e n t
required.
In A u g u s t 1 9 7 5 , B l a c k & V e a t c h I n t e r n a t i o n a l
a
contract
bility
for
with
ASC
developing
to
all
take
of
complete
the
signed
responsi-
generating
require-
m e n t s in t h e E a s t e r n
P r o v i n c e through 1 9 8 0 . In a d d i -
tion
three
to
the
program
original
included
units
a b o u t 33
under
simple
cycle
design,
the
combustion
The
map
location
t u r b i n e s w i t h p r o v i s i o n s for c o n v e r t i n g t h e s e u n i t s to
B&V
c o m b i n e s c y c l e u n i t s by a d d i n g s t e a m t u r b i n e s .
Arabian
viding
approximately
2,500
MW
of
electric
Pro-
power,
above
and
will
illustrates
pinpoints
construction.
The
be
Gulf.
new
in
the
Saudi
the
Arabia's
country's
of
by
eastern
(Reproduced
main
general
areas
p o w e r grid to be d e s i g n e d
section
from
the
bordering
April
24,
the
1975
i s s u e of E N R )
t h e s e u n i t s w i l l be i n s t a l l e d a t s e v e n d i f f e r e n t s i t e s .
T h e f i r m ' s r e s p o n s i b i l i t i e s in t h e s e p r o j e c t s u l t i m a t e ly
will
include
arrangement
preparation
of p l a n t s ,
of
r e p o r t s on s i t i n g
requisition and purchasing
a l l e q u i p m e n t , c o m p l e t e d e s i g n of t h e f a c i l i t i e s ,
and
of
and
set
up an
office
in
Black &
Veatch's
B8(V
also
personnel
a
(B81VA),
new
is
established
assigned
being
in
Kansas
to A S C
company,
formed
Black
to
City
projects.
8<
manage
the
for
In
Veatch
the
Saudi
Arabia
in-country
work.
m a n a g e m e n t of c o n s t r u c t i o n a n d s t a r t - u p .
ASC
office was
Arabia,
Kansas
The
double-circuit
reports, s u p e r v i s e the purchasing, and c o o r d i n a t e
I6SA.276
the
separate
the transmission
of
370
lines will
miles
along
lines
the
will
G u l f . In a d d i t i o n to m o r e c o n v e n t i o n a l t y p e s of t e r r a i n ,
f i r m ' s a c t i v i t i e s w i t h t h e A S C home o f f i c e . A
distance
transmission
cover
of t h e p r o j e c t s . A S C e n g i n e e r s r e v i e w B l a c k &
Veatch
a
230. kV
C i t y o f f i c e to r e m a i n t h r o u g h o u t t h e e n g i n e e r i n g p h a s e
Arabian
pass through d e s e r t
sand
dune areas, rock outcroppings, and coastal s a l t f l a t s .
97
GRAIN STORAGE
THE NATIONAL PLANNING COUNCIL
HASH EM ITE KINGDOM OF JORDAN
Black & Veatch International
In August, 1975, the National Planning Council of the
Hashemite Kingdom of Jordan engaged Black &
Veatch International to conduct a technical and economic f e a s i b i l i t y study of a proposed grain handling
and storage f a c i l i t y at the Port of Aqaba.
The scope of work included investigation of f a c i l i t i e s
and methods presently used to unload and store grain
at Aqaba and transport it to inland storage or m i l l i n g
f a c i l i t i e s , annual projections of grain inputs for next
ten years, and determination of additional storage
f a c i l i t i e s required to handle future imports at Aqaba
and/or inland distribution centers. The project also
included a study to determine the most appropriate
location for storage f a c i l i t i e s in the port area and
recommend equipment required to unload grain from
ships, convey to storage and outload to inland carriers, including bagging and weighing equipment.
Preliminary layout plans and design drawings for all
recommended f a c i l i t i e s were prepared, specifications
for required equipment were outlined, and preliminary
cost estimates were made. A financial study demonstrated the economic feasibility of the proposed
f a c i l i t i e s . Environmental impact of the proposed
project on the surrounding area was investigated and
included in the report.
98
SUITE 6 0 3
'WXNZlL.ISIt & K E L L Y
- R I N G BUILDING
1200 18TH STREET N.W.
C O N S U L T I N G
E N G I N E E R S
A Coiporaiion • • h m m w m h *
WASHINGTON, D C. 20036 U.S.A.
TELEPHONE (202) 223-1 528
February 16,1977
The Honorable Alan Cranston
United States Senate
452 Russell Senate Office Building
Washington, D.C. -20510
Dear Senator Cranston:
We want to take this opportunity to express our strong concerns over pending legislation relating to the Arab Boycott, which may effectively bar us and many other companies throughout
California, from doing business in the Middle East.
In June, 1976, we had the opportunity to testify before the House International Relations
Committee, on behalf of the International Engineering Committee of the American Consulting Engineers Council, in opposition to the incorporation of more restrictive antiboycott provisions in the extension of the Export Administration Act.
At that time, we pointed out that there were compelling economic, foreign policy, and national
security interests to be weighed; that there was a great deal of misinformation circulating
about the boycott; that its negative impacts on American business enterprises and citizens .
had been grossly exaggerated; and that in light of this background, additional legislation on
this matter was unnecessary, ill-advised, untimely and quite possibly, counterproductive.
In many respects, our message to you today remains unchanged. At a time when our domestic
economy remains shaky and unstable and, in fact, the promise of continued progress toward
recovery has been temporarily set back by the economic dislocations of the current weather/
energy "crunch", we submit that the job-producing potential of American business involvement
in the Middle East is critically important to the U.S. domestic economy.
We are well aware of the arguments made in some circles that in pursuing overseas business
opportunities, American business enterprise is taking jobs away from Americans to the detriment of our domestic economy. On the contrary, our firms are pursuing work in the Middle
East and elsewhere in the developing world precisely because the climate for developmentoriented activities in the United States has become so unfavorable.
Without singling out any one group, we would attribute this unfavorable environment to a
combination of factors, including environmental constraints, higher labor and materials costs,
energy shortages and the like. In other words, it is not a matter of choice between pursuing
opportunities in the United States and internationally. We depend on development-oriented
activities and we must pursue them where we can find them. To fail to do so would not only
prevent our businesses from growing to provide new jobs, but it would mean significant cutbacks
in our existing workforces.
CONSULTING ENGINEERS
INDUSTRIAL • MECHANICAL o ELECTRICAL o STRUCTURAL® PLANNING o REPORTS o DRAINAGE o ROADS ® SURVEYS
99
WINZLERftKELLY
CONSULTING ENGINEERS
P^ge
tWO
The job-producing potential of the engineering professional must be viewed, however,
in an even broader c o n t e x t . General background on the i m p o r t a n t role the engineering professional plays in the process of job-creation through overseas involvement was provided in our
June testimony to the House International Relations C o m m i t t e e and we have enclosed a copy
of t h a t testimony f o r your review. We can summarize b r i e f l y , however, by saying t h a t the
American consulting engineer overseas (1) creates domestic employment opportunities for
engineers and related professionals, in t h a t the greatest portion of actual design work is brought
back t o the United States f o r completion; (2) creates jobs in the American construction industry
since our construction contractors are most f a m i l i a r w i t h the design practices of American
engineers and are in a favorable c o m p e t i t i v e position when bidding on American-designed
projects; and (3) creates jobs in the domestic capital-goods manufacturing sector, since
American engineers are most f a m i l i a r w i t h the specifications and performance capabilities
of American products and tend t o design around these products.
As you w i l l note f r o m the second attachment t o our s t a t e m e n t , we have also provided some
specific data on the numbers of actual jobs, the job potentials, and the dollar volumes of
work in which American consulting engineers are now involved in the Middle East. This data,
gathered in a recent survey of selected f i r m s now working in the Middle East, is, however,
by no means complete, and we are now requesting other f i r m s not originally surveyed t o
develop such data and make the i n f o r m a t i o n available t o Members of Congress. I t is f a i r
t o say that we would expect these figures t o be increased substantially when our datagathering e f f o r t s are complete, yet even as they stand, they are signifcant in light of
current economic conditions.
In a related view, we continue t o believe, as we stated last June, t h a t our growing trade relationship w i t h the Middle Eastern community is continuing t o provide added leverage t o ongoing
p o l i t i c a l and diplomatic e f f o r t s t o bring about a peaceful and lasting settlement in the Middle
East.
While our message remains essentially unchanged, however, a number of events which bear
d i r e c t l y or i n d i r e c t l y on this m a t t e r have occurred since last year and, as a result, we believe
the arguments against passage of additional legislation are even more compelling at this t i m e .
As you are well aware, the Tax Reform A c t of 1976 contains provisions r e s t r i c t i n g the use
of c e r t a i n tax benefits, where compliance or p a r t i c i p a t i o n in boycott a c t i v i t i e s is determined.
In p r a c t i c e , these provisions f o r c e those American companies who make a decision t o comply
or p a r t i c i p a t e in boycott a c t i v i t i e s t o t r e a t such compliance or p a r t i c i p a t i o n as an added
cost of doing business. While we strongly disagreed w i t h this legislation on the basis that
any additional legislation or regulations gives the boycott's existence and application a "largert h a n - l i f e " status as a public policy issue than is warranted, there is a v i r t u e in this approach
in that the freedom to make decisions, i.e. t o pursue business and/or to comply or p a r t i c i p a t e
in boycott a c t i v i t i e s , lies w i t h the individual business enterprise. Presumably, t a k i n g this
approach, a f i r m choosing to comply or participate in boycott a c t i v i t i e s as a condition t o
doing business w i l l either pass this cost of lost tax benefits on t o his c l i e n t , or seek t o have
such provisions modified or waived so as to be in compliance w i t h the law or avoid the boycott
issue e n t i r e l y . In any case, the business enterprise is free to make its own choices, yet is
e f f e c t i v e l y deterred f r o m serving as an agent/instrument in a foreign b o y c o t t .
100
WINZLER St KELLY
CONSULTING ENGINEERS
page three
We believe that this approach will have the desired e f f e c t , and that after these provisions
have been in effect for a reasonable period of t i m e , a comprehensive oversight review will
show that the stated objective of eliminating the negative impact of the boycott in the relatively small number of instances where American citizens and/or business enterprises have
been directly affected, has been achieved.
The importance of taking a reasonable and responsible approach is all the more important
in light of the need to provide as much flexibility as possible to the new Administration and
Congress. This is particularly important in these early days, when leaders of Middle Eastern
and other nations are seeking to open a dialogue with the new leadership and, conversely,
at a time when the Administration and Congress are attempting to move quickly and cooperatively
down the road to solid and sustained economic recovery.
The problem we see with the approach taken in the measure now before you for consideration
is that it is unconditional and inflexible. It would effectively bar American professional engineers
and virtually all American companies from pursuing business opportunities in the Middle East,
leading to economic dislocation, greater unemployment, further deterioration in the U.S.
balance-of-trades position, and a reduction in U.S. ability to positively leverage and influence
continued progress toward peace in the Middle East.
At the same time, we recognize the critical importance of extending the Export Administration
Act. Accordingly, we would ask you to consider the following course of action: (1) extend
the Export Administration Act, retaining boycott-related provisions in the form in which
they exist in the previous Act; (2) undertake both a detailed analysis and oversight review
of the applicability and effectiveness of existing Export Administration regulations and
Treasury Department regulations implementing the antiboycott provisions of the. Tax Reform
Act of 1976, and a thorough assessment of the impacts these regulations and any proposed
alternatives are having or would have on U.S. domestic, economic and foreign policy objectives,
all in conjunction with the Senate Finance Committee, officials of the Treasury and Commerce
Departments and representatives of business and professional organizations directly involved
in the Middle East.
In our judgment, taking such an approach would give the Administration and the Congress
the time required to make a more accurate assessment of the situation, to fairly evaluate
the operation of existing antiboycott laws and regulations, some of which are too new to
properly evaluate at this time, and then, to reach a clear determination as to the need for
new and different laws and/or regulations in this area.
We hope you can concur with our view of the situation.
WINZLER <5c KELLY
William 3. Birkhofer
Director of Business Development
WJB:gab
enclosures
cc: Congressman Don H. Clausen
101
Senator STEVENSON. Thank you.
M r . Helland.
M r . HELLAND. T h a n k you, M r . Chairman. M y name is George A .
Helland. I am appearing i n my capacity as president of the Petroleum
Equipment Supplies Association. I am executive vice president o f
Cameron I r o n Works, Inc., of Houston, Tex.
The association represents 174 companies which manufacture equipment and provide services and supplies to the petroleum industry. W e
believe the legislation before you bears real risks o f damaging American interests.
The dilemma facing the Congress is that t w o groups f r i e n d l y t o the
U n i t e d States are long-time enemies. A s one aspect of their battle,
since 1951, the A r a b League states have engaged i n an economic
boycott.
Most of the A r a b countries required, by law, some certification that
is related t o the A r a b boycott of Israel. Most of these take the f o r m of
a certificate that the goods are not of Israeli o r i g i n or t h a t the goods
are not going to be carried on an Israeli ship, or on a ship that not be
allowed to call at the A r a b customer port. This legislation would prevent us f r o m signing almost any boycott-related certificates.
T o the extent the A r a b boycott has the effect o f discriminating
against U.S. citizens or firms on the grounds of race, color, religion, sex,
or national origin, we should take a hard line. These are fundamental
principles that we should not compromise. To the extent the A r a b boycott is a political action, we must consider whether this legislation w i l l
disrupt our political, diplomatic, and commercial relations.
No one can condone an economic boycott between countries f r i e n d l y
to the U n i t e d States. The only answer lies i n peace i n the M i d d l e East.
B o t h the A r a b countries and Israelis are looking f o r the U n i t e d States
to help to mediate the search f o r peace. A b i l l which the Arabs would
interpret as an affront to their own sovereignty can only make the
search f o r peace more difficult.
The proposed legislation goes f a r beyond attacking discrimination
against U.S. citizens and firms and would v i r t u a l l y prevent U.S. companies f r o m engaging i n trade w i t h A r a b nations. The effect of this is
v i r t u a l counterboyeott of the A r a b countries.
There has been some testimony before the Congress that trade w i l l
not be substantially reduced, because American goods are prized by
A r a b countries. I n other words, the Arabs w i l l m o d i f y their boycott
to adhere to U.S. law and policy.
The t r u t h is t h a t the A r a b countries can do w i t h o u t American technology and goods even though the goods supplied by our industry are
considered among the most needed and are imported i n volume. V i r t u a l l y everything supplied by our industry can be supplied by other
countries, including the Warsaw Pact nations.
W e believe that American companies and American workers which
do not discriminate should not be foreclosed f r o m the opportunity to
sell to countries f r i e n d l y to the U n i t e d States. Y e t that would be the
effect of the proposed legislation. I n just the metalworking segment of
our industry we anticipate the loss of over 110,000 jobs per year over
the coming 5 years and the loss of $1.2 b i l l i o n i n potential wages.
The Warsaw Pact countries and other developed countries would
move i n t o these markets more strongly. The U n i t e d States w i l l also
lose substantial foreign exchange earnings i n the M i d d l e East.
102
The absence of our industry f r o m the A r a b markets would have serious economic effects on the U n i t e d States, but w o u l d result i n no loss
of crude oil production i n any of the A r a b producing countries. A n d
the legislation here is l i k e l y to reduce the A r a b countries' inhibitions
on price restraint.
Since the Congress has taken up this issue, A r a b boycott requests,
w h i c h were i n the past treated casually by many A r a b countries and
often omitted, are less often omitted and are occasionally more strident. I n other cases, we have heard t h a t certain A r a b countries have
already diverted business f r o m U.S. firms.
The legislation before you attempts to govern the conduct of foreign
firms which are owned or controlled by U.S. stockholders. T h i s type
of extention of U.S. sovereignty is subject to increasing criticism.
M a n y of the countries i n which U.S. firms have foreign subsidiaries
have not adopted the U.S. policy, vis-a-vis the A r a b boycott, and to
the extent this legislation attempts to g r a f t U.S. laws and objectives
onto activities w i t h i n these countries, they are l i k e l y to be resentful.
The issue of the A r a b / I s r a e l i boycott and how to deal w i t h i t is a
h i g h l y emotional issue. A number of U.S. States have seized on the
issue and passed antiboycott legislation of v a r y i n g stringency. A l l
of these laws are so newT t h a t exporters are not sure of the requirements, nor even of the constitutionality of the State laws. F o r these
reasons, we believe i t is imperative f o r the Congress to make clear the
supremacy of the Federal Government i n foreign trade by preempting
State laws i n this area.
M r . Chairman, we request that the legislation be amended to clearly
restate the U.S. policy to promote and expand trade w i t h a l l countries i n the M i d d l e East. Some confusion about t h a t policy is clearly
evident after a l l of the debate over this legislation.
S i m i l a r l y , the b i l l should recognize the sovereignty of each nation
to i m p o r t or export the goods and services i t wishes f r o m the countries
and parties w i t h which i t wishes to do business. A n y b i l l should avoid
unnecessary interference w i t h the sovereignty of foreign nations
t h r o u g h the intrusion of U.S. law.
W e would ask the Congress to amend the proposed legislation to
make sure that prohibited antiboycott activity would be l i m i t e d t o persons or firms agreeing to undertake prohibited activities, rather t h a n
an intent to comply. I n t e n t is usually inferred f r o m a collection of
circumstances. O f t e n these are ambiguous, and the lack of c l a r i t y
here could cause serious problems w i t h compliance.
A g a i n , we believe i t is imperative f o r any b i l l to preempt State act i o n dealing w i t h foreign boycotts.
I have attached, as an appendix, data on the potential impact on
jobs and exports of this proposed legislation. I ask that m y testimony
and the appendix be admitted into the record.
I appreciate appearing before you and I w i l l be happy to answer
anv question.
Senator STEVENSON. W i t h o u t objection, i t w i l l be p u t i n the record.
I f there are no objections f r o m m y colleagues, we w i l l continue w i t h
all of the testimony and come back.
[ T h e complete statement f o l l o w s : ]
103
TESTIMONY OF GEORGE A. H E L L A N D
PRESIDENT
PETROLEUM EQUIPMENT SUPPLIERS ASSOCIATION
M r . Chairman, Members of Congress, Ladies and Gentlemen:
My name is George A. Helland.
1 am appearing in my capacity as
President of the Petroleum Equipment Suppliers Association.
Privately, I
am Executive V i c e President-Operations, Cameron I r o n w o r k s , Inc.
The Association represents 174 companies which manufacture petroleum
equipment, provide services and supplies to the exploration, d r i l l i n g and
producing segments of the petroleum industry.
Members of this organization
s e l l about 40% of their products and services overseas, and a substantial
p o r t i o n of this goes to the Middle East.
We believe the legislation before you bears r e a l r i s k s of damaging
A m e r i c a n interests.
The d i l e m m a facing the Congress is that two groups
f r i e n d l y to the United States have been q u a r r e l i n g w i t h each other for a
generation.
A t t i m e s , this q u a r r e l i n g has turned to outright w a r .
As one
aspect of i t , since 1951 the A r a b League States have engaged in an economic
boycott.
T o the extent the A r a b boycott has the effect of d i s c r i m i n a t i n g against
U.S, citizens or f i r m s on the grounds of r a c e , c o l o r , r e l i g i o n , sex or
national o r i g i n , we can and should take a hard line.
p r i n c i p l e s that we should not compromise.
These are fundamental
On the other hand, to the extent
the A r a b boycott is a p o l i t i c a l action of the A r a b States,
we must consider
whether this legislation, without amendment, w i l l disrupt our p o l i t i c a l ,
diplomatic and c o m m e r c i a l relations with the A r a b countries and with others.
104
- 2 -
The proposed legislation goes far beyond attacking d i s c r i m i n a t i o n
against U.S. citizens and f i r m s , and would v i r t u a l l y prevent U.S. companies,
as w e l l as their subsidiaries in foreign countries, f r o m engaging in trade
w i t h A r a b nations.
The effect of this is v i r t u a l counter boycott of the A r a b
countries.
Most of the A r a b countries r e q u i r e by their own laws some c e r t i f i c a t e
f r o m their suppliers and contractors that is related to the A r a b boycott of
Israel.
Most of these take the f o r m of a c e r t i f i c a t e that the goods a r e not
of I s r a e l i o r i g i n or that the goods a r e not going to be c a r r i e d on an I s r a e l i
ship, or on a ship that w i l l not be allowed to c a l l at the A r a b customer p o r t .
T h i s legislation would prevent us and our subsidiaries f r o m signing almost
any boycott-related c e r t i f i c a t e s .
T h e r e has been some testimony on this issue before the Congress that
U.S. trade w i l l not be substantially reduced, because A m e r i c a n goods a r e so
p r i z e d by A r a b countries that they w i l l change their own p o l i t i c a l decisions
and practices in response to this legislation.
In other words that the A r a b s
w i l l modify their boycott to adhere to U. S. law and policy.
The simple answer i s , the A r a b countries can do without A m e r i c a n
technology and goods which we supply even though the goods supplied by
our industry a r e considered among the most needed and a r e imported
in volume.
V i r t u a l l y everything supplied by our industry can be supplied
by other countries, including the Warsaw Pact nations.
How would the A r a b countries react to a U.S. policy which v i r t u a l l y
amounts to a counter boycott? I can only ask, how would we react in the same
situation?
105
-3We have noted that since the Congress has taken up this issue, A r a b
boycott requests,, which were in the past t r e a t e d casually by many A r a b
countries and often omitted, a r e less often omitted and a r e occasionally m o r e
strident.
In other cases we have heard, but have no d i r e c t knowledge, that
c e r t a i n A r a b countries have already diverted business f r o m U.S. f i r m s
without even g i v i n g them the opportunity to quote.
We believe that A m e r i c a n companies and A m e r i c a n w o r k e r s which do
not d i s c r i m i n a t e should not be foreclosed f r o m the opportunity to sell goods
and services to countries f r i e n d l y to the United States.
the effect of the proposed legislation.
Yet that would be
A m e r i c a n f i r m s and their foreign
subsidiaries must abide by host country laws in dealing with the A r a b countries.
If U.S. companies or their foreign subsidiaries are placed in a position of
violating either U.S. law or A r a b law, as they would be by this legislation,
we would expect a large d i v e r s i o n of A r a b country business.
Our industry
consists of f i r m s engaged in metalworking and f i r m s engaged in service
activities.
In just the metalworking segment of our industry and related
energy equipment manufacturers we anticipate the loss of 110,550 jobs per
year over the coming 5 years due to this legislation, and the loss of over
$1. 3 b i l l i o n in potential wages.
The Warsaw Pact countries and other developed countries would seize
the opportunity to move into these markets m o r e strongly and provide whatever equipment is necessary.
exchange earnings.
The U.S. w i l l also lose substantial foreign
I need not r e m i n d you of the burdens on the U.S. economy
of the negative balance of payments between the U.S. and the o i l producing
countries of the Middle East.
106
-4The absence of our industry f r o m A r a b markets would have serious
economic effects on the United States, but would r e s u l t i n no loss of crude
o i l production in any of the A r a b producing countries.
No one can condone an economic boycott between countries f r i e n d l y
to the United States.
Middle East.
The only true answer, of course, lies in peace in the
Both the A r a b countries and the I s r a e l i s are looking for the U.S.
to use its good offices to mediate the search for peace.
A b i l l which the
A r a b s would i n t e r p r e t as an affront to their own sovereignty can only make the
search for peace m o r e d i f f i c u l t .
What action might the A r a b countries take in response to this legislation? They have demonstrated that they are quite w i l l i n g to use the " o i l
weapon".
While it is not l i k e l y that the A r a b countries would cut off o i l ship-
ments to the U. S. , or even reduce the supplies (although they might be
reluctant to increase shipments to the U . S . ) , the legislation here is l i k e l y
to reduce the A r a b countries 1 i n h i b i t i o n s on p r i c e r e s t r a i n t .
V i r t u a l l y no country stands to be damaged m o r e by p r i c e increase in
o i l than I s r a e l .
I s r a e l is almost totally dependent on i m p o r t s , a large
p o r t i o n of which comes f r o m Iran.
I r a n , of course, is recognized as a
leader in urging p r i c e increases among OPEC states and is c e r t a i n to follow
any p r i c e increase among the OPEC members.
c r i t i c a l balance of payments position.
38% inflation last year alone.
blow.
I s r a e l is already in a
Its economy is in serious s t r a i t s w i t h
A further o i l i m p o r t burden would be a serious
107
-5The legislation before you attempts to govern the conduct of foreign
f i r m s which are owned or controlled by U. S. stockholders.
As I am sure
the Congress is aware, this type of extension of U.S. sovereignty is being
subject to increasing c r i t i c i s m among both the developed and undeveloped
countries.
Canada, for example, has recently acted to c u r b this trend
through establishment of its Foreign Investment Review Agency and by changes
in its Combines Investigation A c t , specifically prohibiting the effects of
certain foreign judgments in Canada.
Many of the countries in which U.S.
f i r m s have foreign subsidiaries and affiliates have not adopted the U.S. policy,
vis-a-vis the A r a b boycott, and to the extent this legislation attempts to
g r a f t U.S. laws and objectives onto activities within these countries, they are
l i k e l y to be resentful.
The issue of the A r a b / I s r a e l i boycott and how to deal w i t h it is a highly
emotional issue, and what the A r a b boycott does and does not do seems widely
misunderstood.
A number of U. S. states, however, have siezed on the issue
and passed anti- boycott legislation of varying stringency.
Some deal only
w i t h the d i s c r i m i n a t i o n aspects; others are as broad or broader than the
legislation under consideration.
troublesome.
The effects on A m e r i c a n trade is v e r y
A l l of these laws are so new that exporters are not sure of
the requirements, nor even of the constitutionality of the state laws.
Already
there has been some significant shift in purchases, sales and shipments f r o m
states with these laws to other states.
For these reasons, we believe it is
i m p e r a t i v e for the Congress to make clear the supremacy of the federal
government in foreign trade by preempting state laws in this area.
85-654 O - 77 - 8
108
-6-
We would ask the Congress to amend the proposed legislation to make
sure that prohibited anti-boycott a c t i v i t y should be l i m i t e d to persons or
f i r m s agreeing to undertake prohibited a c t i v i t i e s , r a t h e r than an intent
to comply.
Intent is usually i n f e r r e d f r o m a collection of circumstances.
Often, these a r e ambiguous, and the lack of c l a r i t y here could cause serious
p r o b l e m s w i t h compliance.
Secondly, we believe any b i l l should avoid
unnecessary interference w i t h the sovereignty of foreign nations through
the intrusion of U. S. law.
S i m i l a r l y , the b i l l should recognize the sovereignty of each nation to
i m p o r t or export the goods and services i t wishes f r o m the countries and
p a r t i e s w i t h which it wishes to do business.
Again, we believe it is imperative for any b i l l to preempt state action
dealing w i t h foreign boycotts.
L a s t l y , A m e r i c a n business is being buried under an avalanche of
f e d e r a l paperwork.
The proposed legislation would continue the r e p o r t i n g
requirements to the Department of C o m m e r c e , which a r e duplicated by the
r e p o r t i n g requirements under the Ribicoff Amendment of the Tax R e f o r m
A c t of 1976.
We suggest deleting the r e p o r t i n g requirement under the proposed
legislation, or in the a l t e r n a t i v e , urging your colleagues to undertake to
eliminate the r e p o r t i n g requirement under the Ribicoff Amendment.
F i n a l l y , M r . Chairman, and most i m p o r t a n t l y , the legislation should
be amended to c l e a r l y restate the U.S. policy to promote and expand trade
w i t h a l l countries in the Middle East.
Some confusion about that policy is
c l e a r l y evident after a l l of the debate over this legislation.
109
-7I have attached as an appendix, data on the potential impact on jobs
and exports of this proposed legislation.
appendix be admitted into the r e c o r d .
I appreciate appearing before you and
I w i l l be happy to answer any questions.
I ask that my testimony and the
110
APPENDIX
TESTIMONY
OF GEORGE A .
PETROLEUM
EQUIPMENT
TO
HELLAND,
SUPPLIERS
PRESIDENT
ASSOCIATION
BEFORE
SUBCOMMITTEE
OF THE SENATE
BANKING,
ON I N T E R N A T I O N A L
FINANCE
HOUSING AND URBAN A F F A I R S
FEBRUARY
21,
1977
COMMITTEE
m
CONTENTS
P o t e n t i a l Impact o f Arab Boycott Regulations
1
Summary o f T r e n d s i n E x p o r t S a l e s o f P e t r o l e u m E q u i p m e n t
2
Summary o f E x p o r t S h i p m e n t s 1 9 5 5 - 1 9 7 5
4
C h a r t o f E x p o r t Shipments 1955-1975
5
E x p o r t s o f P e t r o l e u m E q u i p m e n t - 1975 - By E q u i p m e n t Groups
T o t a l - 14 C o u n t r i e s Share
6
D o l l a r V a l u e o f E x p o r t s t o 14 A r a b C o u n t r i e s
7
P o t e n t i a l D o l l a r Value o f Exports
To 14 A r a b C o u n t r i e s 1 9 7 7 - 1 9 8 1
8
R e f i n e r y E x p a n s i o n - 14 A r a b C o u n t r i e s
$5 B i l l i o n I n C a p i t a l E q u i p m e n t
9
N a t u r a l - G a s P r o c e s s i n g P l a n t s 1 9 7 7 - 1 9 8 1 - 14 A r a b C o u n t r i e s
$5 B i l l i o n I n C a p i t a l E q u i p m e n t
10
P e t r o c h e m i c a l P l a n t s 1 9 7 7 - 1 9 8 1 - 14 A r a b C o u n t r i e s
$1.5 B i l l i o n I n C a p i t a l Equipment
11
P i p e l i n e P r o j e c t s 1 9 7 7 - 1 9 8 1 - 14 A r a b C o u n t r i e s
$ 8 . 2 B i l l i o n I n C a p i t a l Equipment
12
S o u r c e s and M e t h o d s
13
112
POTENTIAL IMPACT OF ARAB BOYCOTT
ON PETROLEUM EQUIPMENT RELATED METAL WORKING INDUSTRY
E x p e n d i t u r e s o f 14 B o y c o t t N a t i o n s 1977 - 1981
(In Billions)
D r i l l i n g and P r o d u c t i n g Equipment
$
1.8
R e f i n e r y Equipment
5.0
N a t u r a l Gas P r o c e s s i n g Equipment
5.5
P e t r o c h e m i c a l P l a n t Equipment
1.6
P i p e L i n e Equipment
8.2
$
22.1
E f f e c t on M e t a l Working I n d u s t r y Employment
T o t a l Employment (work y e a r s )
Employment Annualized over 5 years
Average Annual l o s s i n wages
I n M e t a l Working I n d u s t r y
- 1 -
552,500
110,500
$1,326,000
113
Summary o f Trends I n E x p o r t Sales
Of P e t r o l e u m Equipment
The t h r e a t o f t h e proposed Arab B o y c o t t l e g i s l a t i o n on p r o d u c e r s o f
p e t r o l e u m equipment and s e r v i c e i s s e r i o u s because o f t h e u n u s u a l l y h i g h
percentage o f i n d u s t r y sales t o the i n t e r n a t i o n a l markets.
U n l i k e most o t h e r i n d u s t r y i n t h e U n i t e d S t a t e s , p e t r o l e u m equipment
m a n u f a c t u r e r s have developed e x p o r t s a l e s t o a l e v e l where t h e y account
f o r 40% o f t h e i r a n n u a l volume.
I n 1955, e x p o r t s o f p e t r o l e u m equipment
t o t a l e d $129.6 m i l l i o n .
The market has expanded t o $1.58 b i l l i o n i n
1975.
T h i s g r o w t h i s due t o a number o f f a c t o r s w h i c h must be u n d e r s t o o d
i n o r d e r t o measure t h e t o t a l impact o f any l o s s o f i n t e r n a t i o n a l m a r k e t s .
B e g i n n i n g i n 1959 when U.S. domestic a c t i v i t y began t o d e c l i n e , equipment
manufacturers increased e f f o r t s t o develop i n t e r n a t i o n a l markets.
From
l e s s t h a n 10% o f a n n u a l s a l e s , t h e s e markets now account f o r more t h a n
40%.
The c o n t i n u i n g p r o d u c t r e s e a r c h and g r o w t h i n m a n u f a c t u r i n g t e c h n o l o g y
has made U.S. p e t r o l e u m equipment t h e s t a n d a r d o f t h e w o r l d .
However,
i t i s n o t enough t o make t h e b e s t t o o l s a v a i l a b l e t o keep market p o s i t i o n
i n p e t r o l e u m equipment s a l e s , a s t r o n g f i e l d s a l e s and s e r v i c e o r g a n i z a t i o n
i s necessary.
I t i s t h e f o l l o w up a f t e r t h e s a l e which makes f u t u r e
growth o p p o r t u n i t i e s p o s s i b l e .
E x p o r t s o f p e t r o l e u m equipment t o t h e 14 c o u n t r i e s accounted f o r
$195.9 m i l l i o n i n f o r e i g n exchange e a r n i n g s i n 1975.
About 4900 m e t a l
w o r k i n g j o b s were i n v o l v e d .
To g e t a p r o p e r p e r s p e c t i v e on t h i s i t i s necessary t o see t h e
e f f e c t o v e r a f i v e y e a r p e r i o d i n w h i c h s u b s t a n t i a l g r o w t h i s expected.
I n t h e y e a r s 1977 t h r u 1981 i t i s r e a s o n a b l e t o expect t h a t t h e market
f o r U.S. made p e t r o l e u m equipment w i l l be $1.8 b i l l i o n i n t h e 14 c o u n t r i e s
e n f o r c i n g t h e Arab B o y c o t t .
I n a d d i t i o n equipment f o r r e f i n e r i e s n a t u r a l gas p r o c e s s i n g p l a n t s ,
p e t r o c h e m i c a l p l a n t s and p i p e l i n e s w i l l t o t a l $20.3 b i l l i o n i n t h e same
t i m e frame. Most o f t h i s equipment c o u l d be p r o v i d e d by U n i t e d S t a t e s
companies and p l a n t s .
To a c h i e v e $22.9 b i l l i o n i n s a l e s would r e q u i r e a l m o s t 495 thousand
employees' j o b s i n t h e g e n e r a l c l a s s i f i c a t i o n o f m e t a l w o r k i n g .
Broken
down i n t o one y e a r segments, t h i s i s 110,500 m e t a l w o r k i n g j o b s per
y e a r . The a n n u a l p a y r o l l would be i n t h e range o f $1.32 b i l l i o n .
There
a r e a l s o some 1,200 j o b s o f U. S. C i t i z e n s w o r k i n g f o r o i l equipment and
s e r v i c e companies i n t h e 14 Arab c o u n t r i e s which would be l o s t .
- 2 -
114
Not included i n the lost wages figures presented are the jobs lost
from design and engineering firms, petroleum industry service companies
(geophysical, d r i l l i n g , logging, d r i l l i n g f l u i d s , well completions,
cementing and stimulation) and consulting firms. Also, the loss of jobs
i n the banking, f r e i g h t forwarding, insurance, port operations and
shipping are not included.
-3-
115
SUMMARY OF EXPORT SHIPMENTS
(Amounts Shown i n M i l l i o n s o f
Dollars)
Year
R o t a r y (1)
Drilling Bits
R o t a r y (2)
D r i l l i n g Rigs
Other (3)
D r i l l i n g Equipment
T o t a l (4)
Drilling-Producing
Equipment Shipments
1955
$
$
$
$
24.3
16.1
47.6
129.6
1965
20.7
28.8
71.8
185.2
1970
38.2
48.6
150.3
329.2
1973
52.4
51.1
389.3
639.3
1974
79.2
77.5
640.8
924.4
1975
110.8
181.1
1,057.7
1,580.0
(1)
Schedule B 6952465
(2)
Schedule B 7 1 8 4 2 6 1 ,
(3)
Schedule B 7184264
(4)
Includes 1,
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Schedule
Source:
7193148 and 7320330
2 & 3 above p l u s :
B
B
B
B
B
B
B
6952450
6952470
7192162
7192310
7193147
7193150
7198062
-
D r i l l & c o r e b i t s & reamers c o n t a i n i n g diamonds
P a r t s NEC f o r c o r e b i t s , d r i l l b i t s , e t c .
O i l w e l l and f i e l d pumps, l i q u i d .
O i l , gas s e p a r a t i n g equipment and p a r t s .
F i e l d r o d l i f t i n g equipment.
O i l f i e l d equipment, NEC.
O i l and gas f i e l d w i r e l i n e , e t c . , and
a c c e s s o r i e s , NEC.
U. S. Department o f Commerce
-4-
116
PETROLEUM EQUIPMENT EXPORTS
1955 -
1975
Value i n
$ Millions
$
1600
T o t a l Petroleum
Equipment E x p o r t s
1500
1400
Drilling
equipment
1300
1200
1100
1000
900
800
700
500
400
300
Drilling
Rigs
Drilling
Bits
200
100
1955
Source:
1970
1965
P e t r o l e u m Equipment S u p p l i e r s
U. S. D e p t . o f Commerce
1975
-5-
Assoc.
117
EXPORTS OF PETROLEUM EQUIPMENT 1975 - BY EQUIPMENT GROUPS
D o l l a r s i n Thousands - (OOO Omitted)
T o t a l Exports
Exports
to
Exports t o
Boycott Countries
As Percentage
Of Exports
Boycott Countries
D r i l l & core b i t s & reamers
containing diamonds
D r i l l b i t s , core b i t s &
reamers
$
10,019.2
110,770.5
13.4*
14.809.6
Parts f o r d r i l l b i t s , core
b i t s and reamers
19,740.5
O i l w e l l d r i l l i n g machineryRotary
38,262.9
Well d r i l l i n g machinery& Parts
9.7*
978.3
3.7$
739.9
13.0*
5,220.1
1,057,713.4
11.4*
120,159.7
O i l w e l l & f i e l d pumpsliquid
37,615.5
O i l , gas, separating
equipment and p a r t s
28,562.9
9.1*
3,420.4
40.0*
11,379.1
F i e l d rod l i f t i n g e q u i p t .
13,662.9
O i l f i e l d Derricks
& p a r t s , NEC
75.863.5
O i l f i e l d equipment, NEC
28.676.6
1,094.0
3.8*
O i l & gas f i e l d wire l i n e ,
equipment
95,819.9
17.698.7
18.5*
12, 691.2
18.8$
Truck mounted d r i l l i n g e q u i p t .
TOTAL
Source:
67,017.0
$1,583,724.8
U. S. Department of Commerce - FT410-1975
187.9
7,556.9
$195,935.8
1.4*
9.9*
12.3*
118
PETROLEUM EQUIPMENT EXPORTS 1975
DOLLAR VALUE OF EXPORTS TO 14 ARAB COUNTRIES
(Thousands o f D o l l a r s - 000 O m i t t e d )
Value
Arab Emirates
$
Percent
49,307.6
25.3%
Bahrain
12,702.6
6.5%
Egypt
19,666.3
10.1%
Iraq
46,735.3
23.9%
Jordan
A
Kuwait
6,283.9
Lebanon
448.6
3.2%
A
Libya
15,809.0
8.1%
Oman
2,313.8
1.2%
P e o p l e s Democratic R e p u b l i c o f Yemen
A
Qatar
Saudi A r a b i a
Syria
3,678.2
1.8%
36,340.8
18.6%
2,553.4
1.3%
Yemen
A
TOTAL
$
A-Less t h a n 0.5%
-7-
195,935.8
100.0%
119
POTENTIAL DOLLAR VALUE OF EXPORTS TO 14 ARAB COUNTRIES
1977-1981
( M i l l i o n s of Dollars)
Value
Arab Emirates
$
455
Bahrain
126
Egypt
182
Iraq
432
Jordan
A
Kuwait
57
Lebanon
3
Libya
146
Oman
22
Peoples Democratic Republic o f Yemen
A
Qatar
32
Saudi A r a b i a
336
Syria
23
Yemen
A
TOTAL
$
A - Less t h a n 0.5%
- 8 -
1,824
120
REFINERY EXPANSION - 14 ARAB COUNTRIES
19 P r o j e c t s * - 1 . 8 M i l l i o n B a r r e l s / D a y C a p a c i t y
$5 B i l l i o n I n C a p i t a l Equipment
CATEGORY
$ MILLION
Columns, t r a y o r packed
$
208
Pressure vessels
Reactors
177
(hydrocracking)
*-
142
Process p i p e & f i t t i n g s
481
H e a t exchangers
394
( a l l types)
E l e c t r i c a l power & l i g h t i n g
281
Fired heaters & b o i l e r s
263
Valves
284
Compressors & b l o w e r s
257
Instrumentation
168
Pumps
149
Steel structures,
Insulation
platforms,
(pipe, vessels,
Storage tanks
supports
108
columns, exchangers)
119
(process)
S p e c i a l equipment
(filters,
169
mufflers,
etc.)
110
C o o l i n g towers
39
Ecology, p o l l u t i o n
61
Storage
( t a n k farm)
Loading r a c k , docks,
U t i l i t i e s piping,
750
etc.
300
storage piping
350
Rigging, cranes
65
F i r e f i g h t i n g equipment
160
Total
$
* O i l and Gas J o u r n a l - October 4 ,
1976
-9-
5035
121
NATURAL-GAS PROCESSING PLANTS 1 9 7 7 - 1 9 8 1 - 14 ARAB COUNTRIES
4 Projects* -
$10 B i l l i o n
$ 5 , 4 6 8 B i l l i o n I n C a p i t a l Equipment
CATEGORY
$ MILLION
Columns
$
704
Pressure vessels
314
Pipe & f i t t i n g s
510
H e a t exchangers
510
E l e c t r i c a l power
350
Fired heaters & boilers
351
Valves
350
Compressors & b l o w e r s
349
Instrumentation
180
Pumps
249
Structural Steel
125
Insulation
125
Special & Misc.
(filters,
mufflers,
etc.)
125
Cooling towers
63
Ecology, p o l l u t i o n
63
S t o r a g e Tanks
485
Loading r a c k
210
Inventory
125
F i r e f i g h t i n g equipment
125
Total
*
$
O i l and Gas J o u r n a l - October 4 ,
1976
-10-
5468
122
PETROCHEMICAL PROJECTS 1 9 7 7 - 1 9 8 1 - 14 ARAB COUNTRIES
41 Projects*
$1,578 B i l l i o n I n C a p i t a l
Equipment
CATEGORY
$ MILLION
Columns, t r a y o r packed
$
80
Pressure vessels
60
Reactors
86
Pipe & f i t t i n g s
Utilities
196
& storage, piping,
fittings
130
H e a t exchanges
135
E l e c t r i c a l power
97
Fired heaters & boilers
90
Valves
86
Compressors & b l o w e r s
91
Instrumentations
58
Pumps
53
Structural steel
38
Insulation
40
Storage tanks
40
Special equip, ( f i l t e r s ,
mufflers, mixers,
etc.)
38
Cooling towers—
21
Extrusion & handling equip.
185
P o l l u t i o n c o n t r o l equip.
55
Total
$
* O i l and Gas J o u r n a l - October 4 ,
-11-
1976
1579
123
PIPELINE PROJECTS 1 9 7 7 - 1 9 8 1 - 14 ARAB COUNTRIES
16 P r o j e c t s * -
$9.5
$8.22 B i l l i o n i n C a p i t a l
Billion
Equipment
CATEGORY
$ MILLION
Line pipe
3904
P i p e l i n e f i t t i n g s and v a l v e s
572
Prime movers, compressors, pumps
1,258
Other s t a t i o n f a c i l i t i e s - Valves - Meters
1,001
Coating
301
Communications
114
P i p e l i n e c o n s t r u c t i o n equipment
1,072
TOTAL
8,222
* O i l and Gas J o u r n a l - October 4 ,
1976
-12-
85-654 O - 77 - 9
124
S o u r c e s o f D a t a a n d M e t h o d s Used
To F o r e c a s t F u t u r e M a r k e t s
H i s t o r i c a l d a t a o n P e t r o l e u m E q u i p m e n t E x p o r t s s u p p l i e d b y t h e U.
S. D e p a r t m e n t o f Commerce - F . T . - 4 1 0 .
F u t u r e p e t r o l e u m equipment e x p o r t p r o j e c t i o n s based on p a s t s a l e s ,
p l u s e s t i m a t e d m a r k e t e x p a n s i o n f o r p l a n n e d and p r o j e c t e d p r o g r a m s o f
oilfield activity.
The s h i p m e n t s t o t h e s e c o u n t r i e s o v e r t h e p a s t t h r e e y e a r s h a v e
j u m p e d f r o m $57 m i l l i o n t o $195 m i l l i o n .
I t i s not reasonable t o expect
t h e s e s a l e s t o a l m o s t t r i p l e i n t h e n e x t t h r e e y e a r s and t h e n t r i p l e
a g a i n by 1981.
A more r e a s o n a b l e p r o j e c t i o n w o u l d be a t t h e f o l l o w i n g
rate:
Year
1973
1974
1975
1976
1977
1978
1979
1980
1981
Shipments
(Actual)
"
"
( E s t i m a t e o n 10 mos. a c t u a l )
Estimate
"
"
"
"
Total -
$
1977 t o 1 9 8 1
($Million)
57
105
195
219
261
307
360
426
470
$ 1,824
Refinery Expansion:
P r o j e c t s - O i l a n d Gas J o u r n a l - W o r l d Wide
C o n s t r u c t i o n O c t o b e r 4 , 1976 page 112 f . f .
N a t u r a l Gas P r o c e s s i n g P l a n t s :
P r o j e c t s - O i l a n d Gas
W o r l d Wide C o n s t r u c t i o n - O c t o b e r 4 , 1976 page 162 f . f .
Journal-
Petrochemical Plants:
P r o j e c t s - O i l a n d Gas J o u r n a l - W o r l d Wide
C o n s t r u c t i o n - O c t o b e r 4 , 1976 page 128 f . f .
Pipeline Projects:
P r o j e c t s - O i l a n d Gas J o u r n a l - W o r l d Wide C o n s t r u c t i o n - O c t o b e r 4 , 1976 p a g e 126 f . f .
C o s t f a c t o r s f o r e q u i p m e n t n e e d e d f o r t h e 89 p r o j e c t s w e r e t a k e n f r o m
" M a r k e t D a t a 7 6 " p u b l i s h e d b y t h e P e t r o l e u m P u b l i s h i n g Company, T u l s a ,
Oklahoma.
The f i g u r e s f o r r e f i n e r y c o n s t r u c t i o n w e r e r e d u c e d b e c a u s e
-13(continued)
125
t h e t y p e o f r e f i n e r i e s t o be b u i l t i n t h e s u b j e c t c o u n t r i e s w i l l n o t
b e a s e l a b o r a t e a s u n i t s b u i l t i n more a d v a n c e d c o n s u m i n g c o u n t r i e s .
A n n u a l l o s s i n wages w e r e computed by t h e
$_ X
A S/W
$
A S/W
1 yr
5 Yr
AMS
AWL
=
=
=
=
=
=
1 Y r . X AMS = AWL
5 Yrs
Total Sales ($19.8 B i l l i o n )
Average S a l e s Per Worker ( $ 4 0 , 0 0 0 )
One Y e a r
P e r i o d c o v e r e d by p r o j e c t i o n
A v e r a g e Wages ( $ 1 2 , 0 0 0 )
A n n u a l Wages l o s t
-14-
formula:
126
M r . STEWART. F i r s t I want to express m y appreciation, to the committee and M r . Marcuss f o r the opportunity to appear. I am accompanied by P a u l P r a t t , who works w i t h our international councils and
therefore has expertise i n the international area.
I assume our complete statement is a part of the record.
I t is unfortunate, I t h i n k , but thoroughly understandable, t h a t we
are not i n a position to address an administration position on this
particular issue. W e understand t h a t Secretary Vance w i l l present such
a position on the 28th.
I share the views expressed by other witnesses, i n connection w i t h a
concern about a confrontation at this stage affecting international
negotiations w i t h Israel and the A r a b States. Indeed, i t is more than a
coincidence that the new administration is now r e t u r n i n g its Secretary
of State f r o m the M i d d l e East after having conferred w i t h the parties,
to what is really a w a r ; no peace has yet been achieved.
W e feel that i n their present f o r m the antiboycott bills do represent
a confrontation, which is unnecessary, particularly under the current
circumstances and the m o r n i n g Washington Post has an article t o
the effect that this issue was raised w i t h Secretary Vance, I believe i n
Saudi Arabia.
I want to make i t clear wTe do not appear here i n support o f the
boycott. Indeed, American business would like n o t h i n g better than t o
get r i d of i t , but we are convinced, as I t h i n k you are, that i t w i l l be
necessary f o r a peace settlement to be arrived at before the Arabs rescind the boycott entirely.
I would like to say t w o affirmative things, before suggesting some
negative ones. F i r s t , of all, we support the national security provisions
of t i t l e I of S. 69 and S. 92.
O n a related matter, but not as to a b i l l which is before this committee, we commend Senator Stevenson f o r introducing S. 7 1 0 . 1 am very
f a m i l i a r w i t h the misuse by Government of the T r a d i n g - W i t h - t h e Enemy A c t , which, d u r i n g President Johnson's administration, was
used by a large strain of legal reasoning, to j u s t i f y foreign direct investment controls.
Now, to the bills before the subcommittee. I t h i n k there is a distinct
possibility t h a t the administration may give serious consideration to
going another route w i t h the approval, of course, of the Congress, as
distinguished f r o m the bills before the committee. T h a t w o u l d involve
stepping up the pressure on companies to negotiate boycott-related
clauses out of deals w i t h the A r a b countries, where this can be done,
and we understand i t has been done i n some cases. Then back t h a t up
w i t h p o w e r f u l negotiations and diplomacy, as distinguished f r o m what
I w i l l describe as confrontation bills.
W i t h due respect to the subcommittee's opening remarks, there are
certain comments that were made which I won't take the time w i t h i n
the 5-minute period to address, t h a t I believe reflect some misunder-
127
standings. W e published not too l o n g ago a piece called " M y t h s a n d
Unrealities o f the A r a b Boycott o f Israel." Those myths should really
be dealt w i t h before any conclusions are reached, i n our judgment. W e
ask t h a t this M A P I publication be admitted f o r the record.
Senator STEVENSON. I t shall be p a r t o f the record (see p. 1 8 7 ) .
M r . STEWART. NOW, t r y i n g t o stay w i t h i n the 5-minute period, I
w a n t t o t i c k off a f e w things t h a t are i n o u r w r i t t e n statement. F i r s t ,
the U n i t e d States already has taken f a r more action against f o r e i g n
boycotts t h a t any other nation. T h a t is a fact.
A t the same time, t o some degree we are being h y p o c r i t i c a l as a
nation, i f we conclude t h a t the A r a b boycott is bad, b u t t h a t the boycotts o r similar actions, w h i c h we employ as a country are a l l r i g h t .
I won't go into the details o f what has been done thus f a r , but we w i l l
f u r n i s h i t f o r the record, i n the interest o f time. W e share t h e sug :
gestion t h a t the A r a b s do have options w i t h regard t o purchase o f
equipment, w h i c h they want. Based on what we are t o l d by f o r e i g n
companies which do supply the Arabs they w o u l d choose t h a t route, at
least i n some cases.
T h e prohibitions r e g a r d i n g certifications, and compliance w i t h them,
are very difficult. T h e y place a tremendous burden on A m e r i c a n i n dustry, because about a l l t h a t a company t h a t is asked t o sign a certification can say is really speculation on certain facts w h i c h are n o t
available t o the company. I am sure the gentleman on the committee
are aware t h a t the boycott list is not a public document and i t is w h a t
has been called i n terms o f our Constitution, i t is a m o v i n g document.
I t is moved around by A r a b nations who attempt to use i t , i n connect i o n w i t h relations w i t h U.S. companies. W e see really very l i t t l e t o be
gained b y the passage o f this legislation, and we see much to be lost
i n terms o f the present state o f negotiations. One b i l l w o u l d p r o h i b i t
negative certifications.
I used t o have a l a w professor, who used the term, " a distinction
w i t h o u t a difference."
I really t h i n k a negative versus a positive certification is a "distinct i o n , " although you can make a technical distinction. T h e refusal-todeal provisions are very difficult to observe f o r some o f the reasons t h a t
I have mentioned, and they may be very difficult t o enforce.
The w o r d " i n t e n t " was referred to, once again, difficult to prove,
and also difficult t o comply w i t h .
W e believe, therefore, i n conclusion that i t w o u l d be detrimental
f o r U . S . interests t o attempt t o legislate against the A r a b boycott
beyond the present law and measures we have endorsed. T o the extent
there are other problems w i t h adverse effect on the U n i t e d States, we
believe those matters should be handled t h r o u g h diplomacy. A t least
the new a d m i n i s t r a t i o n should be given an o p p o r t u n i t y t o do so.
[Complete statement o f M r . Stewart f o l l o w s : ]
128
Statement o f t h e
Machinery and A l l i e d Products I n s t i t u t e
to the
Subcommittee on I n t e r n a t i o n a l Finance
of the
Senate Committee on B a n k i n g , Housing and Urban A f f a i r s
on
S. 69 and S. 92, B i l l s To Amend t h e
Export A d m i n i s t r a t i o n Act
February 21, 1977
Introduction
I appear today i n b e h a l f o f t h e Machinery and A l l i e d P r o d u c t s
I n s t i t u t e (MAPI) w h i c h i s t h e n a t i o n a l r e s e a r c h o r g a n i z a t i o n and spokesman
f o r t h e c a p i t a l goods and a l l i e d equipment m a n u f a c t u r e r s o f t h e U n i t e d
States.
Our t e s t i m o n y d e a l s w i t h the a n t i b o y c o t t p r o v i s i o n s o f S. 69
and S. 92.
Our membership has a v a s t s t a k e i n f o r e i g n t r a d e , i n c l u d i n g s u b s t a n t i a l t r a d e w i t h t h e g r o w i n g markets i n t h e M i d d l e E a s t .
I n 1975, U . S .
e x p o r t s o f machinery and r e l a t e d equipment t o t a l e d $28.5 b i l l i o n .
Of
t h i s t o t a l , $1.5 b i l l i o n were e x p o r t s t o Arab League markets and $300 m i l l i o n were e x p o r t s t o I s r a e l .
The U.S. N a t i o n a l
Interest
We b e l i e v e t h a t enactment o f s t r o n g a n t i b o y c o t t l e g i s l a t i o n ,
such as t h a t c o n t a i n e d i n S. 69 and S. 92 ( r e f e r r e d t o h e r e a f t e r as " t h e
b i l l s " ) , would n o t be i n t h e U.S. n a t i o n a l i n t e r e s t i n t h e coming months
and would be p a r t i c u l a r l y d e t r i m e n t a l i n terms o f t h e l o n g - r a n g e i n t e r e s t s
The
o f t h e U n i t e d S t a t e s , I s r a e l , and t h e Arab b o y c o t t i n g n a t i o n s .
U n i t e d S t a t e s now has a new A d m i n i s t r a t i o n , i n c l u d i n g a new S e c r e t a r y o f
S t a t e , and p o l i t i c a l c o n d i t i o n s i n t h e M i d d l e East a r e , i n t h e o p i n i o n
o f most knowledgeable people i n government and o u t s i d e , b e t t e r t h a n t h e y
have been f o r many y e a r s f o r t h e b e g i n n i n g o f m e a n i n g f u l n e g o t i a t i o n s
toward a permanent peace s e t t l e m e n t .
Passage o f s t r o n g a n t i b o y c o t t
l e g i s l a t i o n , i n a d d i t i o n t o t h a t a l r e a d y on t h e s t a t u t e b o o k s , a t t h i s
t i m e u n d o u b t e d l y would be i n t e r p r e t e d by t h e Arabs as a h o s t i l e g e s t u r e
and c o u l d j e o p a r d i z e t h e key r o l e o f t h e U n i t e d S t a t e s as a m e d i a t o r
i n the forthcoming n e g o t i a t i o n s .
A p a r t f r o m t h i s major f o r e i g n p o l i c y c o n s i d e r a t i o n , we b e l i e v e
t h e b i l l s ' p r o h i b i t i o n s , w h i c h would f o r b i d U.S. companies and t h e i r f o r e i g n a f f i l i a t e s from p r o v i d i n g most forms o f b o y c o t t - r e l a t e d d o c u m e n t a t i o n ,
pose g r e a t r i s k s i n terms o f p o s s i b l e s u b s t a n t i a l d i v e r s i o n o f Arab b u s i ness t o o t h e r i n d u s t r i a l c o u n t r i e s and d i m i n u t i o n o f t h e i m p o r t a n t economic
r o l e t h e U n i t e d S t a t e s now e n j o y s i n t h e M i d d l e E a s t . F u r t h e r , t h e benef i t s t o be gained by e n a c t i n g such l e g i s l a t i o n a r e n o t c l e a r .
Indeed, i t
129
- 12 -
a p p e a r s t o us t h a t t h e b i l l s ' p r o v i s i o n s c o u l d w e l l r e s u l t i n more
f i c u l t i e s f o r U . S . p e r s o n s and f i r m s i n t e r m s o f d o i n g b u s i n e s s i n
M i d d l e East than e x i s t a t p r e s e n t .
difthe
B e f o r e s e t t i n g f o r t h o u r o b j e c t i o n s t o t h e m e a s u r e s , we w a n t
t o make c l e a r t h a t t h e I n s t i t u t e ' s m e m b e r s h i p , and U . S . b u s i n e s s g e n e r a l l y ,
would p r e f e r t h a t t h e b o y c o t t o f I s r a e l be r e s c i n d e d .
Implementation of
t h e b o y c o t t r u n s c o u n t e r t o t h e t h r u s t o f t h e U . S . Government and o t h e r
l e a d i n g t r a d i n g n a t i o n s t o remove r e s t r i c t i v e p r a c t i c e s w h i c h d i s t o r t
t r a d e and i n v e s t m e n t f l o w s .
The b o y c o t t a l s o adds t o t h e c o m p l e x i t y and
p a p e r w o r k a s s o c i a t e d w i t h b u s i n e s s a b r o a d a n d , as a r e s u l t o f t h e d i s c u s s i o n i n r e c e n t m o n t h s o f company " c o m p l i a n c e " w i t h t h e A r a b b o y c o t t
b a s e d o n a m i s u n d e r s t a n d i n g o f D e p a r t m e n t o f Commerce r e p o r t s , has
r e s u l t e d i n e m b a r r a s s m e n t f o r some companies and c o n c e r n t h a t t h e y m i g h t
be t h e s u b j e c t o f d o m e s t i c economic r e t a l i a t i o n as a r e s u l t o f s u c h
"compliance."
H o w e v e r , i n t h e o p i n i o n o f most b u s i n e s s e s and o t h e r o b s e r v e r s o f t h e M i d d l e E a s t , t h e b o y c o t t w i l l n o t be w i t h d r a w n u n t i l t h e r e
i s a p e r m a n e n t peace s e t t l e m e n t i n t h e a r e a .
Some G e n e r a l
Observations
I n i t s d e l i b e r a t i o n s concerning a d d i t i o n a l antiboycott
l a t i o n , we b e l i e v e t h e C o n g r e s s s h o u l d c o n s i d e r t h e f o l l o w i n g :
1.
J u s t a f e w months ago t h e C o n g r e s s , i n an u n p r e c e d e n t e d a d d i t i o n t o t h e I n t e r n a l Revenue Code, e n a c t e d a n t i b o y c o t t amendments t o t h e Tax R e f o r m A c t .
Those e x t r e m e l y c o m p l e x p r o v i s i o n s r e q u i r e t h a t
s p e c i f i e d t a x b e n e f i t s be d e n i e d t o U.S. t a x p a y e r s
who a g r e e , as a c o n d i t i o n o f d o i n g b u s i n e s s i n an
Arab b o y c o t t i n g c o u n t r y , t o r e f r a i n from:
—
Doing business w i t h o r i n a boycotted
o r w i t h the government, companies, or
of that country;
—
D o i n g b u s i n e s s w i t h any U . S . p e r s o n engaged i n
trade i n a country which i s the object of the
boycott;
—
D o i n g b u s i n e s s w i t h any company whose o w n e r s h i p o r management i n c l u d e s i n d i v i d u a l s o f a
p a r t i c u l a r n a t i o n a l i t y , race, or r e l i g i o n or
t o remove ( o r r e f r a i n f r o m s e l e c t i n g ) c o r p o r a t e
d i r e c t o r s who a r e i n d i v i d u a l s o f a p a r t i c u l a r
n a t i o n a l i t y , race, or r e l i g i o n ;
—
Employing i n d i v i d u a l s o f a p a r t i c u l a r
a l i t y , race, or r e l i g i o n .
country
nationals
nation-
legis-
130
- 3 I n addition, tax benefits would be lost i f the taxpayer
agrees, as a condition of the sale of a product to a
boycotted country, to r e f r a i n from shipping or insuring
that product on a carrier owned, leased or operated
by a person who does not participate i n or cooperate
with an international boycott ( i . e . , a carrier which
has been blacklisted for v i o l a t i n g boycott r u l e s ) .
2.
The U.S. Government has taken action i n a number of
areas to assure that the Arab boycott does not d i s criminate against U.S. citizens on the basis of race,
r e l i g i o n , or national o r i g i n . Administrative actions
include: (a) amendments to the Export Administration
Regulations which prohibit U.S. exporters and related
service organizations from taking any action i n response
to a boycott-related request when that request discriminates, or has the e f f e c t of discriminating, against U.S.
citizens or firms on the basis of race, color, r e l i g i o n ,
sex, or national origin; (b) an amendment to the Secretary
of Labor's March 10, 1975 memorandum on the obligations
of federal contractors and subcontractors with respect
to employment abroad; and (c) statements from several
federal regulatory agencies (including the Federal
Reserve Board, the Comptroller of the Currency, the
Securities and Exchange Commission, and the Federal
Home Loan Board) to the i n s t i t u t i o n s under t h e i r j u r i s dictions against discriminatory practices. New laws
include: (a) anti-discrimination provisions of the
International Security Assistance and Arms Export Cont r o l Act governing employment practices i n connection
with the furnishing of m i l i t a r y assistance and the
Foreign M i l i t a r y Sales (FMS) program; and (b) the Equal
Credit Opportunity Act which prohibits any creditor
from discriminating against any credit applicant on
the basis of race, color, r e l i g i o n , national o r i g i n ,
sex, marital status, or age.
3.
S t i l l other U.S. Government actions directed against the
Arab boycott include: (a) the cessation by the Department of Commerce of the d i s t r i b u t i o n of trade opport u n i t i e s known to contain boycott-related conditions;
(b) public disclosure of reports (except for c o n f i dential commercial information) submitted by companies
to the Department of Commerce concerning boycott-related
requests which they have received; (c) withholding of
Export-Import Bank and Overseas Private Investment
Corporation (OPIC) support for transactions which include
boycott-related conditions; and (d) a c i v i l a n t i t r u s t
suit against Bechtel Corporation and four of i t s subsidi a r i e s for a c t i v i t i e s related to the Arab boycott.
131
- 4 -
1/
4.
Since no f o r e i g n c o u n t r y has taken any a c t i o n w h i c h
would have s i g n i f i c a n t adverse impact on i m p l e m e n t a t i o n
o f t h e b o y c o t t , p r o d u c t s r e p r e s e n t i n g comparable t e c h n o l o g y t o U.S. p r o d u c t s o r systems a r e a v a i l a b l e t o t h e
Arab b o y c o t t i n g n a t i o n s f r o m o t h e r c o u n t r i e s , i n c l u d i n g
communist c o u n t r i e s . / I
5.
The Arabs a r e , o f c o u r s e , aware t h a t t h e U n i t e d S t a t e s
exercises c o n t r o l s — i n s h o r t , b o y c o t t s — d i r e c t l y or
i n d i r e c t l y a g a i n s t s e v e r a l communist and o t h e r countries.
A l t h o u g h t h e r e a r e i m p o r t a n t d i f f e r e n c e s between
t h e r e s t r i c t i v e t r a d e p r a c t i c e s employed by t h e Arabs
and those employed by t h e U n i t e d S t a t e s i n terms o f
b o t h t a r g e t s and t e c h n i q u e s , n e i t h e r enjoys any s p e c i a l
l e g i t i m a c y under i n t e r n a t i o n a l l a w . The U.S. i n d i r e c t
c o n t r o l s , p a r t i c u l a r l y those e x e r c i s e d by t h e T r e a s u r y
under t h e T r a d i n g W i t h t h e Enemy A c t , have i m p o r t a n t
e x t r a t e r r i t o r i a l a s p e c t s . Whatever these r e s t r i c t i o n s
e x e r c i s e d e x t r a t e r r i t o r i a l l y by t h e U n i t e d S t a t e s a r e
c a l l e d (extended p r i m a r y b o y c o t t s , secondary b o y c o t t s ,
o r o t h e r ) , t h e i r manner o f i m p l e m e n t a t i o n i s so s i m i l a r
t o t h a t o f t h e Arab b o y c o t t t h a t they would be e f f e c t i v e l y p r o s c r i b e d i f f o r e i g n c o u n t r i e s adopted a n t i b o y c o t t l e g i s l a t i o n a l o n g t h e l i n e s of t h a t proposed
by S. 69 and S. 92.
6.
A l t h o u g h i t has been s t a t e d i n t h e Congress and e l s e where t h a t many U.S. businesses a r e i n f a v o r o f s t r o n g
a n t i b o y c o t t l e g i s l a t i o n — i n d e e d t h a t they seek such
l e g i s l a t i o n i n o r d e r t o be p r o t e c t e d from t h e b o y c o t t —
we a r e n o t aware o f s i g n i f i c a n t business s u p p o r t f o r
a d d i t i o n a l a n t i b o y c o t t l e g i s l a t i o n , even among t h o s e
companies b l a c k l i s t e d .
Because o f t h e p r e s e n t uneven
enforcement o f c e r t a i n aspects o f t h e b o y c o t t , we u n d e r s t a n d t h a t some b l a c k l i s t e d companies a r e d o i n g subs t a n t i a l b u s i n e s s i n a few o f t h e Arab c o u n t r i e s .
In
o t h e r cases, b l a c k l i s t e d companies which m i g h t be c o n cerned t h a t t h e y a r e l o s i n g b u s i n e s s i n Arab b o y c o t t i n g
c o u n t r i e s p r o b a b l y do n o t b e l i e v e t h a t s t r o n g U.S.
a n t i b o y c o t t l e g i s l a t i o n w i l l improve t h e i r p r o s p e c t s
i n those c o u n t r i e s . W h i l e b l a c k l i s t e d and o t h e r comp a n i e s m i g h t be r e l u c t a n t t o adopt a p u b l i c p o s i t i o n
i n f a v o r o f s t r o n g a n t i b o y c o t t l e g i s l a t i o n because o f
concern over f u t u r e p r o s p e c t s f o r s a l e s i n t h e Arab
b o y c o t t i n g n a t i o n s , i t i s our u n d e r s t a n d i n g t h a t t h e
E x e c u t i v e Branch has n o t r e c e i v e d s i g n i f i c a n t i n f o r m a l
b u s i n e s s s u p p o r t f o r such measures.
T h i s p o i n t i s developed more f u l l y i n Attachment A, " A v a i l a b i l i t y
Arabs o f Arms and Other Products From Other I n d u s t r i a l N a t i o n s . "
to
132
- 12 -
7.
The United States experienced a merchandise trade
d e f i c i t of $9.6 b i l l i o n i n 1976 and a l l the forecasts we have seen indicate that i t probably w i l l
be much higher this year. An estimate by a leading w
New York bank i s that the d e f i c i t may be i n the $15$18 b i l l i o n range. While U.S. exports to the Arab boycotting nations s t i l l do not constitute a major portion
of U.S. exports, they are substantial. Perhaps more
importantly, they have provided an important l i f t to
t o t a l U.S. exports of goods and services during the
l a s t two to three years when most of our major overseas markets have been i n a recession. As we noted
at the outset, we believe the b i l l s ' prohibitions
could adversely a f f e c t i n a substantial way U.S. part i c i p a t i o n i n this large and growing market.
8.
I n the opinion of most observers of the Middle East,
the boycott w i l l not be withdrawn u n t i l there is a
permanent peace settlement i n the area. As noted
e a r l i e r , i t also i s the opinion of most observers, i n cluding the Executive Branch of the United States
Government, that for a number of reasons 1977 o f f e r s
the best opportunity for the negotiation of a peace
settlement that has existed for many years. The
United States i s expected to play a major r o l e as
mediator i n those negotiations. Adoption of strong
antiboycott l e g i s l a t i o n , which the Arab nations undoubtedly would interpret as an anti-Arab action, could
jeopardize the U.S. role i n those negotiations.
As the above points indicate, the United States already has taken
greater action than any other country to oppose the Arab boycott. From the
viewpoint of the Arab nations (and probably others) the distinctions between the Arab boycott and U.S. boycotts and r e s t r i c t i v e trade practices
are not s i g n i f i c a n t . Enactment of strong antiboycott l e g i s l a t i o n by the
United States could not only adversely a f f e c t U.S. exports very substant i a l l y but also could compromise the U.S. role as an "honest broker" i n
the coming negotiations toward a permanent peace settlement i n the region.
Impact of the B i l l s i n Terms of the
Arab Boycott of I s r a e l
Impact of the Prohibitions
on U.S. Exporters / I
According to data compiled by the Department of Commerce during
the period April-September 1976, the most recent period for which data are
1/
The b i l l s 1 prohibitions are described b r i e f l y i n Attachment B, "The
Antiboycott Prohibitions of S. 69 and S. 92 i n B r i e f . "
133
6
-
a v a i l a b l e , t h e most numerous b o y c o t t - r e l a t e d r e q u e s t s r e c e i v e d by U . S .
e x p o r t e r s / I were t h e f o l l o w i n g :
R e s t r i c t i v e Trade Requests
Number Received
Carrier or a i r l i n e i s not b l a c k l i s t e d
16,966
I n s u r a n c e company i s n o t b l a c k l i s t e d
Goods t o be e x p o r t e d a r e n o t o f I s r a e l i
o r i g i n and do n o t c o n t a i n m a t e r i a l s o f
Israeli origin
2,254
29,828
S u p p l i e r , v e n d o r , m a n u f a c t u r e r o r benef i c i a r y i s n o t b l a c k l i s t e d nor s i s t e r o r
mother company o f a f i r m t h a t i s b l a c k l i s t e d
5,866
Other
2,776
TOTAL
57,690
W i t h r e s p e c t t o t h e above b o y c o t t - r e l a t e d r e q u e s t s r e c e i v e d by
U.S. e x p o r t e r s f r o m Arab b o y c o t t i n g n a t i o n s , i t appears t o us t h a t the
bills:
1.
Would p r o h i b i t c e r t i f i c a t i o n by U.S. f i r m s t h a t
(a) a b l a c k l i s t e d c a r r i e r w i l l n o t be used f o r a
shipment t o an Arab b o y c o t t i n g c o u n t r y and (b) a
b l a c k l i s t e d marine i n s u r e r has n o t been engaged
t o i n s u r e t h e shipment.
I f such a p r o h i b i t i o n were enacted, t h e p r i n c i p a l
e f f e c t l i k e l y would be o r d e r s l o s t by U.S. f i r m s
who would be p r o h i b i t e d by law from meeting Arab
documentation r e q u i r e m e n t s .
At t h e same t i m e ,
no b e n e f i t s would be gained by the U n i t e d S t a t e s
s i n c e a b l a c k l i s t e d s h i p w i l l not be p e r m i t t e d t o
c a l l a t an Arab p o r t and the owner would not o f f e r
t h e s h i p f o r such a voyage. Presumably t h e same
s i t u a t i o n would be t r u e w i t h r e s p e c t t o marine
insurers.
To t h e e x t e n t t h a t the Arab b o y c o t t i n g n a t i o n s
s h o u l d choose t o c o n t i n u e purchases from U.S.
e x p o r t e r s , they c o u l d s e l e c t b o t h t h e c a r r i e r and
1/
I n a d d i t i o n t o t h e 57,690 b o y c o t t - r e l a t e d r e q u e s t s r e p o r t e d by
e x p o r t e r s , o t h e r e x p o r t - r e l a t e d f i r m s (banks, c a r r i e r s , e t c . ) s u b m i t t e d
an a d d i t i o n a l 60,937 r e p o r t s .
Thus, d u r i n g the A p r i l - S e p t e m b e r 1976
p e r i o d , t h e Department o f Commerce r e c e i v e d over 118,000 r e p o r t s .
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the insurer and they might select foreign firms rather
than blacklisted or even non-blacklisted firms. We
understand that the experience of the marine insurance
industry i n New York and Maryland, which have enacted
antiboycott laws, has been that those laws have r e sulted i n the transfer of boycott-related insurance
requests to foreign-based insurance firms as w e l l as
to firms i n other states.
Thus i t would appear that t h i s prohibition poses subs t a n t i a l risks i n terms of loss of business for both
carriers and marine insurers, as well as exporters.
2.
Would prohibit c e r t i f i c a t i o n s that goods or components
thereof were not produced by blacklisted vendors.
Arab requests for c e r t i f i c a t i o n that the exporter's
vendors are not blacklisted a r e , i n our view, the
only ones which, i n any meaningful way, have the
potential for disrupting established exporter-vendor
relationships. I t i s our understanding that Arab
enforcement of the requirement that products purchased not include materials from blacklisted vendors generally has been l a x . Since the b l a c k l i s t
i s not a public document and only a few U.S. firms
are widely known to be b l a c k l i s t e d , U.S. companies
generally have been able to a t t e s t t h a t , to the
best of t h e i r knowledge, materials were not purchased from blacklisted vendors. We are concerned that a U.S. l e g i s l a t i v e challenge to the
boycott could result i n more s t r i c t enforcement.
U n t i l the boycott i s withdrawn, i t seem unlikely
that the Arab boycotting nations would—except i n
cases of extreme need—engage i n transactions where
they are aware that blacklisted firms are involved.
I n those cases where the Arab nations f e l t that they
needed to purchase U.S. products and there were two
or more potential suppliers, they could ask p o t e n t i a l
suppliers to l i s t t h e i r principal vendors before
placing the order.
3.
Would prohibit U.S. firms from answering questionnaires and other inquiries from Arab boycotting
countries concerning t h e i r business relationships
with I s r a e l .
I t i s our understanding that this type of inquiry
may be sent to a firm by an Arab government or company
(a) prior to establishing business relationships with
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8
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that firm or (b) i n connection with an investigat i o n of an allegation that the firm i s engaging i n
a c t i v i t i e s i n I s r a e l which could result i n i t s
being blacklisted.
With respect to "a," a U.S. prohibition against f u r nishing information could prevent U.S. firms which,
for good commercial reasons,, do not engage i n boycottproscribed a c t i v i t i e s i n I s r a e l (which is the case for
the overwhelming majority of U.S. companies) from
qualifying for business with the Arab boycotting
nations. As to "b" above, the f a i l u r e of a company
to respond to a questionnaire i s , under boycott rules,
an offense that can result i n blacklisting of the
company. Thus, a prohibition on responses to such
inquiries could prevent a company from using the only
means available to defend i t s e l f against unfounded
allegations—perhaps by a competitor—that i t has
engaged i n proscribed a c t i v i t i e s i n I s r a e l .
4.
Probably would prohibit c e r t i f i c a t i o n s that the products to be exported are not of I s r a e l i origin and do
not contain materials of I s r a e l i o r i g i n . / I
As we understand i t , the import regulations of a number
of Arab countries forbid the importation of products of
I s r a e l i o r i g i n or products containing materials of
I s r a e l i o r i g i n and they require c e r t i f i c a t i o n s to this
e f f e c t . While this type of "negative" c e r t i f i c a t i o n is
unusual, i t i s not unusual i n international trade for
importers i n various countries to request—and for
exporters to provide—information concerning the origin
of goods for the purpose of duty assessments i n p a r t i c u l a r . So far as we know, l i t t l e or no use is made of
I s r a e l i components or materials i n U.S. manufacturing
but, from the standpoint of the Arabs i n t h e i r worldwide implementation of the boycott, their prohibitions
might have meaning with respect to prospective purchases from other countries which might be importing
such items from I s r a e l . We cannot see that the proh i b i t i o n proposed i n S. 92 could change anything even
i f the Arabs were w i l l i n g to accept a positive c e r t i f i c a t i o n of o r i g i n ( i . e . , a c e r t i f i c a t i o n that the
goods are of U.S. and/or other [including I s r a e l i ]
origin) i n l i e u of a negative c e r t i f i c a t i o n . I n our
view, i t is important that the exporter know the importer's rules so that the products are accepted when
l 7 A s we read the b i l l s , S. 69 might prohibit such c e r t i f i c a t i o n s and
S. 92 presumably would prohibit them.
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9 -
t h e y reach t h e Arab c o u n t r y . A d m i t t e d l y t h e Arabs
c o u l d accomplish t h i s purpose i n o t h e r ways—a n o t i c e
t o t h e e x p o r t e r , f o r example, i n s t e a d o f a r e q u e s t f o r
a n e g a t i v e c e r t i f i c a t i o n — b u t t h e r e s u l t would be t h e
same—products o f I s r a e l i o r i g i n would n o t be a d m i t t e d .
Impact o f E x t e n d i n g t h e P r o h i b i t i o n s
t o U . S . - C o n t r o l l e d Firms Abroad
The e x t e n s i o n o f t h e p r o h i b i t i o n s and r e p o r t i n g
t o f o r e i g n f i r m s " c o n t r o l l e d " by U.S. f i r m s w o u l d :
requirements
1.
Almost c e r t a i n l y l e a d t o c o n f l i c t s w i t h f o r e i g n
governments (and f o r e i g n s h a r e h o l d e r s a n d / o r c o owners) as a r e s u l t o f a f u r t h e r i n t r u s i o n o f U . S .
law i n t o m a t t e r s a f f e c t i n g l o c a l b u s i n e s s and f o r eign p o l i c y .
Since no o t h e r major f o r e i g n c o u n t r y
has taken any s i g n i f i c a n t a c t i o n a g a i n s t t h e b o y c o t t , such a U.S. law u n d o u b t e d l y would be c h a l l e n g e d
by f o r e i g n governments when i t s p r o h i b i t i o n s p r e v e n ted l o c a l U . S . - c o n t r o l l e d f i r m s from accepting orders
w i t h s u b s t a n t i a l economic a n d / o r f o r e i g n p o l i c y i m p l i c a t i o n s f o r the host country;
2.
I n c r e a s e t h e a l r e a d y complex problems o f company
compliance w i t h U.S. a n t i b o y c o t t laws and r e g u l a t i o n s ( i n c l u d i n g , among o t h e r s , t h e a n t i b o y c o t t
amendments t o t h e Tax Reform A c t w h i c h extend t o
U.S. a f f i l i a t e s a b r o a d ) ; and
3.
I n c r e a s e s u b s t a n t i a l l y t h e r e p o r t i n g burden f o r
U.S. f i r m s (and t h e i r f o r e i g n a f f i l i a t e s ) .
Our Views Concerning t h e
Bills
We r e p e a t our c o n v i c t i o n t h a t t h e proposed l e g i s l a t i o n i s n o t
i n t h e U.S. n a t i o n a l i n t e r e s t .
As we i n d i c a t e d a t t h e o u t s e t and b e l i e v e
t h a t our d i s c u s s i o n has documented, most o f t h e p r o h i b i t i o n s i n t h e b i l l s
p r o b a b l y would r e s u l t i n more adverse e f f e c t s on U.S. b u s i n e s s e s t h a n
e x i s t at present.
Anti-Discrimination
Provisions
The r e p o r t s c o n c e r n i n g r e c e i p t o f b o y c o t t - r e l a t e d r e q u e s t s s u b m i t t e d by companies t o t h e Department o f Commerce show l i t t l e evidence o f
r a c i a l o r r e l i g i o u s m o t i v a t i o n i n i m p l e m e n t a t i o n o f t h e b o y c o t t and t h e
U n i t e d S t a t e s has t a k e n a number o f a c t i o n s t o ensure t h a t t h e b o y c o t t does
n o t r e s u l t i n d i s c r i m i n a t i o n on t h e b a s i s o f r a c e , r e l i g i o n , n a t i o n a l i t y ,
etc.
However, i t may be d e s i r a b l e t o p u t t h e a n t i - d i s c r i m i n a t i o n p r o v i s i o n s
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o f t h e E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s on a f i r m e r s t a t u t o r y b a s i s .
Thus
we endorse t h e two p r o h i b i t i o n s i n S. 69 and S. 92 which r e l a t e t o d i s c r i m i n t i o n a g a i n s t U.S. persons on the b a s i s o f r a c e , r e l i g i o n , n a t i o n a l i t y , o r
national origin.
" R e f u s a l To D e a l "
Provisions
We b e l i e v e t h e p r o h i b i t i o n s w i t h r e s p e c t t o r e f r a i n i n g from
d o i n g b u s i n e s s (1) w i t h o r i n a b o y c o t t e d c o u n t r y and (2) w i t h o t h e r p e r sons, i f r e t a i n e d a t a l l , s h o u l d be m o d i f i e d . W i t h r e s p e c t t o t h e f o r m e r ,
t h e b o y c o t t r u l e s do n o t f o r b i d companies t o engage i n normal e x p o r t t r a d e
with Israel.
F u r t h e r , u n l e s s t h e Arab b o y c o t t i n g n a t i o n s r e s c i n d t h e b o y c o t t , enactment o f t h i s l e g i s l a t i o n w i l l n o t dissuade most companies
i n t e r e s t e d i n s a l e s t o Arab markets f r o m r e f r a i n i n g f r o m i n v e s t i n g o r
engaging i n o t h e r b o y c o t t - p r o s c r i b e d a c t i v i t i e s i n I s r a e l . W i t h r e s p e c t
t o " o t h e r p e r s o n s , " e x t e n s i v e h e a r i n g s h e l d i n the Congress over t h e p a s t
two y e a r s have produced s c a n t evidence t h a t t h e b o y c o t t r u l e s a r e h a v i n g
any s i g n i f i c a n t adverse a n t i t r u s t o r o t h e r impact on U.S. m a n u f a c t u r e r vendor r e l a t i o n s h i p s .
As d r a f t e d , these " r e f u s a l t o d e a l " p r o h i b i t i o n s
i n t h e b i l l s c o u l d r e s u l t i n numerous a l l e g a t i o n s which would be d i f f i c u l t
t o prove and, because o f t h e p o s s i b i l i t y o f such a l l e g a t i o n s , m i g h t d e t e r
some companies from a c c e p t i n g business w i t h Arab b o y c o t t i n g n a t i o n s .
In
a d d i t i o n , i f such p r o h i b i t i o n s were e n a c t e d , as former S e c r e t a r y o f t h e
T r e a s u r y Simon has p o i n t e d o u t , some companies m i g h t make g e n e r a l use o f
n o n - b l a c k l i s t e d f i r m s (vendors, i n s u r e r s , c a r r i e r s , e t c . ) i n connection
w i t h a l l t h e i r overseas o p e r a t i o n s i n o r d e r t o a v o i d a l l e g a t i o n s o f r e f u s a l s t o d e a l when a t r a n s a c t i o n w i t h an Arab b o y c o t t i n g c o u n t r y i s
involved.
Thus, these " r e f u s a l t o d e a l " p r o v i s i o n s would n o t o n l y be
d i f f i c u l t , i f not impossible, to enforce but also could r e s u l t i n f u r t h e r
damage t o b l a c k l i s t e d f i r m s . / l
I f p r o h i b i t i o n s w i t h respect to r e f r a i n i n g
f r o m d o i n g b u s i n e s s w i t h a b o y c o t t e d c o u n t r y and w i t h o t h e r persons a r e
r e t a i n e d , t o a v o i d t h e d i f f i c u l t i e s j u s t d e s c r i b e d they s h o u l d be n a r rowed so t h a t they a p p l y o n l y t o agreements t o r e f r a i n from such a c t i v i t i e s .
P r o h i b i t i o n s Against Furnishing
Information
The E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s now p r e v e n t U.S. persons
from f u r n i s h i n g i n f o r m a t i o n i n response t o a b o y c o t t - r e l a t e d r e q u e s t when
t h a t r e q u e s t d i s c r i m i n a t e s , o r has t h e e f f e c t o f d i s c r i m i n a t i n g , a g a i n s t
U.S. c i t i z e n s o r f i r m s on t h e b a s i s o f r a c e , c o l o r , r e l i g i o n , sex, o r
national origin.
As our statement has e x p l a i n e d , f u r t h e r r e s t r i c t i o n s on f u r n i s h i n g i n f o r m a t i o n would r e s u l t i n (1) p r e v e n t i n g f i r m s w h i c h , f o r p u r e l y
commercial r e a s o n s , have no b u s i n e s s r e l a t i o n s h i p s w i t h I s r a e l from q u a l i f y i n g f o r b u s i n e s s w i t h Arab b o y c o t t i n g n a t i o n s and (2) making i t more
1/
The d i f f i c u l t i e s o f " r e f u s a l t o d e a l " p r o v i s i o n s a r e d i s c u s s e d i n
more d e t a i l i n Attachment C, "The Problems W i t h P r o h i b i t i n g A l l
'Compliance 1 W i t h F o r e i g n B o y c o t t s and W i t h ' R e f u s a l t o D e a l '
Provisions."
138
- ii d i f f i c u l t for firms to defend themselves against unfounded allegations
that they have engaged i n a c t i v i t i e s i n I s r a e l which could result i n
t h e i r being blacklisted.
Matters Which Should Be Included
i n Amendments to the Export
Administration Act
Amendments to the Export Administration Act should include:
—
—
Provisions for the federal preemption of state laws
directed against foreign boycotts. Over the past
year, several states—including the important i n d u s t r i a l states of C a l i f o r n i a , I l l i n o i s , New York,
and Ohio—have enacted laws directed against the
Arab boycott of I s r a e l . The provisions of these
laws vary greatly and i n some cases go well beyond
federal law and regulations i n preventing "compliance"
with the Arab boycott. I f the American response to
the boycott i s not to result i n geographic discrimination among U.S. businesses, amendments to the
Export Administration Act must clearly preempt state
law i n this area. The existence of these varying
state laws also adds to the already heavy l e g a l
burden of compliance with federal tax regulations
and the Export Administration Regulations.
Statutory guidance which would reduce substantially
' present reporting requirements under the Export
Administration Act. During the six-month period,
April-September 1976, the Department of Commerce
received over 118,000 reports, an annual rate of
almost 240,000, and has committed substantial r e sources to administration of the reporting system.
The reporting system is generating paperwork for
industry and government out of a l l proportion to
i t s benefits to government. I n our view the r e porting requirements should include only boycottrelated requests which involve (1) possible discrimination against a U.S. person on the basis of race,
r e l i g i o n , n a t i o n a l i t y , e t c . , (2) agreements by
companies to r e f r a i n from doing business with or i n
a boycotted country, and (3) agreements by exporters
to the e f f e c t that blacklisted suppliers w i l l not be
used.
Conclusion
We believe i t would be detrimental for U.S. interests to attempt
to l e g i s l a t e against the Arab boycott beyond present law and measures we
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have endorsed. To t h e e x t e n t t h a t t h e r e a r e o t h e r aspects o f t h e b o y c o t t
w h i c h t h e Congress b e l i e v e s a r e h a v i n g r e a l i s t i c a l l y a v o i d a b l e adverse
e f f e c t s on t h e U n i t e d S t a t e s , i n our v i e w those m a t t e r s s h o u l d be handled
through diplomacy.
The U n i t e d S t a t e s w i l l have s u b s t a n t i a l e q u i t y i n i t s
r o l e as m e d i a t o r i n M i d d l e East n e g o t i a t i o n s and i t s h o u l d be p o s s i b l e
t o work out m o d i f i c a t i o n s o f c e r t a i n aspects o f b o y c o t t i m p l e m e n t a t i o n
w h i c h would n o t i m p a i r t h e A r a b s ' p r i m a r y o b j e c t i v e o f b o y c o t t i n g I s r a e l .
I n a d d r e s s i n g t h e Arab b o y c o t t i s s u e s t h e Congress must, i n
our v i e w , g i v e more s e a r c h i n g e x a m i n a t i o n than has been g i v e n t o date
c o n c e r n i n g (1) t h o s e f e a t u r e s o f t h e Arab b o y c o t t w h i c h m i g h t have s i g n i f i c a n t adverse impact i l l t h e U n i t e d S t a t e s and (2) t h e l i m i t s on t h e
U n i t e d S t a t e s a b i l i t y t o e f f e c t i v e l y change b o y c o t t p r a c t i c e s . Much o f
t h e debate about t h e b o y c o t t appears t o i n v o l v e form r a t h e r than subs t a n c e , and i f some o f these q u e s t i o n s a r e indeed i m p o r t a n t t o t h e U n i t e d
S t a t e s perhaps changes c o u l d be n e g o t i a t e d w i t h r e s p e c t t o b o y c o t t i m p l e m e n t a t i o n t o accommodate t h e o b j e c t i o n s .
For example, t o e n f o r c e t h e i r
p r o h i b i t i o n a g a i n s t b l a c k l i s t e d v e s s e l s c a l l i n g a t Arab p o r t s , t h e Arabs
do n o t need t o r e c e i v e a c e r t i f i c a t i o n t h a t a b l a c k l i s t e d c a r r i e r w i l l
n o t be engaged f o r a p a r t i c u l a r t r a n s a c t i o n .
Whether a c e r t i f i c a t i o n i s
requested o r n o t , one may assume t h a t t h e cargo w i l l n o t be p l a c e d on
a b l a c k l i s t e d v e s s e l because t h e Arab b o y c o t t i n g n a t i o n s ' p r o h i b i t i o n
a g a i n s t b l a c k l i s t e d v e s s e l s i s w e l l known. S i m i l a r l y , a c e r t i f i c a t i o n
t h a t t h e marine i n s u r e r i s n o t b l a c k l i s t e d a l s o would n o t be needed, b u t
one may presume t h e Arabs would r e f u s e t o have cargos i n s u r e d by b l a c k l i s t e d marine i n s u r e r s .
We hope t h a t these h e a r i n g s and o t h e r s t o be h e l d i n t h i s s e s s i o n
o f Congress w i l l h e l p t o " c l e a r t h e a i r " w i t h r e s p e c t t o p a r t i c i p a t i o n by
U.S. businesses i n M i d d l e East t r a d e . We a r e concerned t h a t , f o r reasons
s e t f o r t h below, some companies, p a r t i c u l a r l y s m a l l e r companies, may be
d e t e r r e d from p a r t i c i p a t i n g i n Arab m a r k e t s :
—
I n December 1975 t h e Department o f Commerce
stopped d i s t r i b u t i n g w i t h i n t h e American b u s i n e s s
community t r a d e o p p o r t u n i t i e s known t o c o n t a i n
b o y c o t t - r e l a t e d c o n d i t i o n s . W h i l e i t can be a r gued on t h e o r e t i c a l grounds t h a t i t i s n o t a p p r o p r i a t e f o r t h e U.S. Government t o d i s s e m i n a t e
such documents, i n our v i e w t h e most l i k e l y p r a c t i c a l e f f e c t i s t o deny i n f o r m a t i o n c o n c e r n i n g
t r a d e o p p o r t u n i t i e s i n Arab b o y c o t t i n g c o u n t r i e s
t o s m a l l e r U.S. companies, t h e companies l e a s t
l i k e l y t o " c o m p l y " w i t h t h e Arab b o y c o t t r u l e s
a g a i n s t i n v e s t m e n t , e t c . , i n I s r a e l because t h e y
would n o t have t h e w h e r e w i t h a l f o r such a c t i v i t i e s
i n t h e f i r s t p l a c e . Large U.S. and f o r e i g n companies
a r e more l i k e l y t o have d i r e c t s a l e s r e p r e s e n t a t i o n
i n t h e Arab s t a t e s o r o t h e r means t o l e a r n o f t h e
trade opportunities.
85-654 O - 77 - 10
140
-
12
-
—
There i s widespread p u b l i c m i s u n d e r s t a n d i n g o f t h e
meaning o f t h e company r e p o r t s c o n c e r n i n g r e c e i p t
o f b o y c o t t - r e l a t e d r e q u e s t s w h i c h a r e d i s c l o s e d by
t h e Department o f Commerce. I t appears t o be w i d e l y
b e l i e v e d , e r r o n e o u s l y , t h a t a l l r e p o r t i n g companies
have " c o m p l i e d " w i t h t h e b o y c o t t i n t h e sense o f
t a k i n g some a f f i r m a t i v e a c t i o n d e t r i m e n t a l t o I s r a e l
o r o t h e r U.S. c o m p a n i e s . / I There a l s o have been
s u i t s between p r i v a t e p a r t i e s on b o y c o t t - r e l a t e d
i s s u e s and numerous s h a r e h o l d e r r e s o l u t i o n s w h i c h
i n v o l v e b o y c o t t - r e l a t e d m a t t e r s have been o f f e r e d .
W h i l e i t i s c e r t a i n l y t h e r i g h t o f U.S. c i t i z e n s t o
oppose t r a d e w i t h any f o r e i g n c o u n t r y o r group o f
c o u n t r i e s , these a c t i o n s suggest t h a t companies e n g a g i n g i n t r a d e w i t h Arab b o y c o t t i n g n a t i o n s may e n c o u n t e r unusual d i f f i c u l t i e s i n a d d i t i o n t o those
posed by t h e U.S. Government.
—
A p l e t h o r a o f complex r e g u l a t i o n s have been i s s u e d
under t h e E x p o r t A d m i n i s t r a t i o n Act and t h e Tax Reform
A c t , t h e i n t e r p r e t a t i o n o f w h i c h i s beyond t h e i n t e r n a l r e s o u r c e s o f many companies.
—
E x t e n s i v e and o v e r l a p p i n g r e p o r t i n g r e q u i r e m e n t s under
b o t h t h e E x p o r t A d m i n i s t r a t i o n A c t and t h e a n t i b o y c o t t
p r o v i s i o n s o f t h e Tax Reform A c t pose a d d i t i o n a l b u r dens f o r companies d o i n g b u s i n e s s i n Arab b o y c o t t i n g
countries.
*
*
*
We g r e a t l y a p p r e c i a t e t h e o p p o r t u n i t y t o appear b e f o r e t h i s
d i s t i n g u i s h e d Subcommittee and o f f e r our s e r v i c e s i f we can be o f f u r t h e r
help.
1/
See Attachment D, " ' C o m p l i a n c e 1 W i t h B o y c o t t - R e l a t e d R e q u e s t s . "
141
Attachment
A
A v a i l a b i l i t y t o Arabs o f Arms and Other Products From
Other Major T r a d i n g N a t i o n s
D u r i n g House c o n s i d e r a t i o n of a n t i b o y c o t t amendments t o the
Export A d m i n i s t r a t i o n A c t , remarks were made i n the course o f b o t h comm i t t e e c o n s i d e r a t i o n o f t h e amendments and d u r i n g f l o o r debate which imp l i e d t h a t o t h e r c o u n t r i e s , p a r t i c u l a r l y i n Europe, were t a k i n g more
f o r c e f u l a c t i o n t h a n t h e U n i t e d S t a t e s t o oppose i m p l e m e n t a t i o n i n those
c o u n t r i e s o f t h e Arab b o y c o t t a g a i n s t I s r a e l .
Proponents o f s t r o n g a n t i b o y c o t t l e g i s l a t i o n a l s o argue t h a t t h e Arabs are so dependent upon (and
p r e f e r ) U.S. arms, i n d u s t r i a l p r o d u c t s , and t e c h n o l o g y t h a t such l e g i s l a t i o n would be u n l i k e l y t o have a s i g n i f i c a n t adverse e f f e c t e i t h e r on U.S.
business w i t h t h e M i d d l e East or on U.S. f o r e i g n p o l i c y .
A c t i o n b e i n g taken by o t h e r c o u n t r i e s , p a r t i c u l a r l y t h e major
t r a d i n g n a t i o n s , i s o f course an i m p o r t a n t f a c t o r t o be c o n s i d e r e d i n
d r a f t i n g U.S. l e g i s l a t i o n .
The Ford E x e c u t i v e Branch and p r i v a t e obs e r v e r s have emphasized t h a t f o r c e f u l a n t i b o y c o t t measures by t h e U n i t e d
S t a t e s p r o b a b l y would have l i t t l e o r no e f f e c t on t h e b o y c o t t but c o u l d —
and p r o b a b l y w o u l d — r e s u l t i n s u b s t a n t i a l d i v e r s i o n o f Arab business t o
other i n d u s t r i a l countries.
The E x e c u t i v e Branch a l s o has emphasized
t h a t such a " c o n f r o n t a t i o n a l " approach c o u l d have adverse e f f e c t s not o n l y
on our e f f o r t s t o broaden commercial t i e s w i t h the Arab s t a t e s , but a l s o
on U.S. e f f o r t s t o a s s i s t i n a r r a n g i n g a permanent peace i n t h e M i d d l e E a s t .
No one can e s t i m a t e w i t h any c e r t a i n t y what t h e e f f e c t s o f s t r o n g
a n t i b o y c o t t l e g i s l a t i o n would be. While some o f t h e Arab s t a t e s may p r e f e r
t o purchase m i l i t a r y goods from the f r e e w o r l d , t h e y c o u l d purchase arms
from noncommunist n a t i o n s o t h e r t h a n t h e U n i t e d S t a t e s and, i f necessary,
from communist c o u n t r i e s .
As f o r i n d u s t r i a l p r o d u c t s and t e c h n o l o g y , w h i l e
t h e Arabs may p r e f e r i n many cases t o purchase from t h e U n i t e d S t a t e s , t h e
market i s h i g h l y c o m p e t i t i v e and t h e r e a r e v e r y few l i n e s where comparable
t e c h n o l o g y i s n o t a v a i l a b l e from abroad.
One can say w i t h a good d e a l of c e r t a i n t y t h a t no major f o r e i g n
c o u n t r y has t a k e n any a c t i o n which would have s i g n i f i c a n t adverse impact on
the implementation of the b o y c o t t .
N e i t h e r t h e Department o f S t a t e nor t h e
Department o f Commerce i s aware o f such a c t i o n s .
F u r t h e r , U.S. companies
which have m a n u f a c t u r i n g and s a l e s o p e r a t i o n s i n numerous f o r e i g n c o u n t r i e s
have r e p o r t e d t h a t t h e y a r e not aware of any s i g n i f i c a n t a n t i b o y c o t t measures
imposed by those c o u n t r i e s .
The m a t t e r of f o r e i g n a c t i o n s a g a i n s t t h e b o y c o t t and t h e " d e pendence" o f Arab c o u n t r i e s on U.S. p r o d u c t s and t e c h n o l o g y have been
addressed by s e n i o r U.S. Government o f f i c i a l s i n r e c e n t months and e x c e r p t s
from t h e i r statements a r e reproduced below. The Saudi A r a b i a n F o r e i g n
M i n i s t e r a l s o r e c e n t l y addressed t h i s "dependence" q u e s t i o n and he t o o i s
quoted below.
142
- 2Comments o f U . S .
Officials
Government
During t e s t i m o n y l a s t June b e f o r e t h e House Committee on I n t e r n a t i o n a l R e l a t i o n s , s e n i o r U . S . Government o f f i c i a l s made t h e f o l l o w i n g
comments c o n c e r n i n g a n t i b o y c o t t a c t i o n by o t h e r c o u n t r i e s and t h e d e p e n dence of Arab s t a t e s on t h e U n i t e d S t a t e s . / I
—
S e c r e t a r y o f t h e T r e a s u r y W i l l i a m E.
June 8 , 1976.
Simon,
The argument i s made t h a t t h e A r a b w o r l d when
f a c e d w i t h such a c h o i c e [ t o e l i m i n a t e t h e b o y c o t t
e n t i r e l y , i r r e s p e c t i v e of a settlement i n the Middle
E a s t , o r cease d o i n g b u s i n e s s w i t h A m e r i c a n f i r m s ]
w i l l r e c o g n i z e t h e importance o f c o n t i n u e d access t o
U . S . goods and s e r v i c e s and t h e r e f o r e e l i m i n a t e what
t h e y c o n s i d e r one o f t h e i r p r i n c i p a l weapons i n t h e
p o l i t i c a l struggle against the State of I s r a e l .
Unf o r t u n a t e l y , t h i s argument f a i l s t o r e f l e c t s e v e r a l
basic f a c t s .
The U . S . a l o n e among i n d u s t r i a l c o u n t r i e s has
a c l e a r l y e s t a b l i s h e d p o l i c y and p r o g r a m o f o p p o s i t i o n to f o r e i g n boycotts of f r i e n d l y c o u n t r i e s , i n cluding the b o y c o t t . o f I s r a e l .
[Emphasis s u p p l i e d . ]
O t h e r c o u n t r i e s a l r e a d y s u p p l y a f u l l 80 p e r c e n t o f
t h e goods and s e r v i c e s i m p o r t e d by t h e Arab w o r l d .
T h e r e i s no e v i d e n c e t h a t t h e s e n a t i o n s a r e p r e p a r e d
t o l o s e t h a t $50 b i l l i o n a y e a r m a r k e t o r t o j e o p a r d i z e t h e i r s t a k e i n t h e r a p i d l y e x p a n d i n g economies
o f t h e Arab n a t i o n s .
Further, there i s precious
l i t t l e t h a t t h e U . S . p r e s e n t l y s u p p l i e s t o Arab
n a t i o n s t h a t i s not a v a i l a b l e from sources i n o t h e r
c o u n t r i e s and t h e y a r e eager t o t a k e o u r p l a c e .
The
m a j o r Arab s t a t e s have t h e f u n d s and t h e w i l l t o i n c u r any c o s t s s u c h a s w i t c h m i g h t e n t a i l .
They see
T7
S i n c e t h e t e s t i m o n y c i t e d h e r e , t h e Canadian Government has a d o p t e d
a p o l i c y o f w i t h h o l d i n g government s u p p o r t i n c o n n e c t i o n w i t h b o y c o t t r e l a t e d r e q u e s t s w h i c h w o u l d r e q u i r e a Canadian f i r m t o :
( 1 ) engage
i n d i s c r i m i n a t i o n based on t h e r a c e , n a t i o n a l o r e t h n i c o r i g i n o r
r e l i g i o n o f any Canadian o r o t h e r i n d i v i d u a l ; ( 2 ) r e f u s e t o p u r c h a s e
f r o m o r s e l l t o any o t h e r Canadian f i r m ; ( 3 ) r e f u s e t o s e l l Canadian
goods t o any c o u n t r y ; o r (A) r e f r a i n f r o m p u r c h a s e s f r o m any c o u n t r y .
Canadian f i r m s may a g r e e t o such p r o v i s i o n s b u t , when t h e y do s o , t h e y
may n o t a v a i l t h e m s e l v e s o f Canadian Government s u p p o r t , s u c h as
assistance w i t h respect to contact w i t h f o r e i g n o f f i c i a l s , market
i n f o r m a t i o n and Canadian government f i n a n c i n g .
See S t a t e m e n t on
M o t i o n s by t h e S e c r e t a r y o f S t a t e f o r E x t e r n a l A f f a i r s on B o y c o t t
P o l i c y , House o f Commons, O c t o b e r 2 1 , 1976.
143
- 3 -
t h a t tho U.S. has f r e q u e n t l y engaged i n economic
b o y c o t t s f o r p o l i t i c a l purposes, f o r example i n
Cuba, Rhodesia, N o r t h Korea, and Vietnam, so they
cannot accept the argument t h a t they are not ent i t l e d t o do the same.
Mr. Chairman, I b e l i e v e t h a t we must face an
e s s e n t i a l and w i d e l y r e c o g n i z e d f a c t .
The Arab
b o y c o t t has i t s r o o t s i n the broad I s r a e l i - A r a b
c o n f l i c t and w i l l best be r e s o l v e d by d e a l i n g w i t h
the underlying c o n d i t i o n s of that conflict.JJl
—
A s s i s t a n t S e c r e t a r y o f S t a t e Joseph A. Greenwald,
June 8 , 1976.
. . . We are the o n l y c o u n t r y ( o t h e r t h a n I s r a e l )
t o take a s t r o n g p o s i t i o n i n opposing t h e b o y c o t t
of I s r a e l . . . . / 2
Comments o f Suadi A r a b i a n
Foreign M i n i s t e r
I n a r e c e n t address, P r i n c e Saud A l - F a i s a l , M i n i s t e r o f F o r e i g n
A f f a i r s , Kingdom of Saudi A r a b i a , made t h e f o l l o w i n g p e r t i n e n t comments:
I n t h e c o n c e r t e d a s s a u l t upon the Arab b o y c o t t
i n the U n i t e d S t a t e s , one o f the aims i s t o confuse
the i s s u e .
The second aim i s t o c r e a t e a complacent
a t t i t u d e i n business and economic c i r c l e s i n t h i s
c o u n t r y by p r o p a g a t i n g v a r i o u s s i m p l i s t i c v i e w s .
The
most common i s t h e a s s e r t i o n t h a t t h e Arab c o u n t r i e s
cannot do w i t h o u t American know-how and p r o d u c t s .
Such an assumption i s erroneous and has d a n g e r ous consequences.
The t r u t h of the m a t t e r i s , and
t h i s can be v e r i f i e d by any v i s i t o r t o t h e Arab
w o r l d , c o m p e t i t i o n f o r Arab business i s t r u l y f i e r c e .
. . . The Arabs cannot and w i l l not f o r e g o the boyc o t t because i t i s e s s e n t i a l t o t h e i r s e c u r i t y ; and
i t i s of t h e upmost importance t h a t t h i s f a c t be
1/
2/
See statement of W i l l i a m E. Simon, S e c r e t a r y of the T r e a s u r y , E x t e n s i o n
of t h e Export A d m i n i s t r a t i o n Act o f 1969: Hearings Before t h e Committee
on I n t e r n a t i o n a l R e l a t i o n s , House of R e p r e s e n t a t i v e s , N i n e t y - F o u r t h Cong r e s s , Second Session, Part 1, June 8 , 9, 10, 11, 15 and 16 and August
10 and 24, 1976, pp. 49-50.
See statement of Joseph A. Greenwald, A s s i s t a n t S e c r e t a r y o f S t a t e f o r
Economic and Business A f f a i r s , I b i d , p. 11.
144
- 4 -
r e c o g n i z e d and not i g n o r e d o r b e l i t t l e d .
It is
much more d i f f i c u l t t o r e c t i f y a m i s t a k e a f t e r i t
has been made t h a n t o p r e v e n t i t . / 1
1/
Address by P r i n c e Saud A l - F a i s a l , M i n i s t e r o f F o r e i g n A f f a i r s ,
Kingdom o f Saudi A r a b i a , i n Houston, Texas, on September 23, 1976.
145
At t achment B
The A n t i b o y c o t t P r o h i b i t i o n s of S. 69 and S. 92 i n B r i e f
S t a t e d v e r y b r i e f l y , t h e b i l l s would p r o h i b i t any U.S. person
from t a k i n g t h e f o l l o w i n g a c t i o n s w i t h t h e i n t e n t t o comply w i t h o r supp o r t a f o r e i g n boycott against a country which i s f r i e n d l y t o the United
S t a t e s and i s n o t t h e o b j e c t of any U.S. embargo:
R e f r a i n i n g from d o i n g business w i t h a b o y c o t t e d
c o u n t r y , i t s f i r m s , e t c . , pursuant t o an agreement
w i t h , or a r e q u e s t f r o m , a b o y c o t t i n g c o u n t r y .
—
R e f r a i n i n g from d o i n g business w i t h any o t h e r
person.
—
D i s c r i m i n a t i n g a g a i n s t any U.S. person on t h e
b a s i s o f r a c e , r e l i g i o n , n a t i o n a l i t y or n a t i o n a l
o r i g i n or f u r n i s h i n g i n f o r m a t i o n w i t h r e s p e c t t o
race, r e l i g i o n , etc.
—
F u r n i s h i n g i n f o r m a t i o n about p a s t , p r e s e n t and
f u t u r e b u s i n e s s r e l a t i o n s h i p s o f any person w i t h
a b o y c o t t e d c o u n t r y or w i t h any person known t o be
r e s t r i c t e d from h a v i n g any r e l a t i o n s h i p w i t h a b o y cotting country.
E x c e p t i o n s t o those p r o h i b i t i o n s
permit:
—
Compliance w i t h t h e i m p o r t r u l e s o f a b o y c o t t i n g
c o u n t r y w h i c h (a) p r o h i b i t i m p o r t s from a b o y c o t t e d
c o u n t r y , (b) p r o h i b i t shipment o f goods on a c a r r i e r
of t h e b o y c o t t e d c o u n t r y , and (c) s p e c i f y t h e r o u t e
of t h e c a r r i e r .
—
Compliance w i t h i m p o r t r e q u i r e m e n t s o f t h e b o y c o t t i n g c o u n t r y w i t h request t o (a) c o u n t r y of
o r i g i n of t h e goods (S. 92 would l i m i t t h i s except i o n t o " p o s i t i v e " c e r t i f i c a t i o n s o f o r i g i n ) , (b)
t h e name and r o u t e of t h e c a r r i e r , and ( c ) t h e
name of t h e s u p p l i e r .
Compliance w i t h d e s t i n a t i o n c o n t r o l r e q u i r e m e n t s
of b o y c o t t i n g n a t i o n s w i t h r e s p e c t t o e x p o r t s
from those n a t i o n s .
146
-
—
2
-
Compliance by an i n d i v i d u a l w i t h t h e i m m i g r a t i o n
or p a s s p o r t r e q u i r e m e n t s o f t h e b o y c o t t i n g c o u n t r i e s .
While t h e language of t h e b i l l s r e f e r s t o "any [ f o r e i g n ] b o y c o t t . . . a g a i n s t a c o u n t r y which i s f r i e n d l y t o t h e U n i t e d S t a t e s and
w h i c h i s n o t i t s e l f t h e o b j e c t o f any f o r m o f embargo by t h e U n i t e d
S t a t e s , " t h e measures a r e o f course aimed p r i n c i p a l l y a t t h e Arab b o y c o t t
of Israel.
147
Attachment
C
The Problems W i t h P r o h i b i t i n g A l l "Compliance" W i t h
F o r e i g n B o y c o t t s and W i t h " R e f u s a l To D e a l "
Provisions
Problems W i t h P r o h i b i t i n g
A l l "Compliance"
The f i r s t t e m p t a t i o n f o r those opposed t o i m p l e m e n t a t i o n o f the
Arab b o y c o t t i n t h e U n i t e d S t a t e s i s t o propose t h a t a l l " c o m p l i a n c e " w i t h
t h e b o y c o t t be p r o h i b i t e d ; t h a t i s , companies should be p r o h i b i t e d from
responding t o any Arab r e q u e s t f o r i n f o r m a t i o n .
However, " c o m p l i a n c e "
may c o n s i s t o f no more t h a n a c e r t i f i c a t i o n t h a t the company does n o t have
a p l a n t i n I s r a e l , the p r o d u c t does n o t c o n t a i n any components of I s r a e l i
o r i g i n , or the goods t o be e x p o r t e d w i l l not be shipped on an I s r a e l i
vessel.
Since t h e overwhelming m a j o r i t y o f U.S. f i r m s have no commercial
reason t o have a p l a n t i n I s r a e l or t o use I s r a e l i components, i t i s gene r a l l y recognized t h a t a blanket p r o h i b i t i o n against compliance—in a d d i t i o n t o i t s p r o b a b l e adverse e f f e c t s on U . S . - A r a b r e l a t i o n s — w o u l d serve
no u s e f u l purpose b u t c o u l d d e p r i v e v e r y many U.S. companies who a r e n o t
i n any r e a l sense p a r t i c i p a t i n g i n the Arab b o y c o t t of t h e o p p o r t u n i t y t o
do business i n Arab c o u n t r i e s .
Moreover, even the more l i m i t e d approach t o " c o m p l i a n c e " o f
p r o h i b i t i n g t h e f u r n i s h i n g o f s p e c i f i e d k i n d s o f i n f o r m a t i o n poses subs t a n t i a l problems. As d r a f t e d , t h i s p r o v i s i o n i n S. 69 and S. 92 (and
H.R. 1561) would p r o h i b i t , among o t h e r a c t i o n s , companies from responding
t o Arab i n q u i r i e s w i t h r e s p e c t t o such m a t t e r s as whether t h e y have an
investment i n I s r a e l .
Since f a i l u r e t o respond t o such an i n q u i r y (which
may have been prompted by a f a l s e a l l e g a t i o n ) i s , under b o y c o t t r u l e s , an
o f f e n s e t h a t c o u l d r e s u l t i n b l a c k l i s t i n g , U.S. f i r m s and t h e i r f o r e i g n
a f f i l i a t e s c o u l d be b l a c k l i s t e d even though they do n o t have, f o r p u r e l y
commercial r e a s o n s , an i n v e s t m e n t i n I s r a e l .
Problems W i t h " R e f u s a l
to Deal" Provisions
D e t e r m i n i n g " i n t e n t " and p o s s i b l e u n d e s i r a b l e s i d e e f f e c t s . — A s
a r e s u l t o f the problems d i s c u s s e d above, proponents o f s t r o n g a n t i b o y c o t t
l e g i s l a t i o n have c o n c e n t r a t e d f o r the most p a r t on p r o v i s i o n s which would
p r o h i b i t U.S. f i r m s f r o m " r e f u s i n g t o d e a l " w i t h o t h e r U.S. f i r m s as a r e s u l t o f t h e Arab b o y c o t t .
I n b r i e f , these p r o p o s a l s (and S. 69 i n c l u d e s
such a p r o v i s i o n ) would p r o h i b i t U.S. f i r m s from r e f u s i n g t o d e a l w i t h
o t h e r f i r m s ( i . e . , b l a c k l i s t e d f i r m s ) when the i n t e n t i s t o comply w i t h ,
f u r t h e r , e t c . , t h e Arab b o y c o t t a g a i n s t I s r a e l .
I n p r a c t i c a l terms, t h i s
presumably would mean t h a t a U.S. f i r m c o u l d n o t a g r e e , nor c o u l d i t p r o v i d e c e r t i f i c a t i o n s t o the e f f e c t , t h a t i t w i l l n o t use a b l a c k l i s t e d
c a r r i e r , i n s u r e r o r v e n d o r , i f the " i n t e n t " were t o comply w i t h , f u r t h e r ,
148
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2
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e t c . , the Arab b o y c o t t .
The problems i n d e t e r m i n i n g " i n t e n t " would o f
course be f o r m i d a b l e .
F u r t h e r , as S e c r e t a r y o f Commerce R i c h a r d s o n s t a t e d
i n t e s t i m o n y on a n t i b o y c o t t l e g i s l a t i o n l a s t June: " A l l e g a t i o n s o f p r o h i b i t e d r e f u s a l s t o d e a l would be many. A c t u a l p r o o f o f such r e f u s a l s
would be d i f f i c u l t . " / !
I n a d d i t i o n , a p r o v i s i o n o f t h i s k i n d c o u l d have t h e f o l l o w i n g
undesirable e f f e c t .
I n o r d e r t o a v o i d a p o s s i b l e l e g a l c h a l l e n g e by r e f u s i n g t o d e a l w i t h a b l a c k l i s t e d c a r r i e r , marine i n s u r e r o r v e n d o r , when
an o r d e r from an Arab c o u n t r y was i n v o l v e d , a company m i g h t make g e n e r a l
use o f n o n - b l a c k l i s t e d f i r m s i n a l l o f i t s overseas o p e r a t i o n s .
This
c o u l d occur because o f concern t h a t i f b l a c k l i s t e d f i r m s were used e x c e p t
f o r p r o j e c t s i n Arab b o y c o t t i n g c o u n t r i e s , t h i s c o u l d be c o n s i d e r e d p r i m a
f a c i e evidence o f a r e f u s a l t o deal./2_
Thus enactment o f such a p r o v i s i o n
c o u l d produce r e s u l t s more damaging t o b l a c k l i s t e d f i r m s t h a n t h e e x i s t i n g
situation.
Other aspects of " r e f u s a l t o d e a l " p r o v i s i o n s . — A s i d e f r o m t h e
enforcement p r o b l e m s , t h e approach o f p r o h i b i t i n g r e f u s a l s t o d e a l should
be examined from another v i e w p o i n t .
An agreement o r a c e r t i f i c a t i o n by an
e x p o r t e r t o t h e e f f e c t t h a t a b l a c k l i s t e d c a r r i e r w i l l n o t be used i s
h a r d l y m e a n i n g f u l when, as a p r a c t i c a l m a t t e r :
(1) a b l a c k l i s t e d c a r r i e r
would n o t be p e r m i t t e d t o u n l o a d a t an Arab p o r t ; and (2) t h e owner o f
t h e c a r r i e r i s n o t l i k e l y t o o f f e r t h e v e s s e l f o r such a voyage.
The
s i t u a t i o n i s o n l y s l i g h t l y d i f f e r e n t w i t h r e s p e c t t o nonuse o f b l a c k l i s t e d
m a r i n e i n s u r e r s and v e n d o r s . Presumably, t h e A r a b s , f a c e d w i t h t h e p r o s p e c t o f d e a l i n g w i t h such f i r m s , p r o b a b l y would n o t e n t e r i n t o t h e t r a n s action.
I f a p r o h i b i t i o n against c e r t i f i c a t i o n s w i t h respect to b l a c k l i s t e d c a r r i e r s and b l a c k l i s t e d marine i n s u r e r s were e n a c t e d , i n those cases
where t h e Arabs wished t o o b t a i n U.S. p r o d u c t s t h e p r o h i b i t i o n c o u l d be
a v o i d e d by t h e i r p l a c i n g t h e o r d e r on a f . o . b . p l a n t or f . a . s . p o r t b a s i s
and by t h e i r s e l e c t i n g t h e c a r r i e r and i n s u r e r .
Since i n such an e v e n t u a l i t y t h e Arabs m i g h t w e l l s e l e c t non-U.S. c a r r i e r s and m a r i n e i n s u r e r s , t h e
i n t e r e s t s of b o t h t h e U.S. t r a n s p o r t a t i o n and marine i n s u r a n c e i n d u s t r i e s
1/
2/
See Statement o f E l l i o t t L . R i c h a r d s o n , E x t e n s i o n o f t h e E x p o r t A d m i n i s t r a t i o n A c t o f 1969: Hearings B e f o r e t h e Committee on I n t e r n a t i o n a l Rel a t i o n s , House o f R e p r e s e n t a t i v e s , N i n e t y - F o u r t h Congress, Second Sess i o n , P a r t I , June 8 , 9 , 10, 11, 15 and 16, and August 10 and 24, 1976,
pp. 273-95.
T h i s p o i n t , among o t h e r s , was made by S e c r e t a r y o f t h e T r e a s u r y Simon
i n t e s t i m o n y l a s t June on proposed a n t i b o y c o t t l e g i s l a t i o n .
See S t a t e ment o f W i l l i a m E. Simon, S e c r e t a r y of t h e T r e a s u r y , E x t e n s i o n o f t h e
Export A d m i n i s t r a t i o n Act of 1969, I b i d , p p . 48-53.
149
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c o u l d be a d v e r s e l y a f f e c t e d .
I t i s s i g n i f i c a n t t h a t a statement l a s t
summer by the American I n s t i t u t e o f Marine U n d e r w r i t e r s , whose membership
i n c l u d e s some 120 marine i n s u r a n c e companies, recommended t h a t t h e problem
o f " d i s c r i m i n a t o r y p r a c t i c e s " be d e a l t w i t h "on a f e d e r a l l e v e l p r e f e r a b l y
through diplomatic c h a n n e l s . " / I
T h i s statement was concerned p r i n c i p a l l y w i t h the impact on the marine i n s u r a n c e i n d u s t r y of a n t i b o y c o t t laws
enacted i n New York and o t h e r s t a t e s .
I t notes " a s u b s t a n t i a l s h i f t of
b o y c o t t - r e l a t e d i n s u r a n c e r e q u e s t s away from i n s u r e r s i n New Y o r k , and
more r e c e n t l y M a r y l a n d , t o f o r e i g n based i n s u r a n c e concerns or concerns
whose i n t e r e s t s l i e p r i m a r i l y i n o t h e r j u r i s d i c t i o n s . "
[Emphasis supplied.
Thus, i n New York and Maryland where a n t i b o y c o t t laws have been
enacted, marine i n s u r a n c e business i s b e i n g d i v e r t e d n o t o n l y t o o t h e r
states but also to f o r e i g n c o u n t r i e s . / 3
C e r t a i n l y t h i s suggests t h a t enactment o f a f e d e r a l a n t i b o y c o t t law a l o n g the l i n e s of S. 69 and S. 92
(and H.R. 1561) would n o t improve the p o s i t i o n of U.S. marine i n s u r e r s b u t
w o u l d , when the Arabs choose t o c o n t i n u e purchases i n t h e U n i t e d S t a t e s ,
s i m p l y r e s u l t i n t h e t r a n s f e r o f such business t o f o r e i g n f i r m s .
1/
2/
3/
See "Statement o f the American I n s t i t u t e o f Marine U n d e r w r i t e r s , "
E x t e n s i o n o f t h e Export A d m i n i s t r a t i o n A c t of 1969, op. c i t . , p . 658.
The statement a l s o urges t h a t , should d i p l o m a t i c e f f o r t s f a i l o r i f
Congress should determine t h a t l e g i s l a t i o n i s r e q u i r e d , f e d e r a l
l e g i s l a t i o n s h o u l d c o n t a i n language preempting s t a t e a n t i b o y c o t t
law so t h a t r e g i o n a l or s t a t e d i f f e r e n c e s w i l l n o t r e s u l t i n geographic
d i s c r i m i n a t i o n among U.S. businessmen.
There a l s o have been a l l e g a t i o n s t h a t New York C i t y ' s d e c l i n e i n volume
o f oceangoing t r a f f i c i s due i n s u b s t a n t i a l p a r t t o t h e s t a t e a n t i boycott law, but apparently " p r o o f " i s not a v a i l a b l e .
150
Attachment
"Compliance" With Boycott-Related
D
Requests
I n October 1976 the Department of Commerce began making a v a i l able to the p u b l i c copies of r e p o r t s received from U.S. companies concerning b o y c o t t - r e l a t e d requests as defined i n the Export A d m i n i s t r a t i o n Regul a t i o n s . For a few weeks some newspapers published d a i l y l i s t s of companies which had "complied w i t h the Arab boycott of I s r a e l , " and those
press r e p o r t s implied that the companies had a c t u a l l y taken a c t i o n d e t r i mental to I s r a e l . This misunderstanding arose i n p a r t because of a f e a t u r e
of the r e p o r t i n g form which required t h a t r e p o r t e r s i n d i c a t e whether they
"have complied w i t h " or "have not complied w i t h " a b o y c o t t - r e l a t e d request
f o r i n f o r m a t i o n or a c t i o n . / I
Department of Commerce
Release re "Compliance"
Following the d e c i s i o n t o make p u b l i c the r e p o r t s , on October 19
the Department of Commerce issued a release to deal w i t h questions and
confusion which had r e s u l t e d from the media r e p o r t s concerning the i d e n t i f i c a t i o n of companies "complying" w i t h the Arab b o y c o t t . The release
noted t h a t the Department has not and does not intend to p u b l i s h any
" l i s t " of companies which have "complied" w i t h the Arab b o y c o t t . I t adds
i n explanation: "To do so lumps u n f a i r l y companies t h a t have i n no way
changed t h e i r course of conduct i n response to the boycott w i t h those t h a t
may have taken a f f i r m a t i v e steps t o boycott I s r a e l . "
The release also observed t h a t under the Export A d m i n i s t r a t i o n
Act "compliance" includes—and t y p i c a l l y i n v o l v e s — f u r n i s h i n g i n f o r m a t i o n
or c e r t i f i c a t i o n to an Arab country. For example, an Arab purchaser may
request a c e r t i f i c a t i o n from an American s u p p l i e r t h a t i t has no s u b s i d i a r y
company i n I s r a e l . According to the release, "Whether or not the American
company response i s simply a statement of h i s t o r i c a l f a c t , uninfluenced by
the b o y c o t t , i t s responding to the request f o r c e r t i f i c a t i o n c o n s t i t u t e s
'compliance w i t h a boycott request' w i t h i n the meaning of e x i s t i n g law.
Therefore, compliance w i t h boycott requests may, i n some cases, i n v o l v e
something f a r d i f f e r e n t from an a f f i r m a t i v e act b o y c o t t i n g the State of
Israel."
The release also included the f o l l o w i n g q u o t a t i o n from a recent
congressional report which deals w i t h the q u a l i t a t i v e i m p l i c a t i o n s of
"compliance" i n terms of the Department's r e p o r t i n g requirements:
1/
I n e a r l y January 1977 the Department of Commerce adopted changes i n the
r e p o r t i n g form which drop use of the word "comply" and permit companies
to i n d i c a t e whether they "have taken" or "have not taken" the a c t i o n
requested.
151
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2
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I t was d i f f i c u l t to determine from most reports
whether the f a c t that a ::irm said i t had complied w i t h
a given request a c t u a l l y meant t h a t i t was boycotting
I s r a e l or otherwise a l t e r i n g i t s business p r a c t i c e s i n
order to gain Arab trade.. For example, some companies
v o l u n t a r i l y stated i n t h e i r r e p o r t s t h a t , although they
had provided the requested documentation, they were
doing business w i t h I s r a e l . Some of the r e p o r t i n g
f i r m s are i n f a c t exporting to both I s r a e l and t o Arab
States. Actions of t h i s type would appear t o be q u a l i t a t i v e l y d i f f e r e n t from a company which incorporates
boycott clauses i n purchase orders to i t s American supp l i e r s or which changes suppliers i n order to r e t a i n
Arab b u s i n e s s . / I
Other Considerations
I n a d d i t i o n to the example c i t e d of a company c e r t i f y i n g that i t
does not have a subsidiary i n I s r a e l , equally innocuous f o r nearly a l l U.S
f i r m s would be a c e r t i f i c a t e that the product being shipped does not cont a i n I s r a e l i components.
(However, i t should be recognized t h a t the Arab
requirement f o r these types of c e r t i f i c a t i o n s could act as a d e t e r r e n t —
and i t undoubtedly i s so intended—to f u t u r e investments i n I s r a e l or use
of I s r a e l i - o r i g i n components.) I t might also be asked i f a company i s i n
f a c t supporting the Arab boycott—or i n j u r i n g another American firm—when
i t provides a c e r t i f i c a t i o n that a b l a c k l i s t e d c a r r i e r w i l l not be used.
Such a c a r r i e r would not be permitted to unload i n an Arab port i n any
case and probably would not be o f f e r e d f o r such a voyage by i t s owner.
Even compliance w i t h pro forma b o y c o t t - r e l a t e d requests as to the nonb l a c k l i s t e d status of vendors—when, as i s normally the case, the exporter
does not know which companies are b l a c k l i s t e d and does not change i t s
normal sourcing p r a c t i c e — t y p i c a l l y would not c o n s t i t u t e any a f f i r m a t i v e
a c t i o n adversely a f f e c t i n g I s r a e l .
U
The Arab Boycott and American Business: Report by the Subcommittee
on Oversight and I n v e s t i g a t i o n s of the Committee on I n t e r s t a t e and
Foreign Commerce With A d d i t i o n a l and M i n o r i t y Views, House of Repres e n t a t i v e s , Ninety-Fourth Congress, Second Session, September 1976,
p. 31.
152
Senator S T E V E N S O N . Mr. Withers.
Mr. W I T H E R S . Mr. Chairman, I am John Withers, president of
Grove International Corp., a construction company doing business
throughout the world and for the last 11 years in the Middle East.
I am also chairman of the International Construction Committee,
Associated General Contractors of America, in whose behalf I appear before you today.
The Associated General Contractors of America is a national trade
organization representing approximately 8,200 general contractors.
I n addition, AGC has associate membership of 20,000 subcontractors,
suppliers, and other firms closely related to general contracting. Our
member firms perform about 60 percent of the annual construction
volume in the United States and roughly a third of the construction
volume performed by American contractors overseas.
AGC is firmly opposed to discrimination of any type, based on
religious or ethnic factors. I n this regard, we are in total agreement
with the intent of the antiboycott legislation now being considered.
AGC has long advocated equal opportunity with regard to both hiring and training of all employees, regardless of race, color, creed,
national origin, or sex. We firmly believe discrimination against individuals or firms on this basis should not be tolerated. However,
AGC is opposed to the antiboycott legislation as now proposed, and
further on in my statement we will make recommendations regarding this legislation to which we ask that you give serious consideration. AGC believes the legislation currently being considered in both
Houses of Congress w i l l have a seriously detrimental effect on the
future role of the American businessman in the vast and rapidly
developing Middle East market.
This, in turn, will adversely affect the total American economy.
I t w i l l as well adversely affect the efforts which are presently being
made to settle the conflicts between Israel and the Arab nations.
Legislation, unless carefully designed, could prevent American construction companies from working abroad in certain countries. This
would have a serious affect on the domestic employment situation
for U.S. suppliers and construction companies which are now experiencing the highest unemployment rate of any industry in this
Nation.
I n addition, in our opinion, it w i l l not accomplish its objective:
negation of the Arab boycott. And in all probability i t w i l l bring
on more stringent enforcement of the boycott. The denial to U.S.
industry of the opportunity to participate in the oil-rich market
area would have no stabilizing benefits to the prospects of peace in
the Middle East.
I n point of fact, AGC believes that a reduction in the participation
of U.S. industry in the Middle East will make an equitable settlement of the Middle East conflict much more difficult. The boycott
and its related effects are complex issues, swayed by emotional
consideration.
We would not overreact and adopt legislation that is clearly not
in the best interest of our Nation, and all of its people.
AGC believes that the boycott problem is not one to be solved
by the American businessman, nor by legislation.
I t is one that should be approached as a foreign policy problem
and resolved through normal diplomatic channels. To this you may
153
respond, "We have tried that method and failed. And, accordingly,
we must now try other means."
I n our opinion, more pressure should be brought by you on the
State, Commerce, and Treasury Departments to end the Arab boycott by diplomatic means, instead of passing legislation that is so
stringent that i t may force the American businessman out of the
Middle East market.
We strongly endorse the concept of international trade between
American businessmen and all countries friendly to the United
States. We strongly oppose the use of U.S. industry as an agent in
support of any international boycott.
However, we also firmly believe that the sovereign rights of all
countries to control the import and export of goods and services into
their countries have been and must continue to be acknowledged. I n
this connection, we would like to make several recommendations for
your consideration, i f Congress believes that more stringent antiboycott provisions must be added to the Export Administration
Act.
One. We recognize that the two principles, support of the sovereign
rights of the country and prohibition of the use of American businessmen as agents in support of international boycotts, are in conflict.
Accordingly, we strongly recommend that legislation be designed
to achieve, to the maximum extent possible, the moral principles
involved without preventing the participation of U.S. industry in
the Middle East market. We believe that this can be done.
(2) We recommend that legislation passed at that time exempt from
its provisions contracts that were in existence prior to the date on
which the legislation becomes effective.
(3) We further recommend that the legislation passed preempt State
and other local laws in order to effect a uniform policy throughout the
United States.
I n conclusion, in the opinion of AGC, the risks involved with the
proposed legislation are great. And the benefits to be gained therefrom
are minimal. Americans stand to lose much, i f not all of their share of
the growing Mideast market. Many of the more than 2,000 American
firms presently doing business in the Arab world may be f orced to cease
that business.
Further, it appears that America's role in future Mideast peace
talks will be greatly reduced as a result of such legislation, which is
clearly confrontational in nature.
I n addition, it is not believed that the proposed legislation related
to any of the firms presently prohibited from working in the Arab
world. The risks are great, the benefits to be earned are uncertain, and
I urge you to consider the risks in this definition before taking definite
action. Thank you, Mr. Chairman.
[Complete statement follows:]
S T A T E M E N T OF T H E A S S O C I A T E D G E N E R A L CONTRACTORS OF A M E R I C A
The Associated General Contractors of America is opposed t o anti-boycott legislation now before Congress. So, too, are we opposed to any discrimination based
on religious or ethnic factors. AGC lias long advocated equal opportunity w i t h
regard to both h i r i n g and t r a i n i n g of a l l employees regardless of race, creed,
n a t i o n a l o r i g i n or sex. D i s c r i m i n a t i o n against i n d i v i d u a l s or firms on this basis
should not and w i l l not be tolerated. Concurrently, AGC f u l l y supports a l l U.S.
154
laws, Executive Orders a n d A d m i n i s t r a t i v e Regulations w h i c h p r o h i b i t such
discrimination. AGO sincerely feels t h a t the p u n i t i v e sanctions of the antiboycott amendments i n proposed legislation to extend the E x p o r t A d m i n i s t r a t i o n
A c t o f 1969 are not i n the best interests of the U n i t e d States, the A m e r i c a n businessman or Israel.
THE
ARAB
BOYCOTT
The A r a b Boycott is not a boycott based on religious or ethnic background. T h e
A r a b League nations, technically s t i l l at w a r w i t h the State of Israel, employ the
boycott as an economic measure against the State of Israel. W h i l e boycotts are
odious, they are permissible under i n t e r n a t i o n a l laws. The U n i t e d States has
frequently made use of such boycotts f o r m a i n t a i n i n g a n d preserving i t s own
security and interests.
I n application, there are three kinds of boycotts: p r i m a r y , secondary and
t e r t i a r y . The p r i m a r y boycott is the refusal of the A r a b nations t o t r a d e w i t h
Israel. I t prohibits the entry of I s r a e l i o r i g i n products i n t o A r a b t e r r i t o r y , whether directly or through t h i r d parties, and the transshipment of A r a b products i n t o
Israel. The secondary boycott is the refusal of the A r a b nations t o do business
w i t h firms or i n d i v i d u a l s who contribute to Israel's economic a n d m i l i t a r y
strength by p r o v i d i n g c a p i t a l and technology t h r o u g h investments, j o i n t ventures,
licensing agreements, et al. Generally, i t does not apply t o firms merely selling
n o n - m i l i t a r y products to Israel. F i n a l l y , the t e r t i a r y boycott is the r e f u s a l of
the A r a b nations to p e r m i t the i m p o r t a t i o n of goods and services i n t o t h e i r
countries f r o m companies (both U.S. and foreign) t h a t are deemed t o have
contributed to the economic and m i l i t a r y strength of Israel.
The boycott applies to a l l countries, not j u s t the U.S. F u r t h e r , there are U.S.
companies owned or controlled by jews presently w o r k i n g i n the A r a b w o r l d ,
w h i l e some C h r i s t i a n and Moslem firms w h i c h have actively supported I s r a e l are
boycotted. There is no single, official boycott list (or " B l a c k l i s t " ) , since a u t h o r i t y
to boycott rests w i t h i n d i v i d u a l sovereign states of the A r a b League. " B l a c k l i s t s "
are not made public, but i t is generally accepted t h a t there are about 1,500 firms
f r o m a l l over the w o r l d on t h i s list (not i n c l u d i n g subsidiaries or affiliates of
p r i m a r y concerns), and approximately 600 firms, or 40% of the t o t a l list, are
thought t o be American. Most of these are publicly-held companies, many of
w h i c h are large firms w i t h thousands of shareholders, a n d not considered as
being of a religious or ethnic persuasion.
A question frequently raised is whether or not the boycott impugnes t h e sovereignty of the U.S. or the r i g h t s of its citizens. W e believe t h a t i t does not. I t is
i l l e g a l f o r American companies to discriminate on the basis of race o r religion
and the penalties f o r c i v i l r i g h t s i n f r a c t i o n s are severe. I t should be pointed out,
however, t h a t American firms doing w o r k i n the M i d d l e East are r a r e l y asked,
as a condition of doing business, to discriminate against others ( i n c l u d i n g American firms and i n d i v i d u a l s ) on the basis of religious or ethnic factors.
No American i n d i v i d u a l or firm is forced to do business w i t h the A r a b nations
nor forced to cease f r o m doing business w i t h Israel, but i n some cases a company
cannot do both. The A r a b nations do not t e l l an American businessman t h a t he
cannot buy the products or services of any firm f o r use anywhere else i n the
world, b u t they do say that, i n some cases, those products or services cannot be
used i n the A r a b world.
I n 1976 a Congressional Subcommittee reviewed over SO,000 incidents of boycott compliance and found fewer t h a n 15 incidents i n v o l v i n g d i s c r i m i n a t i o n
based on religious or ethnic factors. These incidents were traced to m i n o r A r a b
officials who were acting outside of the a u t h o r i t y of the A r a b Boycott Office.
Clearly, i t is not the intent o f the A r a b Boycott of I s r a e l t o discriminate against
i n d i v i d u a l s of certain religious or ethnic backgrounds.
T H E EFFECTS OF A N T I - B O Y C O T T
LEGISLATION
Some i n d i v i d u a l s and groups feel t h a t such legislation w i l l cause the A r a b
nations to change t h e i r boycott demands and t h a t they cannot possibly complete
t h e i r ambitious development programs ($140 b i l l i o n over the next five years i n
Saudi A r a b i a alone) w i t h o u t U. S. products, services and assistance. Most
businessmen who have visited the M i d d l e East and have worked i n the A r a b
w o r l d w i l l t e s t i f y t h a t nothing is f u r t h e r f r o m the t r u t h . There is very l i t t l e
t h a t the A r a b nations are presently getting f r o m the U. S. t h a t they cannot get
and w i l l not get f r o m Western European, K o r e a n and Japanese firms, and t h i s
includes a l l of their construction needs. This legislation, i f enacted, w o u l d not
open the way f o r any of the 600 boycotted U. S. firms to participate i n the A r a b
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market. Instead, i t could result i n foreclosing these markets to many of the
thousands of companies now doing business (or those companies h a v i n g the
potential f o r f u t u r e business) i n the M i d d l e East. The U. S. share of the Mideast construction m a r k e t is expected i n the next five years to be some $30
billion (of a t o t a l projected market of -$200 b i l l i o n ) . This can be extrapolated
i n t o some 600,000 to 800,000 jobs i n the construction i n d u s t r y and related fields.
T h e effect of losing the Mideast business on the American economy can best
be demonstrated by looking at examples of i n d i v i d u a l companies. Company A
has a t o t a l construction volume of Mideast w o r k of $240 million, of which $130$140 m i l l i o n was processed f r o m the middle of 1974 to the end of 1976 (30 months).
A t o t a l of 10 jobs i n the Middle East are included i n these figures. Of the $140
million, nearly $52 m i l l i o n was allocated f o r the purchases of U. S. goods and
services. Specific purchase amounts ranged f r o m $20 m i l l i o n i n one state to
$1,200 i n another. Companies i n a t o t a l of 37 states received contracts f o r this one
Mideast job. I n addition, another $6.5 m i l l i o n represents salaries paid i n the
CJ. S. f o r Saudi-based employees. I n other words, 42 percent of the t o t a l dollar
value of the contract f o r these 30 months was regenerated i n the U. S.
Another general contractor has a single job i n A b u D h a b i t o t a l i n g some $52
million, who then contracted w i t h an Alabama firm f o r i t s products t o t a l i n g
$23,350,000. I n addition, other materials were purchased i n the U. S. i n the
amount of $91,000. Construction equipment ( a l l American) was purchased i n the
amount of $1,790,000; small tools and supplies amounted f o r another $331,000.
The contractor himself is employing 27 Americans on the job i n this country and
17 at* the project site. As is readily observed, many jobs are represented by the
purchases made by American firms w i t h contracts i n the Middle East. Similar
data f r o m other companies are available f r o m the AGC headquarters.
THE
AGC
POSITION
AGC opposes anti-boycott legislation because we feel t h a t i t w o u l d have a
seriously detrimental effect on the f u t u r e role of the American businessmen i n
the vast and rapidly developing M i d d l e East market. This, i n t u r n , would
adversely affect the t o t a l American economy. Such legislation would result i n
losses i n business and jobs i n the U. S. I f this legislation is passed by Congress,
the U. S. Government w i l l be d i s c r i m i n a t i n g against a l l U. S. firms presently
working i n the Middle East. No American w i l l benefit f r o m such legislation, nor
w i l l Israel benefit. The benefits, instead, w i l l accrue to the Western Europeans,
the Koreans, and the Japanese who w i l l absorb the nearly 15 percent of the
Middle East market now being handled by American firms. The order of 1000
trucks won't go to Chevrolet—instead i t w i l l go to Mercedes Benz or Datsun.
A
DILEMMA
Large U. S. construction companies doing w o r k i n the Middle East often have
an opportunity to have p r i m a r y choices made by their Middle East customer.
F o r example, a large construction company h i r i n g the services of various subcontractors w o u l d probably submit the names of several subcontracting firms to
their client's representative w i t h the responsibility f o r the selection resting w i t h
t h a t client representative. Hence the decision to use or not to use the services
of any single American firm w o u l d be made by the Middle East owner and not
the American businessmen.
However the situation is different i n the case of a U. S. general contractor
who m i g h t have a b u i l d i n g contract i n the Middle East. I n the conduct of this
job, the contractor w i l l have to procure hundreds of items ranging f r o m materials
such as steel and cement to door knobs and windows. Generally the contractor
w i l l request bids f r o m suppliers and the lowest qualified bidder w i l l usually get
the job. A t t h a t point the general contractor w i l l have to get the product as w e l l
as a l l of the other hundreds of items f o r use i n the job approved by the Middle
East country's consulate or embassy. I n the event t h a t the supplier selected by
the general contractor is on t h a t country's blacklist (because of its contribution
to the economic and m i l i t a r y development of Israel) the general contractor w i l l
be t o l d he cannot use t h a t firm's products.
A t t h a t point the general contractor has three choices. He can buy t h a t firm's
products only to have entrance to the Middle East country denied when the ship
arrives. This is clearly a f u t i l e approach. He can buy another firm's products,
but then be subjected to penalties f o r "cooperating i n an i n t e r n a t i o n a l boycott".
Legislation should direct itself to this, the only, effective solution to the dilemma.
85-654 O - 77 - 11
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T h e general contractor's only other choice w o u l d be to abandon the j o b t h u s
losing 5 percent of the contract price w h i c h represents a p e r f o r m a n c e guarantee,
as w e l l as r i s k i n g h a v i n g a l l other asests on the job confiscated by the Mideast
c o u n t r y , clearly another f u t i l e approach.
A m e r i c a n contractors do n o t w a n t t o refuse t o use the products or services of
other A m e r i c a n firms. However, i n recognizing the sovereign r i g h t s of a l l count r i e s to c o n t r o l and i m p o r t and e x p o r t of goods a n d services, i t appears i n the best
interest of U.S. economic policy as w e l l as U.S. f o r e i g n policy t h a t t h e M i d d l e
E a s t m a r k e t r e m a i n open t o A m e r i c a n businessmen. T h i s can be done i f l e g i s l a t i o n
is designed to achieve t o the m a x i m u m extent possible the m o r a l p r i n c i p l e s
i n v o l v e d w i t h o u t d i r e c t l y c o n f r o n t i n g t h e sovereign r i g h t s of other countries. W e
hope y o u r committee can help us out of t h i s dilemma.
RECOMMENDATIONS
TO CONGRESS
A G C strongly endorses the concept of i n t e r n a t i o n a l t r a d e between A m e r i c a n
businessmen a n d a l l countries f r i e n d l y to the U n i t e d States. W e s t r o n g l y oppose
the use of U.S. i n d u s t r y as a n agent i n support of any i n t e r n a t i o n a l boycott. H o w ever, we also firmly believe the sovereign r i g h t s of a l l countries t o c o n t r o l the
i m p o r t a n d e x p o r t of goods a n d services i n t o t h e i r o w n c o u n t r y m u s t be
acknowledged.
I n t h i s connection we w o u l d l i k e to make several recommendations f o r y o u r
consideration i f Congress believes t h a t more s t r i n g e n t anti-boycott provisions
m u s t be added t o the E x p o r t A d m i n i s t r a t i o n A c t : (1) W e recognize t h a t . t h e s e
t w o p r i n c i p l e s — t h e support of t h e sovereign r i g h t s of a c o u n t r y and p r o h i b i t i o n
of the use of A m e r i c a n businessmen as agents i n support of i n t e r n a t i o n a l boycotts
a r e i n conflict to some extent and we sincerely request t h a t l e g i s l a t i o n be designed
to achieve, to the m a x i m u m extent possible, the m o r a l principles i n v o l v e d w i t h o u t
p r e v e n t i n g the p a r t i c i p a t i o n of U.S. i n d u s t r y i n the M i d d l e E a s t m a r k e t . W e
believe t h a t t h i s can be done. (2) W e recommend t h a t l e g i s l a t i o n passed exempt
f r o m i t s provisions contracts t h a t were i n existence p r i o r to the date on w h i c h
the l e g i s l a t i o n becomes effective. ( 3 ) W e f u r t h e r recommend t h a t the l e g i s l a t i o n
passed preempt state and other local laws to effect a u n i f o r m policy t h r o u g h o u t
the U n i t e d States.
I n conclusion, the r i s k s i n v o l v e d w i t h the proposed l e g i s l a t i o n as i t is being
i n t e r p r e t e d by some are great. Americans stand t o lose much, i f n o t all, of t h e i r
share of t h e g r o w i n g Mideast m a r k e t . M a n y of the more t h a n 2000 A m e r i c a n
firms presently doing business i n the A r a b w o r l d w i l l be forced to cease t h a t business. F u r t h e r , i t appears t h a t America's role i n f u t u r e Mideast peace t a l k s w i l l
be g r e a t l y reduced as a r e s u l t of such l e g i s l a t i o n w h i c h is clearly c o n f r o n t a t i o n a l
i n nature. I n a d d i t i o n , i t is n o t expected t h a t the proposed l e g i s l a t i o n w i l l a i d any
of t h e firms presently p r o h i b i t e d f r o m w o r k i n g i n the A r a b w o r l d .
T h e r i s k s are great. T h e benefits to be gained are uncertain. A G C urges your
c a r e f u l consideration of the r i s k s a n d benefits of t h i s l e g i s l a t i o n before t a k i n g
definite action.
Senator S T E V E N S O N . Thank you, Mr. Withers.
As I mentioned earlier, this subject has generated as much emotion
and pressure as I have seen generated by any issue since I came to the
Congress. The House, in righteous indignation last year, passed legislation that would have prevented the importation of oil from the Middle East, except Iranian oil. I t is difficult to be reasonable about this
subject without appearing unreasonable to both sides.
Now, I agree with at least a part of what almost all of you have said
or implied. This situation could provide a loss of trade in the Middle
East. I n my way of thinking, that loss would not damage the United
States if it is to implement the principle of American sovereignty,
but i f it is a result of American hypocrisy, then we will sustain damage and rightly so.
Mr. Stewart, you referred to myths and realities and said you didn't
have time within that 5-minute limit to get into it. I want to give you
an opportunity to expand on the myths and realities, and also in connection with the charge of hypocrisy, ask you to elaborate on your point
about American boycotts. I am not familiar with any U.S. boycotts that
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are similar to the Arab boycott. The Cuban boycott, for example, is not,
I believe, a secondary boycott.
Would you be specific on that point ?
Mr. S T E W A R T . First, to go to some of the myths, and the use of that
term is not intended to demean anyone who doesn't agree with me,
I just feel that they are myths.
For example, one myth: The Arab boycott is intended to discriminate against U.S. firms that have Jewish owners, directors, or managers. We see no evidence of that to the extent of our knowledge.
Another myth: The Arab boycott is intended to prevent United
States and other foreign firms from "doing business" with Israel. That
is absolutely inaccurate. There is nothing to prevent an American firm
from exporting to Israel, and many do at the same time the boycott
is in effect.
To be entirely fair and candid, the Arabs frown upon U.S. investment in Israel, which position I do not approve of, but as to exporting
from the United States to Israel, there is nothing in the boycott that
precludes it. To the best of our knowledge, companies doing business
with the Arab nations have not been asked to agree to any such
prohibition.
There was a problem, but that to some extent has been cleared up by
a change in the reporting to the Department of Commerce.
Senator S T E V E N S O N . I f I could interrupt at that point, Mr. Stewart.
I f all this legislation does is prohibit compliance with a boycott on
account of race or religion, why should anybody be opposed to it?
I f all it does is prohibit compliance with a request to boycott the State
of Israel, and that is not one of the intentions of the so-called boycott,
why should you be opposed to it ?
Mr. S T E W A R T . We are not opposed to your statement as far as you
have gone, but we are opposed to, for example, the "refusal-to-deal"
provision, which I referred to in my judgment as being both wrong
and unenforceable.
Senator S T E V E N S O N . You referred earlier to intent. Only one of these
bills requires intent to comply. One of them, to become an offense under
the bill, requires an intent to comply. The other makes a mere action,
however unintentional—a clerk's mistake—an offense against the law.
Mr. S T E W A R T . I am aware of that distinction and I should have recognized it when I referred to it. I was speaking of the unfortunate
use of the words "compliance with Arab-related boycott requests."
That is being cleared up by a change in the regulations of the Department of Commerce.
I also want to point out that it is a myth to believe that other industrial countries do not have technological ability to deal with the Arabs,
to fill the gaps which would be substantial, i f companies and project
managers, et cetera, in the United States are precluded, as a practical
matter from doing business with the Arabs.
I t should also be pointed out that the administration of the boycott
is uneven, and some companies have been successful in doing what I
think Government very properly expects them to do; that is, to try
to negotiate out any provisions that are invidious either to the company
or the U.S. Government. But that clout does not rest with every
company.
I think those are illustrative, at least, of some of the things that
I referred to as myths.
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Now, you have posed another question.
Mr. P R A T T . Maybe I can fill in on the question about the United
States
Senator S T E V E N S O N . Why don't you use the microphone so everyone can hear you.
Mr. P R A T T . Y O U asked the question about the U . S . controls that
might be similar to the Arab boycott.
Actually, the United States through the Trading with the Enemy
Act covers operations overseas by U.S.-controlled affiliates, and prohibits them, in effect, from dealing directly or indirectly with several
Communist countries, as well as Rhodesia. There are those controls,
in addition to the treatment of Cuba, or of ships that visit Cuba or
that will be going to Cuba.
Mr. S T E W A R T . We are not inferring, Mr. Chairman, that we approve
necessarily of those boycotts as a matter of principle.
I don't think the U.S. Government walks through this subject with
clean hands i f you deal with the philosophical and principle aspects
of what is equivalent or similar to a boycott.
Senator S T E V E N S O N . I still don't think I have an answer to my question. You suggested earlier the Arab boycott was similar to American
boycotts and implied, at least, that this legislation was hypocritical.
I am asking for the similarity. I don't see it.
Whether it's Trading W i t h the Enemy Act or under the reexport
prohibition that takes place under the Export Administration Act
or whether it is Cuba where we don't boycott persons or firms doing
business with Cuba, where is the similarity ?
Mr. P R A T T . The similarity is that controls, whatever they are called,
primary or secondary boycotts, this type of controls extended abroad,
have extraterritorial effects.
For example, an American-owned or American-controlled company
in France and the United Kingdom can have no dealings with Vietnam, Korea, Cuba, without Treasury licenses, and so forth, purchase
or sale.
Mr. S T E W A R T . We don't say they are necessarily identical, but they
do involve an exercise of sovereignty with extra territorial effects.
Senator S T E V E N S O N . Every nation w i l l resort to any power within
it means including the power to boycott, but I am not aware of any
comparable attempt by the United States to boycott firms and countries which do business with others. I don't think we are a party to any
secondary boycotts.
Mr. S T E W A R T . We would be glad to spell that out with supplemental
memorandums. We do feel those controls which the United States exercises, and presumably for good reason, are comparable, at least in
terms of principle, to the boycott of the type the Arabs employ. That
does not make the Arab boycott right.
We will submit a more detailed comment on that point.
Senator P R O X M I R E . A S I understand the testimony so far, it appears
that you gentlemen don't really have much objection to the bill as I
see it. We just seem to be passing each other. You don't seem to disagree with the provisions in the bill which prohibit secondary or tertiary boycott, as far as exporting is concerned, at least.
You say there is some concern on your part with investment actions
by the Arab countries to prevent investment in Israel, but as far as
exporting goods are concerned, you don't see these is anything—in
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the first place, that they are acting against such export in any way;
and in the second place, if they are, you think it is perfectly proper for
us to pass legislation that will'prevent it.
Is that correct ? Do all of you agree with it ?
Mr. W I T H E R S . May I make a statement ?
Senator P R O X M I R E . Yes, sir.
Mr. W I T H E R S . I n respect to the secondary and tertiary boycott, the
problem as we see it is, we go out—which is, I believe, our practice of
an American construction company—we go out and we get five or six
quotations, based on firms that we know, and manufacture the goods
that are required. Speaking for my firm, we don't attempt to find out
whether any of those firms are on the boycott list or not. We solicit
those quotations and normally we decide to buy on the basis of the
lowest price.
A t that time we must take the commercial invoices, and so forth,
to the council and get them certified. The council may say, "No,
we will not certify this firm because it's on the blacklist." A t that time,
i f you have passed your legislation which says we cannot refuse to
do business with anyone, we are going to have about three alternatives:
One is to, of course, refuse to do business, go back to the company
and say, "We are sorry, we can't buy from you. I f we do that, i t
appears we would be in conflict with the bill as you intend to pass it."
Our other alternative would be to buy from the company regardless of the fact they are on the blacklist; and in that event, we can't get
it into the country.
Senator P R O X M I R E . What you are talking about is a tertiary boycott,
and you are indicating that you think i t would be wrong or imprudent,
at least, for us to pass legislation that would prohibit a tertiary boycott because we would lose business.
Is that right
Mr. W I T H E R S . I am trying to make the distinction. We will try
to abide—try not to abide by the tertiary boycott, but we are in the
position i f we cannot get goods into that country, then what are we
going to do ? We can't fulfill the contract we have undertaken to take.
Senator P R O X M I R E . That is the purpose of this.
Mr. W I T H E R S . That may put us out of business.
Senator P R O X M I R E . I t may or may not.
Mr. W I T H E R S . I agree, it may or may not.
Senator P R O X M I R E . We want to make it economically unacceptable to
the Arab countries that they will not pursue this tertiary boycott
policy of telling American firms what American firms they can deal
or not deal with.
Let me get into something elese. You say a congressional subcommittee reviewed over 30,000 incidents of boycott compliance and found
fewer than 15 incidents involving discrimination based on religious
or ethnic factors. Frankly, I find that citation grossly misleading.
What the report stated was 15 instances of discrimination were found
in 4,000 reports reviewed, but the significant numbers of such incidences may not have been reported because of loopholes in the Commerce Department's reporting regulations.
As a matter of fact, in May of 1976, the Commerce Department held
a conference with businessmen to discuss ways, and I quote, to escape
the reporting mandate contained in the Export Administration Act.
160
My question is this: I take it from your statement that the number
of cases is so diminimishecl you would, at least, favor the provisions of
this bill preventing supplying of any Arab nations that consider
Mr. W I T H E R S . Yes. I have a little difficulty, Senator, understanding
how a company can have a religion. Now, there are companies on the
blacklist, many of them
Senator P R O X M I R E . What's that ?
Mr. W I T H E R S . I say, companies are on the blacklist, but I don't
believe they are put on there because of their religion, because I don't
believe a company has a religion.
Senator P R O X M I R E . Nobody says the company has a religion. We are
talking about blacklisting of American firms owned by people who
are Jewish Americans or with chief executive officers who are Jewish
Americans. I f you are saying that isn't the policy, then you should
have no ob j ection to the bill.
Mr. W I T H E R S . I am not saying that. I don't believe that is the primary reason for firms being on the blacklist. We believe the primary
purpose is because the Arab governments
Senator P R O X M I R E . I think that's right. I think most of the cases
have been because these companies have been dealing with Israel and
hey want to stop it, but there has been another element, that we think
good documentation has been involved in, where American firms run
by Jewish Americans or owned by Jewish Americans have been blacklisted.
I f you say that is not important or not significant, or that you would
support legislation trying to get at that problem, that's fine. We agree
we have no problem here, as far as that is concerned.
Mr. S T E W A R T . Before you go on, Senator, may I comment ?
Senator P R O X M I R E . Yes, sir.
Mr. S T E W A R T . Does the committee have access to the blacklist ?
Senator P R O X M I R E . The staff tells me we have as complete and comprehensive a list as we can get. I t is not always up to date. We have
access to it.
Mr. S T E W A R T . May I pursue for a moment, by asking how many
are on that list ?
Senator P R O X M I R E . I understand about 1 , 5 0 0 firms are on that list.
Mr. S T E W A R T . I would be very surprised i f there were 1 , 5 0 0 . Also,
I am sure you are aware that being on the blacklist, in some instances,
does not mean it is enforced in every case.
Senator P R O X M I R E . This is public; we are happy to make it available to you, to the press, or anybody else. We can give you the list any
time you want it.
Mr. S T E W A R T . I think we would like to have it.
Thank you, sir.
Senator P R O X M I R E . I would like to ask you, further, Mr. Withers,
you cite instances where American firms give up their management
prerogatives under terms dictated by the Arabs. You cite substantial
volumes of U.S. businesses under the control of the Arabs. You are
fearful that the boycott legislation will pass and the Arabs will pull
out and take all their business elsewhere.
That is a practical consideration. But I don't think we are as helpless as you made us out to be and I disagree with your notion that we
just should ignore the moral elements. The fact that this is interference with American sovereignty and American firms and, in my
161
view, the importance of providing assistance to a country which we
should support, Israel.
Don't you really think our Government should use all its authority
to prevent the Arabs from enforcing their attitude toward Israel on
us ? You don't condone restraints of trade, do you ?
Mr. W I T H E R S . N O ; I agree with you, Senator. I n fact, I think in my
oral statement, I recognize that, and then I said, accordingly, we
strongly recommend that legislation be designed to achieve, to the
maximum extent possible, the moral principles involved without preventing the participation of U.S. industry in the Middle East market.
What I am asking you to do, in simple language, is to achieve our
objective, which is a common objective, but don't put us out of business.
Senator P R O X M I R E , When you say, "Don't put us out of business,"
there is no gain without pain, as Senator Stevenson's father used to
say, i f we are going to make any kind of progress in this world we
have to take risks. I t isn't painless. I realize we are perhaps losing
some commercial advantage, maybe losing some profits, maybe losing
some jobs by following legislation which is moral and right, but maybe it is going to be very painful for individual firms.
I t seems to me, i f this is the right course, and we should not permit
other countries to interfere with our own sovereignty and the right
of our American firms to deal with whomever they wish, then I think
we should make that sacrifice.
Mr. W I T H E R S . Mr. Proxmire, nobody forces any American firm to
go to the Arab countries and do business. You go there and you
examine the various conditions of contract, as you would in any country, no matter whether there is a boycott involved or not, and you read
those conditions of contract, then determine whether or not you can
live with them.
Senator P R O X M I R E . Mr. Helland, you indicated that these bills would
be interpreted by the Arabs as an affront to their sovereignty. What
about the affront to our own sovereignty, both foreign and domestic,
which the Arab boycott forces on us ? Shouldn't we take a stand on the
principles of free trade for our own companies?
Mr. H E L L A N D . I w i l l speak from my own background and what I
have been subjected to by the Arab countries or by other countries. I t
is common when a buyer wants to fill a contract, and there are various'
subcontractors involved, assuming a case of a U.S. customer and a
U.S. contractor, that the U.S. customer will say " I want you to choose
my valves from one of these three manufacturers and not a fourth one."
I f you go down to buy a suit, you might want to get a Hart Schaffner
and Marx but not a Hickey Freeman. I think that is your right.
We have had less specification by Arab customers in that regard
than we have by U.S. customers.
There has been a lot of discussion about the blacklist this morning.
I frankly find myself somewhat at a loss to discuss the blacklist,
because as far as our experience as a company, and as far as the experience of our member companies that I have heard about, the blacklist of various firms has not been an issue, other that the selection of
a carrier
Senator P H O X M I R E . Other than what?
162
Mr. H E L L A N D . Selection of a carrier. I f you propose to ship goods
to an Arab port, you would not under any normal circumstance select
a blacklisted carrier, i f you knew he would not be allowed to discharge
the goods in the port. To the extent that they ask you to certify you
are not using a blacklisted carrier, or a carrier of Israeli origin, there
has been some interference on sovereignty, but I don't think that is
really as much an interference in sovereignty as an exercise in judgment.
Senator P R O X M I R E . My time is up. Thank you, Mr. Chairman.
Senator S T E V E N S O N . I f the Senator would yield on his time, which
is expired, the bill, either bill, prohibits compliance with that aspect
of the boycott. You are still free to ship or not to ship on blacklisted
carriers, on Israeli carriers, thatds.
Mr. H E L L A N D . The question was about our sovereignty to make decisions. I was saying that that was the only possible imposition of controls over our sovereignty of decisionmaking.
Senator S T E V E N S O N . I am saying that is not an imposition
Mr. H E L L A N D . I answered what I interpreted to be the Senator's
question.
Senator S T E V E N S O N . Mr. Williams?
Senator W I L L I A M S . I t is clear, you all come from highly competitive
business areas. You are certainlv not in a situation where you are
presently the sole source in vour business activity, in the Middle Eastern countries. Is that right?
You are in an international competition for business.
Mr. S T E W A R T . I would agree with that.
Senator W I L L I A M S . A l l of you. What country—what companies and
from what countries, not the name of the companies, but what countries do you have business competition that you find most intense ?
Mr. H E L L A N D . Senator, may I choose to answer that question, then
the others may want to comment.
I choose to answer it because there has been a lot of discussion about
the clear-cut superiority of the American suppliers of petroleum
equipment.
I n fact, i t has been said in general discussions that they can't do
without us.
Senator W I L L I A M S . Y O U have already said you are not a sole source.
You are in intense competition. From what countries?
Mr. H E L L A N D . There are many suppliers capable of delivering
equipment competitive with U.S. manufacturers of petroleum equipment—Argentine, Australian, Austrian, Brazilian, Canadian, English, French, German, Italian Japanese, and, as stated in my written
testimonv, Warsaw Pact nations—particularly Romanians and the
Soviet Union. These are those from whom the Cameron Iron Works
has felt competitive pressure. Across our product lines, we have received more serious competition from the Austrians, Germans, Italians,
Japanese, and Romanians.
Senator W I L L I A M S . Y O U had three Common Market countries, Germany, France, and Great Britain. How do they handle this boycott?
Mr. H E L L A N D . I have seen no limitation upon their companies to
do business with the Arab nations.
Senator W I L L I A M S . Say that again.
Mr. H E L L A N D . I have not seen personally, or do I know of any restrictions they place upon their suppliers.
163
Senator W I L L I A M S . I f you are wrong on that, your case would be
weakened, wouldn't it ?
I f Germany, for example, had a clear policy directed to their nationals against being drawn into an enforcer of this Arab boycott,
your case would be weakened, wouldn't it ?
Mr. H E L L A N D . My case would be weakened. I think we would have
to analyze the perception of the Arabs toward dealing with the German
suppliers, as well as the practical limitations that are put upon the
German supplier.
Senator W I L L I A M S . I t would be equally true i f Great Britain had a
clear national policy directed to their companies not to be drawn into
an enforcer of the Arab boycott. A m I right?
Mr. H E L L A N D . Yes, sir. To the extent it was enforced to the same
degree that any proposed policy of this country would be.
Senator W I L L I A M S . T O the same degree. Well, Mr. Stewart suggested he would like to submit some supplementary material on another phase of this. I would like the opportunity later, Mr. Chairman,
to submit some documentation of some of these countries that I have
just mentioned. Two of them that do have a national policy directed
to their nationals, companies within their countries against this boycott.
Mr. S T E W A R T . Sir, you would have to check another point as to
whether or not any such national policy is enforced by the government involved. To the best of our knowledge, most i f not all competitor nations do not come even close to the kind of legislation which is
under consideration here.
Senator W I L L I A M S . I t is my information that Great Britain and
Germany do.
Again, we are not going to bring this to the floor tomorrow, so
there will be time.
I wanted to ask two other things, i f I could, Mr. Chairman.
Mr. H E L L A N D . Excuse me, Mr. Williams, since we are trying to get
to the facts of this situation, my company does have operations in
the U K and in Germany. May we also submit what we are told by
the governments there?
•
[The following was received for the record:]
O u r F r e n c h counsel has advised us concerning the a p p l i c a t i o n of the A r a b
Jboycott provisions by our French company. Other t h a n r e f u s i n g to sell to a
boycotted p a r t y , i.e., Israel, or f a i l u r e to h i r e due to religion, he has indicated
no restrictions on compliance w i t h the boycott as a p r a c t i c a l matter. There is
some v e r y unclear legislation pending i n the F r e n c h N a t i o n a l Assembly t h a t
m i g h t a l t e r his instructions. I t appears, however, t h a t t h i s is w o r d e d i n such
a w a y t h a t i t w o u l d n o t hamper operations.
I n the U n i t e d K i n g d o m , w e a r e t o l d t h a t there is no e x i s t i n g o r proposed
legislation w h i c h w o u l d make i t a c r i m i n a l offense f o r an E n g l i s h company
( i n c l u d i n g a f o r e i g n company d o i n g business i n E n g l a n d ) t o enter i n t o an agreement w i t h another p a r t y c o n t a i n i n g restrictions on t h e p a r t of the E n g l i s h
company against t r a d i n g w i t h I s r a e l i concerns o r other concerns w h i c h have
been b l a c k l i s t e d by the A r a b boycott offices. U n d e r the Race Relations A c t of
1976 ( w h i c h has not yet been b r o u g h t i n t o force by the Government) there are
r e s t r i c t i o n s against d i s c r i m i n a t i n g against an i n d i v i d u a l b u t n e i t h e r of these
w i l l apply i f the d i s c r i m i n a t i o n was i n the supply of product f o r export.
T h e r e is no German or I t a l i a n l a w or r e l a t i o n . nor, t o o u r knowledge, any
pending legislation i n e i t h e r of those countries, w h i c h aims specifically a t the
p r o h i b i t i o n of cooperation w i t h A r a b boycott measures against I s r a e l i companies a n d / o r citizens. T h e r e are, however, various general provisions a n d
principles of l a w w h i c h may be applied to cooperation w i t h A r a b boycott meas-
164
ures, a l t h o u g h w e h a v e no knowledge of a n y s i t u a t i o n i n w h i c h t h e y have act u a l l y been a p p l i e d to such cooperation. P r o v i s i o n s w i t h p o t e n t i a l i m p a c t on
cooperation w i t h A r a b boycott measures are, f o r example, c o n t a i n e d i n G e r m a n
a n d I t a l i a n u n f a i r c o m p e t i t i o n l a w s a n d i n general t o r t p r i n c i p l e s and, i n t h e
case of Germany, i n a n t i t r u s t l a w .
T h e r e is no e x i s t i n g or p e n d i n g B e l g i a n o r D u t c h l a w o r r e g u l a t i o n w h i c h
p r o h i b i t s cooperation w i t h the A r a b boycott o r w o u l d impose penalties i n connection w i t h such cooperation.
W h i l e i n B e l g i u m there seems t o have been l i t t l e concern a b o u t t h e p r o b l e m ,
i n t h e N e t h e r l a n d s there seems t o have been s t r o n g negative feelings a b o u t t h e
practices i n v o l v e d a n d sentiment t h a t measures s h o u l d be t a k e n a g a i n s t them.
T h e D u t c h g o v e r n m e n t appears to share these views b u t has n o t made a n y
official statement about the problem.
Senator W I L L I A M S . Certainly. Fine. Do any of you feel the impact
of State law against the Arab boycott ?
There are five States, I believe, that have to some degree, a State
law directed to companies that are exposed to the Arab boycott. Any
of you had any experience with State law ?
M r . HELLAND. N o t yet.
Mr. STEWART. We are aware of the problem that you indicated, and
we believe that the State laws should be preempted.
Senator W I L L I A M S . Whatever we do should be preempted. While
you, as companies—I believe New York is one, California is coming
on
Mr. STEWART. Excuse me, sir. You are aware, of course, that certain
Jewish businessmen who traditionally have been heavy in, I believe,
freight forwarding, have moved out of the State of New York or
transferred business, because of the New York law.
Senator W I L L I A M S . I wasn't familiar with that.
Coming now to this myth and reality, Mr. Stewart, I believe you
said that the Arab states will not deal with American firms because
they have Jewish owners. The reality is business firms have been told
they can't do business because they within their operations, or within
associated organizations, did have Jewish owners. You are familiar
with the famous situation of Merrill Lynch, underwriting could not
include Lazard Freres. Are you familiar with it?
* M r . STEWART. N O .
Senator W I L L I A M S .
Merrill Lynch said, "No Lazard Freres, you
can't have them in the underwriting." What did they do? They withdrew from the underwriting.
There is another brokerage house that went the other way on this.
This is not myth. I t is a reality.
Mr. STEWART. I n terms of decree it is a myth.
Senator W I L L I A M S . Like the Constitution and like the Arab boycott,
you got a moving document. I can't buy that. The hypocrisy, I think
the hypocrisy runs the other way.
You, in supplemental views are going to tell us where we, as a
nation, are involved in boycotting that comes close to this Arab
boycott.
No boycotting of any countrv undertaken by this Nation gets anywhere into that second and third degree.
Mr. P R A T T . We would like to submit that for the record, (see p. 207).
Senator W I L L I A M S . I would like to have one example of secondary
or tertiary boycotts by Americans.
Mr. P R A T T . A n American-controlled company in France cannot
engage in any financial transaction with Vietnam.
165
Senator W I L L I A M S . N O W , American control, certainly as Chairman
Stevenson said, this is within our sovereign reach, within the circle
of or sovereignty, American controlled.
Mr. P R A T T . I ' m not sure that the French Government would accept
that.
Senator W I L L I A M S . We don't accept everything they do, either. We
certainly know our sovereignty and our sovereign reach, it's American companies, American companies controlling activities, are within
our sovereign region.
I would appreciate the opportunity to review how you feel we, as
a nation, are in a hypocritical position. I think we are more hypocritical i f we don't do something on this Arab boycott, knowing that
it's all about, as we do so properly, and, I can use the word "aggressively," but it's not aggressive. But clearly state our national principles, directed to the denial of human rights in controlled societies
within nations of Eastern Europe.
I f we address ourselves to those the internal wrongs of the Soviet
Union and don't address ourselves against something we can control
here in discrimination, I think would be hypocritical.
Mr. S T E W A R T . Our efforts toward achieving our concept of human
rights as you referred to may abort. You will recall the incident with
Hungary. U.S. officials said a lot of words, but the Russian tanks
rolled in. We can't be the policemen of the world in a military sense
or in a moral sense.
Senator W I L L I A M S . Where we do control activity, we do control the
activities of our nationals. When they are involved in a denial of
human rights, we can get involved.
Senator S T E V E N S O N . Senator Sarbanes.
Senator S A R B A N E S . Thank you. There is something I want to try to
be clear about. You seem on the one hand to argue that the boycott
did not really apply that broadly and does not have that much of an
economic impact. The list is much smaller than was suggested to us in
the figures given by the chairman. Then, when it served your argument, you seemed to move completely to the other side and argue that
the economic consequences of this would be enormous, that there is a
tremendous amount of trade and jobs and everything else involved.
Now, which is it ?
Mr. S T E W A R T . Sir, there isn't any inconsistency between those two
propositions because what we are talking about is the status quo as
far as our administrative regulations are concerned, which are considerable in this area and also our state of law.
You have to look at what the bill would be, as distinguished from
what has already been done. This you do not reach. You do not come
around full circle. The figures are interesting; they are contained in
our statement, regarding the economic stake that American business
has in the Middle East.
Yet, on the other hand, it's interesting to note that I believe roughly
80 percent of the imports by the Arabs come from other than the
United States.
Senator S A R B A N E S . I S it your position that the boycott now imposed
does reach in a significant way or does not reach in a significant way ?
Mr. S T E W A R T . I n some situations it reaches. Some it does not.
166
Senator S A R B A N E S . Taking in some situations it reaches, in some i t
doesn't, the question I asked was for you to sum that up and tell me
whether in your opinion it reaches significantly or does not.
Mr. P R A T T . Actually, during the 6-month period, A p r i l to September of 1976, the totals on trade affected by boycott-related requests I
think was something on the order of $1.7 billion. That's one measure.
Now, what effect it's having now I don't think anybody can say.
I think what we are concerned about is what effect this kind of legislation might have.
Senator S A R B A N E S . I understand that's your concern. I want to know
whether you regard the boycott as having a significant reach, as far
as economic impact on American business is concerned here.
Mr. P R A T T . Beyond the figures that have been submitted, I don't
think anyone, I don't believe anyone knows.
M r . STEWART. A S o f n o w .
Senator S A R B A N E S . D O you think this legislation is more needed or
less needed depending upon the reach of significance ?
Mr. S T E W A R T . I don't think it's just a question of need. I think it's
a question of wisdom, that it would be unwise for the Congress to act
in this way at this juncture. I want to make sure that the committee
recognizes that we are not only concerned about the business aspect
of this matter.
As citizens, we are genuinely concerned about avoiding—in its
Government decision—the passage of legislation which w i l l be considered by the Arabs as a confrontation at a time when we are trying
to negotiate a peace settlement.
I don't know what the present administration position is, but the
Ford administration all too late, in my judgment, came to the Congress
with that conclusion, and it just seems to me that the record ought to
be clear, we are not just being selfish businessmen here.
Senator S A R B A N E S . I don't think any questions I have asked you so
far, and I ' m still trying to get answers to them, has gone down that
path.
Mr. S T E W A R T . I agree with that, sir.
Senator S A R B A N E S . I want to try to get an answer to the question as
to whether the reach of the boycott is regarded by you as being economically significant.
Mr. S T E W A R T . I n a total sense as of now, with some exceptions, I
would say no. But, in a total sense in the event this legislation is
enacted in its proposed form or with a minor variation, I wrould say
the impact would be very severe.
Senator S A R B A N E S . You can't really judge that.
Let me ask you this: I n Mr. Helland's statement in the beginning it
says: "To the extent the Arab boycott has the effect of discriminating
against U.S. citizens or firms on the grounds of race, color, religion,
sex, or national origin we can and should take a hard line. These are
fundamental principles we should not compromise.
"On the other hand, to the extent the Arab boycott," you then go
on to, in effect, compromise those principles. Let me come back to the
first statement, which runs to the question of the tertiary boycottHave any of your gentlemen made a case for another country being
able to impose a tertiary boycott, telling company X , an American
company, that it should not do any business with another American
167
company Y, because it has either directors or management or loaners,
certain people have a certain religious faith.
Mr. S T E W A R T . We don't subscribe to that.
Senator S A R B A N E S . D O you support legislation that prohibited company X from doing that under any circumstances ?
Mr. S T E W A R T . On the grounds that you stated, yes. But on the other
hand, i f you will put the businessman's hat on in terms of complying
with the refusal to deal provisions in the bills, and ask how you
would comply with those, you would find yourself in very, very deep
water in a hurry.
There is also a question as to whether they can be enforced.
Senator S A R B A N E S . I take it you agree with that, but.
Then you set out a number of buts, is that correct ?
Mr. S T E W A R T . Not on the discrimination point you describe.
Senator S A R B A N E S . Let me ask another question.
Should company X , an American company, be able to refuse to deal
with company Y, an American company, because company Y trades
with a particular nation, in which other nations are applying the
boycott ? Should an American company be able to in effect enforce the
foreign nations' boycott through its refusal to have economic relationships with another American company ?
Mr. P R A T T . T O start off with the question, companies quite often get
a request to provide a certificate that a blacklisted carrier will not be
used. This comes up frequently. A blacklisted carrier will not under
anv circumstances be permitted to visit an Arab port.
The dilemma for the American company is, as we read this legislation, this kind of certification would be prohibited.
Senator S A R B A N E S . The chairman earlier talked about the carriers.
Let's move on from the carriers and talk about companies other
than carriers.
Mr. W I T H E R S . Mr. Sarbanes, I don't think any American company
wishes to do business because of any reasons you gave or other reasons
attributed to the company being put on the blacklist. And we don't
refuse to do business, but what can we do when we can't get that equipment or material into the country ?
Senator S A R B A N E S . Then you wouldn't be able to enter into the contract, just like now. The law says you can't do business with the Government i f you discriminate against people on racial grounds. There
used to be no such requirement like that. No such requirement. Now
there is such a requirement. I f you do it, you can't get the contract.
Mr. W I T H E R S . Most of the contracts I know of—there are exceptions—but, at least in my personal experience, require us only to agree
to abide by the rules and regulations of the country involved. Somewhere along the line we may try to buy something that is manufactured by a company on the blacklist. Having done that, we have refused the entry of that material into the country.
Now, we are not refusing to do business as an American company
with another company but we can't get material or equipment into
that country. Now, where are we ?
Senator S A R B A N E S . Y O U are implementing the policy of the foreign
country that runs counter to our own policies. You are being the instrument of implementation. Isn't that the case ?
M r . STEWART. N O , s i r .
168
Mr. W I T H E R S . N O , sir. I don't believe so.
Senator S A R B A N E S . Y O U become the enforcer.
Mr. W I T H E R S . I am not refusing. I will buy it and put it on the ship,
but I can't get it off the ship into the port.
Mr. S T E W A R T . He's not an enforcer. He's doing precisely what you
want him to do, which is to deal without discrimination with suppliers. Some blacklisted, most not, sometimes you don't know. I n many
cases you don't know. What he's saying is, and I share the view, the
company that is buying from a supplier is not enforcing the boycott, he's saying
Senator S A R B A N E S . Are you suggesting no company should buy from
suppliers that are on the blacklist ? Avoid suppliers on the blacklist ?
You are not saying that ?
M r . STEWART. N O .
Senator S A R B A N E S . Then they are engaged in a selection amongst
suppliers which has the effect of implementing boycott, are they not,
i f they do that?
Mr. S T E W A R T . What the gentleman was saying is that he's not avoiding the suppliers about whom you are concerned. He goes to his normal suppliers, or he may find a new supplier, that supplier may or may
not be on the blacklist, he buys the goods, an act of nondiscrimination,
but he can't get it into the Arab country i f the Arabs challenge it, because the other company is on the blacklist. That's what the gentleman
is saying.
He is not in the position of an enforcer.
Senator S A R B A N E S . I repeat my question. Are you telling me there
are no American companies that refuse to deal with people that are
on the blacklist, and, in effect, apply the blacklist?
Mr. S T E W A R T . For one thing, I don't believe the average U . S . company knows who is on the blacklist. The second point, I ' m in no position to say there are no companies that would be considered by Government to be discriminating against certain suppliers.
Senator S A R B A N E S . Do you think a company should be able to do
that ? Or do you think they should follow the policy which you suggested, nameiy, not being able to select amongst their suppliers on the
basis of whether thev 'are or are not on the blacklist? Do you think
that's the policy a company should follow ?
Mr. S T E W A R T . I think that's a proper policy.
Senator S A R B A N E S . Then why don't we have this legislation that will
make sure that's the case ?
My time is up, Mr. Chairman. Thank you.
Senator S T E V E N S O N . Mr. Helland, I believe you said you were losing
business to other countries now. I believe you mentioned Germany
and some other countries. You said this legislation will cause you to
lose a lot more business.
What are you doing now that this legislation would prevent you
from doing, that would cost you so much business ?
Mr. H E L L A N D . We are currently complying with U.S. laws and regulations, and we are obtaining business based on price and quality and
so forth. The reporting requirements, or some of the proposed wording
about some of the things we might not accept
Senator S T E V E N S O N . What?
Mr. H E L L A N D . The wording that we might or might not accept under
the proposed legislation. We are told by our Arab customers—we had
169
an instance within the last week, I happened to see a Telex sent by one
of our plant managers to one of our salesmen in the Middle East, and
I have had requests to quote—that we have to certify a number of
things that would be contrary to this legislation
Senator S T E V E N S O N . What are they ?
Mr. H E L L A N D . That the goods would not be of Israeli origin
Senator S T E V E N S O N . Let's stop there.
I f one of the bills permits the negative statement, does it make much
difference?
I think Mr. Stewart indicated earlier it didn't make much difference.
Mr. H E L L A N D . I t would to the Arab countries involved.
Senator S T E V E N S O N . Why can't you require a positive statement
that identifies non-Israeli firms ?
Mr. H E L L A N D . They can't. We talked earlier, I think you mentioned
this is a highly emotional issue and we are dealing with sovereignty.
I went back and looked at a number of purchase orders we received
from Saudi Arabia. There was no language on those purchase orders
that had anything to do with boycott legislation.
I t has now been reinstated. We are told it has been—excuse me——
Senator S T E V E N S O N . Isn't Saudi Arabia changing its requirements,
it doesn't now require this?
Mr. H E L L A N D . They didn't; but it is now reappearing.
Senator S T E V E N S O N . I t has been changed. I t happened a week ago.
I am talking about now. I am trying to find out, what in this legislation is going to cost you so much business. So far you referred to
certificates of origin, including negative certificates of origin, but two
of the countries don't even require them.
Mr. H E L L A N D . They are now doing it. They may have required i t by
law, but they have not as a matter of practice required negative statements of origin.
We have been told by both the Syrians and the Saudis they will no
longer accept positive statements.
Senator S T E V E N S O N . What else in this legislation is going to cost you
all that business?
Mr. H E L L A N D . That would be one of the major problems.
Senator S T E V E N S O N . Both bills permit positive statements of origin
and one permits negative statements.
Mr. H E L L A N D . The one permitting negative certificates of origin
would be far more desirable. That one would permit us in many ways
to keep on doing business.
Senator S T E V E N S O N . Let's say both are committed, what would be
left in the bill that would put you all out of business ?
Mr. H E L L A N D . The statement Senator Sarbanes referred to. When
we supply a product, it must be fit for the service: I t must meet the
temperature requirements, material requirements, and i t must obviously be something that can be imported into the country requiring it.
I think a prudent engineer will select not only something that is
strong enough and of the right material, but also something that can
pass through the port.
I f one of the reasons it cannot pass through the port is that it was
made by a certain manufacturer, I don't think a prudent engineer
would ever select that piece of equipment.
170
[ A supplementary statement received from Mr. Helland follows:]
I n December 1976, a n d J a n u a r y 1977, I was i n the U n i t e d K i n g d o m a n d surveyed our files r e g a r d i n g boycott clauses. I observed t h a t a l t h o u g h o u r customers
h a d not i n t h e recent past requested the use of boycott w o r d i n g , they w e r e beg i n n i n g to do so anew r .
Senator Stevenson commented t h a t t h e w o r d i n g on the boycott l e g i s l a t i o n h a d
been changed to positive statements of o r i g i n r a t h e r t h a n negative statements of
o r i g i n . I h a d not yet h e a r d t h i s a l t h o u g h over the weekend of 26-27 F e b r u a r y ,
Cameron salesmen a n d agents i n I r a q , the Oman, A b u D h a b i , Saudi A r a b i a ,
D u b a i , K u w a i t , I r a n , E g y p t , L i b y a and S y r i a made i n q u i r i e s i n t h e host countries concerning such legislation. As of t h i s reading, only I r a q s t i l l requires negat i v e statements of origin. W e were unable t o get any c o n f i r m a t i o n i n Saudi A r a b i a ,
a l t h o u g h A r a m c o services i n the U n i t e d States has verified t h a t positive statements of o r i g i n w i l l be acceptable. A l l t h e other countries have stated t h a t posit i v e statements of -origin were now acceptable, although they s t i l l have the negat i v e language requirements concerning ownership and b l a c k l i s t i n g of vessels. I
t h i n k these concessions on the p a r t of the A r a b s need t o be considered i n determ i n i n g w h i c h concessions w e m i g h t make i n our pending legislation.
Senator STEVENSON. Are you suggesting only blacklisted companies—that a prudent engineer is going to
Mr. H E L L A N D . I beg your pardon. I can't hear your question.
Senator STEVENSON. Maybe I don't understand your statement, but
you are saying a prudent engineer would systematically not buy from
blacklisted firms?
Mr. H E L L A N D . I am saying a prudent selector of equipment for export into an Arab country would not choose goods that would not be
importable into that Arab country, whether it was because those goods
were of Israeli origin or manufactured by a blacklisted firm.
Senator STEVENSON. What other provisions of this legislation are
going to put you out of business ?
We discussed the carrier provision. You can ship by any route by
any carrier, except blacklisted carriers, but you are not required to ship
by Israeli carriers.
Mr. STEWART. I f I can intervene, beginning our statement we refer
to certain prohibitions that are contained in the statute. Prohibitions;
for example, against a. certification that goods or components thereof
were not produced by blaeklisted vendors.
There are a good number of lawyers in the United States who would
advise corporate clients that that creates serious problems, as do the
other prohibitions that are referred to in our following language. This
whole refiisal-to-deal section is one of the most objectionable ones.
Senator STEVENSON. I thought I understood you to say earlier, Mr.
Stewart, you would have no objection to a law which prevented you
from discriminating against other American companies.
Mr. STEWART. Discriminating on grounds of race or religion
Senator STEVENSON. Right, But for a political purpose, it is all right.
I didn't get that distinction earlier.
Mr. STEWART. I think we have to keep one thing in mind above
everything else. Sure, we are speculating. So is the committee speculating what this bill would do in terms of reaction—I won't use the
stronger word "reprisal"—as far as the Arab countries are concerned.
Senator STEVENSON. That is one of the problems. The Congress frequently, especially in moments of haste and emotional moments, enact
laws that have unintended and somewhat perverse consequences.
Do you think we are enacting into law a counterboycott of the
Arab states? A counterboycott?
171
Mr. S T E W A R T . I don't think so.
Senator S T E V E N S O N . That suggestion was made by someone earlier.
The purpose is really to counter the boycott.
Mr. H E L L A N D . I think that would be the practical effect of the legislation.
Senator S T E V E N S O N . Why wouldn't an American company, as a result of this legislation, refuse to explore business opportunities in
Israel ? That might be an unintended consequence of this legislation,
the absence of business dealings with Israel could create evidence of
refusal to deal with Israel.
The best way to avoid any such evidence would simply be to
refrain from exploring business opportunities in Israel, would it not?
Presumably, you wouldn't have offers of business to reject. Wouldn't
it result in adverse consequences for Israel ?
Mr. H E L L A N D . I know of a number of companies including my own
that are engaged in trade with Israel.
Senator S T E V E N S O N . That is not my question.
The question is, under the legislation, might Israel be adversely
affected? Do you agree with that or not? Wouldn't many American
companies refuse to explore business opportunities in Israel?
Mr. S T E W A R T . I don't get your leap.
Senator S T E V E N S O N . Y O U can't be accused of refusing to deal i f you
have no opportunity to deal, so to avoid any evidence of a refusal
to deal you avoid any offers, any business opportunities in Israel.
Mr. S T E W A R T . Not only in Israel but you may be compelled to
avoid opportunities elsewhere.
Mr. H E L L A N D . I don't think that is a practical possibility when you
receive a letter in the mail that says, "We are interested in purchasing a certain number of items described in this manner. W i l l you
please send us a quotation?"
Senator S T E V E N S O N . What is the implication of that? That Israel
acquires control over American policy because all it has to do is send
such letters in the mail, i f you reject them, then you are guilty of
engaging in a boycott?
Mr. H E L L A N D . I t is like Mr. Stewart said, you said we wouldn't
explore for opportunities in Israel. We explore in Arab countries or
anywhere else, not only by salesmen knocking on their door; they
also make a positive inquiry.
When they ask a question, "What is the price of such and such an
item?" You give them an offer.
Senator S T E V E N S O N . Y O U are making a good case for this legislation.
Let me ask you about one particular provision, then I w i l l quit.
One of these measures prohibits compliance with the visa requirements of foreign countries. A l l countries have visa requirements.
How would that provision affect your conduct of business in foreign
countries, including Arab States and Israel? Are you familiar with
the provisions ?
Mr. W I T H E R S . Yes, I am, Senator.
Also I am looking at what I believe was a statement by you, "These
prohibitions would not apply to the following compliance by individuals with immigration requirements of the boycotting country."
Senator S T E V E N S O N . One of the bills permits compliance with visa
requirements. The others do not.
85-654 O - 77 - 12
172
I am asking you about the bill that does not permit compliance
with visa requirements.
Mr. W I T H E R S . I f it is part of the law
Senator S T E V E N S O N . Saudi Arabia doesn't permit women to work.
Doesn't that raise a question in your mind about the effect of this
legislation ? Have you thought i t through ? What happens i f you try
to go or somebody makes an attempt to go to work in Israel with a
former occupant or resident of one of the occupied territories and
they won't let them back in ? Have none of you thought through the
consequences of that provision in that bill on the conduct of American business abroad if you can't comply with the visa requirements of
the foreign country?
I am giving you an opportunity to say something that is pretty
obvious.
Mr. H E L L A N D . Senator, as wTe talk about sovereign rights of countries, I would think that it was within the rights of a country—be i t
an Arab country, or Israel, or the United States—to regulate who
was allowed in their country.
Senator S T E V E N S O N . What happens i f this bill goes into effect in
Saudi Arabia?
Mr. H E L L A N D . I am not familiar with that particular part of
the
Senator S T E V E N S O N . That is evident.
[ I t was requested that the following appear in the record:]
173
Petroleum
Equipment
Suppliers
Association
1703 First City National Bank. Building
Houston, Texas 77002
713/223-4909
March 10, 1977
The Honorable Adlai E. Stevenson III
Chairman, Subcommittee on International
Finance of the
Senate Committee on Banking, Housing,
and Urban Affairs
5300 Dirksen Senate Office Building
Washington, D. C.
20510
Dear Senator Stevenson:
During my February 21, 1977, testimony for the Petroleum Equipment
Suppliers Association on the subject of the Export Administration Act, you
requested that I furnish you additional comments concerning the serious questions raised by certain visa prohibitions contained in S. 92. This letter,
which I would like to have made part of the record, contains fly comments on
that subject.
There are two provisions in S. 69 which relate to visa requirements of
foreign countries, one of which does not appear in S. 92. At page 23, lines
20 through 22, Section 4A(a)(1)(D) prohibits the furnishing of information
with respect to the race, religion, nationality or national origin of any other
U.S. person. This subsection is identical in both bills. However, S. 92 in
the preceding language in Section 4A(a)(1) prohibits "any United States person
from taking or agreeing to take any of the following actions to comply with,
further, or support any boycott... " S. 69 reads in relevant part "any United
States person from taking any of the following actions with intent to comply
with, further, or support any boycott... " The differences are underlined for
emphasis. On page 25, lines 5 and 6, Section 4A(a)(2)(D), S. 69 provides an
exception for compliance by an individual with the immigration or passport
requirements of any country. This language does not appear in S. 92.
It appears that the intent of these sections of S. 69, within the context
of Title II, would permit an individual person to comply with specific visa
requirements of a foreign country when seeking such a visa to perform work
in that foreign country as an employee of a U. S. firm. The U. S. firm could
not make representations with regard to such employee's race, religion,
nationality or national origin, but the individual employee would not be prohibited from doing so. Obviously, the U.S. cannot control through its own
laws the sovereign right of any foreign country to control people crossing
174
Senator Stevenson
- 2-
March 10, 1977
over its borders or foreign nationals doing work in that country. One notable
attempt to do so in trade legislation passed by the last Congress did not meet
with success but, in fact, had the opposite effect desired. This is true even
when the policies and principles of this country regarding discrimination
toward individuals are in conflict with such requirements of foreign governments.
If U. S. business firms are to conduct business abroad and use U. S.
employees, thereby promoting U.S. employment as opposed to the employment
of foreign residents, the U.S. employees must be able to obtain visas where
required.
A representative sample of visa forms for various Arab countries
is attached, which forms contain requirements to specify the religion of the
applicant. While such information might be useful in the event of death or
serious injury and for other purposes, it might also be used to practice discrimination against individuals of certain faiths. We note with satisfaction
that certain Arab governments have again officially made clear to the U.S.
that the boycott of Israel is not based upon religious grounds, nor is its objective to discriminate against persons of the Jewish faith.
It seems proper that a U. S. f i r m should be able to go forward with
a business project or commercial transaction in a foreign country even if
some of its employees or prospective employees cannot secure a visa and
even if that visa were denied on the basis of that person's religion. The
provisions of S. 92 would appear to prohibit a U. S. f i r m from going forward
with the project. The provisions of S. 69 would appear to permit a U. S. f i r m
to go forward with the project.
We believe it is unreasonable for the policy of the United States to
strongly encourage U. S. firms to do business in foreign countries under principles of free and open trade but, on the other hand, to prohibit a company
from going forward with a project once commenced if any single employee
is denied a visa. While such denial could be for other reasons, it would be
assumed it would be for purposes of racial or religious discrimination. Further,
the mere refusal of an individual to provide that information on the application
could result, in and of itself, in the denial of the visa and the termination
of the project under the provisions of S. 92. No prudent U. S. f i r m could undertake any project in such a country and face the risk of breaching the contract
by terminating the project or proceed under threat of criminal prosecution
in the United States under those requirements. The effect, therefore, for all
intents and purposes, of passage of S. 92 would be to prohibit U.S. firms from
175
Senator Stevenson
-3-
March 10, 1977
doing any further substantial business in any country which requests information
on a person's religion, race, nationality or national origin on these applications.
We seriously question that this was the intent of the drafters.
Thank you for your consideration.
Very truly yours,
QcuAAtf
ft.r'KUlovA
<5e6rge X j Helland, President
Petroleum Equipment Suppliers Association
GAHrmm
Attachments
176
AMBASSADE
OU
CONSULAT
D' A L G E R I E
REPUBLIQUE ALGERIENNE DEMOCRATIQUE ET POPULAIRE
M I N I S T E R E DES A F F A I R E S ETRANGERES
a Washington, D.C.
11 du visa
DEMANDE DE VISA
NOM_
Christian name
DATE ET LIEU DE NAISSANCE _
Date and Place of Birth
PASSEPORT N'°
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by
Passeport n*
_ VALABLE JUSQU'AU_
In
NATIONALITE ACTUELLE
_ D'ORIGINE
Nationality
_RELIGION_
Religion
of Birth
PROFESSION ACTUELLE
Profession
DOMICILE HABITUEL
Adress
ETAT CIVIL
_NOMBRE D'ENFANTS _
Married, single, divorced.
Number of children
MOTIF DU VOYAGE
State your reasons for undertaking the travel
ADRESSE DU SEJOUR EN ALGERIE .
Where will you stay in Algeria
DUREE DU SEJOUR
How long will you stay
_ NOMBRE D'ENTREES .
Number of entries
REFERENCES EN ALGERIE
References in the ALGERIA
COMMENT SONT ASSURES LES FRAIS DE SEJOUR EN ALGERIE?_
Will you be self sufficient during your stay?
PRENOMS DES ENFANTS VOUS ACCOMPAGNANT
Christian name of children travelling with you
DATES DE NAISSANCE
Dates of Birth
AVEZ-VOUS SEJOURNE EN ALGERIE? QUAND ET OU?
Have you been already to Algeria? When and Where?
N.B:
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I'autorisation
pour le btncficiaire
d'occuper un emploi salaril ou
non en A Iglrie.
Ma signature engage ma responsabilite
et m'expose,
en sus des poursuites
prevues par la loi en cas de
fausse declaration,
au REFUS DE TOUT VISA A
L'AVENIR.
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Signature
177
EMBASSY OF INDIA
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IRAQI INTERESTS SECTION
W A S H I N G T O N , D.C.
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Embassy-Consulate of the Slate of Kuwait
VISA APPLICATION FORM
Name in Full
Present Nationality
(Please use block letter)
Previous Nationality .
Profession
Religion
Place of birth
Date of birth
Passport No
Place of issue
Date of issue
Valid tin
Present address
Address in Kuwait
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Reasons for travelling to Kuwait
Authority which recommends granting the required visa (or N.O.C. No.)
Duration of proposed visit
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References and their addresses in Kuwait
Name of family (wife & children if indorsed in The Same Passport) accompanying applicant
Date of arrival
Name and address of sponsor in Kuwait
I hereby declare that the details and information given in this application true and correct.
Place
Date
Signature
179
EMBASSY OF T H E L I B Y A N
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A R A B REPUBLIC
WASHINGTON. D.C.
(Consular Section)
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182
Senator S T E V E N S O N . Are there any other questions ?
Senator P R O X M I R E . I have no questions.
I would like to make sure Mr. Stewart will give us the list of Jewish
firms doing business with the Arabs that have moved out of New York
State.
You indicated
Mr. S T E W A R T . I can't give you that list.
Senator P R O X M I R E . Y O U don't have any specifics ?
Is it a rumor ?
Mr. S T E W A R T . I t is pretty common knowledge there has been a move.
I think with the committee's resources you can get that information,
and I think you may even have some testimony in the record before
these hearings are over.
Senator P R O X M I R E . I f you can document that in any way, shape, or
form., I think that is a damaging point, if it is true. I f it is not true, i f it
can't be documented, I think we ought to know that.
The only other point I would make, on the basis of the testimony of
these witnesses, and they do represent the private firms that are most
concerned; the machinery, allied products, petroleum equipment suppliers, associated general contractors, consulting engineers, and I
haven't heard any documentation at all as to the damage this would do.
Any documentation concern, but no documentation as to what the
damage would be to our business.
No estimates of the amounts. No statistics indicating how much you
do that might be lost.
No indication how many jobs, i f any, might be lost. None of that.
And no contravening of the very emphatic point, made by the other
three Senators today, that we should have control over the sovereignty
of our own firms.
That we should not permit our own firms to be used as agents of
foreign countries to enforce the boycott.
You gentlemen didn't challenge that, in my view, effectively at all.
Mr. S T E W A R T . The implication of the law, if it is passed in its present
form, would require American companies to follow certain procedures
and i f that is accompanied by reaction from the Arab states, which we
believe it would be, there would be substantial loss of business.
Now, we can't quantify that, because we don't know what the Arabs
are goingto do.
But we think wTe know what they are going to do, and I think
Secretary Vance will testify on this point, based on his recent trips.
The Arabs have already anticipated the possibility of this legislation
passing, and if the press report is correct, the Secretary has been
Senator P R O X M I R E . The Secretary of State is going to testify before
the committee next week, but you are the expert on the effect this is
going to have on our economy, if any. You are the first that do business.
You know far more about it than any Government official, because you
represent the private firms that are doing business right now.
We don't have anything on the record here indicating we are going
to have any documented economic loss, if we follow this legislation
which I think can be—should be supported overwhelmingly on
principle.
Mr. H E L L A N D . Senator Proxmire, i f I may call your attention to the
appendix of my remarks submitted in advance. This does support a
calculation showing the assumption that would average out 110,500
183
lost U.S. jobs per year over the next 5 years. To bring it home more
personally to the company. I work for in Houston, Tex., where we had
a very difficult time due to economic circumstances, just laying off 500,
I can guarantee you the estimate of 850 that we would have to lay
off were this legislation implemented and were the reaction of Arab
states as we are fully sure it will be, will prove to be a very painful
thing, resulting in severe economic hardship to a number of our
employees' families, as well as to a number of other people in similar
positions in Houston.
Senator P R O X M I R E . That is the kind of specific claim we want to have
available, so we can have it challenged by the witnesses, so we can
consider it.
Mr. W I T H E R S . The A G C written statement also contains statistics on
this matter. I won't bother to try to read them now, but they are in the
written statement that is attached, and we feel that this bill could make
a very substantial loss to U.S. business and the statistics are given in
here.
Now, when I say we think they could, nobody knows how this thing
is going to work. You got a provision now that says do not deal with
somebody. Now, it is hard to look in a crystal ball and see just what is
going to happen, but it can be very severe from the statistics we have.
Mr. N E E D I I A M . Mr. Chairman, i f I might just add to these other
comments. Again, we have provided some statistics for the record.
Our firm has about 2,600 employees in Kansas City, and over 600 of
those w^ere supported by business we generated in Middle Eastern
countries. So we are talking about an impact of 20 to 25 percent in
our firm.
Beyond that we ordered materials for a client last year in the range
of $500 million. Now, those were materials bought by—bought from
American .manufacturers in California and the other 49 States of
the United States—that could have been bought in Europe
Senator S T E V E N S O N . Well, gentlemen, the provisions you have
spent most of the time discussing aren't going to do you much harm,
in my opinion.
There are provisions that you haven't addressed that could do
you some harm.
Senator W I L L I A M S . Just one question, Mr. Chairman. This is a
question directed to the practical operations with respect to the boycott on your day-to-day business methods really.
Mr. Helland, you were talking about, you wouldn't get—you
wouldn't go to a supplier that was on the blacklist because the product
could get on the ship, but couldn't make it off the ship in the Middle
East Arab port.
That suggests to me that you must have the list, the blacklist, and
consult it before going to suppliers for invitation to bid on your deal.
Mr. H E L L A N D . Senator Williams, I believe in one of my earlier comments I said that when we talked about a blacklist there was some
conjecture, because to my personal knowledge, either at the Cameron
Iron Works or our member companies, the issue of blacklisted companies has not been raised, with the exception of the carrier.
Senator W I L L I A M S . Y O U , i t seems to me, you are all jumping at
shadows and not substance here. The way you put it a little while
ago, you say it would be foolhardy for any of your companies to use
184
a supplier who is on the blacklist. Y o u haven't seen a blacklist, you
say.
M r . H E L L A N D . T h a t is true. I haven't. I n the absence of seeing one,
I am going to assume no one I deal w i t h is on there.
Senator W I L L I A M S . W h e n you get to the port, you got your fingers
crossed.
Mr.
HELLAND.
NO,
sir.
Senator S T E V E N S O N . I t may go by a different name, but the boycott list has been open and notorious f o r years, hasn't it?
M r . H E L L A N D . I know of no supplier of the type of equipment
that either the Cameron I r o n W o r k s or other member companies
use that is a blacklisted company.
Senator S T E V E N S O N . The list exists. I f you haven't seen i t , I w i l l
show i t to you.
M r . H E L L A N D . I have made a note to write and ask f o r a copy of
t h a t list, because I have been unable to find i t i n the past.
Senator W I L L I A M S . I am s t i l l mystified and have a feeling that
you rugged men of business are just j u m p i n g at shadows. Y o u are
t e l l i n g us you are s u p p l y i n g things that you don't know, according
to A r a b determination, whether i t w i l l be accepted or not.
M r . S T E W A R T . W e are not j u m p i n g at shadows. W e are g i v i n g you
the best opinion we can as to what effect we t h i n k this b i l l w i l l have,
as to the degree to which our country is r i s k i n g reprisal, and at the
very m i n i m u m disturbing, beyond the business considerations, a hope
that the new administration can b r i n g about a settlement.
Senator W I L L I A M S . Let's come at this another way. Do you give
to the country that you are going to supply a product a list of your
suppliers that go into your end product?
Mr.
HELLAND.
NO,
sir.
M r . S T E W A R T . Some of them are identifiable.
M r . H E L L A N D . I f you have a nameplate on i t , "manufactured by
the A B C M a n u f a c t u r i n g Co.," i t is obviously identifiable.
I f the A B C Co. were on the blacklist, the presumption under w h i c h
we have operated is that we would know t h a t or would be t o l d that.
W e have not received a copy of the blacklist. I have asked i n various
M i d d l e Eastern countries, A b u Dhabi, Saudi A r a b i a , i f such a list
were available and was told, no. I t is available i n Damascus
Senator W I L L I A M S . W h e n you are b i d d i n g a contract f o r one of
the A r a b boycott countries, when you are b i d d i n g a contract f o r another country, what differences are there i n this way you p u t your
contract together i n terms of suppliers and getting ready to bid?
M r . H E L L A N D . The major contracts that we f i l l are such that there
w o u l d be no difference. I t h i n k possibly the contractors m i g h t have
another answer.
M r . W I T H E R S . W e put out bids. W e get quotations on materials
just as we would later on. W e don't check on o r i g i n or anything.
This says " r e f r a i n f r o m doing business w i t h any person." T h a t is
what worries me.
I f we sign a contract that requires us to abide by the laws and
regulations of Saudi Arabia, i t is possible that we w i l l come i n conflict w i t h this provision. A t that time, we w i l l be prevented f r o m f u l f i l l i n g our contract at a severe penalty to ourselves or be i n violation
of this provision.
185
Senator W I L L I A M S . Speculation. Speculation. T h a t is what I call
shadows
M r . W I T H E R S . I t may be speculation, but a businessman must make
t h a t decision. H e may make the decision not to enter into the contract, thus losing the volume of business that he m i g h t otherwise do
and never be i n violation of that provision.
M r . H E L L A N D . M r . Chairman, you asked earlier about questions
concerning visa requirements. M a y I submit w r i t t e n testimony on
Senator S T E V E N S O N . Yes. I wish you would. I t h i n k that provision i n one of these bills raises serious questions.
Most a l l A r a b States have visa requirements.
Gentlemen. We w i l l keep the record open long enough f o r you to
give us your comments on the administration's position after we have
received that, which we expect on February 28, as well as other
comments.
M r . S T E W A R T . Before you close, I wTant to be sure that the committee understands t h a t American business does not endorse the
boycott. W e don't like i t at all. Not at all. I t has been said by some
that there is an attitude of acceptance or accommodation to the
boycott. H o p e f u l l y , w i t h o u t legislation companies can accomplish
more thorough negotiations w i t h their A r a b customers, and, at the
same time, we feel that that should be accompanied by a stay, shall we
say, on legislation of this type.
There is one other point that ought to be i n the record, i f I may
take a second.
T h a t is, the supplying of m i l i t a r y equipment via the Department
of Defense, to both Israel and to A r a b States as well. Now, that
equipment goes through a special section of D O D , and the U n i t e d
States is f u r n i s h i n g m i l i t a r y hardware, w i t h the approval of this
Government, to both sides and i t is not small potatoes.
Senator W I L L I A M S . I missed the point there. The Arabs should
not accept that m i l i t a r y equipment because we are also doing business
w i t h Israel under their principle?
M r . S T E W A R T . N O . I am merely suggesting that f o r the record and
for informational purposes, the flow of m i l i t a r y goods out of the
U n i t e d States into both the A r a b countries and to Israel is going
f o r w a r d , and i t goes f o r w a r d w i t h o u t any particular encumbrances,
because i t is going t h r o u g h the Department of Defense.
M y point is, that w^e are—as a c o u n t r y — t r y i n g to achieve a balance between one group of countries and Israel i n connection w i t h
f u r n i s h i n g them m i l i t a r y hardware. A n d we are doing so to the Israelis, as well as to the A r a b countries. Also, to the best of my knowledge, no effort has been made by the Arabs to stop supplying m i l i t a r y goods to Israel.
Senator W I L L I A M S . I t h i n k t h a t is central to what we are attempti n g here, to open up i n another area, private commerce, and have
American business have equal opportunity, whether i t is an A r a b
State or Israel.
M r . S T E W A R T . I made the point earlier that the Arabs have never
urged upon, pressed, or taken any action to preclude the U n i t e d States
f r o m exporting to Israel.
186
Senator S T E V E N S O N . I think that makes the point that this legislation, i f i t becomes law, would not interfere with your business, unless
you intend to boycott Israel.
And you say there is no intention to boycott anyway.
Mr. S T E W A R T . That is correct. I just wanted to be sure the record
was clear on that point.
Senator S T E V E N S O N . One other aspect which I w i l l raise, then we
must move on.
Rarely is any mention given to the implications of this legislation
for the United States and its interests in all parts of the world, in
the controversial conflict between Taiwan and the People's Republic
of China or between Greece and Turkey. What happens i f black nations
boycott Rhodesia, for example. Are American companies prevented
from joining that effort? Are they required then to do business with
Rhodesia ?
Thank you.
You have been very helpful and, as I have mentioned earlier, the
record w i l l remain open.
Mr. S T E W A R T . We appreciate the opportunity.
[Additional material received for the record from the Machinery
and Allied Products Institute follows:]
187
M
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(202)
MACHINERY**
Allied Products
IN STITUTE
1200 E I G H T E E N T H
331-8430
STREET,
N.W.
•
WASHINGTON,
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MYTHS AND R E A L I T I E S
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D. C.
Machinery & A l l i e d Products I n s t i t u t e a n d i t s a f f i l i a t e d q r c a n i z a t i o n , Council f o r Technological Advancement,
a r e e n g a g e o i n . r e s e a r c h i h t h e economics of c a p i t a l gdoos. ( t h e f a c i l i t i e s o f p r o o u c t i o n , d i s t r i b u t i o n , t r a n s p o r t a t i o n
COMMUNICATION AN0 COMMERCE), IN ADVANCING THE TECHNOLOGY AND FURTHERING THE ECONOMIC PROGRESS OF THE UNITED STATE
20036
188
Summary
During t h e course of debate and discussion of the Arab b o y c o t t ,
a number of myths have gained currency. These myths and the corresponding
f a c t u a l s i t u a t i o n s a r e as f o l l o w s :
1.
Myth: The Arab boycott i s intended to d i s c r i m i n a t e
against U.S. firms t h a t have Jewish owners, d i r e c t o r s ,
or managers.
This a l l e g a t i o n i s not supported by the evidence
a v a i l a b l e from the tens of thousands of company r e p o r t s
concerning b o y c o t t - r e l a t e d requests received by the
Department of Commerce. F u r t h e r , t h r e e senior U.S.
Government o f f i c i a l s and s e v e r a l Arab o f f i c i a l s have
made statements to the e f f e c t t h a t the boycott i s
not intended to d i s c r i m i n a t e against persons on the
basis of r a c e , r e l i g i o n , or n a t i o n a l o r i g i n .
2.
Myth: The Arab boycott i s intended to prevent U.S.
and other f o r e i g n f i r m s from "doing business" w i t h
Israel.
While a c t i v i t i e s of U.S. firms i n I s r a e l such
as an investment or l i c e n s i n g agreement could r e s u l t
i n the firms being b l a c k l i s t e d , the boycott r u l e s do
not p r o h i b i t U.S. firms from exporting n o n m i l i t a r y
goods to I s r a e l , and many companies export t o both
I s r a e l and Arab c o u n t r i e s .
3.
Myth: Companies r e p o r t i n g to the Department of Commerce
t h a t they have "complied" w i t h Arab b o y c o t t - r e l a t e d r e quests are a c t i v e l y p a r t i c i p a t i n g i n the Arab boycott
against I s r a e l .
Because of the design of the r e p o r t i n g form, companies which provide the Arabs w i t h requested i n f o r m a t i o n
or c e r t i f i c a t i o n s were, u n t i l r e c e n t l y , r e q u i r e d to check
a block on the form i n d i c a t i n g whether they have or have
not "complied" w i t h the request f o r i n f o r m a t i o n , e t c . As
the Department of Commerce explained i n a press r e l e a s e ,
the f a c t t h a t a company reported to the Department t h a t
i t had complied w i t h a given request ( e . g . , f o r a c e r t i f i c a t i o n t h a t the f i r m has no investments i n I s r a e l or
t h a t the product contains no I s r a e l i components) does
not n e c e s s a r i l y mean t h a t i t has changed i t s course of
conduct i n response t o the boycott or has taken any
a f f i r m a t i v e steps to boycott I s r a e l .
Consistent w i t h
t h i s view, i n January 1977 the Department of Commerce
adopted changes i n the r e p o r t i n g form which drop use of
the word "comply" on t h a t form.
189
4.
Myth: Other i n d u s t r i a l c o u n t r i e s a r e t a k i n g more
f o r c e f u l a c t i o n than the United States against the
b o y c o t t , and t h e Arabs need U.S. arms, i n d u s t r i a l
p r o d u c t s and t e c h n o l o g y so b a d l y t h a t t h e y would n o t
be l i k e l y t o s w i t c h a s u b s t a n t i a l amount of purchases
to other countries i f strong antiboycott l e g i s l a t i o n
were adopted by t h e U n i t e d S t a t e s .
The Departments of Commerce and S t a t e a r e not
aware o f any s i g n i f i c a n t a c t i o n by o t h e r i n d u s t r i a l
c o u n t r i e s t o oppose i m p l e m e n t a t i o n of t h e b o y c o t t .
I t i s a f a c t t h a t t h e U n i t e d S t a t e s s u p p l i e s no more
t h a n 20 p e r c e n t o f t h e Arab n a t i o n s ' i m p o r t s of goods
and s e r v i c e s . W h i l e no one can e s t i m a t e t o what
e x t e n t t h e Arabs would s w i t c h purchases t o o t h e r
c o u n t r i e s as a r e s u l t o f more f o r c e f u l U.S. a c t i o n
a g a i n s t t h e b o y c o t t , t h e r e a r e v e r y few p r o d u c t s ,
i n c l u d i n g arms, w h i c h t h e Arab n a t i o n s c o u l d n o t
i m p o r t from o t h e r i n d u s t r i a l n a t i o n s and communist
countries.
5.
Myth: A l t h o u g h t h e A r a b s ' p r i m a r y b o y c o t t e n j o y s
l e g i t i m a c y under i n t e r n a t i o n a l l a w , i t s secondary and
t e r t i a r y a s p e c t s do n o t .
The U n i t e d S t a t e s does n o t
engage i n secondary b o y c o t t s (except f o r c e r t a i n
measures a g a i n s t f o r e i g n s h i p s t h a t c a l l a t Cuba),
but does engage i n " l e g i t i m a t e " p r i m a r y b o y c o t t s
against c e r t a i n countries.
A c t u a l l y , n e i t h e r t h e b o y c o t t s a p p l i e d by t h e
Arabs n o r those a p p l i e d by t h e U n i t e d S t a t e s a r e
c l e a r l y s a n c t i o n e d by i n t e r n a t i o n a l l a w . The U n i t e d
S t a t e s does engage i n economic c o e r c i o n a c t i v i t i e s
w i t h secondary b o y c o t t aspects by p r o h i b i t i n g f o r e i g n
f i r m s c o n t r o l l e d by U.S. f i r m s ( o r managed by U.S.
c i t i z e n s ) from engaging i n t r a n s a c t i o n s w i t h N o r t h
Vietnam, South Vietnam, Cambodia, N o r t h Korea, Cuba,
and Southern Rhodesia. The U n i t e d S t a t e s a l s o r e s t r i c t s f o r e i g n f i r m s c o n t r o l l e d by U.S. f i r m s from
engaging i n t r a n s a c t i o n s i n v o l v i n g s t r a t e g i c p r o d u c t s
w i t h t h e S o v i e t Union, t h e P e o p l e ' s R e p u b l i c o f China,
and o t h e r communist c o u n t r i e s .
In a d d i t i o n , the
c o n t r o l s e x e r c i s e d by t h e U n i t e d S t a t e s on e x p o r t s
o f U . S . - o r i g i n t e c h n i c a l d a t a and p r o d u c t s a l s o have
some s i g n i f i c a n t secondary b o y c o t t a s p e c t s .
Whatever
t h e r e s t r i c t i o n s e x e r c i s e d e x t r a t e r r i t o r i a l l y by t h e
U n t i e d S t a t e s a r e c a l l e d , t h e i r manner o f implement a t i o n i s so s i m i l a r t o t h a t o f t h e Arab b o y c o t t t h a t
t h e y would be e f f e c t i v e l y p r o s c r i b e d i f f o r e i g n count r i e s adopted a n t i b o y c o t t l e g i s l a t i o n a l o n g t h e l i n e s
190
o f t h a t proposed by S. 69 and H.R. 1 5 6 1 / 1 i n t r o d u c e d
e a r l i e r t h i s month i n t h e new Congress.
As t h e above summary i n d i c a t e s , t h e r e i s c o n s i d e r a b l e m i s u n d e r s t a n d i n g c o n c e r n i n g s e v e r a l a s p e c t s o f t h e Arab b o y c o t t — f r o m t h e comparat i v e l y minor i s s u e of t h e " l e g i t i m a c y " o f t h e U.S. v s . Arab b o y c o t t s t o
major m a t t e r s such as t h e a l l e g e d d i s c r i m i n a t o r y m o t i v a t i o n o f t h e b o y c o t t
and t h e r o l e o f o t h e r major t r a d i n g n a t i o n s .
C e r t a i n l y a l l o f these m a t t e r s
should be f u l l y e x p l o r e d and weighed i n d e t e r m i n i n g what t h e a p p r o p r i a t e
U.S. response t o t h e b o y c o t t s h o u l d be.
I n our v i e w , t h e f u l l development of t h e above i s s u e s , as w e l l
as those posed by l e g i s l a t i v e p r o p o s a l s d i s c u s s e d i n a companion MAPI
memorandum,/2 r a i s e s e r i o u s q u e s t i o n s as t o whether t h e Arab b o y c o t t i s
a m a t t e r which can be addressed e f f e c t i v e l y — t a k i n g i n t o account U.S.
f o r e i g n p o l i c y and commercial i n t e r e s t s — b y l e g i s l a t i o n .
" D i s c r i m i n a t o r y " Aspects o f t h e B o y c o t t
A l l e g a t i o n s a r e f r e q u e n t l y made t h a t t h e Arab b o y c o t t i s r a c i a l l y
m o t i v a t e d and t h a t , i n i t s i m p l e m e n t a t i o n , i t i s d i r e c t e d a g a i n s t companies
w h i c h a r e Jewish-owned o r have Jews a c t i v e i n t h e i r management. The e v i d e n c e
a v a i l a b l e t o t h e U.S. Government does not s u p p o r t these a l l e g a t i o n s , and
b o t h U.S. Government and Arab o f f i c i a l s have i s s u e d p u b l i c s t a t e m e n t s t o
t h e e f f e c t t h a t t h e b o y c o t t i s n o t i n t e n d e d under i t s g o v e r n i n g p r i n c i p l e s
t o d i s c r i m i n a t e a g a i n s t i n d i v i d u a l s o r f i r m s on t h e b a s i s o f r a c e o r r e l i g i o n .
Even i f t h i s were t h e case, t h e U.S. Government has adopted an a r r a y o f a d m i n i s t r a t i v e and l e g i s l a t i v e measures t o m i n i m i z e t h e p o s s i b i l i t y o f d i s c r i m i n a t o r y a c t i o n s on t h e b a s i s o f r a c e , r e l i g i o n , c o l o r , sex, and n a t i o n a l
origin.
The Evidence From Reports F i l e d
By U.S. Companies W i t h t h e
Department o f Commerce
I n December 1975 Under S e c r e t a r y o f Commerce James A. Baker, I I I
t e s t i f i e d t h a t d u r i n g t h e f i r s t t e n y e a r s of t h e r e p o r t i n g program over
50,000 t r a n s a c t i o n s i n v o l v i n g b o y c o t t - r e l a t e d r e q u e s t s were r e c e i v e d by t h e
Department and, of t h e s e , o n l y t w e n t y - f i v e i n s t a n c e s were r e p o r t e d where
t h e r e q u e s t a p p a r e n t l y i n v o l v e d d i s c r i m i n a t i o n on r e l i g i o u s o r e t h n i c g r o u n d s . / 3
1/
2/
3/
The d e t a i l s o f S. 69 a r e d i s c u s s e d i n a companion MAPI memorandum, "An
A n a l y s i s o f Key A n t i b o y c o t t P r o v i s i o n s o f S. 6 9 , " FT-71.
Ibid.
See statement o f Under S e c r e t a r y o f Commerce James A. Baker, I I I ,
D i s c r i m i n a t o r y Arab P r e s s u r e on U.S. B u s i n e s s ; Hearings B e f o r e t h e Subcommittee on I n t e r n a t i o n a l Trade and Commerce o f t h e Committee on I n t e r n a t i o n a l R e l a t i o n s , House o f R e p r e s e n t a t i v e s , N i n e t y - F o u r t h Congress,
F i r s t Session, March 6, 12, 13, and December 11, 1975, pp. 114-121.
191
A c c o r d i n g t o t h e Department o f Commerce's a n a l y s i s of
r e c e i v e d i n more recenc months:
—
D u r i n g t h e p e r i o d October 1975-March 1976, U.S. comp a n i e s r e p o r t e d r e c e i v i n g f o u r " D i s c r i m i n a t o r y quest i o n n a i r e s " ( i . e . , questionnaires that included r e quests f o r i n f o r m a t i o n or a c t i o n w h i c h , as d e f i n e d
i n t h e D e p a r t m e n t ' s r e g u l a t i o n s , d i s c r i m i n a t e , or have
t h e e f f e c t o f d i s c r i m i n a t i n g , a g a i n s t U.S. c i t i z e n s o r
f i r m s on t h e b a s i s of r a c e , c o l o r , r e l i g i o n , sex or
n a t i o n a l o r i g i n ) and f o u r "Other d i s c r i m i n a t o r y
requests."/!
—
D u r i n g t h e p e r i o d A p r i l - J u n e 1976, U.S. companies r e p o r t e d r e c e i v i n g one " D i s c r i m i n a t o r y q u e s t i o n n a i r e "
and two " O t h e r d i s c r i m i n a t o r y r e q u e s t s . "
reports
As n o t e d below (see statement of A s s i s t a n t S e c r e t a r y of S t a t e
Joseph Greenwald), as a g e n e r a l r u l e t h e Arab governments have p r o v i d e d
assurances t h a t such d i s c r i m i n a t o r y r e q u e s t s a r e u n a u t h o r i z e d e x c e p t i o n s
t o t h e i r p o l i c y o f n o t d i s c r i m i n a t i n g on t h e b a s i s o f r a c e o r r e l i g i o n .
O f f i c i a l Statements Concerning t h e
N o n - d i s c r i m i n a t o r y Nature o f t h e
Boycott
Both U.S. Government and Arab o f f i c i a l s have r e p e a t e d l y s t a t e d
t h a t t h e b o y c o t t i s n o t i n t e n d e d t o d i s c r i m i n a t e a g a i n s t persons o r f i r m s
on grounds o f r a c e , r e l i g i o n , e t c .
—
S e c r e t a r y of t h e Treasury W i l l i a m E. Simon, June 9,
1976.
. . . According to i t s governing p r i n c i p l e s , the
Arab b o y c o t t of I s r a e l i s not based on d i s c r i m i n a t i o n a g a i n s t U.S. f i r m s o r c i t i z e n s on e t h n i c o r
r e l i g i o u s grounds. .
1/
2/
Since December 1, 1975 U.S. f i r m s have been p r o h i b i t e d by t h e Department
o f Commerce's Export A d m i n i s t r a t i o n R e g u l a t i o n s from complying w i t h such
d i s c r i m i n a t o r y q u e s t i o n n a i r e s or r e q u e s t s .
See statement o f W i l l i a m E, Simon, S e c r e t a r y of t h e T r e a s u r y , E x t e n s i o n
of t h e Export A d m i n i s t r a t i o n Act of 1969: Hearings B e f o r e t h e Committee
on I n t e r n a t i o n a l R e l a t i o n s , House o f R e p r e s e n t a t i v e s , N i n e t y - F o u r t h Cong r e s s , Second Session, P a r t 1 , June 8 , 9, 10, 11, 15 and 16 and August
10 and 24, 1976, p . 48.
192
S e c r e t a r y o f Commerce E l l i o t t L . R i c h a r d s o n , June 11,
1976.
. . . The evidence t h u s f a r s u p p o r t s t h e v i e w t h a t
t h e b o y c o t t i s symptomatic o f t h e Mideast c o n f l i c t
and t h a t , i n i t s c u r r e n t m a n i f e s t a t i o n s , i t i s n o t
based on r e l i g i o u s o r e t h n i c c r i t e r i a . / I
—
A s s i s t a n t S e c r e t a r y o f S t a t e Joseph A. Greenwald, June
8 , 1976.
. . . There have been o n l y a h a n d f u l o f d i s c r i m i n a tory requests, mainly i n v o l v i n g p r i v a t e practices,
out o f more t h a n 50,000 b o y c o t t r e q u e s t s t o U.S.
f i r m s r e p o r t e d t o t h e Department o f Commerce from
1970 t h r o u g h November 1975. As a g e n e r a l r u l e , we
have r e c e i v e d assurances t h a t t h e s e a r e u n a u t h o r i z e d
e x c e p t i o n s and t h a t i t i s n o t t h e p o l i c y o f t h e
governments a p p l y i n g t h e b o y c o t t o f I s r a e l t o d i s c r i m i n a t e i n b u s i n e s s t r a n s a c t i o n s on t h e b a s i s o f
race o r r e l i g i o n .
H i g h - r a n k i n g Arab government r e p r e s e n t a t i v e s have emphasized t h i s w i t h b o t h p u b l i c
and p r i v a t e assurances t h a t r e l i g i o n o r creed bears
no r e l a t i o n s h i p t o t h e Arab b o y c o t t . / 2
—
P r i n c e Saud A l - F a i s a l , M i n i s t e r o f F o r e i g n A f f a i r s ,
Saudi A r a b i a , September 23, 1976.
The b o y c o t t i n v o l v e s no r e l i g i o u s o r r a c i a l
discrimination.
I t a p p l i e s e q u a l l y t o Muslims,
C h r i s t i a n s , Jews and anyone e l s e who would s t r e n g t h e n
I s r a e l ' s a b i l i t y t o wage war on Arab c o u n t r i e s and
peoples.
I t i s t h e r e f o r e an economic d e v i c e f o r
a s s u r i n g t h e s e c u r i t y o f t h e Arab s t a t e . / 3
—
Mohammed Mahmoud Mahgoub, Commissioner G e n e r a l , C e n t r a l
O f f i c e f o r t h e B o y c o t t o f I s r a e l , League o f Arab S t a t e s ,
August 31, 1975.
The B o y c o t t P r i n c i p l e s a r e a l s o v e r y f a r f r o m
r a c i a l or r e l i g i o u s i n f l u e n c e s ; [they are] p r a c t i c e d
1/
2J
3/
See statement o f E l l i o t t L . R i c h a r d s o n , S e c r e t a r y o f Commerce, I b i d ,
p . 268.
See statement o f Joseph A. Greenwald, A s s i s t a n t S e c r e t a r y o f S t a t e
f o r Economic and Business A f f a i r s , I b i d , pp. 11-12.
From an address by P r i n c e Saud A l - F a i s a l i n Houston, Texas, on
September 23, 1976, p . 4.
193
w i t h a l l persons—natural or moral—notwithstanding
t h e i r n a t i o n a l i t y o r r e l i g i o n , as l o n g as t h e y supp o r t t h e economy o f I s r a e l and i t s war e f f o r t .
In
t h i s r e s p e c t , t h e B o y c o t t A u t h o r i t i e s do not d i s c r i m i n a t e among persons on t h e b a s i s of r e l i g i o n o r
n a t i o n a l i t y , t h e y r a t h e r do so on t h e b a s i s o f t h e i r
p a r t i a l i t y o r i m p a r t i a l i t y t o I s r a e l and Z i o n i s m . . .
./I
A c t i o n s Taken by t h e U.S. Government
To Ensure That t h e Arab B o y c o t t Does
Not D i s c r i m i n a t e A g a i n s t U.S. C i t i z e n s
on E t h n i c o r R e l i g i o u s Grounds
The E x e c u t i v e Branch has t a k e n s e v e r a l a c t i o n s t o ensure t h a t
t h e b o y c o t t does n o t d i s c r i m i n a t e a g a i n s t U.S. c i t i z e n s on t h e b a s i s o f
r a c e , c o l o r , r e l i g i o n , sex, o r n a t i o n a l o r i g i n .
These i n c l u d e t h e f o l l o w i n g :
1/
—
Amended t h e E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s t o
p r o h i b i t U.S. e x p o r t e r s and r e l a t e d s e r v i c e o r g a n i z a t i o n s f r o m t a k i n g any a c t i o n w i t h r e s p e c t t o a
b o y c o t t - r e l a t e d r e q u e s t when t h a t r e q u e s t d i s c r i m i n a t e s , or has t h e e f f e c t o f d i s c r i m i n a t i n g , a g a i n s t
U.S. c i t i z e n s o r f i r m s on t h e b a s i s o f r a c e , c o l o r ,
r e l i g i o n , sex, or n a t i o n a l o r i g i n .
—
Amended t h e S e c r e t a r y of L a b o r ' s March 10, 1975 memorandum on t h e o b l i g a t i o n s o f f e d e r a l c o n t r a c t o r s and
s u b c o n t r a c t o r s t o r e q u i r e t h a t (1) any c o n t r a c t o r
who i s unable t o a c q u i r e a v i s a f o r any employee o r
p o t e n t i a l employee t o a c o u n t r y w i t h which i t i s
doing b u s i n e s s , and who b e l i e v e s t h a t t h e v i s a r e f u s a l
i s based on t h e r a c e , r e l i g i o n , sex, or n a t i o n a l o r i g i n
o f an employee o r p o t e n t i a l employee must i m m e d i a t e l y
n o t i f y t h e Department o f S t a t e , and (2) t h e Department
of State i s t o take appropriate a c t i o n through d i p l o m a t i c channels t o a t t e m p t t o g a i n e n t r y f o r t h e
individual.
—
Proposed H.R. 11488 i n t h e 9 4 t h Congress which would
p r o h i b i t economic c o e r c i o n based on r a c e , c o l o r , r e l i g i o n , n a t i o n a l o r i g i n , or sex.
Excerpted f r o m a memorandum, " N a t u r e o f t h e B o y c o t t o f I s r a e l " enclosed
w i t h an August 31, 1975 l e t t e r from Commissioner General Mahgoub t o
D i s t r i c t Committee No. 12, N a t i o n a l A s s o c i a t i o n o f S e c u r i t i e s D e a l e r s ,
I n c . , New Y o r k , New Y o r k . The l e t t e r and accompanying memorandum were
i n c l u d e d i n The Arab B o y c o t t and American B u s i n e s s : Report by t h e Subcommittee on O v e r s i g h t and I n v e s t i g a t i o n s o f t h e Committee on I n t e r s t a t e and F o r e i g n Commerce W i t h A d d i t i o n a l and M i n o r i t y Views, House
o f R e p r e s e n t a t i v e s , N i n e t y - F o u r t h Congress, Second Session, September
1976, p . 86.
194
Laws enacted w i t h i n t h e p a s t year d i r e c t e d , a t l e a s t i n p a r t ,
a g a i n s t p o s s i b l e d i s c r i m i n a t o r y p r a c t i c e s w h i c h m i g h t a r i s e as a r e s u l t
o f t h e Arab b o y c o t t i n c l u d e :
—
The Equal C r e d i t O p p o r t u n i t y A c t , enacted i n March
1976, w h i c h amended t h e Consumer C r e d i t P r o t e c t i o n
Act t o p r o h i b i t any c r e d i t o r f r o m d i s c r i m i n a t i n g
a g a i n s t any a p p l i c a n t w i t h r e s p e c t t o a c r e d i t t r a n s a c t i o n on t h e b a s i s o f r a c e , c o l o r , r e l i g i o n , n a t i o n a l
o r i g i n , sex, m a r i t a l s t a t u s , o r age.
—
A n t i - d i s c r i m i n a t i o n p r o v i s i o n s i n the I n t e r n a t i o n a l
S e c u r i t y A s s i s t a n c e and Arms E x p o r t C o n t r o l A c t ,
enacted l a s t June, w h i c h r e q u i r e t h a t any c o n t r a c t
e n t e r e d i n t o by a f e d e r a l agency i n c o n n e c t i o n w i t h
the f u r n i s h i n g of m i l i t a r y assistance or the Foreign
M i l i t a r y Sales (FMS) program, s h a l l i n c l u d e a p r o v i s i o n
t o t h e e f f e c t t h a t , i n employing or a s s i g n i n g p e r s o n n e l
t o p a r t i c i p a t e i n t h e a c t i v i t y , t h e f i r m w i l l not t a k e
i n t o account t h e e x c l u s i o n a r y p o l i c i e s o r p r a c t i c e s o f
any f o r e i g n government w h i c h a r e based on r a c e , r e l i g i o n ,
n a t i o n a l o r i g i n o r sex.
—
A n t i b o y c o t t p r o v i s i o n s o f t h e Tax Reform Act w h i c h deny
c e r t a i n t a x b e n e f i t s t o U.S. t a x p a y e r s who a g r e e , as a
c o n d i t i o n o f d o i n g b u s i n e s s i n an Arab b o y c o t t i n g count r y , t o r e f r a i n from (1) d o i n g b u s i n e s s w i t h any company
whose ownership o r management i n c l u d e s i n d i v i d u a l s o f a
p a r t i c u l a r n a t i o n a l i t y , r a c e , o r r e l i g i o n or (2) employing
i n d i v i d u a l s of a p a r t i c u l a r n a t i o n a l i t y , r a c e , o r r e l i g i o n .
(These and o t h e r b o y c o t t - r e l a t e d a c t i o n s w h i c h may j e o p a r d i z e U.S. t a x p a y e r s ' t a x b e n e f i t s a r e d e s c r i b e d i n MAPI
Memorandum FT-69. T r e a s u r y ' s i m p l e m e n t a t i o n of t h e s e
p r o v i s i o n s was r e p o r t e d i n MAPI B u l l e t i n s 5506 and 5510.)
F i n a l l y , a number o f government r e g u l a t o r y agencies ( i n c l u d i n g t h e
F e d e r a l Reserve Board, t h e C o m p t r o l l e r o f t h e C u r r e n c y , t h e S e c u r i t i e s and
Exchange Commission, and t h e F e d e r a l Home Loan Board) have i s s u e d s t a t e m e n t s
t o t h e i n s t i t u t i o n s under t h e i r j u r i s d i c t i o n s a g a i n s t d i s c r i m i n a t o r y p r a c t i c e s .
Arab B o y c o t t Rules W i t h Respect t o " D o i n g B u s i n e s s "
With I s r a e l
Much o f t h e media t r e a t m e n t o f t h e Arab b o y c o t t , and even remarks
by some members o f Congress, r e f l e c t t h e v i e w t h a t t h e Arab b o y c o t t r u l e s
p r o h i b i t U.S. and o t h e r f o r e i g n f i r m s f r o m h a v i n g any f o r m of commercial
relations with Israel.
Some s t a t e m e n t s of Arab p o l i c y a r e indeed so g e n e r a l
195
i n n a t u r e as t o suggest t h a t t h i s may be t h e c a s e . / l ^ However, t h e " G e n e r a l
P r i n c i p l e s f o r t h e Arab B o y c o t t o f I s r a e l R e l a t i n g t o M a n u f a c t u r i n g and
T r a d i n g Companies,"/2 i n d e f i n i n g a c t i v i t i e s which a r e deemed t o be " i n
s u p p o r t o f t h e economy of I s r a e l , " do n o t i n c l u d e r o u t i n e s a l e s o f nonm i l i t a r y equipment t o I s r a e l so l o n g as t h e e x p o r t e r does n o t have a
g e n e r a l agent or head o f f i c e f o r t h e M i d d l e East l o c a t e d i n I s r a e l . Many
U.S. f i r m s e x p o r t b o t h t o I s r a e l and Arab s t a t e s .
On t h e o t h e r hand,
a c t i v i t i e s i n I s r a e l beyond e x p o r t s a l e s — e . g . , an investment or an a g r e e ment p r o v i d i n g f o r t h e use o f t h e f i r m ' s t e c h n o l o g y or n a m e — c l e a r l y a r e
a c t i v i t i e s which could r e s u l t i n b l a c k l i s t i n g .
I n c r e a s e i n U.S. E x p o r t s t o
Israel
U.S. t r a d e s t a t i s t i c s suggest t h a t t h e b o y c o t t i s n o t h a v i n g any
s i g n i f i c a n t impact on e x p o r t s t o I s r a e l .
According to data submitted t o
t h e House Committee on I n t e r n a t i o n a l R e l a t i o n s by t h e Department o f
State,_/3 U.S. e x p o r t s t o I s r a e l i n c r e a s e d from $557 m i l l i o n i n 1972 t o
$1.20 b i l l i o n i n 1974 and t o $1.55 b i l l i o n i n 1975.
(Even a l l o w i n g f o r
e x t r a o r d i n a r i l y l a r g e m i l i t a r y e x p o r t s i n 1974 and 1975 [$377 m i l l i o n and
$529 m i l l i o n , r e s p e c t i v e l y ] , t h e i n c r e a s e i n commercial e x p o r t s appears
substantial.)
The d a t a s u b m i t t e d by t h e Department o f S t a t e a l s o show t h a t
t o t a l I s r a e l i i m p o r t s from a l l d e s t i n a t i o n s have i n c r e a s e d s u b s t a n t i a l l y
d u r i n g t h e same p e r i o d from a l e v e l of $2.47 b i l l i o n i n 1972 t o $5.77
b i l l i o n i n 1975.
1J
2/
3/
For example, t h e Commissioner G e n e r a l , C e n t r a l O f f i c e f o r t h e B o y c o t t
of I s r a e l , League o f Arab S t a t e s , has s t a t e d t h a t a f i r m c o u l d be
b l a c k l i s t e d i f i t " c a r r i e s out any a c t i o n i n I s r a e l which m i g h t supp o r t i t s economy, develop i t s i n d u s t r y o r i n c r e a s e t h e e f f i c i e n c y o f
its military effort."
See t h e memorandum accompanying t h e l e t t e r
from Commissioner General Mahgoub t o t h e N a t i o n a l A s s o c i a t i o n o f
S e c u r i t i e s D e a l e r s w h i c h i s c o n t a i n e d i n The Arab B o y c o t t and A m e r i can Business, op. c i t . , p. 86. T h i s broad language c o u l d be i n t e r p r e t e d t o cover almost any k i n d o f a c t i v i t y i n I s r a e l .
However, i n
a n o t h e r p a r t of t h e same memorandum, Mr. Mahgoub s t a t e s t h a t i f a
f i r m ' s r e l a t i o n s w i t h I s r a e l "do not go beyond pure o r d i n a r y b u s i ness r e l a t i o n s , " i t w i l l n o t be b l a c k l i s t e d .
T h i s document, w h i c h was e x c e r p t e d from "General P r i n c i p l e s f o r t h e
B o y c o t t of I s r a e l " p u b l i s h e d by t h e C e n t r a l O f f i c e f o r t h e B o y c o t t
of I s r a e l , was p r o v i d e d t o t h e Senate Subcommittee on M u l t i n a t i o n a l
C o r p o r a t i o n s by t h e Department of S t a t e d u r i n g h e a r i n g s i n 1975.
It
was i n c l u d e d w i t h MAPI Memorandum FT-63.
L e t t e r dated June 21, 1976 from A s s i s t a n t S e c r e t a r y o f S t a t e f o r
C o n g r e s s i o n a l R e l a t i o n s Robert J . McCloskey t o House I n t e r n a t i o n a l
R e l a t i o n s Committee Chairman Thomas E. Morgan, E x t e n s i o n of t h e
Export A d m i n i s t r a t i o n Act o f 1969, op. c i t . , p . 30.
196
"Compliance" W i t h B o y c o t t - R e l a t e d Requests
I n October 1976 the Department of Commerce began making a v a i l a b l e
to the p u b l i c copies of r e p o r t s received from U.S. companies concerning boyc o t t - r e l a t e d requests as defined i n the Export A d m i n i s t r a t i o n Regulations.
For a few weeks some newspapers published d a i l y l i s t s of companies which
had "complied w i t h the Arab boycott of I s r a e l , " and those press r e p o r t s
implied t h a t the companies had a c t u a l l y taken a c t i o n d e t r i m e n t a l t o I s r a e l .
This misunderstanding arose i n p a r t because of a f e a t u r e of the r e p o r t i n g
form which required t h a t r e p o r t e r s i n d i c a t e whether they "have complied
w i t h " or "have not complied w i t h " a b o y c o t t - r e l a t e d request f o r i n f o r m a t i o n
or a c t i o n . / I
Department of Commerce
Release r e "Compliance"
Following the d e c i s i o n to make p u b l i c the r e p o r t s , on October 19
the Department of Commerce issued a r e l e a s e t o deal w i t h questions and confusion which had r e s u l t e d from the media r e p o r t s concerning the i d e n t i f i c a t i o n of companies "complying" w i t h the Arab boycott. The r e l e a s e noted
t h a t the Department has not and does not intend t o publish any " l i s t " of
companies which have "complied" w i t h the Arab boycott.
I t adds i n
explanation:
"To do so lumps u n f a i r l y companies t h a t have i n no way
changed t h e i r course of conduct i n response t o the boycott w i t h those t h a t
may have taken a f f i r m a t i v e steps t o boycott I s r a e l . "
The r e l e a s e also observed t h a t under the Export A d m i n i s t r a t i o n
Act "compliance" includes—and t y p i c a l l y i n v o l v e s — f u r n i s h i n g i n f o r m a t i o n
or c e r t i f i c a t i o n to an Arab country. For example, an Arab purchaser may
request a c e r t i f i c a t i o n from an American s u p p l i e r t h a t i t has no s u b s i d i a r y
company i n I s r a e l .
According to the r e l e a s e , "Whether or not the American
company response i s simply a statement of h i s t o r i c a l f a c t , uninfluenced by
the b o y c o t t , i t s responding t o the request f o r c e r t i f i c a t i o n c o n s t i t u t e s
'compliance w i t h a boycott request' w i t h i n the meaning of e x i s t i n g law.
Therefore, compliance w i t h boycott requests may, i n some cases, i n v o l v e
something f a r d i f f e r e n t from an a f f i r m a t i v e act boycotting the S t a t e of
Israel."
The r e l e a s e a l s o i n c l u d e d t h e f o l l o w i n g q u o t a t i o n from a r e c e n t
congressional r e p o r t which deals w i t h the q u a l i t a t i v e i m p l i c a t i o n s of
" c o m p l i a n c e " i n terms o f t h e D e p a r t m e n t ' s r e p o r t i n g r e q u i r e m e n t s :
I t was d i f f i c u l t to determine from most r e p o r t s
whether the f a c t t h a t a f i r m said i t had complied w i t h
a given request a c t u a l l y meant t h a t i t was boycotting
I s r a e l or otherwise a l t e r i n g i t s business p r a c t i c e s i n
1/ I n e a r l y January 1977 the Department of Commerce adopted changes i n the
r e p o r t i n g form which drop use of the word "comply" and permit companies
to i n d i c a t e whether they "have taken" or "have not taken" the a c t i o n
requested.
See MAPI B u l l e t i n 5537.
197
o r d e r t o g a i n Arab t r a d e . For example, some companies
v o l u n t a r i l y stated i n t h e i r r e p o r t s t h a t , although they
had p r o v i d e d t h e r e q u e s t e d documentation, t h e y were
d o i n g business w i t h I s r a e l .
Some o f t h e r e p o r t i n g
f i r m s a r e i n f a c t e x p o r t i n g t o b o t h I s r a e l and t o
Arab S t a t e s . A c t i o n s o f t h i s t y p e would appear t o
be q u a l i t a t i v e l y d i f f e r e n t from a company w h i c h i n c o r p o r a t e s b o y c o t t c l a u s e s i n purchase o r d e r s t o i t s
American s u p p l i e r s o r which changes s u p p l i e r s i n
o r d e r t o r e t a i n Arab b u s i n e s s . / I
Other
Considerations
I n a d d i t i o n t o t h e example c i t e d of a company c e r t i f y i n g t h a t i t
does n o t have a s u b s i d i a r y i n I s r a e l , e q u a l l y innocuous f o r n e a r l y a l l U.S
f i r m s would be a c e r t i f i c a t e t h a t t h e p r o d u c t b e i n g shipped does n o t con(However, i t should be r e c o g n i z e d t h a t t h e Arab
t a i n I s r a e l i components.
r e q u i r e m e n t f o r these t y p e s o f c e r t i f i c a t i o n s c o u l d a c t as a d e t e r r e n t —
and i t u n d o u b t e d l y i s so i n t e n d e d — t o f u t u r e i n v e s t m e n t s i n I s r a e l o r use
o f I s r a e l i - o r i g i n components.)
I t m i g h t a l s o be asked i f a company i s i n
f a c t s u p p o r t i n g t h e Arab b o y c o t t — o r i n j u r i n g a n o t h e r American f i r m — w h e n
i t p r o v i d e s a c e r t i f i c a t i o n t h a t a b l a c k l i s t e d c a r r i e r w i l l n o t be used.
Such a c a r r i e r would not be p e r m i t t e d t o unload i n an Arab p o r t i n any
case and p r o b a b l y would n o t be o f f e r e d f o r such a voyage by i t s owner.
Even compliance w i t h p r o forma b o y c o t t - r e l a t e d r e q u e s t s as t o t h e n o n b l a c k l i s t e d s t a t u s o f vendors—when, as i s n o r m a l l y t h e case, t h e e x p o r t e r
does n o t know w h i c h companies a r e b l a c k l i s t e d and does n o t change i t s
normal s o u r c i n g p r a c t i c e — t y p i c a l l y would n o t c o n s t i t u t e any a f f i r m a t i v e
a c t i o n adversely a f f e c t i n g I s r a e l .
A v a i l a b i l i t y t o Arabs of Arms and Other P r o d u c t s From
Other Major T r a d i n g N a t i o n s
D u r i n g House c o n s i d e r a t i o n of a n t i b o y c o t t amendments t o t h e Export
A d m i n i s t r a t i o n A c t , remarks were made i n t h e course o f b o t h committee cons i d e r a t i o n o f t h e amendments and d u r i n g f l o o r debate which i m p l i e d t h a t
o t h e r c o u n t r i e s , p a r t i c u l a r l y i n Europe, were t a k i n g more f o r c e f u l a c t i o n
t h a n t h e U n i t e d S t a t e s t o oppose i m p l e m e n t a t i o n i n those c o u n t r i e s o f t h e
Arab b o y c o t t a g a i n s t I s r a e l .
Proponents o f s t r o n g a n t i b o y c o t t l e g i s l a t i o n
a l s o argue t h a t t h e Arabs a r e so dependent upon (and p r e f e r ) U.S. arms,
i n d u s t r i a l p r o d u c t s , and t e c h n o l o g y t h a t such l e g i s l a t i o n would be u n l i k e l y
t o have a s i g n i f i c a n t adverse e f f e c t e i t h e r on U.S. business w i t h t h e M i d d l e
East o r on U.S. f o r e i g n p o l i c y .
A c t i o n b e i n g t a k e n by o t h e r c o u n t r i e s , p a r t i c u l a r l y t h e major
t r a d i n g n a t i o n s , i s o f course an i m p o r t a n t f a c t o r t o be c o n s i d e r e d i n
1/
The Arab B o y c o t t and American Business,
op. c i t . ,
p. 31.
198
d r a f t i n g U.S. l e g i s l a t i o n .
The Ford Executive Branch/1 and p r i v a t e observers have emphasized t h a t f o r c e f u l a n t i b o y c o t t measures by the United
States probably would have l i t t l e or no e f f e c t on the boycott but could—
and probably would—result i n s u b s t a n t i a l d i v e r s i o n of Arab business to
other i n d u s t r i a l c o u n t r i e s .
The Executive Branch also has emphasized t h a t
such a " c o n f r o n t a t i o n a l " approach could have adverse e f f e c t s not only on our
e f f o r t s to broaden commercial t i e s w i t h the Arab s t a t e s , but also on U . S .
e f f o r t s to a s s i s t i n arranging a permanent peace i n the Middle East.
No one can estimate w i t h any c e r t a i n t y what the e f f e c t s of strong
antiboycott l e g i s l a t i o n would be.- While some of the Arab s t a t e s may p r e f e r
to purchase m i l i t a r y goods from the f r e e world, they could purchase arms
from noncommunist nations other than the United States and, i f necessary,
from communist c o u n t r i e s .
As f o r i n d u s t r i a l products and technology,
w h i l e the Arabs may p r e f e r i n many cases to purchase from the United S t a t e s ,
the market i s h i g h l y competitive and t h e r e are very few l i n e s where comparable
technology i s not a v a i l a b l e from abroad.
One can say w i t h a good deal of c e r t a i n t y t h a t no major f o r e i g n
country has taken any a c t i o n which would have s i g n i f i c a n t adverse impact on
the implementation of the boycott. N e i t h e r the Department of State nor the
Department of Commerce i s aware of such a c t i o n s .
F u r t h e r , U.S. companies
which have manufacturing and sales operations i n numerous f o r e i g n countries
have reported t h a t they a r e not aware of any s i g n i f i c a n t a n t i b o y c o t t measures
Imposed by those c o u n t r i e s .
. The matter of f o r e i g n actions against the boycott and the "dependence" of Arab countries on U.S. products and technology have been
addressed by senior U.S. Government o f f i c i a l s i n recent months and excerpts
from t h e i r statements are reproduced below. The Saudi Arabian Foreign
M i n i s t e r also r e c e n t l y addressed t h i s "dependence" question and he too i s
quoted below.
Comments of U.S. Government
Officials
During testimony l a s t June before the House Committee on I n t e r n a t i o n a l R e l a t i o n s , senior U.S. Government o f f i c i a l s made the f o l l o w i n g comments
concerning antiboycott a c t i o n by other countries and the dependence of Arab
s t a t e s on the United S t a t e s .
—
Secretary of the Treasury W i l l i a m E. Simon,
June 8, 1976.
The argument i s made t h a t the Arab world when
faced w i t h such a choice [ t o e l i m i n a t e the boycott
1/
I t should be r e c o g n i z e d t h a t t h e v a r i o u s p o l i c y i s s u e s r e l a t e d t o t h e
Arab b o y c o t t o f I s r a e l w i l l o f course be reexamined by t h e C a r t e r
Administration.
199
e n t i r e l y , i r r e s p e c t i v e of a settlement i n the Middle
E a s t , or cease d o i n g business w i t h American f i r m s ]
w i l l r e c o g n i z e t h e importance o f c o n t i n u e d access t o
U.S. goods and s e r v i c e s and t h e r e f o r e e l i m i n a t e what
t h e y c o n s i d e r one o f t h e i r p r i n c i p a l weapons i n t h e
p o l i t i c a l s t r u g g l e against the State of I s r a e l .
Unf o r t u n a t e l y , t h i s argument f a i l s t o r e f l e c t s e v e r a l
basic f a c t s .
The U.S. a l o n e among i n d u s t r i a l c o u n t r i e s has
a c l e a r l y e s t a b l i s h e d p o l i c y and program of o p p o s i t i o n to f o r e i g n boycotts of f r i e n d l y c o u n t r i e s , i n cluding the boycott of I s r a e l .
[Emphasis s u p p l i e d . ]
Other c o u n t r i e s a l r e a d y s u p p l y a f u l l 80 p e r c e n t o f
t h e goods and s e r v i c e s i m p o r t e d by t h e Arab w o r l d .
There i s no evidence t h a t these n a t i o n s a r e prepared
t o l o s e t h a t $50 b i l l i o n a year market o r t o j e o p a r d i z e t h e i r s t a k e i n t h e r a p i d l y expanding economies
o f t h e Arab n a t i o n s .
Further, there i s precious
l i t t l e t h a t t h e U.S. p r e s e n t l y s u p p l i e s t o Arab
n a t i o n s t h a t i s n o t a v a i l a b l e f r o m sources i n o t h e r
c o u n t r i e s and t h e y a r e eager t o t a k e our p l a c e .
The
major Arab s t a t e s have t h e funds and t h e w i l l t o
i n c u r any c o s t s such a s w i t c h m i g h t e n t a i l .
They
see t h a t t h e U.S. has f r e q u e n t l y engaged i n economic
b o y c o t t s f o r p o l i t i c a l purposes, f o r example i n
Cuba, Rhodesia, N o r t h Korea and Vietnam, so t h e y
cannot accept t h e argument t h a t they a r e n o t
e n t i t l e d t o do t h e same.
Mr. Chairman, I b e l i e v e t h a t we must f a c e an
e s s e n t i a l and w i d e l y r e c o g n i z e d f a c t .
The Arab
b o y c o t t has i t s r o o t s i n t h e broad I s r a e l i - A r a b
c o n f l i c t and w i l l b e s t be r e s o l v e d by d e a l i n g w i t h
the underlying c o n d i t i o n s of that c o n f l i c t . / I '
—
A s s i s t a n t S e c r e t a r y o f S t a t e Joseph A. Greenwald,
June 8, 1976.
. . . We a r e t h e o n l y c o u n t r y ( o t h e r t h a n I s r a e l )
t o t a k e a s t r o n g p o s i t i o n i n opposing t h e b o y c o t t
o f I s r a e l . . . ._/2
1/
2/
See statement o f W i l l i a m E. Simon, S e c r e t a r y o f t h e T r e a s u r y , E x t e n s i o n
o f t h e E x p o r t A d m i n i s t r a t i o n Act o f 1969, op. c i t . , pp. 49-50.
See statement o f Joseph A. Greenwald, A s s i s t a n t S e c r e t a r y o f S t a t e f o r
Economic and Business A f f a i r s , I b i d , p . 1 1 .
200
Comments of Saudi Arabian
Foreign M i n i s t e r
I n a recent address, Prince Saud A l - F a i s a l , M i n i s t e r of Foreign
A f f a i r s , Kingdom of Saudi A r a b i a , made t h e f o l l o w i n g p e r t i n e n t comments:
I n the concerted assault upon the Arab boycott
i n the United S t a t e s , one of t h e aims i s t o confuse
the issue. The second aim i s t o c r e a t e a complacent
a t t i t u d e i n business and economic c i r c l e s i n t h i s
country by propagating various s i m p l i s t i c views. The
most common i s the a s s e r t i o n t h a t the Arab countries
cannot do without American know-how and products.
Such an assumption i s erroneous and has dangerous
consequences. The t r u t h of the matter i s , and t h i s
can be v e r i f i e d by any v i s i t o r t o the Arab world,
competition f o r Arab business i s t r u l y f i e r c e .
. . . The Arabs cannot and w i l l not forego the boyc o t t because i t i s e s s e n t i a l t o t h e i r s e c u r i t y ; and
i t i s of the utmost importance t h a t t h i s f a c t be r e cognized and not ignored or b e l i t t l e d .
I t i s much
more d i f f i c u l t t o r e c t i f y a mistake a f t e r i t has been
made than to prevent i t . / I
Boycotts—Ours and Theirs
Congressional and p u b l i c discussion of the Arab boycott has i n cluded some mention of the f a c t t h a t the United States also engages i n
boycotts, but the discussion almost always has been t o the e f f e c t t h a t t h e
United S t a t e s , w i t h one exception i n v o l v i n g Cuba,/2 does n o t — l i k e the Arabs
—engage i n secondary boycotts. Much of the discussion also suggests t h a t
w h i l e the Arabs' primary boycott against I s r a e l ( i . e . , the Arabs' r e f u s a l
to have d i r e c t dealings w i t h I s r a e l ) i s sanctioned by i n t e r n a t i o n a l law,
i t s secondary aspects ( i . e . , i t s attempts t o i n t e r f e r e w i t h economic r e l a t i o n s between the United States [and other countries] and I s r a e l ) and
i t s t e r t i a r y aspects ( i . e . , i t s attempts to i n t e r f e r e w i t h r e l a t i o n s among
U.S. persons and f i r m s ) are not sanctioned by i n t e r n a t i o n a l law.
1/
2J
Address by Prince Saud A l - F a i s a l , M i n i s t e r of Foreign A f f a i r s , Kingdom
of Saudi A r a b i a , i n Houston, Texas, on September 23, 1976.
The U.S. Government maintains a l i s t of ships which have c a l l e d a t Cuban
ports so t h a t i t can deny those ships the r i g h t to c a r r y U . S . - f i n a n c e d
cargo and, u n t i l l a t e 1975, t o r e f u e l a t U.S. p o r t s .
In addition, thirdcountry vessels and a i r c r a f t cannot o b t a i n bunkers from U.S. p o r t s , w i t h out Department of Commerce approval, i f the c a r r i e r i s destined f o r North
Korea, North Vietnam, South Vietnam, or Cambodia, or had r e c e n t l y c a l l e d
at one of those d e s t i n a t i o n s .
201
The d i s c u s s i o n w h i c h f o l l o w s c o n c e r n i n g U.S. " b o y c o t t s " and
Arab b o y c o t t s i s i n t e n d e d t o p o i n t up t h e e x t e n t t o w h i c h U.S. e x p o r t and
t r a n s a c t i o n c o n t r o l s have e x t r a t e r r i t o r i a l ( o r secondary b o y c o t t ) a s p e c t s
and t h e f a c t t h a t i n t h e v i e w s o f o t h e r s — A r a b c o u n t r i e s and o t h e r n a t i o n s —
U.S. c o n t r o l s do n o t e n j o y any s p e c i a l l e g i t i m a c y . / I A d m i t t e d l y , f r o m t h e
U.S. p o i n t o f v i e w , t h e r e a r e q u a l i t a t i v e d i f f e r e n c e s between t h e t a r g e t o f
t h e Arab c o u n t r i e s ( I s r a e l , a c o u n t r y f r i e n d l y t o t h e U n i t e d S t a t e s ) and
our own p r i n c i p a l t a r g e t s — N o r t h Korea, N o r t h Vietnam, South Vietnam,
Cambodia, Cuba, and Southern Rhodesia. There a r e a l s o i m p o r t a n t d i f f e r ences i n t h e manner and e x t e n t t o w h i c h U.S. enforcement i n t r u d e s i n t o t h e
economy o f f o r e i g n c o u n t r i e s as compared t o t h e A r a b s ' enforcement o f t h e i r
boycott.
However, as t h e d i s c u s s i o n which f o l l o w s shows, t h e manner o f
I m p l e m e n t a t i o n o f Arab and U n i t e d S t a t e s economic c o e r c i o n i s so s i m i l a r
t h a t , i f f o r e i g n c o u n t r i e s adopted a n t i b o y c o t t l e g i s l a t i o n a l o n g t h e l i n e s
proposed i n t h e c u r r e n t Congress, t h e e f f e c t i v e n e s s o f U.S. e x p o r t and
t r a n s a c t i o n c o n t r o l s c o u l d be s e r i o u s l y i m p a i r e d .
" L e g i t i m a c y " Under I n t e r n a t i o n a l
Law o f U n i t e d S t a t e s and Arab
B o y c o t t s and R e s t r i c t i v e
Trade P r a c t i c e s
A paper p r e s e n t e d r e c e n t l y t o t h e American Bar A s s o c i a t i o n by a
r e p r e s e n t a t i v e o f t h e Department o f S t a t e ' s O f f i c e o f L e g a l A d v i s e r suggests
t h a t i n t e r n a t i o n a l law does n o t c l e a r l y s a n c t i o n — o r p r o h i b i t — a n y f o r m o f •
economic c o e r c i o n . . C i t i n g a 1970 U n i t e d N a t i o n s General Assembly R e s o l u t i o n
a p p r o v i n g a " D e c l a r a t i o n on P r i n c i p l e s o f I n t e r n a t i o n a l Law Concerning
F r i e n d l y R e l a t i o n s and C o o p e r a t i o n Among S t a t e s , " t h e paper n o t e s t h a t one
p r o v i s i o n o f t h e D e c l a r a t i o n "seems t o mean" t h a t two t y p e s o f c o e r c i o n a r e
prohibited:
t h a t w h i c h a t t e m p t s t o coerce a s t a t e n o t t o e x e r c i s e i t s l e g a l
r i g h t s and t h a t w h i c h a t t e m p t s t o e x t o r t a d v a n t a g e s . / 2 The defenders o f t h e
Arab b o y c o t t a g a i n s t I s r a e l c o n s i d e r i t a l e g i t i m a t e measure o f s e l f - d e f e n s e ,
r a t h e r t h a n an e f f o r t t o secure advantages, and i t i s our u n d e r s t a n d i n g t h a t
t h e U.S. p o s i t i o n i s t h a t U.S. r e s t r i c t i v e t r a d e p r a c t i c e s do not f a l l w i t h i n
those p r o h i b i t i o n s .
1/
2/
I n a speech I n Houston, Texas on September 23, 1976, t h e Saudi A r a b i a n
M i n i s t e r o f F o r e i g n A f f a i r s observed:
"The U n i t e d S t a t e s has f r e q u e n t l y
made use o f them [ b o y c o t t s ] f o r m a i n t a i n i n g and p r e s e r v i n g i t s own
security.
Indeed, t h i s c o u n t r y [ t h e U n i t e d S t a t e s ] has t o t a l t r a d i n g
r e s t r i c t i o n s i n e f f e c t at present against various c o u n t r i e s i n widely
s c a t t e r e d p a r t s o f t h e w o r l d ; and i t has sought over t h e y e a r s t o enf o r c e i t s b o y c o t t s b o t h d i r e c t l y and i n d i r e c t l y .
The o n l y d i f f e r e n c e
between our b o y c o t t and y o u r s i s t h e t a r g e t . "
See "Remarks D e l i v e r e d by David H. S m a l l , A s s i s t a n t L e g a l A d v i s e r f o r
Near E a s t e r n and South A s i a n A f f a i r s , Department o f S t a t e , t o t h e
American Bar A s s o c i a t i o n N a t i o n a l I n s t i t u t e on C u r r e n t L e g a l Aspects
of Doing Business i n t h e M i d d l e E a s t , " November 12, 1976, p . 6.
202
The paper a l s o observes t h a t " . . . t h e mere f a c t t h a t c e r t a i n
measures o f economic c o e r c i o n a r e n o t i l l e g a l under i n t e r n a t i o n a l l a w does
not mean t h a t t h e y a r e d e s i r a b l e , m e r i t e d , o r t h a t t h e y may n o t be l a w f u l l y
resisted.
On t h e c o n t r a r y , our e f f o r t s t o p r e v e n t t h e i n t r u s i o n o f t h e
Arab b o y c o t t o r any o t h e r b o y c o t t i n t o our s o c i e t y and i n t o our economy
a r e w e l l w i t h i n our r i g h t s under i n t e r n a t i o n a l l a w . . . . " / I
The S i m i l a r i t i e s and D i f f e r e n c e s
i n U.S. and Arab R e s t r i c t i v e
Trade P r a c t i c e s
Both t h e Arabs and t h e U n i t e d S t a t e s a p p l y s o - c a l l e d p r i m a r y b o y cotts against target countries.
That i s , t h e Arab n a t i o n s g e n e r a l l y p r o h i b i t any commercial r e l a t i o n s between t h e i r c o u n t r i e s and I s r a e l .
Simil a r l y , t h e U n i t e d S t a t e s Government g e n e r a l l y p r o h i b i t s any commercial
r e l a t i o n s between t h e U n i t e d S t a t e s and N o r t h Vietnam, South V i e t n a m ,
Cambodia, N o r t h Korea, Cuba, and Southern Rhodesia.
The Arabs extend t h e i r b o y c o t t t o o t h e r c o u n t r i e s by w i t h h o l d i n g
purchases f r o m p a r t i e s i n t h i r d c o u n t r i e s w h i c h a r e b l a c k l i s t e d o r w h i c h
w i l l not provide requested i n f o r m a t i o n or c e r t i f i c a t i o n s .
The U n i t e d S t a t e s extends i t s embargoes and o t h e r r e s t r i c t i v e
trade practices to other countries through various regulations administered
by t h e T r e a s u r y / 2 and p o r t i o n s o f t h e Department o f Commerce's E x p o r t Admini s t r a t i o n Regulations.
These v a r i o u s r e g u l a t i o n s have t h e f o l l o w i n g e f f e c t s
on t r a n s a c t i o n s by f i r m s i n f o r e i g n c o u n t r i e s w i t h t h e c o u n t r i e s w h i c h a r e
4
t h e U.S. t a r g e t s :
—
27
2/
F o r e i g n f i r m s " c o n t r o l l e d " by U.S. companies may n o t
s e l l t o , or purchase f r o m , N o r t h Vietnam, South V i e t nam, Cambodia, o r N o r t h Korea w i t h o u t a T r e a s u r y
l i c e n s e and such a l i c e n s e p r o b a b l y w i l l n o t be
granted.
I n o t h e r words, a U . S . - c o n t r o l l e d f i r m
i n c o r p o r a t e d i n t h e U n i t e d Kingdom, France, Japan
or any o t h e r c o u n t r y may n o t conduct any f i n a n c i a l
t r a n s a c t i o n w i t h t h e f o u r communist c o u n t r i e s w i t h o u t
a Treasury l i c e n s e .
These r e g u l a t i o n s a l s o p r o h i b i t
a U . S . - c o n t r o l l e d f o r e i g n f i r m from s e l l i n g — w i t h o u t
a T r e a s u r y l i c e n s e — t o a n o t h e r l o c a l f i r m i f i t has
knowledge t h a t t h e i t e m w i l l be s o l d t o ( o r w i l l be
I b i d , p . 7.
Treasury's c o n t r o l s are administered through:
t h e F o r e i g n A s s e t s Cont r o l R e g u l a t i o n s ( N o r t h Vietnam, South Vietnam, Cambodia, and N o r t h
K o r e a ) ; t h e Cuban A s s e t s C o n t r o l R e g u l a t i o n s ; and Rhodesian Sanct i o n s Regulations.
I n a d d i t i o n , the Transaction Control Regulations
p r o h i b i t u n l i c e n s e d t r a n s a c t i o n s i n v o l v i n g s t r a t e g i c p r o d u c t s between
f o r e i g n f i r m s " c o n t r o l l e d " by U.S. companies and t h e S o v i e t U n i o n , t h e
P e o p l e ' s R e p u b l i c o f China, and o t h e r communist c o u n t r i e s except
Yugoslavia.
203
i n c o r p o r a t e d i n a p r o d u c t w h i c h w i l l be s o l d t o )
o f t h e above communist c o u n t r i e s . / I
one
—
F o r e i g n f i r m s c o n t r o l l e d by U . S . companies may n o t
s e l l t o o r p u r c h a s e f r o m Cuba w i t h o u t a T r e a s u r y
license.
S i n c e O c t o b e r 1975 U . S . p o l i c y has been
t o g r a n t a l i c e n s e f o r e x p o r t s when t h e t r a n s a c t i o n
does n o t i n v o l v e m i l i t a r y equipment o r o t h e r s t r a t e g i c
products.
P r i o r t o O c t o b e r 1975 i t was T r e a s u r y ' s
p o l i c y t o deny a l l a p p l i c a t i o n s t o e x p o r t t o Cuba.
—
U . S . c i t i z e n s who a r e a c t i v e as managers, d i r e c t o r s ,
e t c . , i n f o r e i g n f i r m s must o b t a i n a T r e a s u r y l i c e n s e
t o e n a b l e t h o s e f o r e i g n f i r m s t o c a r r y o u t any t r a n s a c t i o n s i n v o l v i n g R h o d e s i a and such a l i c e n s e p r o b a b l y
w i l l n o t be g r a n t e d .
—
F o r e i g n f i r m s , w h e t h e r o r n o t t h e y a r e c o n t r o l l e d by U . S .
f i r m s o r have U . S . c i t i z e n s a c t i v e i n t h e i r management,
and U . S . f i r m s may s u f f e r a t l e a s t l o s s o f U . S . e x p o r t
p r i v i l e g e s i f they ship U . S . - o r i g i n products or t e c h n i c a l d a t a t o u n a u t h o r i z e d d e s t i n a t i o n s as i n d i c a t e d
on t h e D e s t i n a t i o n C o n t r o l S t a t e m e n t w h i c h must
accompany U . S . e x p o r t s .
The l i s t o f U . S . and f o r e i g n
f i r m s w h i c h have v i o l a t e d t h e r e g u l a t i o n s and have l o s t
U . S . e x p o r t p r i v i l e g e s o r a r e on p r o b a t i o n ( i . e . , t h e
U . S . " b l a c k l i s t " ) i s c o n t a i n e d i n Supplement No. 1
t o P a r t 388 o f t h e E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s .
—
Foreign importers of U . S . - o r i g i n unpublished t e c h n i c a l
d a t a ( i . e . , p r o p r i e t a r y d e s i g n and m a n u f a c t u r i n g d a t a )
r e l a t e d t o a b r o a d r a n g e o f p r o d u c t s must p r o v i d e t h e
U.S. e x p o r t e r w i t h w r i t t e n assurances t h a t the t e c h n i c a l d a t a w i l l n o t be r e e x p o r t e d t o communist c o u n t r i e s ( e x c e p t Y u g o s l a v i a ) and t h a t t h e p r o d u c t made
l o c a l l y w i t h t h e d a t a w i l l n o t be e x p o r t e d by t h e
f o r e i g n f i r m t o s p e c i f i e d communist c o u n t r i e s .
When
such a s s u r a n c e s c a n n o t be o b t a i n e d by t h e U . S . e x p o r t e r , a v a l i d a t e d e x p o r t l i c e n s e must be o b t a i n e d .
The E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s a l s o i n c l u d e o t h e r t e c h niques ( e . g . , "end-use s t a t e m e n t s " .from p o t e n t i a l purchasers) w h i c h , a l t h o u g h
i n t e n d e d t o a l l o w s a l e s t o be consummated by m i n i m i z i n g t h e p o s s i b i l i t y o f
d i v e r s i o n t o u n a u t h o r i z e d d e s t i n a t i o n s , n e v e r t h e l e s s have e x t r a t e r r i t o r i a l
i m p l i c a t i o n s by r e s t r i c t i n g t h e r i g h t o f t h e f o r e i g n f i r m t o r e s e l l t h e
p r o d u c t t o d e s t i n a t i o n s p r o h i b i t e d by U . S . r e g u l a t i o n s .
1/
This " t e r t i a r y b o y c o t t " aspect also a p p l i e s t o Treasury r e g u l a t i o n s
g o v e r n i n g t r a n s a c t i o n s w i t h Cuba and S o u t h e r n R h o d e s i a and t o i t s r e g u l a t i o n s r e s t r i c t i n g c e r t a i n t r a n s a c t i o n s by f o r e i g n f i r m s c o n t r o l l e d by
U . S . f i r m s w i t h o t h e r communist c o u n t r i e s , ,
85-654 O - 77
204
Although the Treasury r e g u l a t i o n s i n p a r t i c u l a r represent a
r a t h e r s u b s t a n t i a l a s s e r t i o n o f e x t r a t e r r i t o r i a l a p p l i c a t i o n o f U.S. l a w ,
t h e y a r e n o t b r o a d l y opposed by f o r e i g n j u r i s d i c t i o n s ( p r o b a b l y because
t h e b u s i n e s s w i t h t h e U.S. t a r g e t c o u n t r i e s n o r m a l l y goes t o o t h e r
l o c a l l y owned f i r m s ) .
However, t h e Canadian Government has o b j e c t e d
on a number o f occasions t o t h e U.S.-imposed r e s t r i c t i o n s on Canadian
companies, and d i f f i c u l t i e s a l s o have a r i s e n w i t h o t h e r c o u n t r i e s ( e . g . ,
A r g e n t i n a , w i t h r e s p e c t t o a u t o m o t i v e s a l e s t o Cuba) f r o m t i m e t o t i m e
when t r a n s a c t i o n s w i t h i m p o r t a n t l o c a l economic o r f o r e i g n p o l i c y i m p l i c a t i o n s were i n v o l v e d .
E f f e c t on U.S. " B o y c o t t s " and Other
R e s t r i c t i o n s i f Foreign Countries
Adopted Laws S i m i l a r t o Proposed
U.S. A n t i b o y c o t t L e g i s l a t i o n
A l t h o u g h the U.S. and Arab economic w a r f a r e t e c h n i q u e s a r e
d i f f e r e n t i n some r e s p e c t s , i t i s i n t e r e s t i n g t o n o t e what t h e e f f e c t
would be on U.S. " b o y c o t t s " i f f o r e i g n n a t i o n s adopted l e g i s l a t i o n a l o n g
t h e l i n e s o f t h e a n t i b o y c o t t p r o v i s i o n s o f S. 69 and H.R. 1 5 6 1 / 1 i n t r o duced i n t h e Congress e a r l i e r t h i s month. L e t us assume t h a t , s a y ,
France enacted such a l a w .
Based on our i n t e r p r e t a t i o n o f S. 69 and H.R.
1561, such a c t i o n by t h e French Government would have t h e e f f e c t s d e s c r i b e d
below on U.S. e x p o r t and t r a n s a c t i o n c o n t r o l s .
T7
—
S. 69 and H.R. 1561 would p r o h i b i t any U.S. person
( i n c l u d i n g U.S. f o r e i g n s u b s i d i a r i e s ) where t h e i n t e n t i s t o comply w i t h , f u r t h e r , e t c . , a b o y c o t t
from r e f r a i n i n g f r o m d o i n g business w i t h a b o y c o t t e d
country.
I f France enacted such a p r o v i s i o n , French
f i r m s , i n c l u d i n g U . S . - c o n t r o l l e d f i r m s i n France and
F r e n c h - c o n t r o l l e d f i r m s i n t h e U n i t e d S t a t e s (and
elsewhere) c o u l d n o t comply w i t h U.S. law p r o h i b i t i n g
t r a d e w i t h Vietnam, Cambodia, N o r t h Korea, Cuba, and
Southern Rhodesia. Firms i n France and F r e n c h - c o n t r o l l e d f i r m s i n t h e U n i t e d S t a t e s (and elsewhere)
c o u l d n o t comply w i t h U.S. d e s t i n a t i o n c o n t r o l r e g u l a t i o n s to prevent d i v e r s i o n of U . S . - o r i g i n products
and t e c h n i c a l d a t a t o t h e above communist c o u n t r i e s
and Southern Rhodesia.
—
The b i l l s would p r o h i b i t t h e f u r n i s h i n g by any U.S.
person o f i n f o r m a t i o n t o a b o y c o t t i n g c o u n t r y about
whether any person has, has had, o r proposes t o
have any business r e l a t i o n s h i p w i t h a b o y c o t t e d
country.
I f France enacted such a l a w , i t p r o b a b l y
would p r o h i b i t French f i r m s ( i n France and elsewhere)
from complying w i t h U.S. Export A d m i n i s t r a t i o n Regul a t i o n s ' provisions regarding transfers of U . S . - o r i g i n
These p r o p o s a l s a r e d i s c u s s e d i n d e t a i l i n a companion MAPI memorandum,
"An A n a l y s i s o f Key A n t i b o y c o t t P r o v i s i o n s o f S. 6 9 , " FT-71.
205
t e c h n i c a l d a t a w h i c h r e q u i r e w r i t t e n assurances from
t h e f o r e i g n i m p o r t e r s t h a t , w i t h o u t U.S. Government
p e r m i s s i o n , t h e d a t a w i l l n o t be r e e x p o r t e d t o any
communist c o u n t r y (except Y u g o s l a v i a ) and t h a t t h e
p r o d u c t made w i t h t h e d a t a w i l l n o t be e x p o r t e d t o
s p e c i f i e d communist c o u n t r i e s .
Such a French law
a l s o would presumably p r o h i b i t French f i r m s (and
t h e i r f o r e i g n a f f i l i a t e s ) from p r o v i d i n g end-use
c e r t i f i c a t e s s i n c e such an a c t i o n p r o b a b l y would be
c o n s i d e r e d as f u r t h e r i n g a U.S. b o y c o t t o r r e s t r i c t i v e trade practice.
I t i s n o t l i k e l y t h a t f o r e i g n c o u n t r i e s would accept w i t h o u t
c h a l l e n g e a U.S. law w h i c h p u r p o r t e d t o deny t o l o c a l f i r m s (even though
U.S.-owned) t h e o p p o r t u n i t y t o p a r t i c i p a t e i n t h e growing Arab m a r k e t s .
Such a U.S. law almost c e r t a i n l y would i n c r e a s e t h e problems o f U.S. i n v e s t o r s abroad by c a u s i n g c o n f l i c t s w i t h l o c a l s h a r e h o l d e r s and l o c a l
governments and would u n d o u b t e d l y l e a d t o d i p l o m a t i c d i f f i c u l t i e s between
t h e U.S. Government and l o c a l governments. Beyond t h e immediate i s s u e s
of t h e r i g h t o f f o r e i g n governments t o e s t a b l i s h t r a d e p o l i c y w i t h t h e
Arab s t a t e s and p o s s i b l e i n c r e a s e d h o s t i l i t y t o U.S. d i r e c t i n v e s t m e n t , a
f u r t h e r i n t r u s i o n o f U.S. law i n t o f o r e i g n economies c o u l d r e s u l t i n t h e
l o n g - r a n g e impairment o f U.S. f o r e i g n t r a d e c o n t r o l s , t h e p r i m a r y o b j e c t i v e
o f w h i c h i s t o p r o t e c t U.S. n a t i o n a l s e c u r i t y .
While i t i s u n l i k e l y t h a t
f o r e i g n c o u n t r i e s would enact laws a g a i n s t a l l aspects o f U.S. e x t r a t e r r i t o r i a l c o n t r o l s a p p l i c a b l e t o U . S . - o r i g i n p r o d u c t s and t e c h n i c a l d a t a
s i n c e such a c t i o n c o u l d r e s u l t i n t h e d e n i a l o f c e r t a i n advanced U.S. t e c h n o l o g y t o t h e i r economies, t h e freedom o f U . S . - c o n t r o l l e d a f f i l i a t e s i n
those c o u n t r i e s t o comply w i t h T r e a s u r y r e g u l a t i o n s m i g h t be a b r i d g e d .
It
i s i n t h i s area t h a t U.S. f o r e i g n t r a d e c o n t r o l s have most f r e q u e n t l y r u n
c o u n t e r t o t r a d e p r a c t i c e s and d i p l o m a t i c p o l i c i e s of f o r e i g n c o u n t r i e s .
Conclusion
As was n o t e d a t t h e o u t s e t , s i n c e t h e stakes i n v o l v e d i n t h e U.S.
response t o t h e Arab b o y c o t t a r e h i g h , any a c t i o n t a k e n must be grounded on
a f u l l u n d e r s t a n d i n g of t h e i s s u e s i n v o l v e d .
I n our v i e w t h e f u l l development o f t h e above i s s u e s , as w e l l as
o t h e r s posed by a n t i b o y c o t t l e g i s l a t i o n b e f o r e t h e Congress, suggest t h a t
t h e b o y c o t t i s n o t a m a t t e r w h i c h can be addressed e f f e c t i v e l y by f u r t h e r
legislation.
Our p o s i t i o n , s e t f o r t h i n a statement l a s t summer t o t h e
House Committee on I n t e r n a t i o n a l R e l a t i o n s , i s t h a t :
—
A c t i o n has been t a k e n by t h e E x e c u t i v e Branch i n a
number o f areas t o assure t h a t t h e b o y c o t t does n o t
d i s c r i m i n a t e a g a i n s t U.S. c i t i z e n s on t h e b a s i s o f
race, r e l i g i o n , or n a t i o n a l o r i g i n ;
208
I t s h o u l d be n o t e d a t t h e o u t s e t t h a t i n t e r n a t i o n a l l a w does
n o t c l e a r l y s a n c t i o n — o r p r o h i b i t — a n y f o r m o f economic c o e r c i o n .
(See
"Remarks D e l i v e r e d by D a v i d H. S m a l l , A s s i s t a n t L e g a l A d v i s e r f o r Near
E a s t e r n and S o u t h A s i a n A f f a i r s , Department o f S t a t e , t o t h e American
Bar A s s o c i a t i o n N a t i o n a l I n s t i t u t e on Current Legal Aspects o f Doing
B u s i n e s s i n t h e M i d d l e E a s t , " November 1 2 , 1 9 7 6 . )
That i s , U.S. boycotts
a n d r e s t r i c t i v e t r a d e p r a c t i c e s e n j o y n o more l e g i t i m a c y u n d e r i n t e r n a t i o n a l law than Arab p r a c t i c e s .
As t o t e c h n i q u e s e m p l o y e d , i t may b e
p r e s u m e d t h a t n a t i o n s w i l l s e l e c t t h e e c o n o m i c weapons w h i c h w i l l i n f l i c t
t h e maximum amount o f damage u p o n t h e enemy w i t h t h e minimum damage t o
themselves.
B o t h t h e Arabs and t h e U n i t e d S t a t e s a p p l y s o - c a l l e d p r i m a r y
boycotts against target countries.
That i s , the Arab n a t i o n s g e n e r a l l y
p r o h i b i t any c o m m e r c i a l r e l a t i o n s between t h e i r c o u n t r i e s and I s r a e l .
S i m i l a r l y , t h e U . S . Government g e n e r a l l y p r o h i b i t s any c o m m e r c i a l r e l a t i o n s between t h e U n i t e d S t a t e s and N o r t h V i e t n a m , South V i e t n a m ,
C a m b o d i a , N o r t h K o r e a , Cuba a n d S o u t h e r n R h o d e s i a .
Because o f t h e s i z e
o f t h e U n i t e d S t a t e s m a r k e t a n d t h e d i v e r s i t y o f i t s e x p o r t s , many o f
w h i c h a r e t e c h n o l o g i c a l l y advanced, U . S . d e n i a l o f e x p o r t s and i m p o r t s
can have s i g n i f i c a n t i m p a c t , p a r t i c u l a r l y i n t h e i n i t i a l stages o f an
embargo a g a i n s t a c o u n t r y s u c h a s Cuba w h i c h h a s b e e n h i s t o r i c a l l y
dependent on t h e U n i t e d S t a t e s f o r a w i d e v a r i e t y o f i m p o r t s and as an
export market.
The A r a b s , h a v i n g a l i m i t e d c a p a c i t y t o a f f e c t I s r a e l d i r e c t l y
through d e n i a l of rhe r e g i o n ' s major export product ( o i l ) or through
i m p o r t p r o h i b i t i o n s , extend t h e i r b o y c o t t t o t h i r d c o u n t r i e s by w i t h h o l d i n g purchases from p a r t i e s i n t h i r d c o u n t r i e s which are b l a c k l i s t e d
f o r a s s i s t i n g I s r a e l i n s p e c i f i e d ways o r w h i c h w i l l n o t p r o v i d e r e q u e s t e d
information or c e r t i f i c a t i o n s .
The U n i t e d S t a t e s , w h i c h h a s much more f o r e i g n d i r e c t i n v e s t m e n t
t h a n t h e A r a b s t a t e s , e x t e n d s i t s embargoes a n d o t h e r r e s t r i c t i v e t r a d e
practices t o U.S.-controlled firms i n other countries through various
r e g u l a t i o n s a d m i n i s t e r e d b y t h e T r e a s u r y and p o r t i o n s o f t h e Department
o f Commerce's E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s .
I n general, the regul a t i o n s a d m i n i s t e r e d by Treasury p r o h i b i t U . S . - c o n t r o l l e d f i r m s abroad
f r o m engaging i n any t r a n s a c t i o n t s a l e s o r purchases) w i t h a t a r g e t
country without a Treasury l i c e n s e .
W h i l e i t may b e a r g u e d t h a t t h o s e
c o n t r o l s c o n s t i t u t e an " e x t e n d e d p r i m a r y b o y c o t t " t o p r e v e n t U . S . f i r m s
f r o m c a r r y i n g o u t a c t i o n s a b r o a d w h i c h t h e y may n o t c a r r y o u t i n t h e
U n i t e d S t a t e s , t h e c o n t r o l s e x t e n d t o a l l a c t i v i t i e s abroad and n o t j u s t
t o a c t i v i t i e s r e l a t e d t o the U.S. f i r m s ' business i n the United S t a t e s .
These v a r i o u s U . S . r e g u l a t i o n s have t h e f o l l o w i n g e f f e c t s on
t r a n s a c t i o n s by f i r m s i n f o r e i g n c o u n t r i e s w i t h the c o u n t r i e s which are
the U.S. t a r g e t s :
209
F o r e i g n f i r m s " c o n t r o l l e d " b y U . S . c o m p a n i e s may n o t
s e l l t o , o r purchase from. N o r t h Vietnam, South V i e t nam, C a m b o d i a , o r N o r t h K o r e a w i t h o u t a T r e a s u r y
l i c e n s e a n d s u c h a l i c e n s e p r o b a b l y w i l l n o t be
granted.
I n other words, a U . S . - c o n t r o l l e d f i r m
i n c o r p o r a t e d i n t h e U n i t e d Kingdom, F r a n c e , Japan
o r a n y o t h e r c o u n t r y may n o t c o n d u c t a n y f i n a n c i a l
t r a n s a c t i o n w i t h t h e f o u r communist c o u n t r i e s w i t h out a Treasury license.
These r e g u l a t i o n s a l s o
p r o h i b i t a U . S . - c o n t r o l l e d f o r e i g n f i r m from s e l l i n g
— w i t h o u t a Treasury l i c e n s e — t o another l o c a l f i r m
i f i t has knowledge t h a t t h e i t e m w i l l be s o l d t o
Cor w i l l b e i n c o r p o r a t e d i n a p r o d u c t w h i c h w i l l b e
s o l d t o ) one o f t h e a b o v e c o m m u n i s t c o u n t r i e s .
F o r e i g n f i r m s c o n t r o l l e d b y U . S . c o m p a n i e s may n o t
s e l l t o o r p u r c h a s e f r o m Cuba w i t h o u t a T r e a s u r y
license.
S i n c e O c t o b e r 1975 U . S . p o l i c y h a s b e e n
t o g r a n t a l i c e n s e f o r e x p o r t s when t h e t r a n s a c t i o n
does n o t i n v o l v e m i l i t a r y equipment o r o t h e r s t r a t e g i c
products.
P r i o r t o O c t o b e r 1975 i t was T r e a s u r y ' s
p o l i c y t o deny a l l a p p l i c a t i o n s t o e x p o r t t o Cuba.
U . S . c i t i z e n s who a r e a c t i v e a s m a n a g e r s , d i r e c t o r s ,
e t c . , i n f o r e i g n f i r m s must o b t a i n a T r e a s u r y l i c e n s e
t o e n a b l e t h o s e f o r e i g n f i r m s t o c a r r y o u t any t r a n s a c t i o n s i n v o l v i n g R h o d e s i a and s u c h a l i c e n s e p r o b a b l y
w i l l n o t be g r a n t e d .
F o r e i g n f i r m s , whether o r n o t they are c o n t r o l l e d by
U . S . f i r m s o r h a v e U . S . c i t i z e n s a c t i v e i n t h e i r managem e n t , a n d U . S . f i r m s may s u f f e r a t l e a s t l o s s o f U . S .
export p r i v i l e g e s i f they ship U . S . - o r i g i n products or
t e c h n i c a l d a t a t o u n a u t h o r i z e d d e s t i n a t i o n s as i n d i c a t e d on t h e D e s t i n a t i o n C o n t r o l Statement w h i c h must
accompany U . S . e x p o r t s .
The l i s t o f U . S . a n d f o r e i g n
f i r m s w h i c h have v i o l a t e d t h e r e g u l a t i o n s and have l o s t
U.S. e x p o r t p r i v i l e g e s o r are on p r o b a t i o n ( i . e . , t h e
U . S . " b l a c k l i s t " ) , i s c o n t a i n e d i n Supplement No. 1 t o
P a r t 388 o f t h e E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s .
Foreign importers of U . S . - o r i g i n unpublished technical
d a t a C i . e . , p r o p r i e t a r y d e s i g n and m a n u f a c t u r i n g d a t a )
r e l a t e d t o a b r o a d range o f p r o d u c t s must p r o v i d e t h e
U.S. e x p o r t e r w i t h w r i t t e n assurances t h a t the t e c h n i c a l d a t a w i l l n o t be r e e x p o r t e d t o communist count r i e s ( e x c e p t Y u g o s l a v i a ) and t h a t t h e p r o d u c t made
l o c a l l y w i t h t h e d a t a w i l l n o t be e x p o r t e d by t h e
f o r e i g n f i r m t o s p e c i f i e d communist c o u n t r i e s .
When
such assurances cannot be o b t a i n e d by t h e U.S. e x - ,
p o r t e r , a v a l i d a t e d e x p o r t l i c e n s e must be o b t a i n e d .
210
The E x p o r t A d m i n i s t r a t i o n R e g u l a t i o n s a l s o i n c l u d e o t h e r t e c h niques ( e . g . , "end-use statements" from p o t e n t i a l purchasers) which, a l t h o u g h i n t e n d e d t o a l l o w s a l e s t o b e consummated b y m i n i m i z i n g t h e p o s s i b i l i t y o f d i v e r s i o n t o u n a u t h o r i z e d d e s t i n a t i o n s , n e v e r t h e l e s s have e x t r a t e r r i t o r i a l implications by r e s t r i c t i n g the r i g h t of the f o r e i g n f i r m t o
r e s e l l the p r o d u c t t o d e s t i n a t i o n s p r o h i b i t e d by U.S. r e g u l a t i o n s .
Although the Treasury r e g u l a t i o n s i n p a r t i c u l a r represent a
r a t h e r s u b s t a n t i a l a s s e r t i o n of e x t r a t e r r i t o r i a l a p p l i c a t i o n of U.S. law,
t h e y a r e n o t b r o a d l y opposed b y f o r e i g n j u r i s d i c t i o n s ( p r o b a b l y because
t h e b u s i n e s s w i t h t h e U . S . t a r g e t c o u n t r i e s n o r m a l l y goes t o o t h e r l o c a l l y
owned f i r m s ) .
H o w e v e r , t h e C a n a d i a n Government h a s o b j e c t e d o n a number
o f o c c a s i o n s t o t h e U . S . - i m p o s e d r e s t r i c t i o n s on Canadian companies, and
d i f f i c u l t i e s a l s o have a r i s e n w i t h o t h e r c o u n t r i e s ( e . g . , A r g e n t i n a , w i t h
r e s p e c t t o a u t o m o t i v e s a l e s t o Cuba) f r o m t i m e t o t i m e when t r a n s a c t i o n s
w i t h i m p o r t a n t l o c a l economic o r f o r e i g n p o l i c y i m p l i c a t i o n s were
involved.
I t i s i n t e r e s t i n g t o note t h a t , whatever the U.S. r e s t r i c t i o n s
e x e r c i s e d e x t r a t e r r i t o r i a l l y a r e c a l l e d (extended p r i m a r y b o y c o t t , secondary
b o y c o t t , o r o t h e r ) , t h e i r manner o f i m p l e m e n t a t i o n i s so s i m i l a r t o t h a t
o f t h e A r a b b o y c o t t t h a t t h e y w o u l d be e f f e c t i v e l y p r o s c r i b e d i f f o r e i g n
c o u n t r i e s a d o p t e d a n t i b o y c o t t l e g i s l a t i o n a l o n g t h e l i n e s o f S. 69 a n d
S. 9 2 .
I t i s not l i k e l y t h a t f o r e i g n c o u n t r i e s would accept w i t h o u t
c h a l l e n g e a U . S . l a w w h i c h p u r p o r t e d t o d e n y t o l o c a l f i r m s Ceven t h o u g h
U.S.-owned) t h e o p p o r t u n i t y t o j f a r t i c i p a t e i n the growing Arab m a r k e t s .
Such a U . S . l a w a l m o s t c e r t a i n l y w o u l d i n c r e a s e t h e p r o b l e m s o f U . S . i n v e s t o r s a b r o a d b y c a u s i n g c o n f l i c t s w i t h l o c a l s h a r e h o l d e r s and l o c a l
governments and w o u l d u n d o u b t e d l y l e a d t o d i p l o m a t i c d i f f i c u l t i e s between
t h e U . S . Government a n d l o c a l g o v e r n m e n t s .
Beyond t h e i m m e d i a t e i s s u e s
o f t h e r i g h t o f f o r e i g n governments t o e s t a b l i s h t r a d e p o l i c y w i t h t h e
A r a b s t a t e s and p o s s i b l e i n c r e a s e d h o s t i l i t y t o U . S . d i r e c t i n v e s t m e n t ,
a f u r t h e r i n t r u s i o n o f U . S . l a w i n t o f o r e i g n economies c o u l d r e s u l t i n
the long-range impairment o f U.S. f o r e i g n trade c o n t r o l s , the primary
o b j e c t i v e o f which i s t o p r o t e c t U.S. n a t i o n a l s e c u r i t y .
While i t i s
u n l i k e l y t h a t f o r e i g n c o u n t r i e s would enact laws a g a i n s t a l l aspects o f
U.S. e x t r a t e r r i t o r i a l c o n t r o l s a p p l i c a b l e t o U . S . - o r i g i n p r o d u c t s and
t e c h n i c a l d a t a s i n c e such a c t i o n c o u l d r e s u l t i n t h e d e n i a l o f c e r t a i n
advanced U.S. t e c h n o l o g y t o t h e i r economies, t h e freedom o f U . S . - c o n t r o l l e d a f f i l i a t e s i n t h o s e c o u n t r i e s t o comply w i t h T r e a s u r y r e g u l a t i o n s
m i g h t be a b r i d g e d .
I t i s i n t h i s area t h a t U.S. f o r e i g n trade c o n t r o l s
have most f r e q u e n t l y r u n c o u n t e r t o t r a d e p r a c t i c e s and d i p l o m a t i c
policies of foreign countries.
211
Transfer of F r e i g h t Forwarding
B u s i n e s s From New Y o r k C i t y t o
Other Ports
Members o f t h e S u b c o m m i t t e e a s k e d t h a t I s u b s t a n t i a t e my r e m a r k
d u r i n g t h e d i s c u s s i o n p e r i o d t h a t i t was o u r u n d e r s t a n d i n g t h a t some J e w i s h owned f r e i g h t f o r w a r d i n g f i r m s i n New Y o r k C i t y h a v e b e e n m o v i n g t o o t h e r
l o c a t i o n s b e c a u s e o f t h e e n a c t m e n t o f New Y o r k S t a t e ' s a n t i b o y c o t t l a w .
W h i l e t h e s u b j e c t o f t r a f f i c d i v e r s i o n f r o m New Y o r k was a d d r e s s e d i n
t e s t i m o n y b y s u b s e q u e n t w i t n e s s e s , X w a n t t o i n c l u d e some d o c u m e n t a t i o n
o n w h i c h my r e m a r k was b a s e d .
I a l s o am i n c l u d i n g a summary o f r e l e v a n t
t e s t i m o n y by subsequent w i t n e s s e s .
Our f i l e s i n c l u d e t w o a r t i c l e s f r o m n e w s p a p e r s i n F e b r u a r y 1976
w h i c h d e s c r i b e t h e r e a c t i o n i n New Y o r k t o e n a c t m e n t o f t h a t S t a t e ' s
a n t i b o y c o t t law (the " L i s a Law").
The t e x t o f t h o s e a r t i c l e s f r o m The
J o u r n a l o f Commerce a n d t h e New Y o r k Times i s e n c l o s e d .
I n b r i e f these
articles indicate that:
—
S e v e r a l New Y o r k - b a s e d c o m p a n i e s a n d f r e i g h t f o r w a r d e r s were s e r i o u s l y c o n s i d e r i n g l e a v i n g t h e s t a t e
because t h e y b e l i e v e d t h a t t h e y c o u l d n o t comply
w i t h t h e new l a w a n d s t i l l c a r r y o n b u s i n e s s w i t h
the Arab w o r l d .
—
E n a c t m e n t o f t h e L i s a Law w a s , a t t h e l e a s t ,
a c c e l e r a t i n g t h e l o s s b y New Y o r k C i t y o f o c e a n
f r e i g h t t o o t h e r East Coast p o r t s .
The New Y o r k
Times a r t i c l e o f F e b r u a r y 6 , 1976, i n c l u d e s an
e s t i m a t e b y t h e P r e s i d e n t o f t h e New Y o r k S h i p p i n g
A s s o c i a t i o n t h a t t h e p o r t p r o b a b l y was l o s i n g a
minimum o f t w o m i l l i o n t o n s p e r y e a r .
—
F r e i g h t f o r w a r d i n g b u s i n e s s has been d i v e r t e d t o
other ports.
The New Y o r k Times a r t i c l e q u o t e s t h e
President of Behring I n t e r n a t i o n a l , i d e n t i f i e d i n
t h e a r t i c l e a s one o f New Y o r k ' s l a r g e s t f r e i g h t
f o r w a r d e r s , as s t a t i n g t h a t volume a t h i s f i r m has
d r o p p e d 10 t o 20 p e r c e n t .
The a r t i c l e a l s o r e p o r t e d
t h a t B e h r i n g I n t e r n a t i o n a l a l r e a d y h a d moved a 4 0 p e r s o n d e p a r t m e n t t h a t s e r v e d Aramco f r o m New Y o r k
C i t y t o Houston.
F u r t h e r , i t was n o t e d t h a t i n t h e
o p i n i o n o f o f f i c i a l s o f t h e New Y o r k Chamber o f Commerce a n d t h e N a t i o n a l Customs B r o k e r s a n d F o r w a r d e r s
A s s o c i a t i o n t h e m a i n r e a s o n f o r t h e move was e n a c t m e n t
o f t h e L i s a Law.
Beyond t h e s e n e w s p a p e r a r t i c l e s , o u r i m p r e s s i o n t h a t t h e L i s a
Law h a s r e s u l t e d i n s u b s t a n t i a l d i v e r s i o n o f b u s i n e s s f r o m New Y o r k t o o t h e r
212
p o r t s a l s o was s u p p o r t e d b y s t a t e m e n t s o f New Y o r k - b a s e d o r g a n i z a t i o n s
s u b m i t t e d l a s t y e a r t o t h e House C o m m i t t e e o n I n t e r n a t i o n a l R e l a t i o n s d u r i n g i t s h e a r i n g s o n amendments t o t h e E x p o r t A d m i n i s t r a t i o n A c t :
—
The s t a t e m e n t o f t h e New Y o r k S h i p p i n g A s s o c i a t i o n ,
I n c . , s a y s t h a t " T h e mere e x i s t e n c e o f t h i s s t a t u t e
I t h e L i s a Law], however, has had a tremendous impact
o n t h e movement o f t r a d e t h r o u g h t h e P o r t o f New Y o r k
and has encouraged t h e d i v e r s i o n o f such t r a d e t o
o t h e r p o r t s o n t h e A t l a n t i c and G u l f Coasts o f t h e
U n i t e d S t a t e s . . . I I ] t has r e s u l t e d i n m i l l i o n s o f
t o n s o f c a r g o b e i n g d i v e r t e d f r o m t h i s P o r t and b e i n g
moved e l s e w h e r e . "
(See E x t e n s i o n o f t h e E x p o r t A d m i n i s t r a t i o n A c t o f 1969:
H e a r i n g s B e f o r e t h e Comm i t t e e o n I n t e r n a t i o n a l R e l a t i o n s , House o f R e p r e s e n t a t i v e s , N i n e t y - F o u r t h C o n g r e s s , Second S e s s i o n , P a r t
I , pp. 227-233.)
—
The s t a t e m e n t o f t h e A m e r i c a n I n s t i t u t e o f M a r i n e
U n d e r w r i t e r s w h i c h says t h a t , as a r e s u l t o f s t a t e
a n t i b o y c o t t l e g i s l a t i o n , "The I n s t i t u t e has w i t n e s s e d . . .
a s u b s t a n t i a l s h i f t of boycott r e l a t e d insurance requests
away f r o m i n s u r e r s i n New Y o r k , a n d more r e c e n t l y M a r y l a n d , t o f o r e i g n based insurance concerns o r concerns
whose i n t e r e s t s l i e p r i m a r i l y i n o t h e r j u r i s d i c t i o n s . "
(See E x t e n s i o n o f t h e E x p o r t A d m i n i s t r a t i o n A c t , p .
658.)
Please note t h a t t h e statement a s s e r t s t h a t the
s t a t e laws have r e s u l t e d i n t h e t r a n s f e r o f i n s u r a n c e
t o f o r e i g n - b a s e d concerns as w e l l as concerns i n o t h e r
states.
The q u e s t i o n o f t h e d i v e r s i o n o f b u s i n e s s ( i n c l u d i n g f r e i g h t
f o r w a r d i n g b u s i n e s s ) f r o m New Y o r k C i t y a s a r e s u l t o f t h e L i s a Law a l s o
was a d d r e s s e d b y l a t e r w i t n e s s e s d u r i n g y o u r S u b c o m m i t t e e ' s h e a r i n g s o n
F e b r u a r y 21 and F e b r u a r y 22:
—
M r . P h i l i p Baum o f t h e A m e r i c a n J e w i s h C o n g r e s s t e s t i f i e d on F e b r u a r y 21 t h a t h i s o r g a n i z a t i o n had p r e p a r e d
a f a i r l y detailed report analyzing a c t i v i t i e s i n the
P o r t o f New Y o r k a n d f o u n d t h a t t h e r e was no s u b s t a n t i a l
o r s i g n i f i c a n t d i v e r s i o n o f t r a d e as a r e s u l t o f t h e
L i s a Law.
He a l s o s t a t e d t h a t t h e o n l y c h a n g e s i n
o p e r a t i o n s o f w h i c h h e was a w a r e w e r e t h o s e a s s o c i a t e d
w i t h Aramco.
F i n a l l y , he o b s e r v e d t h a t , t o t h e k n o w l edge o f h i s o r g a n i z a t i o n , n e i t h e r New Y o r k n o r a n y
o t h e r j u r i s d i c t i o n has had any s u b s t a n t i a l l o s s o f
t r a d e w i t h i n t h e s t a t e because o f t h e e x i s t e n c e o f
state antiboycott laws.
213
—
M r . G i l b e r t M. W e i n s t e i n o f t h e New Y o r k Chamber o f
Commerce a n d I n d u s t r y c i t e d e s t i m a t e s b a s e d o n B u r e a u
o f Census d a t a c o n c e r n i n g w a t e r b o r n e e x p o r t s t o t h e
A r a b M i d d l e E a s t f o r t h e f i r s t 10 m o n t h s o f 1976
w h i c h i n d i c a t e t h a t t h e r e has been v e r y s u b s t a n t i a l
d i v e r s i o n f r o m New Y o r k / N e w J e r s e y p o r t s o f o c e a n going t r a f f i c to that area.
According t o these data,
d u r i n g 1976 t h o s e p o r t s e x p e r i e n c e d a l o s s o f 1 0 , 2 4 8
l o n g t o n s Ca d e c r e a s e o f 5 . 3 p e r c e n t ) i n t r a f f i c t o
t h e Arab Middle E a s t , w h i l e t r a f f i c from the o t h e r
p o r t s c i t e d ( B a l t i m o r e , Hampton R o a d s , M o b i l e , a n d
New O r l e a n s ) i n c r e a s e d 4 5 0 , 9 1 4 t o n s .
The i n c r e a s e s i n
tonnage d e s t i n e d t o t h e Arab Middle East from those
p o r t s ranged from 9 3 . 1 p e r c e n t f o r Mobile t o 127.6 p e r cent f o r Baltimore.
Mr. Weinstein's testimony i n d i c a t e s t h a t h i s o r g a n i z a t i o n b e l i e v e s t h a t t h e L i s a Law
has been a m a j o r f a c t o r i n t h i s s u b s t a n t i a l s h i f t i n
s h i p m e n t s f r o m New Y o r k / N e w J e r s e y p o r t s t o o t h e r p o r t s .
—
M r . G e r a l d U l l m a n o f t h e N a t i o n a l Customs B r o k e r s a n d
Forwarders' A s s o c i a t i o n o f America t e s t i f i e d t h a t f r e i g h t
f o r w a r d e r s i n New Y o r k C i t y , as a r e s u l t o f t h e L i s a L a w ,
are b e i n g requested by e x p o r t e r s t o d i v e r t shipments
f r o m New Y o r k t o o t h e r p o r t s .
W h i l e t h i s has n o t y e t
r e s u l t e d i n t h e exodus o f f r e i g h t f o r w a r d i n g companies
f r o m New Y o r k , i t h a s r e s u l t e d i n i n c r e a s e d a c t i v i t y
i n t h e o f f i c e s o f t h o s e f r e i g h t f o r w a r d e r companies i n
B a l t i m o r e and o t h e r p o r t s .
Mr. Ullman*s testimony
r e f l e c t e d l i t t l e d o u b t t h a t t h e L i s a Law was t h e p r i n c i p a l f a c t o r i n t h i s divergence of t r a f f i c destined f o r
t h e M i d d l e E a s t f r o m New Y o r k t o o t h e r p o r t s .
As d i s t i n g u i s h e d f r o m t h e comments o f M r . P h i l i p Baum, we f i n d
t h e t e s t i m o n y o f M r . W e i n s t e i n and M r . U l l m a n p e r s u a s i v e .
While i t i s
s u r p r i s i n g t h a t such a s u b s t a n t i a l s h i f t i n t r a f f i c has n o t r e s u l t e d i n
t h e e x o d u s o f f r e i g h t f o r w a r d e r c o m p a n i e s f r o m New Y o r k , i t seems c l e a r
t h a t t h e d i v e r g e n c e o f c a r g o t o o t h e r p o r t s has r e s u l t e d i n t h e t r a n s f e r
o f j o b s i n t h e f r e i g h t f o r w a r d i n g b u s i n e s s f r o m New Y o r k .
My r e f e r e n c e
t o J e w i s h o w n e r s h i p o f f r e i g h t f o r w a r d i n g c o m p a n i e s was b a s e d o n my
i m p r e s s i o n , w h i c h I am n o t a b l e t o s u b s t a n t i a t e , t h a t s i g n i f i c a n t numbers
o f f r e i g h t f o r w a r d i n g a n d m a r i n e i n s u r a n c e f i r m s i n New Y o r k a r e J e w i s h
owned.
O t h e r S u p p l e m e n t a r y Comments
Testimony o f S e c r e t a r y o f S t a t e Vance.—Since our appearance
b e f o r e y o u r Subcommittee, S e c r e t a r y o f S t a t e Vance p r e s e n t e d t h e E x e c u t i v e
B r a n c h ' s p o s i t i o n on a n t i b o y c o t t l e g i s l a t i o n .
The S e c r e t a r y p o i n t e d o u t
very e f f e c t i v e l y the p o t e n t i a l detrimental effects of strong antiboycott
l e g i s l a t i o n on U.S. d i p l o m a t i c e f f o r t s i n t h e M i d d l e E a s t and on U . S .
t r a d e and f i n a n c i a l r e l a t i o n s w i t h t h e a r e a .
The S e c r e t a r y ' s s t a t e m e n t
214
also recognized the great d i f f i c u l t y i n d r a f t i n g e f f e c t i v e l e g i s l a t i o n
i n t h e " r e f u s a l t o d e a l " a r e a f r o m t h e s t a n d p o i n t o f e n f o r c e m e n t , t h e need
t o p r o v i d e c o m p a n i e s w i t h c l e a r g u i d e l i n e s o n how t o c o n d u c t t r a d e i n b o y c o t t - r e l a t e d c o n d i t i o n s , and t h e d i f f i c u l t p r o b l e m s w h i c h w o u l d be posed
f o r f i r m s by t h e proposed l e g i s l a t i o n i n terms o f complying w i t h c e r t a i n
o f t h e i m p o r t documentation requirements o f t h e Arab b o y c o t t i n g n a t i o n s .
As we i n d i c a t e d i n o u r F e b r u a r y 2 1 s t a t e m e n t , t h e b e n e f i t s t o
b e g a i n e d b y S. 69 a n d S. 92 a r e n o t a t a l l c l e a r .
I n d e e d , we b e l i e v e
that c e r t a i n of the b i l l s ' provisions (including the refusal to deal prov i s i o n s ) c o u l d w e l l r e s u l t i n more d i f f i c u l t i e s f o r U . S . p e r s o n s a n d
f i r m s , i n c l u d i n g b l a c k l i s t e d persons and f i r m s , i n terms o f d o i n g b u s i ness i n t h e M i d d l e East t h a n e x i s t a t p r e s e n t .
Further, to repeat, the
e f f e c t o f such b i l l s on n e g o t i a t i o n s f o r a peace s e t t l e m e n t m i g h t be
serious.
U.S. a n t i b o y c o t t a c t i o n s already taken.—We b e l i e v e the hearings
have n o t g i v e n s u f f i c i e n t a t t e n t i o n t o t h e f a c t t h a t t h e U n i t e d S t a t e s
a l r e a d y h a s t a k e n a number o f a c t i o n s a g a i n s t f o r e i g n b o y c o t t s a n d t h a t
t h e s e a c t i o n s go f a r beyond w h a t has been done b y any o t h e r c o u n t r y .
I n a d d i t i o n t o a c t i o n s w h i c h have been t a k e n a d m i n i s t r a t i v e l y ( w i t h r e s e p c t
t o d i s c r i m i n a t o r y b o y c o t t - r e l a t e d r e q u e s t s , p u b l i c d i s c l o s u r e o f company
r e p o r t s , w i t h h o l d i n g o f government a s s i s t a n c e f o r t r a n s a c t i o n s c o n t a i n i n g
b o y c o t t - r e l a t e d c o n d i t i o n s ) , t h e Congress has e n a c t e d — w i t h o u t p u b l i c
h e a r i n g s o r o p p o r t u n i t y f o r p u b l i c comment—novel and complex a d d i t i o n s
t o t h e I n t e r n a l Revenue Code t h r o u g h t h e a n t i b o y c o t t amendments t o t h e
Tax R e f o r m A c t .
These p r o v i s i o n s , w h i c h d e n y c e r t a i n t a x b e n e f i t s t o t a x p a y e r s
who p a r t i c i p a t e i n o r c o o p e r a t e w i t h a b o y c o t t i n ways s p e c i f i e d i n t h e
A c t , p r o v i d e an inducement f o r companies t o a t t e m p t t o n e g o t i a t e f o r t h e
removal o f o f f e n d i n g b o y c o t t - r e l a t e d c o n d i t i o n s .
In his testimony before
t h e S u b c o m m i t t e e o n F e b r u a r y 2 8 , S e c r e t a r y o f S t a t e Vance m e n t i o n e d t } i a t
d i p l o m a t i c e f f o r t s and t h e e f f o r t s o f t h e U . S . b u s i n e s s community have
b r o u g h t a b o u t some e n c o u r a g i n g c h a n g e s i n A r a b r e q u i r e m e n t s f o r n e g a t i v e
certifications.
As was s u g g e s t e d i n o u r t e s t i m o n y , t h e r o u t e o f n e g o t i a t i o n — t h r o u g h U.S. d i p l o m a t i c c h a n n e ls and by f i r m s i n i n d i v i d u a l t r a n s a c t i o n s — o f f e r a more p r o m i s i n g , a n d c e r t a i n l y l e s s c o s t l y , means o f
m i n i m i z i n g t h e impact o f t h e Arab b o y c o t t t h a n t h e sweeping p r o h i b i t i o n s
o f S. 69 a n d S. 9 2 .
A v a i l a b i l i t y o f b l a c k l i s t i n f o r m a t i o n . — D u r i n g my t e s t i m o n y I
i n q u i r e d o f t h e Subcommittee as t o w h e t h e r i t had access t o t h e b l a c k l i s t .
The r e s p o n s e was i n t h e a f f i r m a t i v e , t h a t i t i s a p u b l i c d o c u m e n t , a n d
t h a t i t i s a v a i l a b l e t o us t h r o u g h t h e Subcommittee.
A f t e r our appearance,
we c a l l e d t h e S u b c o m m i t t e e o f f i c e t o o b t a i n b l a c k l i s t i n f o r m a t i o n .
We
w e r e r e f e r r e d t o t h e 1975 h e a r i n g s b y t h e S e n a t e F o r e i g n R e l a t i o n s Comm i t t e e ' s Subcommittee on M u l t i n a t i o n a l C o r p o r a t i o n s .
Those h e a r i n g s ,
a l r e a d y i n o u r p o s s e s s i o n , c o n t a i n a 1970 b l a c k l i s t o f S a u d i A r a b i a .
This
h a r d l y i s complete or c u r r e n t i n f o r m a t i o n .
215
Moreover, i t i s our understanding t h a t i n a d d i t i o n t o a b l a c k l i s t
m a i n t a i n e d b y t h e C e n t r a l O f f i c e o f t h e B o y c o t t i n Damascus, e a c h o f t h e
A r a b n a t i o n s p a r t i c i p a t i n g i n t h e b o y c o t t m a i n t a i n s i t s own n a t i o n a l l i s t .
I t i s a l s o o u r u n d e r s t a n d i n g t h a t none o f t h e s e l i s t s a r e g e n e r a l l y a v a i l a b l e t o t h e p u b l i c and c e r t a i n l y a r e n o t a v a i l a b l e t o U . S . f i r m s w h i c h a r e
e x p o r t i n g t o the Arab n a t i o n s .
I n a n u t s h e l l , t h e Subcommittee and i t s
s t a f f o b v i o u s l y do n o t h a v e u p - t o - d a t e i n f o r m a t i o n o n A r a b b l a c k l i s t s , n o r
does t h e b u s i n e s s community.
Degree o f a c t i o n b y f o r e i g n governments a g a i n s t t h e Arab b o y c o t t . — I n o u r o r a l comments o n F e b r u a r y 2 1 a n d i n o u r w r i t t e n s t a t e m e n t ,
we made t h e p o i n t t h a t , t o t h e b e s t o f o u r k n o w l e d g e a n d t h a t o f t h e E x e c u t i v e B r a n c h , no f o r e i g n g o v e r n m e n t C o t h e r t h a n I s r a e l ) h a s t a k e n a n y a c t i o n
w h i c h w o u l d have any s i g n i f i c a n t i m p a c t on i m p l e m e n t a t i o n o f t h e b o y c o t t .
We a r e c o n f i d e n t t h a t S e n a t o r W i l l i a m s w i l l f i n d l i t t l e i f a n y e v i d e n c e
t h a t t h e U n i t e d K i n g d o m , Germany, o r a n y o t h e r c o u n t r y t a k e s s t r o n g a c t i o n ,
as a g o v e r n m e n t , a g a i n s t t h e A r a b b o y c o t t .
Even i f t h e r e h a v e b e e n some
s t a t e m e n t s o f p o l i c y i n o p p o s i t i o n t o f o r e i g n b o y c o t t s , one s h o u l d b e a r
i n mind t h a t a p o l i c y i s sometimes announced by a f o r e i g n government b u t
not enforced.
The v e r y s u b s t a n t i a l U . S . c o m m i t m e n t a n d a s s i s t a n c e t o I s r a e l . —
I n o r a l remarks, I r e f e r r e d t o the f a c t t h a t , i n supplying m i l i t a r y
hardware, t h e U n i t e d S t a t e s has g i v e n v e r y s u b s t a n t i a l s u p p o r t t o b o t h
I s r a e l a n d t h e A r a b n a t i o n s , a n d i s c o n t i n u i n g t o do s o .
In amplification
o f t h a t p o i n t , s i n c e 1965 U . S . m i l i t a r y a s s i s t a n c e t o I s r a e l h a s t o t a l e d
o v e r $6 b i l l i o n a n d a f u r t h e r $ 1 b i l l i o n i s programmed f o r f i s c a l y e a r
1977.
I n a d d i t i o n , s u b s t a n t i a l economic a s s i s t a n c e has been g i v e n t o
Israel.
Thus, I s r a e l has been g i v e n v e r y s u b s t a n t i a l a s s i s t a n c e o f a l l
t y p e s , p u b l i c and p r i v a t e .
L e g i s l a t i o n o f t h e t y p e now b e f o r e t h e S u b committee i n t e n d e d t o h e l p I s r a e l c o u l d be a c o s t l y — a n d , i n a l l l i k e l i hood, i n e f f e c t i v e — w a y o f a t t e m p t i n g t o expand o u r a l r e a d y s u b s t a n t i a l
assistance.
216
Newspaper A r t i c l e s D e a l i n g W i t h
I m p a c t o f New York S t a t e ' s A n t i b o y c o t t Law
F o l l o w i n g i s a n a r t i c l e b y P e t e r T . L e a c h , J o u r n a l o f Commerce S t a f f ,
The J o u r n a l o f Commerce, F e b r u a r y 6 , 1 9 7 6 .
" H e a r i n g s Open o n A r a b B o y c o t t :
Leaving S t a t e . "
N . Y . - B a s e d F i r m s Weigh
S e v e r a l New Y o r k S t a t e - b a s e d c o m p a n i e s a n d f r e i g h t
forwarders are s e r i o u s l y considering l e a v i n g the s t a t e
b e c a u s e o f t h e " D r a c o n i a n " p r o v i s i o n s o f a new l a w a i m e d
a t p r e v e n t i n g d i s c r i m i n a t i o n by t h e Arab b o y c o t t o f I s r a e l .
S o u r c e s c l o s e t o t h e s e c o m p a n i e s t o l d The J o u r n a l
o f Commerce t h a t t h e c o m p a n i e s a n d f o r w a r d e r s h a v e d e c i d e d
t h a t t h e y cannot comply w i t h t h e p r o v i s i o n s o f t h e s o c a l l e d L i s a l a w and s t i l l c a r r y o n b u s i n e s s w i t h t h e A r a b
world.
Because t h e A r a b s t a t e s a r e d r a w i n g a n i n c r e a s i n g
v o l u m e o f e x p o r t s f r o m t h e s e c o m p a n i e s , t h e y may q u i t t h e
state rather than lose t h i s export business.
These s e n t i m e n t s w e r e e x p r e s s e d a t h e a r i n g s b y t h e
s t a t e A s s e m b l y ' s s u b c o m m i t t e e on human r i g h t s , w h i c h o p e n e d
h e r e T h u r s d a y , o n t h e A r a b b o y c o t t o f i n d i v i d u a l s a n d companies doing business w i t h I s r a e l .
The h e a r i n g s , u n d e r t h e c h a i r m a n s h i p o f Assemblyman
Joseph F. L i s a , D-Queens, were convened t o assess t h e w o r k i n g s o f t h e new New Y o r k S t a t e l a w p r o h i b i t i n g r e l i g i o u s
d i s c r i m i n a t i o n b y means o f a b l a c k l i s t o r b o y c o t t .
New Y o r k S t a t e Human R i g h t s C o m m i s s i o n e r W e r n e r H.
K r a m a r s k y i n d i c a t e d t h a t some o f t h e p r o v i s i o n s o f t h e new
l a w may n o t be e n f o r c e a b l e .
He s a i d t h a t i t i s p r o b a b l y
n o t u n l a w f u l t o r e q u i r e a c e r t i f i c a t i o n t h a t goods s h i p p e d
t o an A r a b c o u n t r y a r e n o t b e i n g s h i p p e d o n a v e s s e l owned
by a c o u n t r y u n f r i e n d l y t o t h e i m p o r t i n g c o u n t r y .
Mr. Kramarsky s a i d h i s d e p a r t m e n t has had no e x p e r i ence w i t h i n t e r n a t i o n a l t r a d e and b a n k i n g , and c o n s e q u e n t l y
l a c k s t h e e x p e r t i s e t o e n f o r c e t h e New Y o r k S t a t e l a w .
Urges F e d e r a l Law.—Mr. Kramarsky urged t h e passage
of federal l e g i s l a t i o n to enforce provisions against d i s c r i m i n a t i o n on a n a t i o n a l l e v e l .
Assembly Speaker S t a n l e y S t e i n g u t accused t h e U n i t e d
S t a t e s Government o f b e i n g " a n a l l - t o o - w i l l i n g p a r t n e r o f
the Arabs."
from
217
" I n c e r t a i n i n s t a n c e s t h e y have n o t a l l o w e d American
Jews t o w o r k i n A r a b c o u n t r i e s and t h e y h a v e r e f u s e d t o s u b c o n t r a c t t o A m e r i c a n c o m p a n i e s who w e r e o n t h e b o y c o t t l i s t . "
M r . S t e i n g u t s a i d t h a t P r e s i d e n t G e r a l d F o r d ' s commitment t o
end t h e b o y c o t t h a d b e e n f o l l o w e d b y a " g o - e a s y " p o l i c y b y
t h e Commerce D e p a r t m e n t , a n d b y w h a t a p p e a r s t o b e a r e v e r s a l
o f t h e t o u g h s t a n d i n i t i a l l y t a k e n by t h e F e d e r a l Reserve
System.
M r . S t e i n g u t i n d i c a t e d t h a t New Y o r k b a n k s h a v e p l a y e d
a p r i n c i p a l r o l e i n the enforcement o f the b o y c o t t .
"Their
r e f u s a l t o accept invoices w i t h o u t c e r t i f i c a t i o n t h a t the
companies had c o m p l i e d w i t h t h e Arab b o y c o t t r u l e s s e t them
up as t h e f o c a l p o i n t o f t h e e n t i r e p r o c e d u r e , " he s a i d .
Banks t o T e s t i f y . — C h a s e M a n h a t t a n B a n k , F i r s t N a t i o n a l
C i t y Bank a n d C h e m i c a l Bank a r e a l l s c h e d u l e d t o t e s t i f y o n
t h e i r r o l e i n shipping c e r t i f i c a t i o n i n today's hearings at
t h e C a r n e g i e I n t e r n a t i o n a l Endowment C e n t e r .
I n T h u r s d a y ' s h e a r i n g s , i n t e r n a t i o n a l e x e c u t i v e o f CBS,
I n c . and RCA C o r p . e x p l a i n e d t h e r e a s o n s why b o t h c o m p a n i e s
have b e e n b o y c o t t e d b y t h e League o f A r a b S t a t e s .
C h a r l e s R. D e n n y , RCA's r e t i r e d v i c e p r e s i d e n t o f i n t e r n a t i o n a l o p e r a t i o n s , s a i d RCA was b l a c k l i s t e d i n 1966 b e cause i t h a d a l i c e n s i n g a g r e e m e n t w i t h a d i s t r i b u t o r i n
I s r a e l , a l l o w i n g h i m t o p r e s s r e c o r d s u s i n g t h e RCA l a b e l .
A r a b b o y c o t t o f f i c i a l s h a v e t o l d M r . Denny t h a t RCA
c o u l d be d e l i s t e d i f RCA s e v e r e d r e l a t i o n s w i t h i t s I s r a e l
l i c e n s e e , b u t M r . Denny s a i d RCA w o u l d n o t t e r m i n a t e t h a t
arrangement.
S a l e s D r o p . — B e c a u s e o f t h e A r a b b o y c o t t , he s a i d ,
RCA's s a l e s t o A r a b c o u n t r i e s h a d d r o p p e d f r o m a $10 m i l l i o n v o l u m e i n 1966 t o $ 1 m i l l i o n l a s t y e a r .
Leonard Spinrad, v i c e p r e s i d e n t o f c o r p o r a t e i n f o r m a t i o n f o r CBS, I n c . , s a i d CBS l e a r n e d i n 1969 t h a t i t h a d
b e e n b o y c o t t e d as a r e s u l t o f e s t a b l i s h i n g a r e c o r d pressing subsidiary i n I s r a e l ,
CBS R e c o r d s I s r a e l , L t d .
Mr S p i n r a d s a i d CBS h a s d e c i d e d t o c o n t i n u e o p e r a t i o n s i n
I s r a e l a n d h a s made no e f f o r t t o g e t o f f t h e b o y c o t t l i s t .
A m a n u f a c t u r e r o f men's o u t e r w e a r f o r use i n a i r c r a f t maintenance w o r k , Gerald Spiwak, t o l d t h e subcommittee
t h a t N o r t h r o p A v i a t i o n had d e c l i n e d t o buy c l o t h i n g f r o m h i s
218
f i r m b e c a u s e i t was J e w i s h - o w n e d .
He s a i d a N o r t h r o p b u y e r
h a d t o l d h i s Los A n g e l e s s a l e s r e p r e s e n t a t i v e t h a t t h e comp a n y c o u l d n o t b u y f r o m anyone who was J e w i s h b e c a u s e N o r t h r o p does a s u b s t a n t i a l amount o f b u s i n e s s i n S a u d i A r a b i a .
C o n f u s i o n C r e a t e d . — T h e New Y o r k S t a t e l a w a g a i n s t t h e
A r a b b o y c o t t , w h i c h was s p o n s o r e d b y Assemblyman L i s a l a s t
y e a r , h a s c r e a t e d a good d e a l o f c o n f u s i o n i n t h e m i n d s o f
companies d o i n g b u s i n e s s i n t h e Arab w o r l d .
The l a w has n o t
y e t b e e n t e s t e d i n t h e c o u r t s , and G e n e r a l E l e c t r i c C o r p . ,
w h i c h was summoned t o t e s t i f y i n t o d a y ' s h e a r i n g s , h a s d e c i ded t o t e s t t h e law by r e f u s i n g t o a p p e a r .
S t a t e Assemblymen on t h e s u b c o m m i t t e e a p p e a r e d t o be
h o l d i n g t h e h e a r i n g s as a means o f p r e s s u r i n g t h e F e d e r a l Government i n t o p a s s i n g s t i f f e r a n t i - b o y c o t t l e g i s l a t i o n o f i t s
own.
B u t d o u b t s h a v e b e e n r a i s e d as t o t h e c o n s t i t u t i o n a l i t y
o f c e r t a i n p o v i s i o n s o f t h e New Y o r k S t a t e l a w .
F o l l o w i n g i s an a r t i c l e b y R i c h a r d P h a l o n f r o m The New Y o r k T i m e s , F e b r u a r y
1976.
" A n t i - B o y c o t t Law T r i m s P o r t ' s M i d e a s t T r a f f i c ;
i s Losing Mideast Business."
Port
Here
E x p o r t e r s , a p p a r e n t l y w o r r i e d a b o u t b r e a c h i n g a new
s t a t e l a w t h a t makes a i d i n g t h e A r a b b o y c o t t o f I s r a e l a
misdemeanor, a r e d i v e r t i n g cargo d e s t i n e d f o r t h e M i d d l e
E a s t f r o m New Y o r k C i t y t o o t h e r p o r t s .
The l a w , an amendment t o t h e S t a t e ' s Human R i g h t s
A c t , became e f f e c t i v e J a n . 1 .
A c c o r d i n g t o James J . D i c k man, p r e s i d e n t o f t h e New Y o r k S h i p p i n g A s s o c i a t i o n , i t i s
t o o e a r l y t o t e l l e x a c t l y how h a r d t h e p o r t h a s b e e n h i t
so f a r .
"We j u s t know w e ' r e l o s i n g an a w f u l l o t o f f r e i g h t , "
he s a i d i n an i n t e r v i e w .
" W e ' r e p r o b a b l y l o s i n g a minimum
o f two m i l l i o n t o n s a y e a r . "
That f i g u r e would r e p r e s e n t about 9.5 percent o f the
t o t a l 2 1 m i l l i o n * t o n s o f g e n e r a l c a r g o t h e p o r t o f New Y o r k
handled l a s t year.
The p o r t , p a r t l y b e c a u s e o f i t s c o m p a r a t i v e l y h i g h
o p e r a t i n g c o s t s , has b e e n l o s i n g f r e i g h t t o M o n t r e a l ,
B a l t i m o r e and o t h e r E a s t Coast p o r t s f o r y e a r s .
6,
219
The " L i s a l a w " — A s s e m b l y m a n J o s e p h F . L i s a , D e m o c r a t
o f Queens, s p o n s o r e d t h e s t a t u t e — i s a p p a r e n t l y a c c e l e r a t i n g
that trend.
A c c o r d i n g t o G e r a l d H. U l l m a n , g e n e r a l c o u n s e l f o r
t h e New Y o r k F r e i g h t F o r v a r d e r s A s s o c i a t i o n , and G i l b e r t
Weinstein, vice president of i n t e r n a t i o n a l a f f a i r s for the
New Y o r k Chamber o f Commerce, t h e e c o n o m i c p r e s s u r e has
a l r e a d y b e g u n t o eddy f r o m t h e l o n g - s h o r e l a b o r on t h e d o c k s
t o p a c k i n g h o u s e s and f r e i g h t f o r w a r d e r s .
M r . L i s a c o u l d n o t be r e a c h e d f o r comment.
In the
p a s t he has c o n t e n d e d t h a t s u c h commentary i s on s h a k y
f a c t u a l ground.
B u t a s p o t c h e c k o f f r e i g h t f o r w a r d e r s (whose f u n c t i o n i s t o arrange t h e d e t a i l s o f a shipment from the exp o r t e r ' s f a c t o r y t o the p o i n t o f consignment) suggests t h a t
business i s indeed being funneled elsewhere.
Steve Palumbo, a v i c e p r e s i d e n t o f B e h r i n g I n t e r n a t i o n a l I n c . , one o f New Y o r k ' s b i g g e s t f r e i g h t f o r w a r d e r s ,
says t h a t v o l u m e a t h i s f i r m h a s d r o p p e d "10 t o 20 p e r c e n t "
s i n c e t h e L i s a law went i n t o e f f e c t .
B e h r i n g , i n f a c t , has w r i t t e n i t s c l i e n t s and t o l d
t h e m i t c o u l d n o l o n g e r h a n d l e o u t o f i t s New Y o r k o f f i c e
s h i p m e n t s c e r t i f i e d as n o t b e i n g o f I s r a e l i m a n u f a c t u r e .
S a u d i A r a b i a , B a h r a i n , S y r i a and o t h e r A r a b n a t i o n s
almost i n v a r i a b l y r e q u i r e such a c e r t i f i c a t i o n b e f o r e t h e y
w i l l a c c e p t d e l i v e r y o f p u r c h a s e s made h e r e .
E x p o r t e r s and f r e i g h t f o r w a r d e r s a r e a l s o r e q u i r e d ,
as p a r t o f t h e A r a b b o y c o t t o f I s r a e l , t o c e r t i f y — a m o n g
o t h e r t h i n g s — t h a t t h e s h i p o n w h i c h t h e goods a r e b e i n g
moved does n o t c a l l a t I s r a e l i p o r t s and i s n o t o n t h e
Arab b l a c k l i s t .
Conditions Noted.—In the l e t t e r to c l i e n t s , Behring
s a i d i t s New Y o r k o f f i c e " a t t h e p r e s e n t t i m e " w o u l d n o t be
a b l e " t o s h i p f r e i g h t t o any c o u n t r y w h i c h t a k e s p a r t i n
r e s t r i c t i v e trade practices or boycotts."
The l e t t e r a l s o w e n t on t o n o t e , h o w e v e r , t h a t " a l l
o t h e r B . I . I , o f f i c e s w i l l be o p e r a t i n g under n o r m a l c o n d i tions ."
8 5 - 6 5 4 O - 77 - 15
220
" O u r c u s t o m e r s h a v e t o l d us t h e y d o n ' t w a n t any
p r o b l e m s , " M r . Palumbo s a i d i n an i n t e r v i e w .
"They d o n ' t
w a n t t o come t o New Y o r k b e c a u s e o f t h e L i s a l a w . "
Thus f a r t h e l a w , w h i c h r o l l e d t h r o u g h t h e L e g i s l a t u r e w i t h no o p p o s i t i o n , h a s n o t b e e n e n f o r c e d .
W e r n e r H.
K r a m a r s k y , S t a t e Human R i g h t s C o m m i s s i o n e r , c o u l d n o t b e
r e a c h e d f o r comment, b u t he h a s t e s t i f i e d t h a t he has
n e i t h e r the s t a f f nor the budget t o administer the law.
Though M r . U l l m a n a n d o t h e r l a w y e r s h a v e b r o a d l y
c o n s t r u e d t h e l a w f o r b i d d i n g any " a i d i n g a n d a b e t t i n g "
o f t h e A r a b b o y c o t t , t h e Human R i g h t s C o m m i s s i o n has n o t
i s s u e d any g u i d e l i n e s o r r e g u l a t i o n s u n d e r t h e s t a t u t e .
A c c o r d i n g t o one f r e i g h t f o r w a r d e r who s a i d h e
d i d n o t w a n t h i s name d i s c l o s e d , t h e r e s u l t i s t h a t " I ' m
n o t sure whether I ' m b r e a k i n g t h e law or n o t . "
T h i s f o r w a r d e r has t a k e n t h e p r e c a u t i o n o f s e t t i n g up a New J e r s e y c o r p o r a t i o n and o p e n i n g a s m a l l
o f f i c e i n L i n d e n , N . J . , t o w h i c h he i n t e n d s t o s h i f t h i s
business i f t h e law i s e n f o r c e d .
" I t w o u l d e i t h e r mean s t a y i n g i n New Y o r k C i t y
f i r i n g 40 p e r c e n t o f t h e 35 p e o p l e i n t h e o f f i c e , o r
m o v i n g o u t o f t h e c i t y e n t i r e l y , " he s a i d .
and
B e h r i n g has a l r e a d y moved t h e 4 0 - p e r s o n p u r c h a s i n g
department t h a t used t o serve t h e A r a b i a n American O i l
Company f r o m New Y o r k C i t y t o H o u s t o n .
M r . Palumbo s a i d
t h e moved was p r o m p t e d b y t h e n e e d f o r " b e t t e r c o n t r o l s "
rather than the Lisa law.
B o t h M r . W e i n s t e i n o f t h e New Y o r k Chamber o f
Commerce a n d M r . U l l m a n o f t h e F r e i g h t F o r w a r d e r s A s s o c i a t i o n i n s i s t , h o w e v e r , t h e y h a v e b e e n t o l d t h a t t h e new
s t a t u t e was t h e m a i n r e a s o n f o r t h e r e l o c a t i o n .
T h a t ' s 40 j o b s t h e c i t y c a n i l l a f f o r d t o l o s e , "
Mr. Weinstein declared.
"Aramco a l o n e moved m i l l i o n s o f
t o n s t h r o u g h t h e p o r t — a tremendous amount, enough t o
k e e p one s m a l l p o r t b u s y a l l on i t s o w n . "
The Chamber o f Commerce o f f i c i a l s a i d he c o u l d n o t
p u t a number on how many j o b s h a d b e e n a f f e c t e d h e r e , b u t
he a d d e d , " Y o u h a v e t o t h i n k o f t h e p a c k i n g c o m p a n i e s a n d
o t h e r s who make t h e i r l i v i n g o u t o f f o r e i g n t r a d e .
221
M o r a l I s s u e Seen.—The L i s a law has t h e b a c k i n g o f t h e
American Jewish Congress, which contends t h a t t h e Arab b o y c o t t
i s a m o r a l i s s u e r a t h e r t h a n an e c o n o m i c i s s u e .
I t takes the
p o s i t i o n t h a t American business " c o m p l i c i t y " i n the b o y c o t t i s
a form o f "economic w a r f a r e . "
M r . U l l m a n s a y s h e t h i n k s t h e L i s a l a w c o u l d be amended
i n a way t h a t " t h e p o r t a n d e v e r y b o d y e l s e c o u l d l i v e w i t h , "
a l t h o u g h he s a y s he s e e s no movement i n t h a t d i r e c t i o n .
We * v e b e e n g e t t i n g a l o t o f t e a and s y m p a t h y i n
he s a i d , " b u t n o t much o f a n y t h i n g e l s e . "
Albany,"
222
Senator S T E V E N S O N . The next witnesses w i l l also comprise a panel:
Maxwell E. Greenberg, chairman of the National Executive Committee of the Anti-Defamation League ; and M r . C. L . W h i t e h i l l , vice
president and general counsel of General Mills, Inc.
Gentlemen, I w i l l repeat my earlier request: I f you w i l l be good
enough to condense your statements, we w i l l enter the f u l l statements
in the record.
M r . Greenberg., can wo proceed w i t h you first?
STATEMENT OF MAXWELL E. GREENBERG, CHAIRMAN OF THE NATIONAL EXECUTIVE COMMITTEE, ANTI-DEFAMATION LEAGUE,
ACCOMPANIED BY ALFRED MOSES, CHAIRMAN OF THE DOMESTIC
AFFAIRS COMMISSION, AMERICAN JEWISH COMMITTEE; PHILIP
BAUM OF THE AMERICAN JEWISH CONGRESS; AND C. L. WHITEHILL, VICE PRESIDENT AND GENERAL COUNSEL, GENERAL
MILLS, INC.
M r . G R E E N B E R G . Thank you, M r . Chairman.
I n response to the Chair's admonition, I shall not attempt to read to
you that which you may read for yourselves, but summarize the key
portions of the statement prepared.
Senator S T E V E N S O N . W i t h o u t objection, the f u l l statement w T ill be
entered in the record.
[The complete statement follows:]
S T A T E M E N T OF M A X W E L L E . G R E E N B E R G , C H A I R M A N OF T H E N A T I O N A L E X E C U T I V E
C O M M I T T E E OF T H E A N T I - D E F A M A T I O N L E A G U E OF B ' N A I B ' R I T H
M r . C h a i r m a n , members of the committee, m y name is M a x w e l l Greenberg a n d
I a m C h a i r m a n of the N a t i o n a l E x e c u t i v e C o m m i t t e e of the A n t i - D e f a m a t i o n
League of B ' n a i B ' r i t h . I have t h e honor of a p p e a r i n g — n o t only f o r t h e A n t i D e f a m a t i o n L e a g u e — b u t also f o r the A m e r i c a n J e w i s h C o m m i t t e e a n d t h e
A m e r i c a n J e w i s h Congress and the other six n a t i o n a l and 101 l o c a l c o n s t i t u e n t
agencies of the N a t i o n a l J e w i s h C o m m u n i t y R e l a t i o n s A d v i s o r y C o u n c i l whose
names are appended. I a m accompanied today by M r . A l f r e d Moses, A m e r i c a n
J e w i s h Committee, a n d M r . P h i l i p B a u m , A m e r i c a n J e w i s h Congress.
W e appreciate t h i s o p p o r t u n i t y to present o u r views on the a n t i - b o y c o t t p r o v i sions of S. 69 (Stevenson B i l l ) a n d S. 92 ( W i l l i a m s - P r o x m i r e B i l l ) . M r . C h a i r man, we appeared before t h i s Subcommittee i n J u l y , 1975, a n d before several
o t h e r committees of the 94tli Congress w h i c h were then considering amendments
to the E x p o r t A d m i n i s t r a t i o n A c t of 1969, and we presented o u r views i n s u p p o r t
of effective anti-boycott legislation.
T h e need f o r such f e d e r a l l e g i s l a t i o n is as clear and i m p e r a t i v e today as i t was
then, and as i t lias been i n the years before.
T h e i n v i d i o u s and d i v i s i v e c h a r a c t e r of t h e A r a b boycott o p e r a t i o n i n the
U n i t e d States, I submit, has been a m p l y documented by t h i s t i m e by countless
d i s t u r b i n g examples. T h e published record of t h e hearings held by t h i s C o m m i t tee o n J u l y 22 a n d 23, 1975, d e t a i l the h i s t o r y of the boycott since 1946, i t s h a r m f u l i m p a c t on A m e r i c a n citizens a n d companies, i t s distressing use of b l a c k l i s t s
a n d even i t s obnoxious a n t i - J e w i s l i practices. T o t h i s day, t h e A r a b boycott,
d i r e c t l y or i n d i r e c t l y , seeks to coerce responsible A m e r i c a n f i r m s to refuse u n d e r
t h r e a t of w i t h h o l d i n g of A r a b business t o deal w i t h o t h e r A m e r i c a n firms, or to
a v o i d n o r m a l c o m m e r c i a l r e l a t i o n s w i t h I s r a e l , a c o u n t r y f r i e n d l y to the U n i t e d
States.
Some A m e r i c a n firms, o t h e r w i s e t h o r o u g h l y qualified, have been denied or
t h r e a t e n e d w i t h d e n i a l of c o n t r a c t s s i m p l y because of t h e i r t r a d e r e l a t i o n s h i p s
w i t h I s r a e l , or because of t h e i r r e l a t i o n s h i p s w i t h other A m e r i c a n companies
w h o t r a d e w i t h I s r a e l . T h e A r a b boycott has p i t t e d A m e r i c a n firms against
other A m e r i c a n firms t o f u r t h e r the economic w a r f a r e of the A r a b states against
an a l l y of the U n i t e d States. E q u a l l y sinister, a l t h o u g h perhaps more subtle, the
223
A r a b boycott apparatus, h e a d q u a r t e r e d i n Damascus, has compelled A m e r i c a n
f i r m s to police a n d enforce i t s boycott.
I n a n e f f o r t to t e r m i n a t e c e r t a i n of these pernicious practices, imposed upon
the A m e r i c a n business c o m m u n i t y , the Senate i n late August, 1976, passed w i t h
some modifications, a b i l l sponsored by you, M r . C h a i r m a n , aimed p r i n c i p a l l y at
p r o h i b i t i n g the t e r t i a r y boycott. I n the House, a b i l l covering secondary as w e l l
as t e r t i a r y boycotts was adopted. Despite the o v e r w h e l m i n g support f o r antiboycott l e g i s l a t i o n i n b o t h houses of Congress, legislative enactment f a i l e d because a p a r l i a m e n t a r y tactic i n the closing days of the 94th Congress f a t a l l y
delayed the a p p o i n t m e n t of Senate-House conferees.
N o t w i t h s t a n d i n g t h a t p a r l i a m e n t a r y obstruction, an i n f o r m a l conference comm i t t e e was appointed a n d i t agreed upon proposed l e g i s l a t i o n w h i c h you, M r .
C h a i r m a n , have now introduced, w i t h c e r t a i n modifications, as Senate B i l l 69.
A s u m m a r y of t h a t "Conference C o m m i t t e e " b i l l was inserted by y o u i n the
Congressional Record of September 30, 1976, on page S. 17462, and w i t h y o u r
permission I w o u l d l i k e to offer t h a t s u m m a r y as p a r t of m y testimony.
S. 92, i n t r o d u c e d on J a n u a r y 10, 1977, by Senators W i l l i a m s and P r o x m i r e ,
has most of the f e a t u r e s of y o u r b i l l , S. 69, but w i t h some differences and additions w h i c h I w i l l address here today.
M r . C h a i r m a n , b o t h S. 69 and S. 92 are s t r o n g yet reasoned responses to the
boycott's demonstrably h a r m f u l i n t r u s i o n upon A m e r i c a ' s c o m m e r c i a l life. B o t h
bills p r o h i b i t secondary and t e r t i a r y boycotts a n d r e q u i r e public disclosure of
boycott requests and compliance.
B o t h b i l l s w i l l p r o m o t e i n t e r n a t i o n a l commerce and w o r l d peace, because any
b o y c o t t i n g n a t i o n w i l l be t o l d t h a t A m e r i c a n business a n d i n d u s t r y cannot be
made u n w i t t i n g tools of w a r f a r e against our f r i e n d s and allies. B o t h bills w i l l
p r o m o t e domestic h a r m o n y — b y p r e v e n t i n g a r t i f i c i a l r e s t r a i n t of t r a d e a n d prec l u d i n g the p o t e n t i a l segregation of A m e r i c a n businesses i n t o t w o g r o u p s : Those
w h o refuse to have others d i c t a t e w i t h w h o m tliey may do business, and those
w h o accept f o r e i g n d o m i n a t i o n .
B o t h b i l l s do p r o v i d e c e r t a i n exceptions w h i c h have been included to e l i m i n a t e
unreasonable burdens on the i n t e r s t a t e and f o r e i g n commerce of the U.S. T o
i l l u s t r a t e , the l e g i s l a t i o n p e r m i t s A m e r i c a n o i l companies to c e r t i f y they w i l l not
t r a n s s h i p o i l w h i c h they have purchased f r o m Saudi A r a b i a (or other A r a b
states) to I s r a e l , a boycotted c o u n t r y . The bills w o u l d not preclude compliance
w i t h anti-confiscation clauses, o f t e n imposed by one belligerent n a t i o n against
another. F o r example, the l e g i s l a t i o n w o u l d a l l o w p r o h i b i t i o n of the shipment
of goods on a c a r r i e r of a boycotted c o u n t r y or v i a a r o u t e designated by the
boycotting c o u n t r y .
T o begin w i t h , members of the Committee, we believe t h a t the f o l l o w i n g p r i n ciples, at least, m u s t be the basis f o r any anti-boycott l e g i s l a t i o n t h a t is t o be
regarded as w o r t h w h i l e , effective a n d capable of d e a l i n g w i t h the h a r m f u l
aspects of the A r a b boycott operations i n the U n i t e d States.
No U.S. person m a y d i s c r i m i n a t e against a U.S. i n d i v i d u a l on the basis of
t h a t i n d i v i d u a l ' s race, religion, sex, ethnic or n a t i o n a l o r i g i n , to comply w i t h ,
f u r t h e r or support a f o r e i g n boycott.
No U.S. person m a y f u r n i s h i n f o r m a t i o n w i t h r e g a r d to, or reflective of, a
U.S. i n d i v i d u a l ' s race, religion, sex, ethnic, n a t i o n a l o r i g i n or business r e l a t i o n ships w i t h a boycotted c o u n t r y , to or f o r the use of a f o r e i g n c o u n t r y , its
nationals, or residents to comply w i t h , f u r t h e r or support a f o r e i g n boycott.
Xo U.S. person m a y r e f r a i n f r o m doing business w i t h or i n a f o r e i g n c o u n t r y ,
i t s n a t i o n a l s or residents p u r s u a n t to an agreement w i t h a f o r e i g n c o u n t r y , its
n a t i o n a l s or residents thereof, to comply w i t h , f u r t h e r or support a f o r e i g n
boycott.
No U.S. person m a y r e f r a i n f r o m d o i n g business w i t h any other U.S. person
p u r s u a n t to a n agreement w i t h a f o r e i g n c o u n t r y , i t s n a t i o n a l s or residents to
comply w i t h , f u r t h e r or support a f o r e i g n boycott.
Agreements or conduct w h i c h have the p r o h i b i t e d effect on U.S. persons w o u l d
be v i o l a t i o n s of applicable l a w irrespective of where such agreements are entered
into. " A g r e e m e n t s " should be defined t o include compliance w i t h a request f r o m ,
a r e q u i r e m e n t of or on behalf of a b o y c o t t i n g c o u n t r y .
T h e l e g i s l a t i o n should apply to U.S. n a t i o n a l s a n d residents and to domestic
corporations or corporations domiciled i n the U n i t e d States, and t o f o r e i g n corporations owned and c o n t r o l l e d i n f a c t by U.S. nationals, as t o t h e i r a c t i v i t i e s
w i t h i n or outside of the U n i t e d States. I t should also a p p l y t o U.S. companies
wherever located but should not apply to f o r e i g n corporations i n w h i c h a n A m e r i -
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can company may have an ownership interest, but w h i c h i t does not i n f a c t
control. No U.S. person should u t i l i z e any foreign person, whether or not affiliated
w i t h such U.S. person, to evade the application of the legislation.
The legislation should provide t h a t the American public, as w e l l as the legislat u r e and concerned agencies of the U.S. Government, be i n f o r m e d as to requests
affecting the freedom of choice of U.S. persons and compliance w i t h such requests.
I now address, M r . Chairman, the chief area wherein your b i l l , S. 69, and
S. 92 d i f f e r — t h e issue of so-called ''negative certificates of origin." W e submit
t h a t the difference is significant.
S. 69 excepts negative certificates of o r i g i n f r o m the boycott practices proh i b i t e d by the proposed legislation. As you know, negative certificates of o r i g i n
require American exporters, banks, f r e i g h t f o r w a r d e r s and others w h o trade
w i t h A r a b countries, to c e r t i f y t h a t the products being exported to an A r a b
country were not made i n whole or i n p a r t i n Israel.
I n contradistinction, S. 92 prohibits the use of negative certificates of o r i g i n but
w o u l d a l l o w the use of positive certificates of origin, t h a t is, affirmative statements regarding the country of o r i g i n or manufacture, as, f o r example, an
affirmative certification t h a t the goods were "made i n the U n i t e d States." W e
support the latter, t h a t is, the f o r m u l a t i o n i n S. 92. The use of positive certificates
of origin, a common practice i n i n t e r n a t i o n a l trade, is not flawed w i t h the
objectionable features of the negative certificates.
M r . Chairman, w h y do we emphasize the issue of negative certificates of
o r i g i n as a m a j o r distinction between your b i l l and S. 92? Simply stated, the
negative certificate is a cornerstone on w h i c h the A r a b boycott is today struct u r e d and enforced. U n l i k e the positive certificate, there is no j u s t i f i c a t i o n i n
ommercial practice, or i n the application of duties and i m p o r t taxes, f o r negative
certificates. The negative certificate singles out f o r invidious discrimination, a
country f r i e n d l y to the U n i t e d States—Israel. F u r t h e r , i t creates a c h i l l i n g
effect upon otherwise healthy American-Israel trade relations by discouraging
A m e r i c a n firms f r o m developing and m a i n t a i n i n g m u t u a l l y advantageous commerce w i t h the State of Israel. Moreover, when an American firm furnishes
boycott i n f o r m a t i o n to the Arabs by way of c e r t i f y i n g a negative certificate of
o r i g i n i t aids and abets a boycott contrary to U.S.-declared n a t i o n a l policy.
M r . J. T. Smith, then General Counsel of the Department of Commerce cogently underscored this point i n his November 5, 1976 memorandum on the subject
of the A r a b boycott. M r . Smith declared :
" W e are obligated to encourage and request American business concerns to
refuse to take any action t h a t w o u l d f u r t h e r or support the boycott. F i r m s w h i c h
supply i n f o r m a t i o n regarding o r i g i n of goods, nature of business relationships
w i t h Israel, etc., do help the A r a b nations to operate t h e i r boycott system. T h i s
system fundamentally depends upon the a v a i l a b i l i t y of such i n f o r m a t i o n . "
We concur w i t h M r . Smith t h a t when an American firm supplies negative
i n f o r m a t i o n w i t h respect to the o r i g i n of goods, i t affirmatively assists the A r a b
boycott operation. I would l i k e to have entered into the record the complete t e x t
of M r . J. T. Smith's memorandum.
The extensive use of negative certificates by the boycotters is amply documented and points up the need to p r o h i b i t its use. A n analysis by the A n t i D e f a m a t i o n League, the American Jewish Committee and the American Jewish
Congress of the first 836 boycott reports w h i c h had been made public by the
Department of Commerce, f o l l o w i n g President Ford's disclosure order of October 7, 1976, revealed t h a t the negative certificate of origin was, by f a r , the most
frequently demanded boycott condition. Indeed, t h a t demand was made i n 614
out of 836 cases studied—nearly 75 percent. W i t h your permission. I w o u l d like
to have t h a t study entered i n t o the record. M r . Chairman, to permit the continued
employment of the negative certificate of o r i g i n w o u l d legitimize a p r i n c i p a l
weapon employed by the Arab-boycott operation w h i c h compels American firms to
police and enforce its boycott against Israel, and f o r w h i c h there is no justificat i o n i n n o r m a l i n t e r n a t i o n a l trade practices.
A n y concern t h a t A r a b boycotting countries w i l l c u r t a i l trade r a t h e r t h a n
forego negative certificates is dispelled by the recent announcement of the New
Y o r k Chamber of Commerce and I n d u s t r y t h a t the A r a b Boycott Office i n Jeddah
w i l l no longer insist upon negative certificates, but w i l l recommend instead accepting positive assurances of U.S. manufacture. The Chamber reports t h a t several A r a b consultates have acknowledged and indicated agreement to this change.
The decision is g r a t i f y i n g confirmation of the view t h a t negative certificates
are not genuinely necessary or relevant to trade. I t is imperative, however, t h a t
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this be supplemented by a U.S. s t a t u t o r y p r o h i b i t i o n t h a t w i l l act upon these
tentative indications to insure t h a t there w i l l be 110 change i n the current practice
of a f e w A r a b countries and to make certain t h a t this practice becomes u n i f o r m
and universal among the others.
I w o u l d l i k e to t u r n M r . C h a i r m a n to another i m p o r t a n t d i s t i n c t i o n between
S. 69 and S. 92: Section 4 A. (a) (1) of S. 69 states:
. . the President shall
issue rules and regulations p r o h i b i t i n g any United States person f r o m t a k i n g any
of the f o l l o w i n g actions with intent to comply w i t h , f u r t h e r , or support any boycott fostered or imposed by a foreign country against a country w h i c h is f r i e n d l y
to the U n i t e d States . . .". ( i t a l i c supplied) S. 92 differs by e l i m i n a t i n g the words
" w i t h intent". We submit, t h a t the inclusion of these words i n S. 69 unduly
l i m i t s the likelihood of successful enforcement of the c i v i l sanctions of the statute.
I n a c i v i l proceeding, a p r i m a facie case should be made by proving t h a t a
person has engaged i n any of the prohibited a c t i v i t i e s ; to require a private plaint i f f or regulatory agency to prove the mental state of the defendant imposes a
difficult burden of proof. Moreover, the prohibition of S. 92 by its terms (See 4A
(a) ( 1 ) , lines 23-25 on Page 22 of the B i l l ) applies only t o "actions t o comply
w i t h , f u r t h e r or support" any foreign boycott against a f r i e n d l y country. "Wrongf u l " intent is an appropriate element of the prosecution case, i f a c r i m i n a l action
were i n s t i t u t e d under the statute. I n the event, therefore, t h a t a person were
charged c r i m i n a l l y f o r a violation, the requirement of mens rea, c r i m i n a l intent,
would be operative as i n v i r t u a l l y a l l other penal statutes.
M r . Chairman, statements i n opposition to comprehensive boycott legislation
have been heard before t h i s and other Congressional Committees; they have
appeared i n newspaper ads and i n news releases, and i n communications to
stockholders, etc. The t i m e has long passed f o r endless rejoinders to these objections—most of w h i c h are specious i n content, fear-mongering i n intent, and
i n some instances simply designed to c u r r y favor w i t h A r a b business clients,
present or potential. T h i s country has made i t plain i t w i l l not set aside m o r a l
concerns or excuse business f r o m conducting its affairs w i t h i n m o r a l parameters,
even when i t can be persuasively argued t h a t such concerns entail a competitive
cost. Thus this country demands t h a t American businessmen r e f r a i n f r o m bribing
officials abroad i n order to w i n favorable treatment—even though this may be
acceptable abroad and indeed may be the common practice of competing business
firms f r o m other countries. W e are simply not w i l l i n g to purchase American
contracts at the expense of American morality. A n d we believe these same considerations should be involved i n assessing the propriety of A r a b boycott practices i n the U.S.
Opponents of effective anti-boycott legislation have argued t h a t its enactment
would cause American businesses substantial losses of international trade. We
disagree.^ A perusal of the boycott regulations and their implementation establishes t h a t the Arabs apply their blacklist opportunistically. As the New Y o r k
Times commented i n A p r i l , 1976.
"The experts note t h a t i n business deals the Arabs have become h i g h l y sophisticated, examining comparative prices, q u a l i t y and delivery terms more than
the foreign policy of the supplier nations . . . even i n their blacklist of concerns
t h a t have installations i n Israel, the Arabs have recently taken a more flexible
approach, i n keeping w i t h their needs to do business at the best terms. B o t h
Egypt and Syria, A r a b sources report, have brought f o r w a r d proposals t h a t companies could be removed f r o m the blacklist i f they contribute to the economic
development of the A r a b w o r l d to a greater degree t h a n t h e i r involvement i n
Israel."
The same article noted t h a t even though France has cooperated w i t h the
boycott, its trade w i t h the A r a b nations nevertheless has fallen behind I t a l y ,
Sweden, the U n i t e d States, The Netherlands, and even West Germany which
generally does not cooperate w i t h the A r a b boycott.
We sincerely believe, and experience bears out, t h a t A r a b boycotting countries
w i l l buy the best available product f o r the cheapest possible price i n the shortest
delivery t i m e offered. They are, first and foremost, businessmen. They w i l l trade
w i t h any nation on the face of the earth, except perhaps Israel itself. American
know-how, technical genius and product superiority are the controlling c r i t e r i a
and since the beginning, have been the m a j o r factors i n A r a b trade w i t h the
United States. I f and when the American business establishment loses these
special characteristics and qualities, the Arabs w i l l go elsewhere—whether or
not our businessmen have knuckled under to the boycott. Experience shows that
the Arabs w i l l not t u r n their backs on American enterprise—even i n the face of
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an effective anti-boycott l a w — i f we remain competitive i n forms of q u a l i t y service and price.
Furthermore, w h i l e opponents of anti-boycott legislation deplore the possible
loss of business f o r some American firms they f a i l to manifest any concern f o r
those American firms who may lose business f o r standing up to the boycott.
I n the absence of federal legislation, the paradoxical result is t h a t those firms
t h a t adhere to the national policy of this country and resist boycott demands are
made to suffer serious penalty. They pay a price by f o r f e i t i n g A r a b trade w h i l e
those businesses t h a t defy national policy and participate i n the boycott become
the beneficiaries of Arab commerce. T h i s can be corrected only by a federal l a w
w h i c h w i l l proscribe p a r t i c i p a t i o n by any American firm and thus insure t h a t
those businessmen who act upon principle and support our n a t i o n a l policy w i l l
be protected f r o m u n f a i r and unsupportable disadvantage.
S i m i l a r l y , as we have noted, A r a b states allow themselves wide discretion and
leeway as to the stringency w i t h w h i c h they w i l l enforce the boycott i n p a r t i c u l a r
cases. Where an American firm is large enough and p o w e r f u l enough, the A r a b
states characteristically relax boycott requirements and allow business to be
conducted on n o r m a l terms. T h i s means t h a t small and medium size firms, those
w i t h o u t means and power to resist, w i l l continue to suffer serious competitive
disadvantage u n t i l they are given the protection of a federal law w h i c h w i l l
u n i f o r m l y prescribe compliance by all firms alike and thus place a l l American
business on equal footing i n confronting the boycott and i n soliciting A r a b trade.
M r . Chairman, a recent Louis H a r r i s Poll reveals t h a t an overwhelming majori t y of Americans opposes the A r a b bovcott. The American people perceive the A r a b
boycott as a m o r a l issue. President Carter has described compliance and business
cooperation w i t h the boycott as a "disgrace". Our Secretary of Commerce has
stated her views i n identical terms to the Senate Commerce Committee. We respectfully submit t h a t the American Congress bears an obligation to express the
w i l l of the m a j o r i t y of the American people, and to implement, by law, the moral
i n d i g n a t i o n of most American businessmen.
Key leadership of American business now recognizes t h a t e l i m i n a t i o n of the
A r a b boycott requires i n this country immediate legislative action and cannot
a w a i t the u l t i m a t e resolution of the M i d d l e East conflict. Nor are the t w o r e a l l y
related. Boycott i n the U n i t e d States victimizes us regardless of peace, w a r or
ceasefire i n the Middle East.
W o r t h y of special note; M r . Chairman, is the turnabout by the U n i t d States
Chamber of Commerce on the efficacy of boycott legislation. I n a recently issued
"Policy Statement On Foreign Boycotts", the Chamber throws i t s support i n
f a v o r of ". . . legislation w h i c h w o u l d eliminate or reduce any restrictive trade
practices impeding the freest flow of i n t e r n a t i o n a l trade." The statement calls f o r ,
among other things, a statutory ban on secondary and t e r t i a r y boycotts. A l t h o u g h
w e take issue w i t h some of the specifics proposed by the U.S. Chamber of Commerce, we welcome i t to the ranks of those supporting anti-boycott legislation.
Simply stated, the question is whether this great N a t i o n w i l l acquiesce i n
improper foreign demands w h i c h generate practices clearly i n conflict w i t h American principles and interests. The E x p o r t A d m i n i s t r a t i o n A c t of 1969, w h i c h expired several months ago, articulated this principle i n unambiguous language,
declaring i t to be official American policy to oppose foreign boycotts and res t r i c t i v e trade practices against nations f r i e n d l y to the United States. T h a t same
policy, as we said, "encouraged and requested" Americans to refuse to take any
action or support such restrictive trade practices or boycotts.
The bills already introduced i n this 95th Congress, the nearly successful passage
of boycott legislation i n the 94tli Congress f u r t h e r attest to the ever-mounting
support f o r legislation to strengthen and give force to the E x p o r t A d m i n i s t r a t i o n
Act's policy declaration. As I mentioned earlier, the President of the U n i t e d
States has on several occasions declared publicly his unalterable opposition to
the boycott and his support f o r comprehensive legislation against it.
M r . Chairman, i t should be pointed out t h a t six States have already enacted
anti-boycott statutes, w h i l e several others have bills pending. The States have
acted first, because, they view foreign boycott intrusions i n t h e i r j u r i s d i c t i o n s as
i m m o r a l and as discriminatory against tlieir citizens. Second, the States are
adopting legislation because effective Federal legislation has not been enacted
into law. A n examination of the already enacted State laws discloses differences
among them i n scope, f o r m and enforcement. Consequently, some businessmen
and banks i n these States complain they are u n f a i r l y restricted because there are
other States w i t h o u t such statutes. They express fear t h a t their States w i l l be
deprived of Middle East trade w h i c h w i l l be diverted to States w h i c h have no
227
law. I m i g h t add, parenthetically, t h a t we have seen no responsibility study reflecting t h a t any State w i t h an antiboycott law has, because of it, lost, any but
insignificant, Middle East trade. We have, however, seen studies that indicate
there have been no losses sustained as a result of such State legislation.
M r . Chairman, the United States needs a clear, comprehensive and strong national anti-boycott law. We need i t because the American experience shows t h a t
our existing antiboycott policy, w i t h o u t sanctions, has failed to impede h a r m f u l
Arab-boycott operations i n the United States. Based on recent Commerce Department statistics, the evidence confirms t h a t the demands of the A r a b boycotters on
American firms have increased inordinately. Moreover, the study of the recently
released reports, w h i c h we have entered i n t o the record, attests t h a t only 4 percent of a l l those reporting, flatly indicated noncompliance w i t h the boycott
demands.
As an accompaniment of this legislation we urge the Congress to advise the
President and the other members of the Executive Department of the constructive purposes t h a t would be served by using the influence and standing of our
country abroad, to help induce our friends to adopt s i m i l a r legislation and to
enact prohibitions—thus to make i t certain and clear the A r a b boycott w i l l
never be allowed to operate as a disturbing and d i s t o r t i n g factor i n i n t e r n a t i o n a l
trade.
M r . Chairman, the United States of America cannot p e r m i t foreign powers to
use economic blackmail to dictate how Americans shall conduct business here
among themselves or overseas w i t h nations f r i e n d l y to the United States. Congress must legislate now to shield a l l Americans and our business community
f r o m divisive foreign economic pressures, threats, i n t i m i d a t i o n and religious
discrimination. We urge, therefore, the s w i f t enactment of S. 92 w h i c h we believe w i l l allow the American community to conduct its trade and commerce
based upon declared U. S. policies and ethical principles.
NATIONAL
JEWISH
COMMUNITY
CONSTITUENT
NATIONAL
RELATIONS
ADVISORY
COUNCIL
ORGANIZATIONS
AGENCIES
American Jewish Committee ; American Jewish Congress; B ' n a i B ' r i t h — A n t i Defamation League; Jewish Labor Committee; Jewish W a r Veterans of the
U.S.A.; National Council of Jewish W o m e n ; Union of American Hebrew Congregations ; Union of Orthodox Jewish Congregations of A m e r i c a ; and United
Synagogue of America.
LOCAL, STATE, A N D C O U N T Y
AGENCIES
A l a b a m a : Jewish Community Council, B i r m i n g h a m .
Arizona : A n t i - D e f a m a t i o n — C o m m u n i t y Relations Committee, Tucson Jewish
Community Council.
C a l i f o r n i a : Jewish Community Relations Council f o r Alameda and Contra
Costa Counties; Jewish Community Federation, Long Beach; Community Relations Committee of the Jewish Federation-Council, Los Angeles; Sacramento
Jewish Community Relations Council; Community Relations Committee of the
United Jewish Federation, San Diego; Jewish Community Relations Council,
San Francisco; Jewish Community Relations Council, Greater San Jose.
Connecticut: United Jewish Council, B r i d g e p o r t ; Community Relations Commitee, H a r t f o r d Jewish Federation; Connecticut Jewish Community Relations
Council; Jewish Federation, New B r i t a i n ; New Haven Jewish Community Council ; Jewish Community Council, Greater New London, I n c . : Jewish Community
Council, N o r w a l k ; U n i t e d Jewish Federation, S t a m f o r d ; Jewish Federation,
Waterbury.
D e l a w a r e : Jewish Federation of Delaware.
D i s t r i c t of Columbia: Jewish Community Council of Greater Washington.
F l o r i d a : Jewish Federation of Greater F o r t L a u d e r d a l e ; Jewish Federation of
So. B r o w a r d ; Jewish Community Council, Jacksonville; Central Florida Jewish
Community Council; Greater M i a m i Jewish Federation; Jewish Federation of
Palm Beach County.
Georgia : A t l a n t a Jewish W e l f a r e Federation ; Savannah Jewish Council.
228
I l l i n o i s : P u b l i c A f f a i r s Committee, J e w i s h U n i t e d F u n d of M e t r o p o l i t a n Chicago ; J e w i s h C o m m u n i t y Council, P e o r i a ; S p r i n g f i e l d J e w i s h F e d e r a t i o n .
I n d i a n a : Indiana Jewish Community Relations Council; Indianapolis Jewish
C o m m u n i t y R e l a t i o n s C o u n c i l ; J e w i s h C o m m u n i t y Council of St. Joseph C o u n t y .
I o w a : J e w i s h W e l f a r e F e d e r a t i o n , Des Moines.
K a n s a s : ( K a n s a s City—see M i s s o u r i ) .
Kentucky : Jewish Community Federation, Louisville.
L o u i s i a n a : J e w i s h W e l f a r e F e d e r a t i o n , N e w Orleans.
M a i n e : J e w i s h F e d e r a t i o n - C o m m u n i t y C o u n c i l of S o u t h e r n M a i n e .
M a r y l a n d : Baltimore Jewish Council; (Suburban Washington—see D.G.).
M a s s a c h u s e t t s : J e w i s h C o m m u n i t y C o u n c i l of M e t r o p o l i t a n B o s t o n ; J e w i s h
F e d e r a t i o n of the N o r t h Shore, I n c . ; J e w i s h F e d e r a t i o n of G r e a t e r N e w Bedf o r d ; Springfield Jewish Federation ; Worcester Jewish Federation.
M i c h i g a n : J e w i s h C o m m u n i t y C o u n c i l of M e t r o p o l i t a n D e t r o i t ; J e w i s h Comm u n i t y Council, F l i n t .
V i r g i n i a : J e w i s h F e d e r a t i o n of N e w p o r t N e w s - H a m p t o n , I n c . ; U n i t e d J e w i s h
F e d e r a t i o n of N o r f o l k a n d V i r g i n i a B e a c h ; R i c h m o n d J e w i s h C o m m u n i t y Council ; (Northern Virginia—see D.G.).
M i n n e s o t a : J e w i s h C o m m u n i t y R e l a t i o n s C o u n c i l — A n t i - D e f a m a t i o n League
of M i n n e s o t a a n d the D a k o t a s .
M i s s o u r i : J e w i s h C o m m u n i t y R e l a t i o n s B u r e a u of G r e a t e r K a n s a s C i t y ; Jewish C o m m u n i t y Relations Council, St. Louis.
N e b r a s k a : J e w i s h C o m m u n i t y R e l a t i o n s Committee, J e w i s h F e d e r a t i o n of
Omaha.
N e w Jersey : F e d e r a t i o n of J e w i s h Agencies of A t l a n t i c C o u n t y ; J e w i s h Comm u n i t y R e l a t i o n s Council, J e w i s h F e d e r a t i o n of C o m m u n i t y Services, B e r g e n
C o u n t y ; C o m m u n i t y R e l a t i o n s C o u n c i l of the J e w i s h F e d e r a t i o n of s o u t h e r n
N . J . ; J e w i s h C o m m u n i t y F e d e r a t i o n of M e t r o p o l i t a n N . J . ; J e w i s h F e d e r a t i o n
of N o r t h e r n Middlesex C o u n t y ; J e w i s h F e d e r a t i o n of R a r i t a n V a l l e y ; J e w i s h
F e d e r a t i o n of N o r t h J e r s e y ; J e w i s h F e d e r a t i o n of G r e a t e r T r e n t o n ; J e w i s h
F e d e r a t i o n of C e n t r a l N e w Jersey.
N e w Y o r k : J e w i s h C o m m u n i t y Council, A l b a n y ; J e w i s h F e d e r a t i o n of B r o o m e
County; Brooklyn Jewish Community Council; United Jewish Federation, B u f f a l o ; J e w i s h C o m m u n i t y Council, K i n g s t o n ; J e w i s h C o m m u n i t y R e l a t i o n s Counc i l of N e w Y o r k ; J e w i s h C o m m u n i t y F e d e r a t i o n , R o c h e s t e r ; J e w i s h C o m m u n i t y
Council, Schenectady; Syracuse J e w i s h W e l f a r e F e d e r a t i o n ; J e w i s h C o m m u n i t y
Council, U t i c a .
Ohio: A k r o n Jewish Community Federation; Jewish Community Federation,
C a n t o n ; J e w i s h C o m m u n i t y R e l a t i o n s Council, C i n c i n n a t i ; J e w i s h C o m m u n i t y
Federation, C l e v e l a n d ; C o m m u n i t y R e l a t i o n s Committee, Columbus J e w i s h Fede r a t i o n ; C o m m u n i t y R e l a t i o n s Committee, J e w i s h C o m m u n i t y Council, D a y t o n ;
C o m m u n i t y R e l a t i o n s Committee, J e w i s h W e l f a r e F e d e r a t i o n , Toledo ; J e w i s h
C o m m u n i t y Relations Council, J e w i s h F e d e r a t i o n of Youngstown.
O k l a h o m a : T u l s a J e w i s h C o m m u n i t y Council.
Oregon : J e w i s h W e l f a r e F e d e r a t i o n , P o r t l a n d .
P e n n s y l v a n i a : C o m m u n i t y R e l a t i o n s Council, J e w i s h F e d e r a t i o n of A l l e n t o w n ;
J e w i s h C o m m u n i t y C o u n c i l of E a s t o n a n d V i c i n i t y ; J e w i s h C o m m u n i t y C o u n c i l ,
E r i e ; J e w i s h C o m m u n i t y R e l a t i o n s C o u n c i l of G r e a t e r P h i l a d e l p h i a ; C o m m u n i t y
R e l a t i o n s Committee, U n i t e d J e w i s h F e d e r a t i o n of P i t t s b u r g h ; S c r a n t o n - L a c k a w a n n a J e w i s h C o u n c i l ; J e w i s h F e d e r a t i o n of G r e a t e r W i l k e s - B a r r e .
Rhode I s l a n d : C o m m u n i t y R e l a t i o n s Council, J e w i s h F e d e r a t i o n of Rhode
Island.
S o u t h C a r o l i n a : J e w i s h C o m m u n i t y R e l a t i o n s Committee, Charleston.
Tennessee: J e w i s h C o m m u n i t y R e l a t i o n s Council, M e m p h i s ; J e w i s h Federat i o n o f N a s h v i l l e a n d M i d d l e Tennessee.
Texas: Jewish Welfare Federation, D a l l a s ; Jewish Community Relations
Committee, E l P a s o : J e w i s h F e d e r a t i o n , F o r t W o r t h ; J e w i s h C o m m u n i t y Counc i l of M e t r o p o l i t a n H o u s t o n ; C o m m u n i t y R e l a t i o n s Council, J e w i s h Social Service F e d e r a t i o n , San A n t o n i o .
W a s h i n g t o n : J e w i s h F e d e r a t i o n of G r e a t e r Seattle.
W i s c o n s i n : M a d i s o n J e w i s h C o m m u n i t y C o u n c i l ; M i l w a u k e e J e w i s h Council.
M r . G R E E N B E R G . M y name is M a x w e l l Greenberg and I am chairman of the National Executive Committee of the A n t i - D e f a m a t i o n
Lea.<me of B ' n a i B ' r i t h .
I have the honor of appearing before you not only f o r the A n t i Defamation League, but also f o r the American Jewish Committee, the
229
American Jewish Congress and more than 100 national and local
constituent agencies of an umbrella group known as the National
Jewish Relations Community Advisory Council. The names of those
community agencies are appended to our f o r m a l statement.
I am accompanied here today by M r . A l f r e d Moses, representing
the American: Jewish Committee and M r . P h i l i p Baum, presiding
the American Jewish Congress.
We greatly appreciate this opportunity to present our views on
the antiboycott provisions of S. 69, introduced by the chairman; and
S. 92, introduced by Senators Proxmire and W i l l i a m s ; and I believe
I heard i n Senator Proxmire's statement that Senator Sarbanes had
joined as a sponsor of that bill.
M r . Chairman, we appeared before this subcommittee i n J u l y 1975,
and before several other committees of the 94th Congress, which were
then considering amendments to the E x p o r t A d m i n i s t r a t i o n A c t of
1969; and we then presented our views i n support of effective antiboycott legislation.
The need f o r such Federal legislation is as clear and imperative
today as i t was then, and as i t has been i n the years before.
The invidious and divisive character of the A r a b boycott operation
i n the U n i t e d States has been amply documented by this time. The
public record of the hearings held by this committee on J u l y 22 and
23 i n 1975, detail the history of the boycott since 1946. I t s h a r m f u l
impact, on American citizens and companies, its distressing use of
blacklists, and even i t obnoxious anti-Jewish practices.
T o this day, the A r a b boycott directly or indirectly, seeks to coerce
responsible American firms to refuse, under the threat of w i t h h o l d i n g
A r a b business, to deal w i t h other American firms or to avoid normal
commercial relations w i t h Israel, a country f r i e n d l y to the U n i t e d
States.
Some American firms, otherwise thoroughly qualified, have been
denied or threatened w i t h denial of contracts, simply because of their
trade relationships w i t h Israel, or because of their relationships w i t h
other American companies who trade w i t h Israel. The A r a b boycott
has pitted American firms against other American firms, to f u r t h e r
the economic warfare of the A r a b States against an ally of the U n i t e d
States.
Equally sinister, although perhaps more subtle, the A r a b boycott
apparatus has compelled American firms to police and enforce its boycott. O f course, the principal example of that is i n the area of letters of
credit i n which American banking firms of good repute, international
i n operation, serve as en enforcer of A r a b boycott practices.
Now, i n an effort to terminate certain of these pernicious practices,
which have been imposed upon the American business community, the
Senate i n late August 1976, passed w i t h some modifications, a b i l l
sponsored by you, M r . Chairman, aimed p r i n c i p a l l y at p r o h i b i t i n g
the tertiary boycotts.
I n the House a b i l l covering secondary, as well as tertiary, boycotts was adopted.
Despite overwhelming support f o r antiboycott legislation i n both
houses o f Congress, legislative enactment failed, or the adoption of
the legislative enactments failed, because parliamentary tactics i n the
230
closing days of the 94th Congress f a t a l l y delayed the appointment of
Senate and House conferees.
Notwithstanding that, an i n f o r m a l conference committee was appointed and i t agreed upon proposed legislation, which you, Senator
Stevenson, have now introduced w i t h certain modifications as S. 69.
A summary of t h a t conference committee b i l l so-called was inserted
by you i n the Congressional Record of September 30, 1976, on page
S17462, and w i t h your permission I would like to offer t h a t summary
as p a r t of my testimony.
Senator S T E V E N S O N . I t w i l l be inserted i n the record.
[The information follows:]
[From the Congressional Record, Sept. 30, 1976]
T H E EXPORT A D M I N I S T R A T I O N
ACT
M r . STEVENSON. M r . President, t i m e has about r u n out on one of the most i m p o r t a n t items of unfinished business before t h i s Congress—legislation a m e n d i n g
a n d e x t e n d i n g the E x p o r t A d m i n i s t r a t i o n A c t .
T h i s l e g i s l a t i o n deals w i t h a n u m b e r o f c r i t i c a l questions, i n c l u d i n g f o r e i g n
boycotts, nuclear p r o l i f e r a t i o n , g r a i n embargoes, controls on the e x p o r t of strategic m a t e r i a l s , a n d East-West trade.
These are d i f f i c u l t a n d delicate questions w T hicli have been d e a l t w i t h respons i b l y by the l e g i s l a t i v e b r a n c h — a n d i r r e s p o n s i b l y by the a d m i n i s t r a t i o n .
These are m a t t e r s w h i c h r e q u i r e the exercise of statesmanship. B u t i n s t e a d of
statesmanship, the President of the U n i t e d States is engaging i n p o l i t i c a l
gamesmanship.
I t is a dangerous game.
M r . President, l e g i s l a t i o n a m e n d i n g a n d e x t e n d i n g the E x p o r t A d m i n i s t r a t i o n
A c t has been passed by l a r g e m a j o r i t i e s i n b o t h chambers. Conferees f r o m b o t h
bodies have m e t i n f o r m a l l y a n d have resolved t h e differences i n the measures
passed by the Senate a n d the House. B u t t h e w T ill of the Congress is n o w b e i n g
f r u s t r a t e d by a p a r l i m e n t a r y ploy a i m e d a t keeping t h i s l e g i s l a t i o n f r o m being
b r o u g h t to a vote i n the Senate. T h a t e f f o r t is supported by the a d m i n i s t r a t i o n .
I f i t succeeds, t h i s i m p o r t a n t l e g i s l a t i o n w i l l h a v e been sacrificed t o p o l i t i c a l
expediency. Once again, the President w i l l have opposed i n the Congress e f f o r t s
w h i c h , i n his c a m p a i g n f o r reelection, he professes to support.
M r . President, t h i s b i l l contains r e a l i s t i c a n d w o r k a b l e provisions to s t r e n g t h e n
t h e U.S. p o s i t i o n on f o r e i g n boycotts. T h e l e g i s l a t i o n agreed to i n f o r m a l l y by
the conferees blends the House a n d Senate measures a n d improves upon both. I t
w o u l d protect the r i g h t s of A m e r i c a n citizens a n d the sovereignty of a l l n a t i o n s —
the U n i t e d States, I s r a e l , a n d the A r a b States alike. I t w o u l d p r e v e n t A m e r i c a n
companies f r o m c o n s p i r i n g t o boycott I s r a e l w h i l e p r o t e c t i n g the r i g h t o f A m e r i can businesses to engage i n a l l l e g i t i m a t e t r a d e w i t h A r a b States. I t w T ould prev e n t those States f r o m e n l i s t i n g A m e r i c a n companies i n t h e i r boycott o f I s r a e l
w i t h o u t i n t e r f e r i n g w i t h other nations' r i g h t to c o n t r o l t h e i r o w n economic relations w i t h Israel.
T h i s b i l l recognizes t h a t t h e Congress cannot d i c t a t e A r a b policy t o w a r d I s r a e l .
I t reflects also a d e t e r m i n a t i o n t h a t the A r a b States w i l l n o t d i c t a t e A m e r i c a n
policy t o w a r d Israel.
M r . President, t h i s l e g i s l a t i o n deals w i t h o t h e r i m p o r t a n t issues.
I t deals r e a l i s t i c a l l y a n d f o r c e f u l l y w i t h one of the greatest t h r e a t s to mank i n d — t h e p r o l i f e r a t i o n of nuclear weapons. I t calls f o r a c t i o n by t h e U n i t e d
States alone a n d by the U n i t e d States i n concert w i t h t h e other nuclear powers
t o h a l t the spread of nuclear weapons-making c a p a b i l i t y . I t is the f i r s t m a j o r
l e g i s l a t i o n to be acted on by Congress i n m a n y years to deal w i t h n u c l e a r
proliferation.
T h e b i l l contains a measure t o p r o t e c t A m e r i c a n f a r m e r s a n d g r a i n e x p o r t e r s
f r o m a r b i t r a r i l y - i m p o s e d embargoes by p e r m i t t i n g the Congress to o v e r r i d e
P r e s i d e n t i a l embargoes on a g r i c u l t u r a l sales abroad. I t also p e r m i t s a g r i c u l t u r a l
commodities, once purchased f o r shipment abroad, to be stored i n t h e U n i t e d
States w i t h o u t f e a r of embargoes a g a i n s t t h e i r shipment. B o t h measures are
of i m p o r t a n c e to A m e r i c a n f a r m e r s a n d the A m e r i c a n economy.
T h e b i l l also contains measures t o e x p a n d U.S. t r a d e w i t h E a s t e r n E u r o p e
a n d t h e Soviet U n i o n w h i l e a t the same t i m e i m p r o v i n g o u r a b i l i t y to p r e v e n t
231
t r a n s f e r s of strategic m a t e r i a l s to adversaries. I n the ebb a n d flow of detente t h i s
is of c r u c i a l i m p o r t a n c e t o i m p r o v e d relations w i t h the Soviet Union, to the expansion of o u r economy, a n d to the protection of our n a t i o n a l security.
M r . President, the decision to block this legislation not only deprives the P r e s i dent of tools to deal w i t h these sensitive and v i t a l issues, i t means t h a t the E x p o r t
A d m i n i s t r a t i o n A c t i t s e l f w T ill expire. T h i s w i l l mean a n end t o the a u t h o r i t y
u n d e r the act to c o n t r o l sales of strategic m a t e r i a l s to the Soviet U n i o n a n d other
nations. I t w i l l mean a n end to the President's a b i l i t y to protect the A m e r i c a n
economy f r o m shortages of v i t a l commodities. A n d i t w i l l even mean a n end to
the o n l y l a w w h i c h declares i t to be U.S. policy t o oppose f o r e i g n boycotts a n d
gives the President the power to deal w i t h boycotts.
Once a g a i n the w i l l of the Congress has been blocked. N o t by veto, as has
o f t e n been the case i n the past, b u t by a p a r l i a m e n t a r y s t r a t a g e m aimed a t
keeping i m p o r t a n t l e g i s l a t i o n f r o m even being p u t t o a vote. T h i s disregard f o r
the w i l l o f an o v e r w h e l m i n g m a j o r i t y of the House a n d the Senate reflects a fund a m e n t a l i n s e n s i t i v i t y to issues of v i t a l i m p o r t a n c e to the U n i t e d States.
M r . President, i n order t h a t the Members may better u n d e r s t a n d the provisions
of this legislation, I ask unanimous consent t h a t a s u m m a r y be p r i n t e d i n the
RECORD.
T h e r e being no objection, the s u m m a r y was ordered to be p r i n t e d i n the RECORD,
as f o l l o w s :
S U M M A R Y OF E X P O R T A D M I N I S T R A T I O N L E G I S L A T I O N T I T L E
I
T h e b i l l extends the E x p o r t A d m i n i s t r a t i o n A c t to p r o v i d e f o r a two-year extension of the A c t , t h r o u g h September 30,1978.
EXPORT CONTROLS FOR N A T I O N A L
SECURITY
PURPOSES
F a c t o r s to ~be c o n s i d e r e d
T h e b i l l amends Section 4 ( b ) (1) of the A c t to p r o v i d e t h a t i n a d m i n i s t e r i n g
e x p o r t controls f o r n a t i o n a l security purposes, U n i t e d States policy t o w a r d i n d i v i d u a l countries s h a l l not be determined exclusively on the basis of a country's
Communist or non-Communist status but s h a l l take i n t o account such f a c t o r s
as the country's present and p o t e n t i a l r e l a t i o n s h i p to the U n i t e d States, i t s
present a n d p o t e n t i a l r e l a t i o n s h i p t o countries f r i e n d l y or hostile to the U n i t e d
States, its a b i l i t y a n d willingness to c o n t r o l r e t r a n s f e r s of U n i t e d States exports
i n accordance w i t h U n i t e d States policy, a n d such o t h e r f a c t o r s as the President
may deem appropriate.
R e v i e w of n a t i o n a l s e c u r i t y c o n t r o l s
The b i l l requires t h a t the President periodically r e v i e w U n i t e d States policy
t o w a r d i n d i v i d u a l countries to determine w h e t h e r such policy is a p p r o p r i a t e i n
l i g h t of the f a c t o r s mentioned above.
R e p o r t s to C o n g r e s s
The b i l l provides t h a t the
the j u s t i f i c a t i o n f o r U n i t e d
the semi-annual r e p o r t of
beginning w i t h t h e r e p o r t
thereafter.
results of the r e v i e w mentioned above, together w i t h
States policy i n l i g h t of such factors, be i n c l u d e d i n
the Secretary of Commerce r e q u i r e d by t h i s Act,
f o r the first h a l f of 1977 a n d every second r e p o r t
R e v i e w by t h e S e c r e t a r y of D e f e n s e
The b i l l provides f o r r e v i e w by t h e Secretary of Defense of exports to any
n a t i o n to w h i c h exports are r e s t r i c t e d f o r n a t i o n a l security purposes i f the e x p o r t
w i l l m a k e a significant m i l i t a r y c o n t r i b u t i o n to the m i l i t a r y p o t e n t i a l of such
nation. T h e Secretary of Defense is a u t h o r i z e d to recommend to the President
d i s a p p r o v a l of any e x p o r t to any c o u n t r y to w h i c h exports are c o n t r o l l e d f o r
n a t i o n a l s e c u r i t y purposes i f the e x p o r t w i l l make a significant c o n t r i b u t i o n ,
w h i c h w o u l d prove d e t r i m e n t a l to the n a t i o n a l security of the U n i t e d States, to
the m i l i t a r y p o t e n t i a l of such nation.
COMMODITY
CONTROL
LISTS
R e v i e w of u n i l a t e r a l a n d m u l t i l a t e r a l c o n t r o l s
The b i l l provides f o r a detailed r e v i e w of both u n i l a t e r a l a n d m u l t i l a t e r a l
e x p o r t controls a n d f o r a r e p o r t to be s u b m i t t e d to Congress w i t h i n 12 months
of enactment.
232
Foreign availability
T h e b i l l amends Section 4 ( b ) of the A c t to m a k e i t clear t h a t t h e policy t h a t
goods f r e e l y a v a i l a b l e elsewhere a r e not to be c o n t r o l l e d f o r n a t i o n a l s e c u r i t y
purposes unless i t is d e m o n s t r a t e d t h a t the absence of controls w o u l d prove
d e t r i m e n t a l to U.S. n a t i o n a l security. T h e n a t u r e of such evidence is to be
i n c l u d e d i n the semi-annual r e p o r t to Congress. W h e r e controls a r e imposed f o r
n a t i o n a l security purposes n o t w i t h s t a n d i n g f o r e i g n a v a i l a b i l i t y , the P r e s i d e n t
is t o i n i t i a t e negotiations w i t h f o r e i g n countries f o r the purpose of e l i m i n a t i n g
such a v a i l a b i l i t y .
SIMPLIFICATION
OF EXPORT
CONTROLS
T h e b i l l provides f o r a r e v i e w of e x p o r t c o n t r o l l i s t s a n d r e g u l a t i o n s a i m e d
a t seeking w a y s to s i m p l i f y a n d c l a r i f y b o t h e x p o r t c o n t r o l l i s t s a n d e x p o r t regul a t i o n s a n d rules. The r e p o r t is to be s u b m i t t e d t o Congress w i t h 12 months.
EXPORT OF T E C H N I C A L
INFORMATION
Reporting and monitoring technical agreements
T h e b i l l provides t h a t any person ( i n c l u d i n g a n e d u c a t i o n a l i n s t i t u t i o n )
e n t e r i n g i n t o a contract, protocol, or o t h e r u n d e r s t a n d i n g , i n v o l v i n g the t r a n s f e r
f r o m the U n i t e d States of technical i n f o r m a t i o n t o a n y c o u n t r y to w h i c h e x p o r t s
are c o n t r o l l e d f o r n a t i o n a l security or f o r e i g n policy purposes s h a l l f u r n i s h such
documents a n d i n f o r m a t i o n as the Secretary of Commerce s h a l l r e q u i r e to enable
h i m t o m o n i t o r t h e effects of such e x p o r t on t h e n a t i o n a l security a n d f o r e i g n
policy of the U n i t e d States.
S t u d y of e x p o r t s of t e c h n i c a l d a t a
T h e b i l l amends Section 4 of the A c t by a d d i n g a new subsection ( j ) ( 2 ) t h a t
requires a specific study of the p r o b l e m of the export, by p u b l i c a t i o n or o t h e r
means of p u b l i c dissemination, of t e c h n i c a l d a t a w h i c h m a y prove d e t r i m e n t a l to
the n a t i o n a l security or f o r e i g n policy of t h e U n i t e d States. A r e p o r t is r e q u i r e d
w i t h i n 6 m o n t h s on t h e i m p a c t of such e x p o r t s ; t h e r e p o r t s h a l l i n c l u d e recommendations f o r m o n i t o r i n g such exports.
A C T I O N O N EXPORT L I C E N S E
APPLICATIONS
Period for approval
T h e b i l l strengthens the language i n Section 4 ( g ) to c o n f i r m t h e i n t e n t of
Congress t h a t a n y e x p o r t license a p p l i c a t i o n r e q u i r e d under the A c t be a p p r o v e d
or disapproved w i t h i n 90 days of receipt. I f i t is n o t acted upon, i t s h a l l be
deemed approved and the license issued unless the a p p l i c a n t is n o t i f i e d i n w r i t i n g
of the specific circumstances r e q u i r i n g a d d i t i o n a l t i m e a n d the e s t i m a t e d date
of decision.
O p p o r t u n i t y to r e s p o n d
T h e b i l l amends Section 4 ( g ) t o p r o v i d e t h a t whenever a n e x p o r t license
a p p l i c a t i o n is t o be r e f e r r e d t o any m u l t i l a t e r a l r e v i e w process, the a p p l i c a n t
s h a l l be g i v e n a n o p p o r t u n i t y to r e v i e w any d o c u m e n t a t i o n to be s u b m i t t e d f o r
the purpose of describing the e x p o r t i n o r d e r t o d e t e r m i n e w h e t h e r such descript i o n is accurate.
T h e b i l l f u r t h e r provides t h a t i f any e x p o r t license a p p l i c a t i o n is not acted
upon w i t h i n 90 days, the a p p l i c a n t shall, t o the m a x i m u m e x t e n t consistent w i t h
U.S. n a t i o n a l security, be specifically i n f o r m e d i n w r i t i n g of questions raised a n d
negative considerations or recommendations made by any G o v e r n m e n t agency a n d
s h a l l be given a n o p p o r t u n i t y to respond thereto.
R e a s o n s f o r d e n i a l of l i c e n s e
T h e b i l l requires t h a t a n a p p l i c a n t whose e x p o r t license is denied m u s t be
i n f o r m e d i n w r i t i n g of the specific s t a t u t o r y basis f o r t h e denial.
TECHNICAL
ADVISORY
COMMITTEES
T e r m of i n d u s t r y r e p r e s e n t a t i v e s
T h e b i l l amends Section 5 ( c ) (1) of the A c t by l e n g t h e n i n g t h e t e r m of i n d u s t r y
representatives on the t e c h n i c a l a d v i s o r y committees f r o m 2 to 4 years.
233
R o l e of t e c h n i c a l a d v i s o r y c o m m i t t e e s
The b i l l makes i t clear t h a t technical a d v i s o r y committees are t o be consulted,
w h e n they have expertise, w i t h respect to technical m a t t e r s , w o r l d w i d e a v a i l a b i l i t y , licensing procedures, a n d m u l t i l a t e r a l controls.
U s e of r e c o m m e n d a t i o n s
T h e b i l l requires t h a t each semi-annual r e p o r t include a n a c c o u n t i n g of the
consultations u n d e r t a k e n w i t h technical advisory committees, the use made of
t h e i r advice, a n d t h e i r c o n t r i b u t i o n s t o c a r r y i n g out the policies of the A c t .
E X C L U S I O N OF C E R T A I N P E T R O L E U M PRODUCTS F R O M EXPORT
LIMITATIONS
T h e b i l l contains a p r o v i s i o n e x e m p t i n g p e t r o l e u m products refined i n either
U.S. f o r e i g n t r a d e zones or G u a m f r o m short supply e x p o r t c o n t r o l s unless the
Secretary of Commerce finds t h a t such products are i n short supply.
P E N A L T I E S FOR V I O L A T I O N
T h e b i l l amends Section 6 ( b ) , p r o v i d i n g f o r penalties f o r e x p o r t i n g to a
C o m m u n i s t - d o m i n a t e d n a t i o n i n v i o l a t i o n of the A c t , by r e p l a c i n g " C o m m u n i s t d o m i n a t e d n a t i o n " w i t h " c o u n t r y to w h i c h exports are r e s t r i c t e d f o r n a t i o n a l
security or f o r e i g n policy purposes."
INTERNATIONAL
TERRORISM
T h e b i l l amends Section 8 of t h e A c t by a d d i n g a new p a r a g r a p h (8) s t a t i n g
t h a t i t is the policy of the U n i t e d States to use e x p o r t controls to encourage other
countries to t a k e i m m e d i a t e steps t o prevent the use of t h e i r t e r r i t o r y or resources t o a i d those persons i n v o l v e d i n acts of i n t e r n a t i o n a l t e r r o r i s m . T o
achieve t h i s objective, the President is directed to make every reasonable e f f o r t to
secure the r e m o v a l or r e d u c t i o n of such assistance t o i n t e r n a t i o n a l t e r r o r i s t s
t h r o u g h i n t e r n a t i o n a l cooperation a n d agreement before r e s o r t i n g to the impos i t i o n of e x p o r t controls.
EXPORT OF HORSES FOR
SLAUGHTER
The b i l l amends Section 4 of the A c t to a d d a new subsection ( k ) t o p r o h i b i t
the e x p o r t a t i o n by sea f r o m the U n i t e d States of horses f o r the purposes of
slaughter.
C O N G R E S S I O N A L VETO OF EXPORT CONTROLS O N A G R I C U L T U R A L
EXPORTS
T h e b i l l amends Section 4 ( f ) of t h e A c t t o provide t h a t i f e x p o r t controls are
imposed on any a g r i c u l t u r a l c o m m o d i t y f o r f o r e i g n policy purposes, they s h a l l
cease i f the Congress w i t h i n 30 days passes a concurrent r e s o l u t i o n of disapproval.
NUCLEAR
POWERPLANTS
T h e b i l l p r o h i b i t s the use of f o r e i g n assistance f u n d s to finance any nuclear
power p l a n t u n d e r a n agreement f o r cooperation.
T R A I N I N G OF F O R E I G N
NATIONALS
The b i l l contains an amendment to Section 4 ( j ) of t h e A c t r e q u i r i n g a Presid e n t i a l study of the t r a i n i n g of f o r e i g n n a t i o n a l s w i t h i n t h e U.S. i n nuclear
engineering a n d r e l a t e d fields to determine where t h i s c o n t r i b u t e s t o nuclear
p r o l i f e r a t i o n . A r e p o r t is r e q u i r e d w i t h i n 6 months of enactment.
AUTHORIZATION
FOR
APPROPRIATION
T h e b i l l adds a n e w Section 13 t o the A c t t o p r o v i d e t h a t , beginning w i t h fiscal
year 1978, no a p p r o p r i a t i o n m a y be made f o r e x p o r t a d m i n i s t r a t i o n expenses
unless p r e v i o u s l y a n d specifically authorized.
234
AVAILABILITY
OF I N F O R M A T I O N
TO
CONGRESS
T h e b i l l amends Section 7 ( e ) of the A c t to p r o v i d e t h a t the c o n f i d e n t i a l i t y
provisions of the E x p o r t A d m i n i s t r a t i o n A c t do not a u t h o r i z e t h e w i t h h o l d i n g
of i n f o r m a t i o n f r o m a Congressional c o m m i t t e e or subcommittee.
SEMIANNUAL
REPORT
T h e b i l l amends Section 10 of the A c t by a d d i n g a new subsection ( c ) specifyi n g the k i n d s a n d types of i n f o r m a t i o n w h i c h is to be i n c l u d e d i n each semia n n u a l r e p o r t to the Congress.
SUNSHINE
IN
GOVERNMENT
T h e b i l l adds a new section to the A c t w i l i c h requires a n n u a l disclosure statements by each Commerce D e p a r t m e n t employee w h o has policy m a k i n g responsib i l i t i e s r e l a t i n g to e x p o r t a d m i n i s t r a t i o n a n d w h o has any k n o w n
financial
i n t e r e s t i n any person subject to, licensed under, or o t h e r w i s e r e c e i v i n g benefits
u n d e r t h e E x p o r t A d m i n i s t r a t i o n A c t . C r i m i n a l penalties are r e q u i r e d f o r k n o w i n g violations. A n n u a l reports to Congress are r e q u i r e d f r o m the Secretary of
Commerce.
NUCLEAR
PROLIFERATION
T h e sections on nuclear p r o l i f e r a t i o n are i n t w o parts, one d e a l i n g w i t h the
i n t e r n a t i o n a l effort to c o n t r o l the spread of reprocessing, e n r i c h m e n t , a n d heavy
w a t e r technology a n d the o t h e r w i t h u n i l a t e r a l controls over U n i t e d States
nuclear agreements a n d licenses w i t h the objective of l i m i t i n g the a b i l i t y of
non-w T eapons states to possess strategic q u a n t i t i e s of r e a d i l y fissionable m a t e r i a l .
T h e b i l l calls upon the President to seek agreement among nuclear e x p o r t i n g
nations:
( a ) to t e r m i n a t e exports of e n r i c h m e n t , reprocessing, or heavy w a t e r product i o n f a c i l i t i e s w h i l e a l t e r n a t i v e s to n a t i o n a l f a c i l i t i e s are being p u r s u e d ;
( b ) to refuse to e x p o r t nuclear m a t e r i a l s a n d technology t o c o u n t r i e s w h i c h
do not accept i n t e r n a t i o n a l safeguards ;
( c ) to establish m i n i m u m p h y s i c a l s e c u r i t y standards ;
( d ) to establish arrangements f o r sanctions i n the event of v i o l a t i o n s of any
i n t e r n a t i o n a l agreement to c o n t r o l t h e use of nuclear m a t e r i a l s a n d t e c h n o l o g y ;
(e) t o p u r s u e the concept of m u l t i l a t e r a l f u e l f a c i l i t i e s ; a n d
( f ) to establish arrangements f o r a p p r o p r i a t e response, i n c l u d i n g the suspension of t r a n s f e r s of nuclear equipment, m a t e r i a l , or technology, to any nonnuclear weapons c o u n t r y w h i c h has detonated a nuclear explosive device or
w h i c h has embarked upon a nuclear weapons p r o g r a m .
T h e President is t o r e p o r t progress to Congress w i t h i n one y e a r of enactment.
A d d i t i o n a l l y , the b i l l p e r m i t s agreements f o r nuclear cooperation or amendments to or renewals thereof, only i f :
( a ) provisions of the agreement apply to a l l weapons-grade nuclear m a t e r i a l
produced by a reactor t r a n s f e r r e d under such a n agreement, a n d
( b ) the recipient c o u n t r y agrees to p e r m i t the I A E A to r e p o r t to t h e U n i t e d
States on the status of a l l i n v e n t o r i e s of weapons-grade nuclear m a t e r i a l u n d e r
I A E A safeguards possessed by t h a t c o u n t r y .
T h e Secretary of State is t o seek t o amend e x i s t i n g agreements a c c o r d i n g l y
a n d t o o b t a i n f r o m recipient countries r e p o r t s on weapons-grade n u c l e a r m a t e r i a l not under I A E A safeguards. No license is t o be issued i n the absence of a
pledge a g a i n s t use f o r any explosive nuclear device.
F i n a l l y , permission to a p a r t y to a n agreement f o r nuclear cooperation t o
reprocess special nuclear m a t e r i a l t h r o u g h the use of U.S.-supplied m a t e r i a l or
equipment, can only be given upon d e t e r m i n a t i o n by t h e Secretary of State t h a t
detection a n d t i m e l y w a r n i n g of diversions w i l l occur w e l l i n advance of t h e
t i m e a t w h i c h t h a t p a r t y could t r a n s f o r m strategic q u a n t i t i e s of d i v e r t e d n u c l e a r
m a t e r i a l i n t o explosive nuclear devices.
TITLE
A.
II
Prohibitions
Subject t o rules a n d r e g u l a t i o n s issued by the D e p a r t m e n t of Commerce i t
w o u l d be a v i o l a t i o n of the E x p o r t A d m i n i s t r a t i o n A c t t o do any of t h e f o l l o w i n g
w i t h i n t e n t to comply w i t h , f u r t h e r , or support a f o r e i g n boycott or r e s t r i c t i v e
t r a d e p r a c t i c e against a c o u n t r y w h i c h is f r i e n d l y to the U n i t e d States a n d is n o t
the object of any U.S. e m b a r g o :
235
1. R e f r a i n f r o m d o i n g business w i t h any U.S. person or person d o i n g business
i n the U n i t e d States.
2. R e f r a i n f r o m e m p l o y i n g or o t h e r w i s e d i s c r i m i n a t i n g against persons of a
p a r t i c u l a r race, religion, or n a t i o n a l o r i g i n .
3. F u r n i s h i n f o r m a t i o n r e g a r d i n g a person's race, religion, or n a t i o n a l o r i g i n .
4. R e f r a i n f r o m doing business w i t h any person other t h a n the boycotted count r y or i t s nationals.
5. R e f r a i n f r o m doing business w i t h t h e boycotted c o u n t r y or i t s n a t i o n a l s p u r suant t o an agreement w i t h , r e q u i r e m e n t of, or request f r o m or on behalf of a n y
boycotting c o u n t r y . The mere absence of a business r e l a t i o n s h i p w i t h or i n the
boycotted c o u n t r y or i t s n a t i o n a l s w o u l d not constitute a v i o l a t i o n of the above.
6. F u r n i s h i n f o r m a t i o n about w h e t h e r the person does, has done, or proposes
to do business w i t h t h e boycotted c o u n t r y or i t s n a t i o n a l s or w i t h a n y other boycotted person.
B . E x c e p t i o n s to p r o h i b i t i o n s
The above general p r o h i b i t i o n s w o u l d n o t apply to :
1. Compliance w i t h i m p o r t rules p r o h i b i t i n g i m p o r t of goods f r o m boycotted
c o u n t r y or i t s n a t i o n a l s or shipment of such goods on c a r r i e r or boycotted count r y or v i a r o u t e prescribed by b o y c o t t i n g c o u n t r y .
2. Compliance w i t h i m p o r t a n d shipping document requirements w i t h respect
to name a n d route of c a r r i e r a n d i d e n t i t y of supplier a n d c o u n t r y of o r i g i n of
the goods.
3. Compliance w i t h e x p o r t requirements of b o y c o t t i n g c o u n t r y w i t h respect to
transshipment.
4. Compliance by i n d i v i d u a l s w i t h i m m i g r a t i o n requirements of b o y c o t t i n g
country.
5. R e f u s i n g t o honor l e t t e r s of c r e d i t where beneficiary f a i l s t o comply w i t h
requirements thereof, except where such compliance w o u l d be a v i o l a t i o n of
the l a w .
C. Scope of c o v e r a g e
Above p r o h i b i t i o n s a n d r e p o r t i n g requirements w o u l d apply t o (1) U.S. persons
(defined as i n d i v i d u a l s plus corporations organized under U.S. l a w ) ; (2) U.S.
c o n t r o l l e d subsidiaries a n d a f f i l i a t e s ; and (3) persons doing business i n the
U n i t e d States w i t h respect t o t h e i r business i n t h e U n i t e d States.
The test of c o n t r o l w o u l d be c o n t r o l i n f a c t : Does the p a r e n t I n the o r d i n a r y
course of business c o n t r o l the a c t i v i t i e s or determine the policies of the subsidiary ?
D.
Enforcement
E n f o r c e m e n t w o u l d be by Commerce D e p a r t m e n t a d m i n i s t r a t i v e process i n
accordance w i t h the A P A . Rules a n d regulations t o be effective w i t h i n 3 months
of enactment. E x i s t i n g agreements m u s t be b r o u g h t i n t o compliance 3 months
a f t e r effective date of regulations.
E.
Disclosure
E x e m p t e d f r o m p u b l i c disclosure w o u l d be i n f o r m a t i o n r e g a r d i n g the q u a n t i t y ,
description and value of any goods to w h i c h the boycott r e p o r t relates i f the
Secretary of Commerce determines t h a t disclosure thereof w o u l d place the person r e p o r t i n g a t a competitive disadvantage.
C h a r g i n g l e t t e r s or other documents i n i t i a t i n g enforcement proceedings w o u l d
be made pubilc.
M r . G R E E N B E R G . Senate b i l l 9 2 , introduced by Senators W i l l i a m s and
Proxmire, has most of the features of your b i l l , S. 69, but w i t h some
differences and additions, which I w i l l address here today.
M r . Chairman and members of the committee, both Senate b i l l 69
and Senate b i l l 92 are strong but reasoned responses, to the boycotts
demonstrably h a r m f u l intrusion on America's commercial life. B o t h
bills prohibit secondary and t e r t i a r y boycotts and require public disclosure of boycott requests and compliance. B o t h bills w i l l promote
international commerce and w o r l d peace, because any boycotting
nation w i l l be t o l d that American business and industry cannot be
made u n w i t t i n g tools of warfare against our friends and allies. B o t h
85-654 O - 77 - 16
236
bills w i l l promote domestic harmony by preventing artificial restraints
of trade and precluding the potential segregatiqn of American business into two groups: Those who refuse t o have others dictate w i t h
whom they may do business, and those who accept foreign domination.
B o t h bills provide certain exceptions which have been included t o
eliminate unreasonable burdens on the commerce of the U n i t e d States.
T o illustrate, the legislation permits American o i l companies to cert i f y they w i l l not transship o i l w h i c h they have purchased f r o m Saudi
A r a b i a or another A r a b country to Israel. The bills would preclude
compliance w i t h anticonfiscation clauses, often imposed by one belligerent nation against another. F o r example, the legislation w o u l d allow
p r o h i b i t i o n of the shipment of goods on a carrier of a boycotted
country, or via a route designated by the boycotting country.
T o begin w i t h , i n terms of this basic legislation, we believe the
f o l l o w i n g principles, at least, these principles must be the basis f o r
any antiboycott legislation t h a t is t o be regarded as worthwhile, effective, and capable of dealing w i t h the h a r m f u l aspect of the A r a b boycott operations i n the U n i t e d States.
F i r s t , that no U.S. person may discriminate against a U.S. i n d i v i d ual on the basis of t h a t individual's race, religion, sex, ethnic or
national origin, to comply w i t h , f u r t h e r , or support foreign boycotts.
Second, t h a t no U.S. person may f u r n i s h i n f o r m a t i o n w i t h regard
to or reflective of a U.S. individual's race, religion, sex, ethnic o r national origin, or his business relationships w i t h a boycotted country,
to or f o r the use of a foreign country, its nationals or residents t o comp l y w i t h , f u r t h e r , or support a, foreign boycott.
T h i r d , no U.S. person may r e f r a i n f r o m doing business w i t h or i n
a foreign country, its nationals or residents, pursuant to an agreement
w i t h the foreign country, its nationals or residents, i n order t o comply
w i t h , f u r t h e r , or support a foreign boycott.
A n d f o u r t h , the f o u r t h basic principle here: No U.S. person may ref r a i n f r o m doing business w i t h any other U.S. person pursuant t o an
agreement w i t h a foreign country, its nationals or residents, to comply
w i t h , f u r t h e r , or support a foreign boycott.
Agreements or conduct which have the prohibited effect on U.S.
persons would be violations of applicable law irrespective o f where
such agreements are entered into. The concept of agreement should
be defined to include compliance w i t h a request f r o m a requirement o f ,
or on behalf of a boycotting country.
The legislation should apply to U.S. nationals and residents and to
domestic corporations, and to foreign corporations owned and controlled, i n fact, by U.S. nationals, as to their activities w i t h i n or outside the U n i t e d States. I t should also apply t o U.S. companies
wherever located, but i t need not apply and should not apply to foreign corporations, i n which an American company may have an ownership interest but which i t does not, i n fact, control. On the other
hand, no U.S. person should utilize any foreign person, whether or
not affiliated w i t h such U.S. person, to evade the application of the
legislation.
F i n a l l y , the legislation should provide t h a t the American public, as
well as Congress and concerned agencies of the U.S. Government,
should be informed as to requests affecting the freedom of choice of
U.S. persons and compliance w i t h such requests.
237
I now address, M r . Chairman, those areas, major ajreas i n which
your b i l l , Senate b i l l 69, and Senate b i l l 92 differ. There is on particular area of concern t o us. I t is the issue of the so-called "negative
certificates of o r i g i n . " W e believe the difference between the t w o bills
to be significant.
Senate b i l l 69 excepts negative certificates of o r i g i n f r o m its coverage. M a n y boycott practices are prohibited by the proposed legislation
but as an exception to that, negative certificates of o r i g i n are permitted.
A s you all know, negative certificates of o r i g i n require American exporters or banks, f r e i g h t forwarders, others who trade w i t h an A r a b
country to certify regarding goods going to an A r a b country, that the
goods were not made i n whole or i n part i n the State o f Israel.
Senate b i l l 92 prohibits the use of negative certificates of o r i g i n but
would allow the use of so-called positive ones, t h a t is affirmative statements regarding the country of manufacture. F o r example, a certification t h a t the goods were made i n the U n i t e d States. W e support
this i n Senate b i l l 92. This is not flawed w i t h the objectionable features of the negative certificates.
Parenthetically, I should state we believe the certificates o f o r i g i n
i n general are undesirable but we understand the possible commercial
need for positive certificates of o r i g i n under some circumstances.
W h y do we emphasize this issue ? S i m p l y stated, the negative, certificate is the cornerstone on which the boycott is today structured and
enforced. U n l i k e the positive certificate, there is no justification i n
commercial practice or i n the application of duties and i m p o r t taxes.
The negative certificate singles out f o r invidious discrimination a
country f r i e n d l y to the U n i t e d States, I t creates a c h i l l i n g effect on
American-Israeli trade relations by discouraging American firms f r o m
developing and m a i n t a i n i n g mutual advantageous commerce w i t h the
State of Israel.
Moreover, when an American firm furnishes boycott i n f o r m a t i o n to
the Arabs by way of c e r t i f y i n g a negative certificate of origin, i t aids
and abets a boycotting country contrary to U.S. declared national
policy.
The extensive use of negative certificates by the boycotters is amply
documented and points up the need to p r o h i b i t its use. A n analysis by
the A n t i - D e f a m a t i o n League, the American Jewish Committee and
the American Jewish Congress of the reports made public by the Department of Commerce f o l l o w i n g M r . Ford's disclosure orders of
October 1976 revealed the negative certificate of o r i g i n was by f a r the
most outstanding example, 75 percent of the cases.
I would like that study entered i n the record, M r . Chairman.
Senator S T E V E N S O N . W i t h o u t objection.
[The document f o l l o w s : ]
238
J a n u a r y , 19YY
Analysis:
836 Arab Boycott Request Reports F i l e d With The U . S .
Commerce D e p a r t m e n t S i n c e O c t o b e r 7 , 1976
Summary o f
1.
Findings
The 836 b o y c o t t r e q u e s t r e p o r t s s t u d i e d i n d i c a t e d compliance by U . S .
f i r m s i n about 8j% o f t h e cases and non-compliance i n h%.
I n about 9% o f t h e
r e p o r t s , d e c i s i o n as t o compliance was b e i n g made by "another p a r t y " or had not
y e t been made; t h e compliance p a t t e r n t h e r e f o r e c o u l d be as h i g h as 96%.
2.
The most f r e q u e n t b o y c o t t r e q u e s t s r e p o r t e d were f o r
"Negative
Certi-
f i c a t e s o f O r i g i n " and f o r d e c l a r a t i o n s t h a t t h e c a r r i e r t r a n s p o r t i n g t h e goods
was n o t on t h e
3.
blacklist.
S a u d i A r a b i a , K u w a i t and t h e U n i t e d A r a b E m i r a t e s were t h e
o f d e s t i n a t i o n f o r goods i n v o l v e d i n 65$ o f t h e 836 b o y c o t t r e p o r t s
countries
analyzed,
I r a q , L i b y a and B a h r a i n i n a n o t h e r 2 0 $ , and J o r d a n , E g y p t , Oman-Muscat and
Q a t a r i n a n o t h e r 11%.
A number o f A r a b League s t a t e s , such as A l g e r i a ,
a n d Sudan, were n o t i n v o l v e d i n any o f t h e b o y c o t t
k.
Morocco
requests.
Freight forwarding firms f i l e d approximately
o f t h e 836
reports,
b a n k s f i l e d a l m o s t 30$ o f t h e d o c u m e n t s , and i n a n o t h e r 2 1 $ , t h e e x p o r t i n g
itself
filed.
Of 2^7 r e p o r t s f i l e d b y b a n k s , s u b s i d i a r i e s o f one b a n k
13U, o r a l m o s t 55%>
5.
The b a n k ' s New Y o r k s u b s i d i a r y f i l e d 1 1 1 o f t h e 13^
I n cases where f r e i g h t
f o r w a r d e r s or banks f i l e d t h e b o y c o t t
firm
filed
reports.
request
r e p o r t t h e name o f t h e e x p o r t e r was a l w a y s b l a c k e d o u t b y t h e Commerce D e p a r t m e n t .
239
( R e c e n t Commerce D e p a r t m e n t r e g u l a t i o n s ,
dated October 18, 1976, e x p l i c i t l y
q u i r e each p a r t y t o a t r a n s a c t i o n r e c e i v i n g a b o y c o t t r e q u e s t —
i.e.,
exporter,
bank or f r e i g h t
forwarder — to f i l e
A l l the reports
a n a l y z e d i n t h i s memorandum w e r e f i l e d b e f o r e t h e o p e r a t i v e
o f t h e new r e g u l a t i o n s . .
a r e p o r t w i t h t h e Department o f
P r e s u m a b l y u n d e r t h e new r e g u l a t i o n s ,
t h e e x p o r t e r w i l l be a m a t t e r o f p u b l i c
6.
Re-
Commerce*
the i d e n t i t y
date
of
record.)
A m e r i c a n - A r a b t r a d e p r o m o t i o n g r o u p s , s u c h as t h e U . S . - A r a b Chamber
of
Commerce a n d t h e A m e r i c a n - A r a b Chamber o f Commerce, p l a y e d a n o t i c e a b l e r o l e
in
t h e b o y c o t t p r o c e s s b y v a l i d a t i n g b o y c o t t - t a i n t e d documents o r by i n i t i a t i n g
boy-
cott
requests i n almost
7.
30% o f t h e 836 b o y c o t t r e p o r t s
studied.
L o c a l Chambers o f Commerce i n t h e U n i t e d S t a t e s v a l i d a t e d
c o n t a i n i n g b o y c o t t r e q u e s t s i n more t h a n 10$ o f t h e c a s e s
reported.
documents
240
Compliance
Analysis:
836 A r a b B o y c o t t R e q u e s t R e p o r t s
With t h e U.S.
Commerce D e p a r t m e n t S i n c e O c t .
(Table
Filed
7,
1976
l)
A n a l y s i s o f 836 b o y c o t t
request reports
f i l e d w i t h t h e U.S.
Commerce
Depart-
ment s i n c e O c t o b e r 7 , 1976 — made p u b l i c b y t h e D e p a r t m e n t p u r s u a n t t o an
order
of that
boycott
date by President Ford —
by t h e r e p o r t i n g U.S.
I n t h e 836 r e p o r t s
reported in
i n d i c a t e s widespread compliance w i t h t h e
firms.
examined, non-compliance or
3^ c a s e s — a b o u t k%.
i n e v e r y <:ase.
o f n o n - c o m p l i a n c e was
C o m p l i a n c e , o r i n t e n t i o n t o c o m p l y , was
ported i n almost 8 j % o f the r e p o r t s —
I n t h e r e m a i n i n g 77 r e p o r t s ,
intent
725 o f t h e 836
re-
analyzed.
m o r e o v e r , t h e r e was t h e p o s s i b i l i t y
of
compliance
I n J2 o f t h e 7 7 , f i r m s r e p o r t i n g s a i d t h a t t h e d e c i s i o n w i t h
spect t o
c o m p l i a n c e was b e i n g made b y " a n o t h e r p a r t y " a n d i n f i v e
reported
t h a t no d e c i s i o n c o n c e r n i n g c o m p l i a n c e h a d b e e n made.
i n a l l t h e s e cases t o be i n f a v o r o f c o m p l i a n c e ,
emerge f r o m t h e 836 r e p o r t s s t u d i e d .
cases,
it
Were t h e
rewas
decisions
a p a t t e r n o f 96$ c o m p l i a n c e
I n any c a s e , t h e 836 r e p o r t s
indicate
would
more
t h a n 86% c o m p l i a n c e .
The 3^ r e p o r t s t h a t w e r e f i l e d i n d i c a t i n g n o n - c o m p l i a n c e w i t h b o y c o t t
q u e s t s w e r e f i l e d b y 20 c o m p a n i e s w h i l e t h e f i v e r e p o r t s
indicating that
s i o n w i t h r e s p e c t t o c o m p l i a n c e h a d n o t y e t b e e n made w e r e f i l e d b y f o u r
Of t h e
3U r e p o r t s
i n d i c a t i n g n o n - c o m p l i a n c e , more t h a n h a l f
f i l e d b y f i v e companies i n C a l i f o r n i a .
that
state's
Finally,
stringent
25 f i r m s
anti-boycott
deci-
companies.
— 18 —
were
Whether o r n o t t h i s p a t t e r n stems
from
l a w c o u l d n o t be
f i l e d t h e 72 r e p o r t s
determined.
indicating that
the decision
r e s p e c t t o c o m p l i a n c e o r n o n - c o m p l i a n c e was b e i n g made b y a n o t h e r p a r t y
i n the transaction.
re-
a
T h e ' t y p e s o f c o m p a n i e s f i l i n g t h e s e r e p o r t s w e r e as
with
involved
follows:
241
Banks —
13
Forwarders —
Exporters —
9
2
E x p o r t Agent —
O f t h e 72 s u c h
1
reports,
Banks f i l e d
—1*5
Forwarders —
Exporters —
2k
2
Export Agent —
1
K i n d s o f B o y c o t t Requests and Compliance
( T a b l e s 2 , 8 and 9)
By f a r t h e m o s t f r e q u e n t t y p e o f b o y c o t t
tive
Certificate
of Origin"
a c t i o n was n o t o f I s r a e l i
origin.
filed.
a
"Nega-
i n d i c a t i n g t h a t t h e merchandise i n v o l v e d i n a
o r i g i n and t h a t
it
c o n t a i n e d no c o m p o n e n t s o f
Such r e q u e s t s w e r e r e p o r t e d i n
(See T a b l e
r e q u e s t r e p o r t e d was f o r
o r more t h a n 70$ o f t h e
trans-
Israeli
reports
2.)
I n 203 o f t h e 836 r e p o r t s — 2h.3%
— a negative c e r t i f i c a t e
o f o r i g i n was
the only boycott request reported.
C o m p l i a n c e was i n d i c a t e d i n 187 o f t h e s e
reports,
There i s a n o t i c e a b l e
—
or 92.1%.
(See T a b l e 8 . )
was r e q u i r e d a n d c a s e s w h e r e t h e r e was a t l e a s t
w i t h the request
for a negative c e r t i f i c a t e
I n more t h a n h a l f t h e r e p o r t s ,
for
difference —
i n compliance between cases i n w h i c h o n l y a n e g a t i v e c e r t i f i c a t e
—
one o t h e r b o y c o t t r e q u e s t
i n t h e t r a n s a c t i o n was n o t on t h e
In just
o v e r 20% o f t h e r e p o r t s ,
carrier
— the ship or the plane —
t h e r e were r e q u e s t s
d i d not
along
requests
t r a n s p o r t i n g t h e m e r c h a n d i s e was
w h i l e i n o n e - t h i r d o f t h e c a s e s , a d e c l a r a t i o n was
t h a t the manufacturer, or exporter
3.3$
origin
88.8$.
f i r m s i n d i c a t e d t h e y had r e c e i v e d
a d e c l a r a t i o n t h a t t h e shipper or c a r r i e r
not b l a c k l i s t e d ,
of
203
for
requested
blacklist.
a declaration that
c a l l at I s r a e l i
ports.
the
242
A d e c l a r a t i o n t h a t t h e i n s u r e r was n o t b l a c k l i s t e d was r e q u i r e d i n more
t h a n Q% of
t h e 836 r e p o r t s ,
ceipt of a request
n o t on t h e Arab
for
while
i n a l m o s t h%t
a declaration that
reporting firms
indicated
re-
t h e bank n e g o t i a t i n g t h e c r e d i t
was
blacklist.
Requests f o r
declarations that
goods i n v o l v e d i n a t r a n s a c t i o n h a d n o t
p a s s e d , o r w o u l d n o t p a s s , t h r o u g h " P a l e s t i n e " made up a m i n o r p e r c e n t a g e
as d i d r e q u e s t s t o German f i r m s
t i o n w o u l d not be used f o r
for
a declaration that
reparations to Israel;
t h a n one p e r c e n t o f t h e 836 r e p o r t s a n a l y z e d .
I n t h e most f r e q u e n t t y p e s o f b o y c o t t
shipper or c a r r i e r
carrier
doesn't
funds from t h e
such r e q u e s t s appeared i n
(See T a b l e
Israeli
ports,
requests — Negative
a n c e r a n g e d f r o m Qk.2% t o 9 1 .
and i n s u r e r
In the less
Certificates,
blacklisted,
n o t on b l a c k l i s t
frequent
categories,
—
size of the
"samples"
Of t h e 836 r e p o r t s
l i s t i n g requirement
manufacturer
tiating
credit
analyzed,
600, o r 71.8%, c o n t a i n e d a t l e a s t
f o r t h e t r a n s a c t i o n was n o t o n t h e A r a b b l a c k l i s t .
88.5%.
and o b v i o u s l y - w o r d e d b o y c o t t
T h e r e w e r e o n l y 10 c a s e s ,
the
(See T a b l e
r e q u e s t s were
There were f o u r
two.
Compliance
9-)
significantly
national.
has a b u s i n e s s
asked
rela-
C o m p l i a n c e was r e p o r t e d i n 9
of
cases i n w h i c h American f i r m s were r e q u i r e d
to
t h e y h a d no b u s i n e s s r e l a t i o n s h i p s w i t h I s r a e l
C o m p l i a n c e was r e p o r t e d i n
nego-
f o r example, i n which r e p o r t i n g f i r m s were
t i o n s h i p w i t h I s r a e l o r an I s r a e l i
declare that
one b l a c k -
— a d e c l a r a t i o n t h a t t h e v e s s e l c a r r y i n g the goods,
d e c l a r e t h a t t h e y d i d n o t do b u s i n e s s w i t h a n y f i r m t h a t
t h e 10 c a s e s .
the
o r e x p o r t e r o f t h e g o o d s , t h e i n s u r a n c e company, o r t h e b a n k
The most b l a t a n t
to
to
involved.
was i n d i c a t e d i n 5 3 1 o f t h e s e 600 r e p o r t s —
rare.
compli-
compliance
ranged from 71.9$ t o 100$, t h e v a r i a t i o n p r o b a b l y b e i n g a t t r i b u t a b l e
smaller
less
2.)
not b l a c k l i s t e d , manufacturer or exporter not
c a l l at
(1.2$)
transac-
o r an I s r a e l i
citizen.
243
T h e r e w e r e t w o c a s e s i n w h i c h t h e b o y c o t t r e q u i r e m e n t -was a d e c l a r a t i o n
neither
the exporter nor i t s
each case, t h i s b o y c o t t
subsidiaries
had any i n v e s t m e n t s
in Israel.
r e q u i r e m e n t was c o n t a i n e d i n a c o n t r a c t b e t w e e n
In
indivi-
d u a l A r a b b o y c o t t e r s a n d A m e r i c a n f i r m s — t h e o n l y t w o c a s e s o f t h e 836
i n w h i c h t h e document s p e c i f y i n g t h e b o y c o t t
two, likewise,
or
its
i n which the requirement
subsidiaries,
r e q u e s t was a c o n t r a c t
called for
h a d no i n v e s t m e n t s i n
which t h i s
t o use i t s
and t h e
name i n I s r a e l .
also declare that
it
T h i s was t h e o n l y c a s e
in
r e q u i r e m e n t was n o t e d i n t h e 836 b o y c o t t r e q u e s t r e p o r t s
carry I s r a e l i
goods.
examined.
citizens.
had s t o c k h o l d e r s ,
(Table
citizens
time business transactions
r e q u e s t s t o be i n c l u d e d .
requests concerning American f i r m s '
suggests t h a t Arab b o y c o t t e r s
its
Israeli
dealings
determine the
stage i n the boycott process,
with
answers
so t h a t b y
Such q u e s t i o n s h a v e b e e n i n c l u d e d i n l e t t e r s
s e n t t o A m e r i c a n f i r m s b y t h e A r a b B o y c o t t O f f i c e as p a r t
not c u r r e n t l y
or
the
a r e e n t e r e d i n t o , t h e r e i s no need f o r s u c h b o y c o t t
l i s t i n g process i n past years.
w i t h U.S.
reporting
affiliates
o w n e r s , o f f i c e r s o r e m p l o y e e s who w e r e
t o t h e s e q u e s t i o n s a t an e a r l i e r
tionnaires
its
2.)
The s c a r c i t y o f b o y c o t t
I s r a e l and I s r a e l i
shipper
T h e r e w e r e no cases r e p o r t e d i n w h i c h
f i r m s were asked t o d e c l a r e t h a t n e i t h e r t h e e x p o r t e r s ,
subsidiaries
only
exporter,
Israel.
T h e r e was one c a s e i n w h i c h a d e c l a r a t i o n was r e q u i r e d t h a t t h e
does n o t
analyzed
a declaration that the
One o f t h e t w o c o n t r a c t s r e q u i r e d t h a t t h e e x p o r t e r
d i d not allow the r i g h t
I n any c a s e , i t
r e q u i r i n g such d e c l a r a t i o n s
and q u e s -
of the
w o u l d appear t h a t t h e Arabs
as p a r t
of individual
transactions
.firms.
Arab C o u n t r i e s o f D e s t i n a t i o n
Three councries
were t h e c o u n t r i e s
that
(Table
— Saudi A r a b i a ,
of destination
3)
K u w a i t and t h e U n i t e d A r a b E m i r a t e s
f o r m e r c h a n d i s e i n v o l v e d i n 65% o f t h e
—
836
blackare
244
boycott
request reports analyzed.
destination
Syria,
comprised a l i t t l e
L e b a n o n , Yemen, t h e Yemen P e o p l e s R e p u b l i c
reports
illegible
i n t e r e s t i n g t o note t h a t
them A l g e r i a ,
or obviously
involved
Tunisia
nec-
incorrect.
a number o f A r a b League member s t a t e s ,
among
Sudan a n d M o r o c c o , w e r e n o t i n v o l v e d i n a n y o f t h e 836 b o y c o t t
Companies F i l i n g t h e R e p o r t s
Freight
forwarding firms f i l e d
p o r t s and 7 ^ . 8 $ o f a l l r e p o r t s
of the reports
( T a b l e U)
379 o f t h e 836 r e p o r t s
w h i l e b a n k s f i l e d 2U7 o f t h e r e p o r t s ,
filed.
almost
13^ r e p o r t s ,
studied —
1+5.3$
o r 2 9 . 5 $ — a c o m b i n e d t o t a l o f 626
E x p o r t i n g companies f i l e d 178, o r
—
re21.3$,
studied.
As n o t e d i n t h e Summary o f F i n d i n g s ,
o f t h e 2^7 r e p o r t s
55$ — w e r e f i l e d b y v a r i o u s
subsidiaries
1 1 1 w e r e f i l e d b y t h e b a n k ' s New Y o r k
A group o f 21 r e p o r t s ,
an " o c e a n c a r r i e r "
In a l i t t l e
— a shipping
for boycott
banks,
these
stated that
it
was a c t i n g as " a g e n t "
by
for
line.
filing
firms
listed
( i n 3 c a s e s ) , manuf a c t Taring ( i n 2 c a s e s ) ,
agent, c a r r i e r
Non-Arab P a r t i e s Making B o y c o t t
I n 79 r e p o r t s ,
Of
subsidiary.
more t h a n one p e r c e n t o f t h e f o r m s t h e
t h e m s e l v e s as s t e a m s h i p a g e n t s
s h i p company, e x p o r t
submitted by
o f one b a n k .
r e p r e s e n t i n g 2 . 5 $ o f t h e 836 s t u d i e d , w e r e f i l e d
one f o r w a r d i n g f i r m w h i c h s p e c i f i c a l l y
request
of
analyzed.
Kinds o f
13^ —
and
more t h a n 2 $ , a n d i n t h e r e m a i n i n g 1$ o f t h e r e p o r t s ,
e s s a r y i n f o r m a t i o n was m i s s i n g ,
is
L i b y a and B a h r a i n were c o u n t r i e s
i n some 2 0 $ , w h i l e E g y p t , J o r d a n , Oman-Muscat a n d Q a t a r w e r e
i n about 11$.
It
Iraq,
steam-
and middleman.
Requests
or 9-5$ of the t o t a l ,
(Table
5)
reporting firms
o r i g i n a t e d w i t h a non-Arab
indicated that
the
party.
Of t h e s e 79 c a s e s , t h e A m e r i c a n - A r a b Chamber o f Commerce i n H o u s t o n was
i d e n t i f i e d as t h e o r g a n i z a t i o n m a k i n g t h e b o y c o t t
request
t h e U . S . - A r a b Chamber o f Commerce i n New Y o r k was named i n
i n 55 r e p o r t s ,
three.
while
245
F r e n c h "banks w e r e named i n 1 1 o f t h e 79 c a s e s , E n g l i s h f i r m s i n t h r e e
a n d a B e l g i a n "bank was i d e n t i f i e d as o r i g i n a t i n g t h e " b o y c o t t r e q u e s t
One U . S .
freight
forwarding firm reported that
t h e r e q u e s t was t h e e x p o r t e r .
The i d e n t i t y
cases
i n one
i n s i x cases t h e p a r t y
of the exporter
i s unknown
report.
making
since
on e a c h f o r m t h e name and a d d r e s s o f t h e e x p o r t e r was b l a c k e d o u t e x c e p t w h e r e
the exporting f i r m f i l e d the r e p o r t .
(The f o r m r e q u i r e s t h a t t h e name and a d -
d r e s s o f t h e e x p o r t e r be s u p p l i e d ,
the r e p o r t i n g f i r m i s not the
if
exporter.)
R o l e o f U . S . - A r a b Chambers o f Commerce ( T a b l e s 6 a n d 1 0 )
It
has b e e n a p p a r e n t
l o c a t e d i n key c i t i e s
is
rial
t h i s memorandum.
for
Atlantic
confirmed by a n a l y s i s
The o r g a n i z a t i o n s
branch i n Baltimore, Md.),
for negative
request
requests.
operation,
involved include the
U.S.-Arab
i n New Y o r k and San F r a n c i s c o
(and a Mid-
a n d t h e A m e r i c a n - A r a b Chamber o f Commerce i n ,
reports
certification
c o n d i t i o n s by t h e U . S . - A r a b
o f Commerce.
commerce
Center.
Of t h e 836 b o y c o t t
cott
A r a b - A m e r i c a n chambers o f
o f t h e 836 r e p o r t s w h i c h f o r m e d t h e r a w m a t e -
Commerce, I n c . w i t h o f f i c e s
Houston's World Trade
quests
some t i m e t h a t
i n t h e U.S. p l a y a r o l e i n t h e Arab b o y c o t t
and t h i s
Chamber o f
for
examined, 238, or 2 8 . 5 $ , c o n t a i n e d
as t o t h e o r i g i n o f t h e goods a n d o t h e r
Chamber o f Commerce o r t h e A m e r i c a n - A r a b
C o m p l i a n c e was r e p o r t e d i n 218 o f t h e 238 c a s e s — 9 1 . 6 $ o f
The 238 r e p o r t s
i n c l u d e t h e 58 m e n t i o n e d above i n w h i c h t h e
reboyChamber
such
American-
A r a b Chamber o f Commerce i n H o u s t o n o r t h e U . S . - A r a b Chamber o f Commerce i n New
Y o r k was named as o r i g i n a t i n g t h e b o y c o t t
An a n a l y s i s
request.
o f t h e r o l e p l a y e d b y A r a b - A m e r i c a n chambers o f commerce i n
238 c a s e s m e n t i o n e d i s
shown i n . T a b l e 1 0 .
Perhaps most s i g n i f i c a n t
i n g a r e s i x c a s e s i n w h i c h documents s u b m i t t e d t o t h e s e u n i t s
i n H o u s t o n and
New Y o r k f o r v a l i d a t i o n w e r e r e j e c t e d b y t h e s e A r a b - A m e r i c a n t r a d e
because t h e y l a c k e d r e q u i r e d b o y c o t t
clauses.
the
and r e v e a l -
organizations
246
The A r a b - A m e r i c a n Chamber o f Commerce i n H o u s t o n r e j e c t e d f o u r
ments ; t h e U . S . - A r a b Chamber o f Commerce, I n c .
two.
In a l l
s i x c a s e s , t h e companies t h a t
t i o n i n d i c a t e d compliance — r e c t i f i c a t i o n
the necessary boycott
i n New Y o r k r e j e c t e d t h e
s u b m i t t e d t h e documents f o r
c l a u s e s — when t h e documents w e r e r e t u r n e d t o
chambers w e r e i d e n t i f i e d as t h e p a r t i e s m a k i n g t h e b o y c o t t
T h e r e w e r e 13 r e p o r t s
bination positive
and n e g a t i v e c e r t i f i c a t e
along w i t h a disclaimer
c o u n t r y of> o r i g i n .
ment..."
tive
I n IT other
request o f the
com55
three.
requests
A r a b d e s t i n a t i o n was n o t
"Certification...limited
responsibility
to
f o r any o t h e r
state-
o f o r i g i n and o t h e r b o y c o t t
requests —
posi-
but
a d i s c l a i m e r o f t h e k i n d quoted above.
Md., v a l i d a t e d a boycott
U.S.-Arab
Chamber o f Commerce,
Baltimore,
clause d e c l a r i n g t h a t the vessel c a r r y i n g the
goods
blacklisted.
I n a d d i t i o n t o t h e f o r e g o i n g 89 c a s e s , t h e r e w e r e 1U9 r e p o r t s
w h i c h t h e company r e p o r t i n g i n d i c a t e d t h a t
it
tification
T h e r e i s no d o c u m e n t a r y
that
them.
s u c h c a s e s , t h e A r a b - A m e r i c a n chamber v a l i d a t e d t h e
I n one c a s e , t h e M i d - A t l a n t i c
was n o t
of
Arab-American
o f o r i g i n and o t h e r b o y c o t t
stating:
T h i s chamber d i s c l a i m s
and n e g a t i v e c e r t i f i c a t e s
without
valida-
i n w h i c h an A r a b - A m e r i c a n chamber v a l i d a t e d a com-
t h a t t h e v e s s e l c a r r y i n g t h e goods t o t h e i r
blacklisted)
other
The A r a b - A m e r i c a n Chamber o f Commerce i n H o u s t o n i n i t i a t e d
a n d t h e U . S . - A r a b Chamber i n New Y o r k i n i t i a t e d t h e o t h e r
(e.g.,
docu-
o f t h e e m i s s i o n s and i n s e r t i o n
These s i x c a s e s a r e i n c l u d e d i n t h e 58 m e n t i o n e d i n w h i c h t h e
panies f i l i n g .
such
f r o m an A r a b - A m e r i c a n c h a m b e r .
such c e r t i f i c a t i o n
f i l i n g the report
such v a l i d a t i o n —
quirement .
filed
indicate that
f o r example, v i a a l e t t e r
it
of credit
company
received a request
containing
cer-
evidence
a c t u a l l y t o o k p l a c e i n t h e s e cases s i n c e t h e
is required only to
in
had been r e q u e s t e d t o o b t a i n
for
such a r e -
247
P a r t i c i p a t i o n b y L o c a l A m e r i c a n Chambers o f Commerce ( T a b l e s 7 , 7a a n d 1 1 )
Prior
to the establishment
1967, l o c a l u n i t s o f t h e U.S.
t i m e as p a r t i c i p a t i n g
U.S.
a
export
o f t h e U . S . - A r a b Chamber o f Commerce, I n c . ,
Chamber o f Commerce w e r e i d e n t i f i e d
from time
i n t h e A r a b b o y c o t t b y c e r t i f y i n g documents i n v o l v e d
shipments t o Arab c o u n t r i e s .
in
Some o f t h e m c o n t i n u e t o p l a y
to
in
such
role.
I n 97 b o y c o t t r e q u e s t
r e p o r t s o f t h e 836 a n a l y z e d — 1 1 . 6 $ — a l o c a l
chamber o f commerce was i n v o l v e d i n t h e b o y c o t t p r o c e s s .
I n 92 o f t h e 97 c a s e s ,
a l o c a l chamber v a l i d a t e d documents c e r t i f y i n g t h e n o n - I s r a e l i
origin of
the
merchandise i n the t r a n s a c t i o n or o t h e r b o y c o t t r e s t r i c t i o n s .
More t h a n
four-
fifths
of the 9 2 . c e r t i f i c a t i o n s
chambers — t h e
(Illinois)
merce.
Humble ( T e x a s )
Chamber o f
—
75 — w e r e p r o v i d e d b y t h r e e s u c h
local
Chamber o f Commerce n e a r H o u s t o n , t h e Des
Commerce, a n d t h e S o u t h H o u s t o n ( T e x a s )
The t w o u n i t s n e a r H o u s t o n v a l i d a t e d 52 r e p o r t s
f o r w a r d e r a n d t h e Des P l a i n e s u n i t
v a l i d a t e d 23 r e p o r t s
Chamber o f
f i l e d b y one
Plaines
Com-
freight
f i l e d by another
freight
forwarder.
In five reports,
l o c a l chambers o f commerce d i s t r i b u t e d documents t h a t
c l u d e d b o y c o t t p r o v i s i o n s and r e q u i r e d v a l i d a t i o n b y an A r a b - A m e r i c a n
T a b l e 7a p r o v i d e s a g e o g r a p h i c a l b r e a k d o w n o f t h e 97 r e p o r t s
chambers o f commerce w e r e
in-
chamber.
i n which
local
involved.
Discrimination
Boycott
requests
involving religious
on t h r e e o f t h e 836 r e p o r t s ,
d i s c r i m i n a t i o n were r a r e —
or less than o n e - h a l f o f
1%.
I n each o f t h e t h r e e c a s e s , w h i c h o r i g i n a t e d i n Saudi A r a b i a , t h e
n a t i o n took the
form o f a b o y c o t t - r e l a t e d request t h a t
a hexagonal or
s t a r n o t a p p e a r on t h e goods o r p a c k a g e s t o be s h i p p e d t o t h e S a u d i
appearing
discrimisix-pointed
importer.
248
A l t h o u g h c o m p l i a n c e w i t h such r e q u e s t s
i s b a r r e d by U.S. r e g u l a t i o n s
pro-
m u l g a t e d b y t h e Commerce D e p a r t m e n t u n d e r t h e E x p o r t A d m i n i s t r a t i o n A c t ,
(and
r e c e n t l y c o n t i n u e d by E x e c u t i v e Order o f t h e P r e s i d e n t ) ,
the
compliance w i t h
d i s c r i m i n a t o r y b o y c o t t r e q u e s t was i n d i c a t e d i n e a c h o f t h e t h r e e r e p o r t s
tioned
It
men-
above.
is
i n t e r e s t i n g t o note t h a t
discriminatory
language,
several other requests o r i g i n a l l y
s u c h as t h e f o l l o w i n g :
goods a r e n o t b e a r i n g t h e h e x a g o n a l s t a r b r a n d . "
was c r o s s e d o u t
(by t h e Arab b o y c o t t e r
" I n v o i c e s m u s t show t h a t
I n some c a s e s t h i s
the discriminatory
language be i n s e r t e d ,
f l a g o r any o t h e r
Israeli
origin."
language
s u c h as t h e
c l a u s e be
symbol s p e c i f i c a l l y
None o f t h e r e p o r t s e x a m i n e d c o n t a i n e d r e q u e s t s
for
de-
the
signifying
information
concerning
ownership or c o n t r o l o f the e x p o r t i n g f i r m by persons o f t h e Jewish f a i t h ,
p r e s e n c e o f Jews o n i t s b o a r d o f d i r e c t o r s .
the
following:
" I n v o i c e s m u s t show t h a t t h e goods a r e n o t b e a r i n g
Israeli
the
— Saudi A r a b i a n i n every case) ; i n
r e m a i n i n g cases i n s t r u c t i o n s were i s s u e d t h a t
l e t e d and o t h e r r e s t r i c t i v e
d i d have
None o f t h e r e p o r t s ,
the
likewise,
in-
q u i r e d w h e t h e r t h e r e p o r t i n g f i r m u s e d t h e goods a n d / o r s e r v i c e s o f a J e w i s h
subcontractor,
a n d t h e r e w e r e no r e p o r t s i n v o l v i n g r e q u e s t s t h a t
persons o f a p a r t i c u l a r
performedi
a f i r m not
r e l i g i o n t o t h e Arab c o u n t r y where s e r v i c e s were t o
send
be
249
TABLE 1
Analysis:
836 B o y c o t t Request
Reports
F i l e d W i t h U . S . Commerce D e p t . And
Released Since October 7,
1976
I n t e n t i o n C o n c e r n i n g Compliance
1)
I n t e n t i o n t o Comply
725
86.7%
2)
I n t e n t i o n N o t t o Comply
34
41%
3)
D e c i s i o n on Compliance
72
8.6%
5
0.6%
t o b e Made b y A n o t h e r
4)
D e c i s i o n Not Made
Party
250
Analysis:
Kinds o f Boycott
C o n t a i n e d i n 836 B o y c o t t
Requests
Reports
and
C o m p l i a n c e s I n d i c a t e d f o r Each K i n d
Kind of
B o y c o t t Request
1)
2)
Negative C e r t i f i c a t e s
of Origin
No. o f
Requests
% of
Compliance
Indicated
% Compliance
o f Requests
Requests
5^5
6lU
88.8%
7 3 . k%
Declaration that shipper
or c a r r i e r i s not b l a c k listed
1*38
52.U
388
3)
D e c l a r a t i o n t h a t manuf a c t u r e r or exporter
i s n o t on b l a c k l i s t
278
33.3%
23h
Qk.2%
k)
Declaration that carr i e r (ship or plane)
does n o t c a l l a t
I s r a e l i ports
163
19.5%
1U9
91.h%
Declaration that ins u r e r i s n o t on t h e
blacklist
69
8.3%
63
91.3
6)
D e c l a r a t i o n t h a t bank
negotiating credit is
n o t on t h e b l a c k l i s t
32
3.8
23
71.9
7)
Declaration responding
t o q u e r y w h e t h e r goods
have passed, or w i l l
pass, through
"Palestine"
1.2%
D e c l a r a t i o n as t o w h e t h e r
funds from the t r a n s a c t i o n w i l l b e u s e d as
reparations to Israel
( a s k e d o f German f i r m s )
o.8U%
5)
8)
Declaration that exporter
does n o t do b u s i n e s s w i t h
a n y f i r m t h a t has a b u s i ness r e l a t i o n s h i p
with
I s r a e l o r an I s r a e l i
national
10
1.2
3.6%
80%
251
Kind o f
B o y c o t t Request
No. o f
Requests
10) D e c l a r a t i o n t h a t e x p o r t e r , or a f f i l i a t e
o r s u b s i d i a r y , does
n o t have s t o c k h o l d e r s
owners, o f f i c e r s o r
employees who a r e
Israeli citizens
)
)
)
11) D e c l a r a t i o n t h a t e x p o r t e r does n o t h a v e ,
and does n o t i n t e n d
t o have, any b u s i n e s s
relations with Israel
o r an I s r a e l i c i t i z e n
)
)
)
)
)
)
12) D e c l a r a t i o n t h a t e x p o r t e r , or subsidi a r i e s , has no
investments i n I s r a e l
)
)
)
)
N
13) D e c l a r a t i o n t h a t s h i p - )
p e r does n o t c a r r y
)
I s r a e l i goods
)
lU) Declaration t h a t exp o r t e r does n o t a l l o w
use o f i t s name i n
Israel
85-654 O - 77 - 17
Cowplianee
Indicated
')
)
)
)
0
N
% Compliance
o f Requests
J2
'
Q.k&%
$0%
2
0.2b%
50$
0.12$
0.12$
0
252
TABLE 3
Analysis:
A r a b C o u n t r i e s Of
I n 836 B o y c o t t
Country
Destination
Reports
No. o f
Reports
% of
Reports
Saudi Arabia
237
28.3%
Kuwait
173
20.7%
U n i t e d Arab Emirates
131
15.7%
Iraq
64
7.7%
Libya
57
6.8%
Bahrain
50
6%
Jordan
26
3.1%
Egypt
26
3.1%
Oman-Muscat
23
2.8%
Qatar
21
2.5%
Syria
12
1.4%
Lebanon
2
0•24%
Yemen A r a b R e p u b l i c
2
0.24%
Yemen P e o p l e s D e m o c r a t i c R e p u b l i c
2
0.24%
Tunisia
1
0.12%
Necessary I n f o r m a t i o n Missing
8
0.96%
253
TABLE 4
Analysis:
836 B o y c o t t
T y p e s Of F i r m s
Reports
Reporting
Forwarders
379
45.3%
Banks
247
29,5%
Exporters
178
21.3%
21
2.5%
Forwarder
(as agent f o r
"Ocean
Carrier")
Steamship Agents
3
0.36%
Manufac t u r e r s
2
0.24%
Carrier
1
0.12%
S t e a m s h i p Company
1
0.12%
Export
1
Agent
Middleman
Unreadable,
Not
Reported
1
Vw
0.12%
2
0.24%
254
TABLE 5
Analysis:
836 B o y c o t t R e p o r t s
Boycott Requests Not
Originating
I n An A r a b C o u n t r y
A m e r i c a n - A r a b Chamber o f Commerce,
H o u s t o n , Texas
U . S . - A r a b Chamber o f Commerce,
New Y o r k
Inc.,
F r e n c h Banks
E n g l i s h Firms
B e l g i a n Bank
Exporters
(As R e p o t t e d By A F r e i g h t
—
Forwarder)
255
SABLE ,6
P a r t i c i p a t i o n By U . S « « * r a b Chambers
Of Commerce Or A m e r i c a n - A r a b
Chafer*
Of Commerce I n 836 B o y c o t t R e p o r t s
Number o f
Reports
238
% of Total
Reports
28.5%
COnpliatice
indicated
218
% Compliaft6e
91.6%
* As i n d i c a t e d i n T a b l e 5 , i n 5 8 o f t h e s e r e p o r t s , p a r t i c i p a t i o n
b y t h e A m e r i c a n - A r a b Chamber o f Commerce, o r a s i m i l a r u n i t ,
c o n s i s t e d o f making t h e b o y c o t t r e q u e s t t o t h e r e p o r t i n g f i r m .
256
TABLE 7
P a r t i c i p a t i o n Through Boycott
C e r t i f i c a t i o n b y U . S . Chambers
o f Commerce C o n t a i n e d i n 836
Boycott Reports
No. o f
% of
Reports
Reports
Total
Indicated
Compliance
97
11.6%
96
% Compliance
99%
TABLE 7A
P a r t i c i p a t i o n i n Boycott C e r t i f i c a t i o n s
U . S . Chambers o f Commerce
Humble ( T e x a s ) Chamber o f Commerce
Des P l a i n e s ( 1 1 1 . ) Chamber o f Commerce
S o u t h H o u s t o n ( T e x a s ) Chamber o f Commerce
R i c h f i e l d ( M i n n . ) Chamber o f Commerce
P e o r i a ( 1 1 1 . ) A r e a Chamber o f Commerce
M a r i t i m e Chamber o f Commerce ( N . Y . )
New O r l e a n s Chamber o f Commerce
New Y o r k Chamber o f Commerce and I n d u s t r y
D e l a w a r e C o u n t y ( P a . ) Chamber o f Commerce
G r e a t e r Omaha ( N e b . ) Chamber o f Commerce
D a l l a s ( T e x a s ) Chamber o f Commerce
Lakewood ( 0 . ) Chamber o f Commerce
Hampton Roads ( V a . ) Chamber o f Commerce
34
23
18
5
4
4
2
2
1
1
1
1
1
257
TABLE 8
Analysis:
836 Reports
Request for Negative C e r t i f i c a t e of Origin Only
No. of
Requests
% of
Requests
Compliance
indicated
% Compliance
203
24.3%
187
92.1%
258
TABLE 9
Analysis:
836 R e p o r t s
Requests W i t h A t L e a s t One B l a c k l i s t i n g
No. o f
Requests
600
% of
Requests
71.8%
Compliance
Indicated
531
Requirement
% Compliance
88.5%
259
TABLE 10
Analysis:
83'3 R e p o r t s
A r a b Chamber o f Commerce P a r t i c i p a t i o n
1)
Certification
of positive
boycott clauses)
of origin.
and n e g a t i v e c e r t i f i c a t e
+ disclaimer:
"Certification...limited
T h i s Chamber d i s c l a i m s
responsibility
No. o f R e p o r t s
% of
13
2)
No
% of
% of
origin
(and o t h e r
Requests
Requests
0.12%
Documents r e j e c t e d b y t h e A r a b Chamber o f Commerce f o r
lack of
% of
6
Requests
0.72%
R e q u e s t s i n i t i a t e d b y u n i t s o f t h e A r a b Chamber o f
No. o f R e p o r t s
% of
58*
Commerce.
Requests
6.9%
R e q u e s t s w h e r e c e r t i f i c a t i o n b y t h e A r a b Chamber o f Commerce i s
(no d o c u m e n t a r y e v i d e n c e o f s u c h
No. o f
Total
* Includes
anti-
clauses.
No. o f R e p o r t s
6)
of
blacklisted.
1
Israel boycott
statements..
2%
Validation that vessel is not
No. o f Reports
5)
any o t h e r
country
disclaimer.
17
4)
only to
Requests
and n e g a t i v e c e r t i f i c a t e
No. o f R e p o r t s
3)
for
(and o t h e r
1.6%
C e r t i f i c a t i o n of positive
cott clauses).
of o r i g i n
Reports
certification).
% of
Requests
149
17.8%
238
28.5%
the 6 rejected f o r
lack of boycott
clauses.
needed
boy-
260
TABLE
Analysis:
836
11
Reports
U . S . Chambers o f Commerce
1)
Certification
of positive
other boycott
clauses).
Participation
and n e g a t i v e C e r t i f i c a t e
No. o f R e p o r t s
% of
92
2)
of Origin
Requests
11%
D i s t r i b u t i o n o f documents i n c l u d i n g b o y c o t t p r o v i s i o n s
A r a b Chamber o f Commerce
No. o f
Total:
(and
Reports
and
participation.
% of
Requests
1
0*6%
97
11.6%
requiring
261
Mr. G R E E N B E R G . Mr. Chairman, to permit the continued employment of the negative certificate of origin would legitimize a principal
weapon employed by the Arab-boycott operation which compels American firms to police and enforce its boycott against Israel, for which
there is no justification in normal international trade practices.
The concern that Arab boycotting countries will curtail trade rather
than forgo negative certificates of origin is dispelled, indeed, substantially mitigated, by the recent announcement of the New York Chamber of Commerce and Industry, that the Arab Boycott Office in Jeddah will no longer insist upon negative certificates, but will recommend instead accepting positive assurances of U.S. manufacture. The
chamber reports that several Arab consulates have acknowledged and
indicated agreement to this change.
We have here the bulletin, named World Trade of the New York
Chamber of Commerce and Industry, which reports this change in
policy requiring certification. We would like to introduce i t for the
record.
This reports that :
T h e f o l l o w i n g consulates have advised by telephone t h a t t h e clause is no
longer required : I r a q , K u w a i t , L i b y a , and Saudi A r a b i a . Shippers need only show
c o u n t r y of o r i g i n on the invoices a n d certificate of origin.
Now, this decision by the Arab boycotting nations is gratifying confirmation of the view that these certificates are not necessary for trade.
I t is imperative, however, that this policy decision should be supplemented by the U.S. statutory prohibition that will act upon these
tentative indications to insure that there will be no future change in
the current practice of a few Arab countries and to make certain that
this practice becomes uniform and universal among the others.
I would like to turn, Mr. Chairman to another important distinction
between Senate bill 69 and Senate bill 92: Section 4 A. (a)(1) of
Senate bill 69 states:
. . . the President shall issue rules a n d regulations p r o h i b i t i n g any U n i t e d
States person f r o m t a k i n g a n y of t h e f o l l o w i n g actions w i t h i n t e n t t o comply
w i t h , f u r t h e r , or support a n y boycott fostered o r imposed by a f o r e i g n country
against a c o u n t r y w h i c h is f r i e n d l y t o the U n i t e d States. . . .
Senate bill 92 differs by eliminating the words "with intent." We
submit, that the inclusion of these words in S. 69 unduly limits the
likelihood of successful enforcement of the civil sanctions of the
statute.
I n a civil proceeding, a prima facie case should be made by proving
that a person has engaged in any of the prohibited activities; to require a private plaintiff or regulatory agency to prove the mental state
of the defendant imposes a difficult burden of proof. Moreover, the
prohibition of S. 92 by its terms applies only to "actions taken to
comply with, further or support" any foreign boycott against a friendly
country.
Now, "wrongful" intent is or may be an appropriate element of
the prosecution case, i f a criminal action were instituted under the
statute. I n the event, therefore, that a person were charged criminally
for a violation, the requirement of mens rea, criminal intent, would
be operative as in virtually all other penal statutes.
This country has made it very plain, that it will not set aside moral
concerns or excuse businesses from conducting its affairs within appro-
262
priate moral parameters, even when it can be persuasively argued that
appropriate behavior entails possible competitive costs. Thus, this
country demands that American businessmen refrain from bribing officials abroad in order to win favorable treatment, even though this
behavior may be acceptable abroad and, indeed, may be the common
practice of competing business firms from other countries. We are
simply not willing to purchase American contracts at the expense of
American morality. We believe the same considerations should be involved in assessing the propriety of Arab boycotting practices in the
United States.
Opponents of the legislation have argued that this would cause
American businesses considerable losses of international trade.
We sincerely believe, and experience bears out, that Arab boycotting
countries w i l l buy the best available product for the cheapest possible price in the shortest delivery time offered. They are, first and foremost, businessmen. They will trade with any nation on the face of the
earth, except perhaps Israel itself. American know-how, technical
genius, and product superiority are the controlling criteria and since
the beginning, have been the major factors in Arab trade with the
United States. I f and when the American business establishment loses
these special qualities, the Arabs will go elsewhere, whether or not
our businessmen have knuckled under to the boycott. Experience show^s
they will not turn their backs on us i f we remain competitive in terms
of quality*, service, and price.
I n the absence of Federal legislation, the paradoxical result is, those
firms that adhere to the national policy of this country and resist the
boycott demands are made to suffer serious penalty or may be opening
themselves to serious penalties. They pay a price by forfeiting Arab
trade, while those businesses that defy national policy and participate
in the boycott become beneficiaries of Arab commerce. This can be
corrected only by a Federal law which will proscribe participation by
any American firm and thus insure that these businessmen who act
upon principle and support our national policy will be protected from
unfair and unsupportable disadvantage.
Mr. Chairman, a recent Louis Harris poll reveals that an overwhelming majority of Americans opposes the Arab boycott. The American
people perceive the Arab boycott as a moral issue. President Carter has
described compliance and business cooperation with the boycott as a
"disgrace." Our Secretary of Commerce has stated her views in identical terms to the Senate Commerce Committee at her confirmation. We
respectfully submit that the American Congress bears an obligation to
express the will of the majority of the American people, and to implement, by law, the moral indignation of most American businessmen.
To buttress our view, not only by the Louis Harris poll referred to,
but by editorial comment in newspapers around the country, we would
like to introduce 16 editorials from various leading newspapers across
the country, which have appeared from January 1976 to October 1976,
supporting the legislation being considered today.
Senator S T E V E N S O N . Without objection.
[The documents reference follow:]
263
[From the Chicago Daily News, Oct. 23, 1976]
T H E BOYCOTT L I S T T H A T I S N ' T
The Commerce Department has s t i r r e d up more confusion t h a n understanding
i n disclosing the names of U.S. companies t h a t have become associated w i t h the
A r a b boycott of Israel. I n l i g h t of the misinterpretation of the l i s t of names
released so f a r , President Ford's campaign-trail order f o r disclosure was poorly
thought out and needs revision. The boycott should be resisted, but t h i s method
offers no solution.
The "boycott l i s t " is nothing of the k i n d i n the first place. I t is simply a list
of U.S. companies that, as required by federal law, i n f o r m e d the Commerce
Department t h a t they have been asked by A r a b customers about their products—
such as whether the products sold to A r a b states were made i n Israel or shipped
on blacklisted vessels.
W h a t the l i s t is n o t is a roster of companies t h a t refuse to deal w i t h Israel i n
order to m a i n t a i n trade w i t h A r a b nations.
A trade boycott between any t w o nations often is as dangerous as i t is foolish
because the m u t u a l animosity i t fosters can poison chances f o r peaceful reconciliation. The A r a b boycott is doubly reprehensible because i t seeks to coerce
other nations i n t o p a r t i c i p a t i n g i n an u n f a i r and t o t a l l y repungant act of
discrimination.
B u t many of the companies whose names were disclosed by the Commerce
Department do f a r more business w i t h I s r a e l t h a n w i t h A r a b states. A n d f u r t h e r ,
the highest executives of many companies are themselves Jews and they make
no attempt to hide t h e i r financial support of Israel.
The i n f o r m a t i o n provided by the companies amounted t o stating historical
facts t h a t are readily available i n public financial records.
Obviously the "boycott l i s t " is a sham maintained by A r a b states as a sop to
their pretension of s o l i d a r i t y against Israel.
B u t i t is a l i s t f u l l of mischief. Many of the companies named already have been
harmed financially by I s r a e l sympathizers who see i t as a certified l i s t of companies t h a t are boycotting I s r a e l to c u r r y f a v o r w i t h the Arabs.
Congress has a duty i n this situation to divise legislation f o r b i d d i n g U.S.
companies f r o m complying w i t h the Arabs' requests f o r boycott i n f o r m a t i o n .
I t would create a legal defense f o r the companies to cite i n refusing to supply
the i n f o r m a t i o n i n w h i c h the Arabs profess such interest.
B u t we suspect the Arabs are more interested i n buying American made goods
than keeping lists they don't pay attention to anyway.
[ F r o m the Chicago Sun-Times, Nov. 20, 1976]
B A N A N T I - I S R A E L BOYCOTTS
The Commerce Department has released the names of 38 U.S. companies t h a t
have acceded to the A r a b anti-Israel boycott. As a result, confusion reigns. Some
of the companies on the l i s t claim they do business w i t h I s r a e l as w e l l as w i t h
A r a b nations.
Apparently the companies listed by Commerce need have done l i t t l e more
t h a n report they had received requests f o r i n f o r m a t i o n about their trade practices
to end up on the list. I t is also possible t h a t some of the companies acceded f u l l y
to A r a b demands.
E i t h e r way, i t is unconscionable t h a t U.S. executives should be g i v i n g out any
k i n d of i n f o r m a t i o n on whether they do business w i t h I s r a e l or other companies
t h a t trade w i t h the Israelis. The fact t h a t they are even supplying the informat i o n makes them susceptible to anti-Israel pressures.
Obviously the U.S. companies themselves are i n no position to thumb their
noses at the A r a b countries. A t the same t i m e they w o u l d be doing that, the
Arabs, w i t h the endorsement of the U.S. government, are b u y i n g huge quantities
of arms f r o m the U n i t e d States. I t is U.S. policy t h a t this nation continue to
i m p o r t huge quantities of Mideast oil. H o w can U.S. companies create bad
relations w i t h Arabs when the a d m i n i s t r a t i o n is w o r k i n g at cross purposes?
264
There is a w a y o u t : the adoption of an easy-to-understand l a w p r o h i b i t i n g
U.S. companies f r o m g i v i n g to foreign governments or executives any i n f o r m a t i o n about the race, religion or national o r i g i n of its employes or f r o m pledging
not to do business w i t h any other company or foreign nation.
I f such a ban had the force of law, a U.S. company w o u l d be able to t e l l the
Arabs i t could not legally comply w i t h any boycott demands. Given the superiority
of U.S. goods and services, the Arabs w o u l d have to buy anyhow, j u s t as they
are buying arms now even though this country supplies I s r a e l as well. Such a
l a w died i n the closing days of Congress, i n large p a r t because President F o r d
threatened a veto.
I t should be reintroduced, passed and signed. Here's one w a y to show t h a t
U.S. foreign policy does have some m o r a l i t y .
[ F r o m t h e G r e e n s b o r o D a i l y N e w s , O c t . 13, 1 9 7 6 ]
BOYCOTTING
ISRAEL
I n last week's televised debate, President F o r d excoriated Congress f o r f a i l i n g
to p r o h i b i t cooperation by American companies i n the A r a b economic boycott
against Israel. "Because Congress f a i l e d to act," the President said, " I a m going
to announce tomorrow t h a t the Department of Commerce w i l l disclose those
companies t h a t participated i n the A r a b boycott.
Sure enough, the next day the President issued a directive r e q u i r i n g disclosure
by the Commerce D e p a r t m e n t but only of " f u t u r e " reports filed by cooperating
companies and excluding i n f o r m a t i o n w h i c h m i g h t put a company at a "competitive disadvantage" i n e x p l o i t i n g the A r a b trade. W h a t t h i s means is h a r d
to say. Probably nothing.
I n his passionate advocacy of the cause of Israel, the President also took a f e w
liberties w i t h the facts. The administration, as w e l l as the Congress, was a p a r t y
to the lapse this year of the E x p o r t A d m i n i s t r a t i o n A c t w h i c h declared against
" r e s t r i c t i v e trade practices and boycotts fostered or imposed by foreign countries
against other countries f r i e n d l y to the U n i t e d States." I n its stead, President
F o r d issued an executive order w h i c h imposed c r i m i n a l penalties of fines up to
$10,000—not much of a deterrent for m u l t i n a t i o n a l corporations.
L a s t year, the President also issued regulations p r o h i b i t i n g d i s c r i m i n a t i o n by
American companies against U.S. citizens, such as Jews and supporters of Israel,
at the behest of the Arabs. The Commerce Department ordered American companies doing business w i t h the Arabs to disclose their responses to the A r a b
demands to boycott Israel and discriminate i n employment against JewishAmericans. Of the 25,000 companies reporting 90 per cent complied w i t h the
demands. Secretary of Commerce E l l i o t Richardson has released the names of
a handful.
The A r a b states imposed t h e i r economic boycott on I s r a e l i n the early 1950s.
They have attempted not only to impose t h i s boycott policy on A m e r i c a n companies directly, but to put pressure on companies not to do business w i t h other
companies dealing w i t h Israel, not to employ Jews, and not to deal w i t h Jewishowned firms.
I n i t s efforts to pursue an "even-handed" policy i n the M i d d l e East, the U n i t e d
States has acted cautiously on this issue. The fact is, however, t h a t w h i l e the
Arabs may exercise t h e i r sovereign rights and boycott Israel, they have no
a u t h o r i t y to require American companies to do the same. The U n i t e d States
should not allow itself to become a passive partner i n an economic boycott
which is not the policy of its government. I n p a r t i c u l a r , i t cannot a l l o w foreign
governments to mandate the v i o l a t i o n of the constitutional r i g h t s of i t s citizens.
Strong legislation is required to b r i n g the practice of American firms i n t o line
w i t h the policy of our Department of State. A price may have to be p a i d i n
i l l w i l l f r o m the A r a b countries. So be i t . These nations w i l l have to learn t h a t
their sovereignty stops at their own watersedge.
[ F r o m t h e B a l t i m o r e S u n , O c t . 7, 1 9 7 6 1
THE
SECOND P R E S I D E N T I A L D E B A T E
Last night's presidential debate was an encounter i n w h i c h an adept challenger
could score points by focusing on w h a t he considers the m i s h a n d l i n g of certain
incidents or developments of the last few years as evidence of f o r e i g n policy
265
failures. T h i s Governor Carter did. H e could pounce w i t h t e l l i n g effect on the
F o r d and N i x o n administration's support of the t y r a n n i c a l regime i n Chile. H e
could cite the lack of progress on S A L T negotiations w i t h o u t reference to obstructive or delaying actions on the Soviet side. H e could exploit American f a i l ures elsewhere w i t h o u t precisely t e l l i n g how he would have dealt w i t h implacable
enemies i n these trouble spots. H e could do a l l this because he possessed—and
used—the advantages of the non-incumbent i n matters of foreign affairs.
The common pre-debate wisdom gave President F o r d the advantage because, as
incumbent, he would have access to a l l the i n f o r m a t i o n and rationale underlying
foreign policy. B u t this common wisdom overlooked one key aspect of the Kennedy-Nixon debates of 1960. I n these debates, John Kennedy often held the
i n i t i a t i v e because he could grieve over alleged American weaknesses found at
the end of an era i n w h i c h R i c h a r d N i x o n served as vice president. A n d he could
envisage a w o r l d i n w h i c h the U n i t e d States w o u l d be stronger, more respected
and more widely admired.
Confronted w i t h the Carter version of the Kennedy attack, President F o r d
t r i e d strongly at first, then more feebly as he went along, to defend the accomplishments of his a d m i n i s t r a t i o n . H e emphasized repeatedly t h a t the nation is
at peace, t h a t American diplomacy is currently t r i u m p h a n t i n the M i d d l e East
and increasingly effective i n southern A f r i c a . B u t having made these points, he
f a i l e d to elaborate them w i t h the vision of hope voters crave.
The President's performance also contained obvious flaws t h a t seemed f a r
greater than any Governor Carter committed. H e put f o r w a r d the thoroughly
unbelievable theory t h a t Poland and Romania are not under the domination of
the Soviet Union. H e may have meant t h a t the people of these countries remain
indomitable i n spirit. B u t he d i d not say that. He made an even worse mistake
later when he bragged t h a t he had j u s t signed a t a x b i l l penalizing corporations t h a t engage i n the A r a b boycott. I n actuality the F o r d a d m i n i s t r a t i o n opposed this unwise use of t a x a u t h o r i t y w h i l e the Republican leadership allowed
a wiser approach to die.
M r . Carter's m a j o r weakness on first impression seemed to be i n a lack of
generosity i n acknowledging certain American strengths he w i l l be happy to use
i f he is President. H e ignored recent accomplishments, or suggested they are
failures, and when challenged on whether he did not t h i n k America the strongest
nation i n the w o r l d he retreated into some of his f a v o r i t e moralistic homilies.
These may have been intended to cover over his tendency—perhaps his correct
tendency—to take as tough a position on certain w o r l d trouble spots as the
President. B u t i t d i d not work. M r . Carter's penchant f o r ambiguity shown
through again.
GIVING I N
TO T H E
BOYCOTT
The disgraceful f a i l u r e of Congress to enact a judicious l a w protecting American business f r o m the A r a b boycott of Israel has penalized those states such as
New Y o r k and M a r y l a n d w h i c h have done r i g h t i n enacting t h e i r own laws. As a
result, pressure w i l l increase on A t t o r n e y General Francis B. Burch, whose office
is d r a f t i n g regulations (for the enforcement of the M a r y l a n d law, to keep the
teeth out. The temptation w i l l grow f o r ports i n states lacking anti-boycott laws
to solicit business away f r o m the ports of New Y o r k and B a l t i m o r e w i t h the
most sordid of sales pitches.
The M a r y l a n d l a w is carefully d r a w n w i t h modest scope, to p r o h i b i t M a r y landers f r o m d i s c r i m i n a t n i g against other M a r y l a n d s as a condition f o r doing
business. No one can object to i t . No one need fear i t . A l a r m s t h a t i t would divert
B a l t i m o r e business to N o r f o l k are unsubstantiated but could become self-fulfilling. There should be no going back because of Congress' f a i l u r e to pre-empt the
field w i t h solid legislation of i t s own. M r . B u r c h should make the l a w as effective
as he can and challenge the rest of the nation to follow suit. A n d M a r y l a n d port
promoters should be ready to publicize any business solicitations by r i v a l ports
suggesting a welcome f o r A r a b secondary and t e r t i a r y boycotts t h a t t u r n Americans against Americans, A more vigorous effort by M a r y l a n d port promoters to
get better legislation out of the next Congress is also very much i n order.
B o t h the House and the Senate passed sensible amendments to the E x p o r t
A d m i n i s t r a t i o n A c t t h a t w o u l d have publicized any compliance w i t h the boycott
and forbidden discrimination against Americans as a condition of doing business. I n the f r a n t i c last days of the session the conference committee f a i l e d t o
reconcile the differences i n the b i l l s because the Republican leadership f a i l e d to
appoint conferees. T h i s was i n furtherance of a d m i n i s t r a t i o n opposition to the
bill, based on unpersuasive arguments t h a t c i v i l rights or a n t i - t r u s t laws are
sufficient and on evident fear of offending Arab states.
266
A less desirable anti-boycott measure d i d pass. The t a x r e f o r m b i l l w o u l d deny
export earnings t a x credits to firms complying w i t h the boycott. T h i s is a dist r a c t i o n f r o m the cause of t a x r e f o r m itself, using t a x policy as a t o o l f o r other
purposes.
T h i s n a t i o n can get g r o w i n g business f r o m the A r a b w o r l d w i t h o u t being dictated to p o l i t i c a l l y or compromising i t s beliefs i f i t stands united. I f the A r a b
governments and businessmen are shown t h a t A m e r i c a n firms w i l l not be bullied,
and under l a w cannot be bullied, the demands t h a t American firms boycott I s r a e l
and boycott persons t h a t do not boycott Israel, w T ill f a l l off. The craven f a i l u r e
to show t h i s only invites more unwelcome A r a b d i c t a t i o n of domestic A m e r i c a n
business practice.
[ F r o m t h e K a n s a s C i t y S t a r , Sept. 25, 1 9 7 6 ]
A R A B BOYCOTT
PITS
PROFIT AGAINST
PRINCIPLE
B o t h houses of the U.S. Congress, by substantial majorities, have now passed
legislation to discourage p a r t i c i p a t i o n by American firms i n the A r a b boycott
of Israel. The Senate version is considerably less restrictive t h a n the one voted
Wednesday by the House. Conferees expect to have a compromise b i l l ready f o r
consideration next week.
The argument over antiboycott legislation has pitted principle against economic
interest. Opponents charge t h a t a tough b i l l could cost U.S. business $7 b i l l i o n or
more a year i n lost sales to A r a b countries and result i n a d d i t i o n a l domestic unemployment. Supporters do not deny t h a t there w o u l d be some economic impact
but m a i n t a i n t h a t resisting the boycott is a m o r a l requirement f o r t h i s country.
The a d m i n i s t r a t i o n has consistently opposed efforts to i n h i b i t the boycott by
law, p r e f e r r i n g t o rely on persuasion and adverse p u b l i c i t y t o r e s t r a i n companies f r o m yielding to the Arabs' a n t i - I s r a e l a n d anti-Jewish trade conditions.
Various a d m i n i s t r a t i o n spokesmen have cited the effectiveness of t h a t approach,
but the facts t e l l a different story. Boycott compliance is widespread among U.S.
exporting, contracting and engineering firms and financial institutions. T h a t explains the v i g o r of their opposition t o real restraints.
No one has suggested t h a t the stand of principle on this question w o u l d be
w i t h o u t certain cost. The question is how great t h a t cost really w i l l be and, more
to the point, how enduring. A r a b commercial sanctions have weight so long as
they can be selectively applied. B u t w i t h U.S. business presenting a solid f r o n t
of noncompliance, the A r a b regimes w i l l face a h a r d weighing of t h e i r own i n t e r ests. There is a t least a reasonable expectation t h a t they w i l l buckle, i n practice
i f not publicly.
I f they do not, i t w i l l not be the first t i m e t h a t American business has been
asked to pay a price i n dollars f o r behaving responsibly. As the scandal of intern a t i o n a l corporate payoffs has demonstrated, there is more involved i n f o r e i g n
commercial relations t h a n simply the numbers on the bottom line. Decency a n d
larger policy objectives also enter into the calculation.
[ F r o m t h e N e w Y o r k Times, Sept. 14, 1 9 7 6 ]
THE
ARAB
BOYCOTT
The A r a b boycott against I s r a e l raises difficult political, economic, legal a n d
m o r a l issues f o r the U n i t e d States. The boycott is repugnant. I t violates A m e r i can principles and laws when i t requires American companies, as a condition
f o r doing business w i t h A r a b countries, to discriminate against A m e r i c a n citizens because of t h e i r religion. I t u n f a i r l y imposes secondary boycotts against
American companies t h a t h i r e Jewish employees or directors, or trade w i t h
Israel.
E f f o r t s to prevent American companies f r o m acceding to boycott rules imposed
upon them by a foreign power are u n f o r t u n a t e l y complicated by the f a c t t h a t
the U n i t e d States has itself engaged i n secondary boycotts against other count r i e s — f o r example, f o r t r a d i n g w i t h Cuba. Such e x t r a t e r r i t o r i a l i t y is a t h r e a t
to l i b e r a l trade and investment, to the r i g h t s of innocent people i n other countries, to the sovereignty of other nations, and to peace itself.
A l l of t h i s makes more difficult, but no less relevant, the question whether the
U n i t e d States can effectively prevent i t s own businesses f r o m y i e l d i n g t o A r a b
267
pressures t h a t abridge the r i g h t s of other American citizens and companies.
The route taken by Senator Ribicoff i n amending the pending omnibus t a x b i l l
w i t h a requirement t o impose t a x penalties on companies t h a t participate i n
secondary or t e r t i a r y boycotts seems to us the w r o n g solution. Using the t a x
code as a p u n i t i v e device establishes a dangerous precedent. The t a x laws are not
intended to be p a r t of the law-enforcement system; t h e i r purpose is to provide
revenues and to improve the economy's stability and growth.
A l t h o u g h certain types of activities are encouraged by the t a x laws (as
through the investment t a x c r e d i t ) , stretching t h a t principle i n t o a new system
to punish corporations or i n d i v i d u a l s f o r alleged misdeeds is a questionable
course. Under the Ribicoff amendment, moreover, determination of g u i l t w o u l d
be made by the Secretary of the Treasury " o r his delegate." Such powers, i f
granted to an agency administrator, m i g h t be employed a r b i t r a r i l y , especially
i n dealing w i t h such complex questions as whether a firm d i d or d i d not participate i n a secondary or t e r t i a r y boycott.
U n f o r t u n a t e l y , the Ribicoff amendment has now been embedded i n the t a x b i l l
adopted by the House-Senate conference committee, and the President may have
no choice but to accept i t or r i s k k i l l i n g the t a x b i l l and endangering the economic recovery. Over the coming months, however, Congress and the President
should develop a more effective and legally sound attack on the boycott.
The a n t i t r u s t laws, the c i v i l r i g h t s laws and the banking and security laws
give the U n i t e d States Government the means of curbing conspiracies and disc r i m i n a t o r y practices by American companies t h a t cooperate w i t h the A r a b
boycott. Enforcement of those laws w o u l d do much to stiffen the resistance of
American firms to foreign economic blackmail. The Government has recently
stepped up its actions to penalize firms t h a t violate American laws i n response
to the A r a b boycott. T h i s may signal a welcome change f r o m past attitudes
wThen, as a report by the House Subcommittee on Oversight and Investigations
shows, the U.S. Commerce Department actually helped and encouraged American
firms to uphold the A r a b boycott and w i n k e d a t violations of the disclosure requirements of the E x p o r t A d m i n i s t r a t i o n Act, intended by Congress to fight
the boycott. Secretary E l l i o t Richardson insists t h a t under his a d m i n i s t r a t i o n
such conduct has ceased.
Congress nevertheless should strengthen the E x p o r t A d m i n i s t r a t i o n A c t by
m a k i n g i t illegal f o r American firms to engage i n secondary or t e r t i a r y boycotts.
The threat of economic reprisal by the Arabs cannot be accepted as a basis f o r
p e r m i t t i n g American firms to submit to odious terms t h a t violate the rights and
interests of other Americans, or abridge this nation's sovereign powers.
[ F r o m t h e P h i l a d e l p h i a I n q u i r e r , Sept. 29, 1 9 7 6 ]
U . S . S H O U L D N O T S U C C U M B TO A R A B B O Y C O T T D E M A N D S
T h a t report t h a t Saudi A r a b i a was threatening to impose a new o i l embargo
against the U.S. seems to have been exaggerated. I t came f r o m Egypt's official
Middle East News Agency, an unreliable source. Saudi Arabia's foreign minister,
Prince Saudi bin Faisal, as w e l l as officials of the U.S. State and Treasury departments, have categorically denied i t . Official denials are not a l l t h a t reliable
either, but i n this instance there is no evidence to refute them. •
Saudi Arabia, however, is not above p u t t i n g pressure on the U.S. i n other
ways. I t is p a r t i c u l a r l y concerned about t w o proposals now on the congressional
agenda.
One is the F o r d A d m i n i s t r a t i o n ' s proposed sale of 650 air-to-surface Maverick
missiles to Saudi Arabia. Last F r i d a y , i n a surprise move, the Senate Foreign
Relations Committee voted 8 - 6 to block the sale. The Saudis say they need the
weaponry to defend themselves against, among others, I r a n , w h i c h the U.S. is
also even more amply p r o v i d i n g w i t h weaponry.
Sen. C l i f f o r d Case, who introduced the resolution b a r r i n g the sale, believes
t h a t Saudi Arabia's possession of so many and such sophisticated weapons would
be " a d i s t u r b i n g and potentially destabilizing f a c t o r " i n the Middle East balance
of power. W e share the New Jersey Republican's concern, b u t the real destabil i z i n g factor is the massive and unrestrained shipments of arms to such countries as I r a n and Saudi Arabia.
T h a t issue has to be reconsidered by the next administration. Meanwhile,
though we are unenthusiastic about the sale, i t amounts to only $30 m i l l i o n ,
85-654 O - 77 - 18
268
scaled i n h a l f f r o m the administration's o r i g i n a l proposal. I f , by inaction, Congress lets i t go through, we do not t h i n k i t w i l l do t h a t much harm.
The other issue, the A r a b boycott against Israel, involves a m a t t e r of A m e r i c a n
principle. I f the Arabs insist on conducting economic w a r f a r e against Israel,
America's most reliable f r i e n d i n the Mideast, there may be no w a y of preventing
them. B u t the U.S. is not obliged, nor should i t oblige itself and the Arabs, to
cooperate w i t h them.
Saudi A r a b i a and the o i l companies w i t h interests there have been w a r n i n g
t h a t anti-boycott legislation w o u l d cause the U.S. to lose billions of dollars.
Somehow, we doubt t h a t the Saudis, who can get quite realistic when their own
profits are involved, w o u l d cut off their nose to spite t h e i r face. W e certainly
doubt, f o r instance, t h a t they w o u l d refuse to buy those M a v e r i c k missiles i f
the makers also do business w i t h I s r a e l or have " Z i o n i s t s " on their board of
directors.
Beyond that, though, the argument t h a t profits come before p r i n c i p l e is repugnant to us as we t h i n k i t is to most Americans, who have a long t r a d i t i o n of
refusing to pay tribute. This is a m a t t e r of self-interest as w e l l as principle, f o r
once the w o r d gets around t h a t a person or a n a t i o n w i l l submit to blackmail,
the blackmailers w i l l only step up their demands.
[From the Philadelphia Inquirer, Sept. 5, 1976]
U . S . POLICY AND PRIDE ARE AT STAKE I N BOYCOTT C L A I M S
The E x p o r t A d m i n i s t r a t i o n Act of 1969 declares i t to be U.S. policy to oppose
and to encourage U.S. firms to refuse to cooperate w i t h " r e s t r i c t i v e trade practices or boycotts fostered or imposed by any foreign country, against another
country f r i e n d l y to the U n i t e d States."
L a s t November, President F o r d issued a directive designed f u r t h e r to protect
American business and citizens f r o m d i s c r i m i n a t i o n as a result of the A r a b
economic w a r against a f r i e n d l y country, Israel. Now, i n Congress, legislation
is being proposed to c l a r i f y and enforce the official policy of the U n i t e d States.
The House I n t e r n a t i o n a l Relations Committee has voted, 27-1, to make i t i l legal f o r U.S. firms to cooperate w i t h the A r a b boycott. Senate-House t a x b i l l
conferees are also giving favorable consideration to a Senate provision w h i c h
w o u l d deny t a x advantages, such as foreign t a x credits, d e f e r r a l of t a x a t i o n
on foreign earnings, and t a x benefits f o r exports, to firms t h a t comply w i t h the
A r a b boycott.
The F o r d A d m i n i s t r a t i o n is uncompromisingly opposed to these measures. I n
this, i t is at least consistent. Secretary of State H e n r y Kissinger has always
opposed w h a t he considers to be congressional interference i n his conduct of
foreing affairs.
The a d m i n i s t r a t i o n argues t h a t the problem can only be cured t h r o u g h diplomacy and t h a t i n any case legislation w o u l d n ' t w o r k . The trouble is t h a t diplomacy hasn't worked very well, either. Legislation, obviously, could not break
the A r a b boycott, but t h a t is not the prime purpose. I t s purpose is to c a r r y out
our own n a t i o n a l policy, to protect our own n a t i o n a l interests, and to protect
our own citizens f r o m being discriminated against.
N o r is i t at a l l certain t h a t legislation w o u l d deprive U.S. firms of profits i n
the A r a b market. The Arabs do need and w a n t American technology and capital.
I n t r a n s i g e n t as they have been about the boycott i n their rhetoric, i n practice
they have done business w i t h anyone when i t suits their convenience.
Beyond that, though, there is a m o r a l question. I t is not a m a t t e r of Congress'
t e l l i n g American firms w h o m to do business w i t h . The question is w h y the l a w
should a c t u a l l y provide t a x advantages, w h i c h everyone has to pay f o r , to firms
w h i c h flout official policy.
A n d there is also the m a t t e r of n a t i o n a l pride, a t e r m we are not a t a l l ashamed
to use. I f Arabs do not wish to do business w i t h Americans because we w i l l not
be subservient to t h e i r policy, t h a t is t h e i r a f f a i r . B u t w h y should we be subservient? W h y should the U.S. yield i t s principles and its interests to help the
Arabs h u r t our citizens and our allies?
" W e w i l l not allow anyone to dictate to us how we shall conduct our affairs."
So stated one A r a b spokesman i n w a r n i n g the U.S. against "interference" w i t h
the A r a b boycott.
Well, the U.S. is not t r y i n g to dictate to the Arabs, b u t neither should we supinely allow them to dictate to us.
269
[From the St. Louis Globe Democrat, July 15, 1976]
DON'T BOW TO ARAB BLACKLISTING
There is no w a y t h a t t h i s c o u n t r y can stop A r a b countries f r o m conducting
economic w a r against I s r a e l by b l a c k l i s t i n g firms and i n d i v i d u a l s t h a t have
dealings w i t h Israelis.
B u t the U n i t e d States should not condone the practice of a good m a n y A m e r i can firms of b o w i n g to t h i s heavy economic pressure.
I t was reported recently i n The W a l l Street J o u r n a l t h a t representatives of
the A r a b League t h a t r u n the boycott are meeting w i t h considerable success i n
f o r c i n g U.S. companies to stop t r a d e w i t h Israel.
A t the boycott office i n Damascus, Syria, i t was claimed t h a t the number of
A m e r i c a n companies on a l i s t of 1500 blacklisted firms has dropped t o 40 per
cent of total. A f e w years ago the U n i t e d States companies h a d comprised 60
percent or a much l a r g e r l i s t .
H o w d i d so m a n y A m e r i c a n firms get off the l i s t ? They a p p a r e n t l y stopped
t h e i r t r a d e or other m a j o r help to Israel. Once they h a d convinced the A r a b
blackslisters t h a t they had broken aff dealings w i t h Israel, the U.S. companies
were eligible to p a r t i c i p a t e i n t r a d e and other ventures i n the o i l - r i c h A r a b
nations.
Obviously the A r a b s are going to continue t h e i r vendetta against Israel. B u t
Congress shouldn't p e r m i t companies t o consent to t h i s k i n d of b l a c k m a i l i n order
to do business w i t h A r a b countries.
T h e idea of a group of nations t e l l i n g A m e r i c a n companies they can't trade
w T ith a c e r t a i n n a t i o n — i n t h i s case I s r a e l — i s repugnant and unacceptable. The
t r a d e w i t h A r a b countries is i m p o r t a n t but i t i s n ' t w o r t h selling the i n t e g r i t y of
A m e r i c a n businesses to get i t .
[From the Kansas City Times, June 15, 1976]
T w o VIEWS OF A BOYCOTT
W i l l i a m E. Simon, t r e a s u r y secretary, recently t o l d a House c o m m i t t e e t h a t
the A r a b economic boycott against I s r a e l is easing and t h a t proposed legislation
to i n h i b i t compliance by U.S. firms is unnecessary and m i g h t even make matters
worse.
Only the day before, however, the d i r e c t o r of a bureau of the D e p a r t m e n t of
Commerce testified before another House panel, t h a t , j u s t i n t h e l a s t calendar
q u a r t e r , 119 U.S. banks, reported c o m p l y i n g w i t h 4,071 specific boycott requests.
Several banks had t o be fined f o r f a i l i n g to r e p o r t the transactions as required.
One of these witnesses is w r o n g and one is r i g h t . A n d since Secretary Simon
was t a l k i n g i n generalities w h i l e the m a n f r o m Commerce h a d h a r d figures i n
hand, i t seems clear enough w h i c h one of t h e m h a d done some homework. The
4,071 b a n k i n g compliances—which projects to more t h a n 16,000 a year and i n
j u s t one i n d u s t r y — h a r d l y sounds to us l i k e a p i c t u r e of improvement. Or i f i t
is, the boycott has i n f i l t r a t e d A m e r i c a n economic l i f e more pervasively t h a n wTe
ever dreamed.
I n his testimony, Simon noted t h a t the U.S. i n the past h a d boycotted Cuba,
Rhodesia, N o r t h K o r e a and N o r t h V i e t n a m a n d t h a t the Arabs cannot understand w h y they are not e n t i t l e d " t o do the same." There is, of course, a c r u c i a l
difference: T h e U.S. d i d not impose secondary sanctions against firms i n other
countries w h i c h , f o r policy reasons of t h e i r own, continued to t r a d e w i t h the
proscribed regimes.
T h a t is the special offense of the A r a b boycott. I f the Arabs choose not to
t r a d e w i t h Israel, t h a t is w h o l l y t h e i r o w n business. B u t is is quite another
t h i n g t o t r y to make other nations u n w i l l i n g p a r t i e s to the economic w a r f a r e .
Secretary Simon seems to suggest t h a t the best w a y to deal w i t h t h i s outrage
is to t u t - t u t r e p r o a c h f u l l y b u t take not tangible countermeasures i n the hope
t h a t the boycott w i l l presently go away. T h a t is s i l l y . I f the figures f r o m the
b a n k i n g c o m m u n i t y are any i n d i c a t i o n , i t is not going to go a w a y — n o t volunt a r i l y i n any case.
A n t i b o y c o t t l e g i s l a t i o n is needed. A n d i f i t means a f e w lost orders or cancelled contracts, t h a t w i l l not be the first t i m e Americans have been called upon
to pay some s m a l l price f o r principle. Nor should i t be the last.
270
[ F r o m t h e C h a r l o t t e O b s e r v e r , J u n e 14, 1 9 7 6 ]
ARAB
INTRUSION
JONES'S ADVICE I S
WRONG
Neither common decency nor t h e best interests of the U n i t e d States are served
by the practices acknowledged by E d w i n L. Jones J r . of Charlotte i n his testimony
Thursday to a House committee. M r . Jones, president of j . A. Jones Construction
Co., said his company i n some instances has gone along w i t h demands by A r a b
countries t o boycott Israel.
W h y ? N o t to create jobs f o r Americans, but to make money. T h e company
does a substantial business i n Saudi Arabia.
M r . Jones's testimony showed t h a t w h i l e the company is responsive t o the
A r a b countries' foreign policy requirements i t is i g n o r i n g A m e r i c a n policy.
W e t h i n k the company has no business acting, f o r whatever reason, i n a m a t t e r
t h a t is against the policy of the United States.
A r a b pressures of various kinds have been brought to bear upon A m e r i c a n
companies. Many firms have been blacklisted because they had Jewish ownership
or high-level Jewish executives; some of the biggest corporations i n America
have been (blacklisted f o r other reasons, chief among which, apparently, is t h a t
they do business w i t h Israel.
I n other words, some of the A r a b countries not only have t o l d A m e r i c a n
companies they cannot do business w i t h both Israel and A r a b n a t i o n s ; they
also have brought subtle pressures to bear w h i c h m i g h t persuade some companies
to violate A m e r i c a n l a w by d i s c r i m i n a t o r y practices w i t h i n . Congress has
declared the first p a r t of this to be against American p o l i c y ; the second p a r t
is against the law.
As we said some t i m e ago, t h i s is a reprehensible and unacceptable i n t r u s i o n
i n American affairs. No American company should accept such interference.
I n his testimony before the House I n t e r n a t i o n a l Relations Committee, M r .
Jones not only acknowledged t h a t his company has yielded to the boycott-Israel
pressure but also urged Congress not t o enact proposed legislation w h i c h w o u l d
make this a punishable v i o l a t i o n of l a w r a t h e r t h a n simply an expression
of disregard f o r American policy!
H e should have been on the opposite side, as are m a n y American business
executives. They k n o w t h a t the best way to counter the A r a b government's
pressures is to have a l a w on the books w h i c h requires them not t o yield.
Then they could simply t e l l A r a b governments : We have no choice b u t t o comply
w i t h American law.
W o u l d t h a t p u t them out of business i n the A r a b world? I t is conceivable,
though unlikely, t h a t i n a f e w cases i t would. B u t i t is v i r t u a l l y inconceivable
t h a t those developing countries would choose t o do w i t h o u t A m e r i c a n technology, American scientific development and American management know-how.
Such a law, i n our view, overnight would break t h e back of this impudent
i n t r u s i o n i n American l i f e .
The larger question, however, is one of m o r a l i t y . T h e A r a b boycott and
blacklisting of firms has been aimed not only at Israel but also against A m e r i c a n
Jews. I f an A r a b nation wants to do business w i t h an American firm, i t can
abide by this country's rules of decency and f a i r play—or go elsewhere. W e
doubt t h a t those countries, which are being developed largely by A m e r i c a n
enterprise, would go elsewhere.
Congress should make American policy—not a bunch i f o i l kings and sheiks.
[ F r o m t h e W a s h i n g t o n P o s t , J u n e 12, 1 9 7 6 ]
A R A B BOYCOTT V I C T I M S :
AMERICANS
The specific dimensions of the A r a b boycott—in fact, a boycott of A m e r i c a n
firms t h a t deal w i t h or i n I s r a e l or whose officers are identified as " Z i o n i s t s " or
simply as Jews—are 'becoming k n o w n f o r the first time. One House subcommittee
has established t h a t i n 1974-75, 637 American exporters sold at least $352
m i l l i o n and perhaps as much as $781 m i l l i o n i n goods and services under boycott
conditions. Another subcommittee f o u n d t h a t i n the f o u r months r u n n i n g f r o m
last December, one4>ank alone received and executed 824 A r a b letters of credit,
w o r t h $41 million, containing boycott clauses. I n one of a number of such
271
cases, General T i r e has been accused ( b y t h e SEC) of p a y i n g a $150,000
commission t o get off t h e boycott l i s t . A l t h o u g h t h e Justice D e p a r t m e n t has
filed a n a n t i t r u s t s u i t against Bechtel C o r p o r a t i o n f o r b o y c o t t i n g a n o t h e r A m e r i c a n firm i n o r d e r t o f u l f i l l a boycott requirement, B e c h t e l is s a i d t o be n o t i f y i n g
subcontractors t h a t I s r a e l i goods o r m a t e r i a l s shipped on b l a c k l i s t e d vessels
cannot be used i n a $20 b i l l i o n Saudi seaport project.
So t h e A r a b boycott i s real. I t is immense, t h o u g h sometimes capricious. I t
seems t o be g r o w i n g as business prospects g r o w .
W h a t should be done ? T h e a d m i n i s t r a t i o n believes i t s o w n c u r r e n t q u i e t policies
suffice. F u r t h e r l e g i s l a t i o n w o u l d be " c o u n t e r - p r o d u c t i v e , " T r e a s u r y Secretary
W i l l i a m Simon a r g u e d t h e o t h e r day. B u t i t is precisely d u r i n g t h e l a s t two-year
p e r i o d of discreet a d m i n i s t r a t i o n policy t h a t b o y c o t t practices h a v e spread t o
the p o i n t w h e r e hundreds of m i l l i o n s of d o l l a r s of business a y e a r a r e affected
a n d where A m e r i c a n s a r e forced t o t r a m p l e on t h e i r o w n l a w s a n d values a n d
each other as they p u r s u e A r a b business. I t is d i f f i c u l t t o i m a g i n e a policy
t h a t has been more discredited.
T h e A r a b s ' p r i m a r y boycott of I s r a e l is t h e i r o w n a f f a i r . T h e need is overwhelming, however, f o r l e g i s l a t i o n addressing the s e c o n d a r y boycott, by w h i c h
A r a b s to t r y to m a k e A m e r i c a n companies t h e i r i n s t r u m e n t s i n b o y c o t t i n g I s r a e l ;
a n d against t h e t e r t i a r y boycott, by w h i c h A r a b s t r y t o m a k e A m e r i c a n firms
boycott other A m e r i c a n firms t h a t deal w i t h I s r a e l o r t h a t h a v e Z i o n i s t / J e w i s h
officers. W i l l t h e A r a b s t a k e t h e i r business elsewhere? N o d o u b t some w i l l .
B u t since A r a b s w a n t A m e r i c a n business ties not j u s t f o r t h e goods a n d services
b u t f o r the broad p o l i t i c a l ties t h a t come w i t h them, we are confident t h a t most
A r a b s w i l l decide otherwise. They a r e n o t so b l i n d t o t h e i r o w n self-interests
as apologists f o r the boycott t e n d to c l a i m .
T h e a n t i b o y c o t t p r i n c i p l e has been embodied i n A m e r i c a n l a w f o r 11 years.
" I t is the policy of t h e U n i t e d (States," says t h e E x p o r t A d m i n i s t r a t i o n A c t ,
to "oppose" boycotts imposed against f r i e n d l y countries, a n d t o "encourage a n d
request" A m e r i c a n firms not t o t a k e p a r t . W h a t is n o w i n v o l v e d is to t u r n t h a t
e m i n e n t l y sound p r i n c i p l e i n t o a c t u a l practice. T h e State D e p a r t m e n t has h a d
other—political—matters foremost i n mind. The Treasury Department thinks
first o f dollars. B u t a n increasing n u m b e r of companies f a v o r l e g i s l a t i o n t h a t
w o u l d make i t i l l e g a l t o p a r t i c i p a t e i n a practice t h a t — e v e n the c r i t i c s of the
legislative approach agree—is f u n d a m e n t a l l y offensive a n d un-American. F e d e r a l
Reserve B o a r d C h a i r m a n ArtJhur B u r n s stated the o t h e r day t h a t i t is no
longer enough merely t o "encourage a n d request" noncompliance w i t h boycott
requests. " I t is u n j u s t , " he said, " t o expect some banks t o suffer competitive
penalties f o r responding a f f i r m a t i v e l y t o the s p i r i t of U.S. policy, w h i l e others
p r o f i t b y i g n o r i n g t h i s p o l i c y . " H e urged Congress t o " a c t decisively." I t should.
[From the Washington Post, Sept. 20, 1976]
No
AMERICAN
BOYCOTT
T h e A r a b s ' decision to establish a n A r a b boycott of I s r a e l is t h e i r business.
B u t t h e i r a t t e m p t t o establish a n A m e r i c a n boycott of I s r a e l is something v e r y
d i f f e r e n t . I t runs against A m e r i c a n interests, A m e r i c a n values a n d the A m e r i c a n
grain. T h a t i s t h e e l e m e n t a r y d i s t i n c t i o n made by t h e Congress i n w r i t i n g
anti-secondary-boycott provisions i n t o the t a x r e f o r m b i l l . W h e t h e r a t a x b i l l
should be the vehicle f o r a measure r e l a t e d to f o r e i g n policy is an i n t e r e s t i n g
question f o r t h e l a w y e r s . T h e rest of us can t a k e s a t i s f a c t i o n t h a t l e g i s l a t i v e
teeth a r e being p u t i n t o t h e d i p l o m a t i c j a w b o n e w i e l d e d q u i e t l y by t h e a d m i n i s t r a t i o n i n t h e l a s t f e w years. I t is precisely i n those l a s t f e w years, o f course,
t h a t the A r a b s ' p r a c t i c e of a secondary boycott, one d i r e c t e d a t A m e r i c a n firms
t h a t t r a d e w i t h I s r a e l o r t h a t have J e w i s h or " Z i o n i s t " officers, has spread
to encompass business deals measured i n the hundreds o f m i l l i o n s of dollars.
Seldom has the inadequacy of d i p l o m a c y a n d the necessity f o r l e g i s l a t i o n been
so o v e r w h e l m i n g l y demonstrated.
Opponents of the new l e g i s l a t i o n argue, i n effect, t h a t A r a b n a t i o n s a r e so
determined to compel A m e r i c a n s t o support t h e i r boycott of s l r a e l t h a t , i f flouted,
they w i l l t a k e t h e i r b i l l i o n s i n business elsewhere a n d perhaps even d i m i n i s h
the flow of t h e i r oil. N o one w o u l d be s u r p r i s e d i f some A r a b - A m e r i c a n deals
are j u n k e d i n conspicuous a n d symbolic protest. B u t i t i s demonstrably false
t h a t g a i n i n g A m e r i c a n s u p p o r t of t h e i r boycott is so i m p o r t a n t t o t h e A r a b s
272
that, to t h a t end, they w i l l jeopardize the t h i c k economic and p o l i t i c a l ties
they have b u i l t up so carefully w i t h the U n i t e d States i n recent years. Arabs
are spending billions on arms produced by the very manufacturers w h o sell to
Israel, f o r instance. They are doing so presumably because they see more advantage to themselves i n i g n o r i n g the boycott t h a n i n enforcing i t . I n the past,
American companies had l i t t l e incentive to help b r i n g the Arabs t o this sensible
view of t h e i r own self-interest. Now the American companies have an incentive.
Now, too, an American company declining to p a r t i c i p a t e i n the A r a b boycott
w i l l not face the same risk of p a y i n g a financial penalty f o r honoring the
U n i t e d States' longstanding anti-secondary-boycott policy.
One needs to step back a pace. W e t h i n k i t entirely healthy and useful t h a t
the boycott issue has come to the fore. I t goes to the basic f r a m e w o r k i n w h i c h
the U n i t e d States and the A r a b w o r l d are t r y i n g to expand and deepen a relationship t h a t has been, u n t i l relatively recent, n a r r o w and f o r m a l and sometimes
even antagonistic. T h a t there is p o t e n t i a l f o r great m u t u a l advantage i n the
relationship is evident to everyone. T h a t is a l l the more reason t o t r y to move
i t f o r w a r d on the basis of m u t u a l respect. I t makes no more sense f o r Arabs
to demand t h a t Americans now boycott I s r a e l t h a n f o r Americans to demand
t h a t Arabs now trade w i t h Israel. W e w o u l d not contend that, f o r a l l Arabs,
i t is easy to accept the ways of the open i n t e r n a t i o n a l system they are t r y i n g
to join. A r a b states have made impressive progress, however, i n h a l t i n g disc r i m i n a t i o n against American (or other foreign) firms and i n d i v i d u a l s on s t r i c t l y
religious or ethnic grounds. T h e administration's diplomacy, by the way, has
been quite effective i n this regard. I t w i l l be harder f o r Arabs to accept t h a t
they cannot force Americans to d i s c r i m i n a t e i n trade against a t h i r d country.
B u t i t denigrates their intelligence, and i t underestimates t h e i r general passion
f o r modernization, to say t h a t they must stick fast i n t h e i r t r a d i t i o n a l ways.
Certainly Americans should not be encouraging them to do so.
[From the Washington Post, Jan. 26, 1976]
T H E BOYCOTT
ISSUE
A m a j o r battle of principle and policy has been joined by the Justice Department's c i v i l suit charging the San Francisco-based Bechtel Corporation
w i t h supporting the A r a b boycott of Israel. Justice's contention is t h a t the
huge heavy-construction firm, by refusing to deal w i t h blacklisted subcontractors and by r e q u i r i n g subcontractors i n general to refuse to deal w i t h blacklisted companies, is i n v i o l a t i o n of American a n t i t r u s t law. T h e State Department t r i e d unsuccessfully to block the suit, p r i v a t e l y b u t urgently protesting t h a t
even its filing risked alienating the diplomatic favor of, i n p a r t i c u l a r , Saudi
Arabia. Saudi A r a b i a is at once the b u l w a r k of the boycott and a c o u n t r y whose
cooperation is considered v i t a l to A m e r i c a n diplomacy, not to speak of A m e r i c a n
o i l supplies. I n the Treasury and Commerce Departments, moreover, and i n the
business constituencies they represent, f e a r was and is r a m p a n t t h a t the suit
w i l l cost American companies billions of dollars w o r t h of p o t e n t i a l business
throughout the A r a b world.
W e find i t undeniable, nonetheless, t h a t Justice was r i g h t to go ahead and file
the suit. N o t h i n g i n the anti-trust l a w reserves its application to situations w h i c h
don't make foreign waves. I n the E x p o r t A d m i n i s t r a t i o n A c t of 1969, moreover, i t
was declared t o be " t h e policy of the U n i t e d States to oppose restrictive t r a d e
practices fostered or imposed by foreign countries against other countries f r i e n d l y
to the United States." Whether Bechtel is i n fact g u i l t y of a n t i - t r u s t violations,
we leave, of course, t o the courts. B u t i t is noteworthy t h a t Bechtel responded
to the suit not by denying the charges but bv contending—evidently i n reference to certain procedures of t h e Commerce D e p a r t m e n t — t h a t "federal regulations and p r i n t e d forms and statements . . . have expressly stated t h a t compliance w i t h (the boycott) is not illegal under American l a w . " T h e corporation
ndded t h a t its A r a b business is conducted " i n areas and i n ways compatible w i t h
U.S. foreign policy goals."
We sense here the development, w i t h i n the U.S. government a n d w i t h i n the
larger p o l i t i c a l community, of another o f those difficult issues t h a t have made
the conduct of American public l i f e so b i t t e r i n recent years. The difference i n
this case lies i n the fact t h a t the challenge to the administration's economic h a b i t
and foreign policy comes f r o m its own Justice Department, supported, t o be sure,
by a probable m a j o r i t y i n Congress.
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T h i s puts a special burden on the State Department—a burden so f a r inadequately appreciated. For the Department's emphasis has been to complain t h a t
Justice and Congress were complicating the m a k i n g of foreign policy. W h a t the
Department should be doing, however, is telling the U n i t e d State's A r a b friends
t h a t a deepening longterm relationship is only possible on the basis of m u t u a l
respect. T h a t A r a b league states conduct t h e i r own trade boycott against Israel is
t h e i r business— regrettable to Americans but something t h a t the U n i t e d States,
w h i c h has conducted its own politically motivated boycotts, is i n a poor position
to protest. T h a t A r a b states should expect to enlist American firms to support the
A r a b boycott is, however, very different. The issue is t h a t simple.
The court proceeding is likely t o be long and d r a w n out. T h i s may provide
the time and the e x t r a pressure needed f o r the boycott issue to be w o r k e d out on
a political b^sis between the United States and the various A r a b governments. We
hope so. The suit, i f so used by American diplomats, could help A r a b officials understand t h a t they cannot properly expect to entangle American business i n
their fight w i t h Israel. A n d i t could b r i n g an end to a situation—American participation i n the boycott—which is a standing reproof t o the values of the United
States.
[From the Oregonian, June 12, 1976]
SIMON SIMPLY WRONG
Treasury Secretary W i l l i a m Simon was w r o n g i n p r i n c i p l e and perhaps i n fact
when he testified June 9 before the House I n t e r n a t i o n a l Relations Committee
against legislation t h a t w o u l d c u r t a i l conditions under w h i c h U.S. companies
could legally acquiesce i n A r a b trade boycotts against Israel.
The Treasury boss stated t h a t A r a b nations have eased their anti-Israel boycott and t h a t tough U.S. legislation "could alter these favorable developments
regarding enforcement practices."
Simon appears to be correct t h a t A r a b nations have begun to ignore their
own blacklist of more t h a n 1,500 U.S. corporations i f f a i l u r e to deal w i t h specific
companies f o r p a r t i c u l a r products patently is not i n their self-interest. I n such
instances, examples abound to show t h a t the temptation to make a deal overwhelms ideological allergies.
However, t h a t is only a small p a r t of the story. The Cabinet member failed to
mention t h a t tabulations released last month by a House Commerce subcommittee indicate t h a t more t h a n h a l f of the 637 firms asked to comply w i t h the
boycott between January, 1974, and December, 1975, have confirmed t h a t they d i d
so. These companies transacted $352.9 m i l l i o n of business, 54.45 per cent of t h a t
conducted by a l l the firms w i t h A r a b countries d u r i n g the two-year period.
As to Simon's contention t h a t the boycott is easing, the Commerce subcommittee reported t h a t i n the last three months of 1975 more t h a n 90 per cent of U.S.
companies doing business w i t h the Arabs acquiesced i n requests to boycott Israel.
The Treasury secretary also has been trapped f a r off base on principles which
apply to the boycott issue. A r a b states, of course, are entitled to refuse to trade
w i t h t h e i r enemies. They should not be entitled, i n effect, to shape both U.S.
foreign and domestic a f f a i r s by d i c t a t i n g t h a t companies t h a t deal w i t h them cannot deal w i t h blacklisted companies—firms owned by or employing Jews or tradi n g w i t h Israel.
Simon said the A r a b nations consider their economic boycott against I s r a e l no
different f r o m past U.S. boycotts against Cuba, Rhodesia, N o r t h Korea and Vietnam "so they cannot accept the argument t h a t they are not entitled t o do the
same." As the secretary should know, there is a profound difference, which,
incidentally, is also strongly articulated i n U.S. labor law. I t is the principle t h a t
parties secondary to a dispute should not be held hostage to the antagonists' differences. Thus, secondary strikes are i l l e g a l domestically, and U.S. boycotts on
the i n t e r n a t i o n a l scene have adhered to comparable standards.
T h e A r a b demands on U.S. companies violate our standards because they
amount not only to secondary boycotts but also to t e r t i a r y boycotts. Legislation
t h a t finally is produced by the Congress should make i t n a t i o n a l policy to oppose
such economic a r m - t w i s t i n g r a t h e r than leave the burden on a discretionary basis
to companies, which, as the House Commerce subcommittee's study suggests,
are u n w i l l i n g or unable to resist w i t h o u t an infusion of legal muscle.
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[From the Atlanta Journal, June 11, 1976]
ANTI-ISRAELI
BOYCOTT
A p r e l i m i n a r y congressional i n v e s t i g a t i o n of secret Commerce D e p a r t m e n t
documents recently revealed the widespread i m p a c t of a n t i - I s r a e l boycott demands a i m e d a t U.S. exporters d o i n g business w i t h A r a b interests.
T h e report, covering a three-month period l a s t year w h e n f e d e r a l l a w r e q u i r e d
n o t i f i c a t i o n of boycott pressures received by A m e r i c a n exporters, i n d i c a t e d t h a t
91 per cent r e p o r t i n g went along w i t h t h e boycott demands.
T h i s provides s u b s t a n t i a l d o c u m e n t a t i o n f o r the need to r e v i e w t h e U.S. posit i o n i n i t s t r a d i n g relationships w i t h A r a b interests.
Rep. J o h n Moss, c h a i r m a n o f the House f o r e i g n commerce subcommittee on
investigations, obtained the d a t a t h r o u g h subpoena a f t e r f o r m e r Commerce Secr e t a r y Rogers M o r t o n declined to v o l u n t a r i l y t u r n over the m a t e r i a l . T h e findings
have now been released t o the House F o r e i g n A f f a i r s Committee w h i c h is cons i d e r i n g l e g i s l a t i o n to ban compliance by A m e r i c a n companies faced w i t h a n t i I s r a e l boycotts.
A r e v i e w of the Commerce D e p a r t m e n t files by Rep. Moss revealed the seriousness of Arab-backed a t t e m p t s to undermine the I s r a e l i economy. A m e r i c a n firms
seeking to do business w i t h t h e A r a b w o r l d w e r e asked t o c e r t i f y t h a t t h e i r goods
were not of I s r a e l i o r i g i n ; t h a t they were not t r a n s p o r t e d on I s r a e l i ships or on
vessels stopping i n I s r a e l i p o r t s ; t h a t they are n o t dealing w i t h firms b l a c k l i s t e d
by t h e A r a b League boycott office; t h a t they were not i n s u r e d by b l a c k l i s t e d insurance companies; and, i n some cases, t o c e r t i f y t h a t t h e i r senior officers were
n o t Jews.
I t i s t i m e f o r the W h i t e House a n d Congress t o begin serious consideration of
a p p r o p r i a t e economic a n d p o l i t i c a l remedies.
T h e r e can be l i t t l e hope f o r peace i n the M i d d l e East i f t h i s p a t t e r n of c a v i n g
i n t o pressures f o r economic w a r f a r e against I s r a e l is a l l o w e d to continue.
T h e practice also makes a mockery of any claims by A r a b groups t h a t they
have abandoned plans to w i p e o u t t h e i r I s r a e l i neighbors.
Mr. GREENBERG. The key leadership of American business now
recognizes that elimination of the Arab boycott requires immediate
legislative action in this country and cannot await the ultimate resolution of the Middle East conflict; nor are the two really related. Boycott in the United States is an American problem and it victimizes us
regardless of peace, war, or ceasefire in the Middle East.
Simply stated, the question is whether this great Nation w i l l acquiesce to improper foreign demands which generate practices clearly in
conflict with American interests. The Export Administration Act of
1969, which expired several months ago, articulated this principle in
unambiguous language, declaring it to be official American policy to
oppose foreign boycotts and restrictive trade practices against nations
friendly to the United States. That same policy, "encouraged and requested," Americans to refuse to take any action or support such
restrictive trade practices or boycotts.
The bills already introduced in this 95th Congress; and the nearly
successful passage of boycott legislation in the 94th Congress, give
support to the administration's policy declaration. As I mentioned
earlier, the President of the United States has on several occasions declared publicly his unalterable opposition to the boycott. These statements were not mere campaign rhetoric. We believe the President
meant what he said.
I n your earlier discussion, Mr. Chairman, your pointed out, I believe, or Senator Williams pointed out, that there are already six
States that have enacted antiboycott statutes, while several others have
similar bills pending. Why did the States act first? Because they view
275
foreign boycott intrusions in their jurdictions as immoral and discriminatory against their citizens. Second, the States are adopting
legislation because effective Federal legislation has not been enacted
into law. Now, an examination of the already enacted State laws discloses differences among them in terms of their scope, their form, their
enforcement. Consequently, some businessmen and banking institutions in the States that have adopted such laws, complain that they
are unfairly restricted because there are other States without such
statutes. They express fear that their States w i l l be deprived of
Middle East trade which would be diverted to States which have no
law. I might add, parenthetically, that we have seen no responsible
study reflecting any State with an antiboycott law has lost anything
but insignificant amounts of Middle East trade. We have seen studies
that have indicated no losses as a result of such State legislation.
Mr. Chairman, the United States needs a clear, comprehensive, and
strong national antiboycott law. We need it because the American experience shows our -existing antiboycott policy, without sanctions, has
no standing, has failed to impede harmful Arab boycott operations in
the United States. Based on recent Commerce Department statistics,
the evidence confirms that the demands of the Arab boycotters on
American firms have increased inordinately. Moreover, the study of
the recently released reports, which we have entered into the record,
attest that only 4 percent of all those reporting, flatly indicated noncompliance with the boycott demand.
As an accompaniment of this legislation, we urge the Congress to
advise the President and other members of the executive department
of the constructive purposes that would be served by using the influence and standing of our country abroad, to help induce our friends
abroad to adopt similar legislation and to enact similar prohibitions,
thus to make it certain and clear, the Arab boycott will never be allowed to operate as a disturbing and distorting factor in international
trade.
Mr. Chairman and members of the committee, the United States of
America cannot permit foreign powers to use economic blackmail to
dictate how Americans shall conduct business among themselves or
overseas with nations friendly to the United States. Congress must
legislate now to shield all Americans in our business community from
divisive foreign economic pressures, threats, intimidation, and religious discrimination. We oppose any effort to delay the adoption of
this legislation. We urge, therefore, the swift enactment of Senate bill
92 which, we believe, w i l l allow the American community to conduct
its trade and commerce based upon declared U.S. policies and ethical
principles.
Senator STEVENSON. Thank you.
Mr. Whitehill?
Mr. W H I T E H I L L . Mr. Chairman and Senators. My name is Cliff
Whitehill, vice president, General Mills.
I am here to support Senate bill 69 as introduced by Stevenson and
Moynihan. I have delivered a written statement, and I ask that such
be admitted to the record.
Senator STEVENSON. Without objection.
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[Complete statement follows:]
STATEMENT
OF G E N E R A L M I L L S , I N C . P R E S E N T E D B Y C L I F F O R D
V I C E PRESIDENT AND GENERAL COUNSEL
WHITEHILL
M r . C h a i r m a n , General M i l l s appreciates the o p p o r t u n i t y t o comment o n proposed legislation dealing w i t h t h e A r a b boycott. General M i l l s reaffirms support
f o r anti-boycott legislation. W e agree t h a t t h e compromise w o r k e d o u t between
y o u a n d y o u r counterparts i n the House is workable, p r o v i d e d the i m p l e m e n t i n g
regulations c l a r i f y several points. I t w o u l d seem preferable, however, t h a t t h e
language i n t h e legislation be specific a n d w i t h such we w o u l d endorse i t s passage by the 95th Congress.
A s background to more specific w o r d i n g i n the proposed b i l l , our company i s
a m a n u f a c t u r e r a n d exporter of food products, l a r g e l y wheat-based, t o t h e A r a b
countries a n d of chemical products to Israel. T h e p r i n c i p a l p r o d u c t is b a k e r y
flour m i l l e d f r o m U.S. w h e a t w h i c h represents a significant number of bushels
g r o w n by U.S. f a r m e r s . T h i s business is done p r i m a r i l y on letters of c r e d i t ,
w h i c h a l t h o u g h v a r y i n g somewhat by countries, generally r e q u i r e c e r t i f i c a t i o n
that:
( a ) T h e p r o d u c t or any of i t s components does n o t o r i g i n a t e i n I s r a e l ;
( b ) T h e c a r r y i n g vessel is not I s r a e l i and w i l l not c a l l a t I s r a e l i p o r t s ;
(c) T h e c a r r y i n g vessel is n o t on t h e A r a b boycott list.
These certifications (or s i m i l a r w o r d s ) m u s t accompany the l e t t e r o f c r e d i t
w h e n presented to the bank f o r payment, a n d w i t h o u t t h e m the money cannot
be released by the bank. So, i t ' s e i t h e r forego the business or f u r n i s h the certifications. W e have been doing the l a t t e r , as such a c t i o n is merely r e p o r t i n g t h e f a c t s
as we k n o w t h e m a n d is not d i s c r i m i n a t i n g against e i t h e r I s r a e l or a n y U.S. company or U.S. citizen.
W e a r e e x p o r t i n g U.S. products and have no f a c i l i t i e s f o r e x p o r t i n g I s r a e l i
products. Hence, the c e r t i f i c a t i o n t h a t the product or any component does not
o r i g i n a t e i n I s r a e l is n o n d i s c r i m i n a t o r y i f such product or component i s n o t comm e r c i a l l y available f r o m Israel.
Likewise, we understand t h a t i t is recognized, under i n t e r n a t i o n a l l a w , t h a t
a n i m p o r t i n g c o u n t r y m a y exercise discretion over the flag a n d r o u t i n g of the
c a r r y i n g vessel. Hence, the only vessels available to us i n t h e steamship m a r k e t
are those w h i c h i t s owners or agents k n o w w i l l be p e r m i t t e d i n A r a b ports. I t
is only those w h i c h are p e r m i t t e d w h i c h offer service t o us.
I n r e a l i t y then, a certification w h i c h w o u l d say " T h e c a r r y i n g vessel is perm i t t e d to discharge cargo at A r a b p o r t s " w o u l d be the same as one w h i c h says
" T h e vessel is not on the A r a b boycott l i s t . " The only difference is t h a t t h e l a t t e r m i g h t be i n t e r p r e t e d as an i l l e g a l c e r t i f i c a t i o n u n d e r the compromise legisl a t i o n a n d hence deny the e x p o r t e r a n d t h e U.S. of t h a t e x p o r t business.
I w o u l d l i k e to add t h a t as exporters w e do n o t have access t o t h e boycott l i s t ,
a n d therefore we s i m p l y t r a n s m i t t h e vessel i n f o r m a t i o n as given to us by the
vessel owner or agent.
W e w o u l d urge t h a t the present language be c a r e f u l l y reviewed a n d e i t h e r revised to make i t clear t h a t t h e above-mentioned certifications m a y continue, or
p r o v i d e the c l a r i f i c a t i o n i n the legislative h i s t o r y w h i c h w o u l d t h e n guide t h e
d r a f t i n g of the regulations.
W e also suggest t h a t y o u examine the possibility t h a t t h e f e d e r a l enactment
pre-empt various state l a w s dealing w i t h the A r a b boycott w h i c h are n o w causi n g considerable confusion i n t o an already m u r k y area of public policy.
As businessmen, we are understandably concerned t h a t our business opportun i t i e s are not unnecessarily restricted. B u t as citizens w e are even m o r e concerned t h a t a f a i r , even-handed a n d t o t a l l y n o n d i s c r i m i n a t o r y p u b l i c policy be
set f o r t h i n t h i s delicate area.
Mr. W H I T E H I L L . General Mills supported congressional legislation
since A p r i l 1976, and we have not reduced our support of responsible
legislation since that time. We support responsible legislation as a
matter of principle, as General Mills engages in business transactions,
both in Arab countries, as well as Israel.
We are a company that is not on any blacklist, and we are a company that is not owned, controlled, or managed by Jewish Americans.
I n our opinion, Senate bill 69 is on the whole both balanced and effective in this delicate area of international politics and business.
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There are a few minor drafting changes which I feel might better
clarify the intent of this legislation. I n this respect I call your attention to paragraph 2-A, subparagraph ii. As I pointed out in my written statement delivered today, exporters are generally not aware of
what vessels may be on a boycott list. We only know that vessels offering services will be able to discharge their cargoes. Accordingly, I
would suggest deletion of after the word "carrier," the words, "of the
boycotted country." Instead, insert, "which will be denied discharge
of cargo at the ports of the boycotting country."
Also, since the boycotting country does not technically prescribe
routes, the addition of the words, "or limited," after the words "rescribe," in the second part of that sentence, would be helpful.
Lastly, I strongly recommend that appropriate texts be added to
preempt any State or local laws to the contrary, as this legislation is
correctly and truly a matter of national decision.
Thank you.
Senator S T E V E N S O N . Thank you.
Mr. Greenberg, I would like to go back to those two points of difference which you raised earlier. As you have, I believe, indicated, countries at war engage in primary boycotts. I t is not our intention to attempt a prohibition against compliance with a primary boycott; is
there?
Mr. GREENBERG. We do not believe the law could reach that boycott,
and we do not suggest any legislation in that area.
Senator S T E V E N S O N . T O enforce a primary boycott, it is not uncommon for a country to require negative certificates of origin. The purpose is to prevent trading with the enemy. That is the means by which
the primary boycott is enforced. I think you referrred to the Arab requirements of a negative certificate of origin as improper, and at the
least, implied that they were immoral. Am I wrong ?
Mr. GREENBERG. I believe that the requirement of certificates of
origin stems out of differential tariffs and duties imposed by various
countries, as, for example, the United States imposed differentials and
tariffs, and so forth, based on the country from which the goods are
shipped.
Indeed, there is real commercial justification for knowing what
countries the goods originated from, but in the negative form, it is a
tool of economic war. I t has no justification in the normal practices of
international trade
Senator S T E V E N S O N . Y O U are not answering my question. My question, or suggestion that I ask you to differ with, i f you do, is whether
or not the negative certificate of origin isn't simply a means of implementing a primary boycott. I t is to prevent trading with the other parties, is it not ?
Identify yourself, please.
Mr. B A T J M . Phillip Baum, associate director of the American Jewish Congress.
Mr. Chairman, you made the point earlier yourself, a country can
accomplish what we all concede to be its right, that is engage in boycotts against countries with whom it has a belligerent relationship.
The legitimate interests of an Arab country in knowing that the goods
they are purchasing in the United States did not originate in Israel
can be accomplished bv the certification by American exporters that
these goods originate in this country.
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The only purpose for requiring a negative certificate, the only conceivable purpose and the only goal it achieves is to single out the State
of Israel as an enemy of the Arab State and to make the American
firm certify accordingly and thereby become an accomplice in that
effort.
We object to not a primary boycott engaged in by the Arab country,
but to their attempt to engage Americans in carrying out that boycott.
Senator S T E V E N S O N . I object to that, too, but you still have not answered my question. Any boycott singles out a country. I n this case, i t is
Israel.
My question is, i f they can accomplish that objective with a positive
certificate requirement, what difference does i t make i f the law permits
a negative certificate?
Mr. B A U M . Because it requires American firms to join with them
Senator S T E V E N S O N . But there is no objection to joining i f i t is a
positive certificate.
Mr. B A U M . But the positive certificate doesn't single out Israel. I t
does not enlist American firms in an attack on Israel.
Senator S T E V E N S O N . Y O U mentioned a moment ago that the Israelis
could do it just as easily by use of the negative certificates. Is the Israeli
negative certificate innocuous ? They, of course, boycott their enemy.
Mr. B A U M . I would assume no American firm should join in providing negative certificates or origin required by any foreign countries,
and the same policy should apply no matter whether i t is Israel or
the Arabs.
Senator S T E V E N S O N . Some now are refusing to comply with the
negative certificate requirements.
Mr. B A U M . I f they are, we welcome it.
Senator S T E V E N S O N . Y O U think it is immoral or improper ?
Mr. B A U M . Yes. I am suggesting that no American firm should be
made a party to an attempt of a foreign country to engage i n a boycott
of another country. The American firm has no place i n that fight. That
is the business of sovereign states with which he is not involved.
American firms should not thus be drawn into a matter in which they
have no legitimate interest.
Senator S T E V E N S O N . Y O U indicated, Mr. Greenberg, that many of the
Arab States are only requiring positive certificates or origin. W i l l
Israel do likewise?
Mr. M O S E S . I am not in a position to speak for them, but I join in
Mr. Baum's statement, the negative certificate of origin has a pernicious effect with respect to the reaction of American business to the
boycott. I t tends to enlist their assistance in the boycott. Absent any
reason for a negative certificate, recognizing as we do its pernicious
effect, we suggest i t would be appropriate for the negative certificate
to be prohibited by statute.
As to what Israelis do, we do not speak for them.
Senator S T E V E N S O N . I don't see offhand much difference, but apparently countries at war do, including the State of Israel.
You have indicated you have no intention of interfering with their
attempt through negative certificates to support the boycott.
Mr. MOSES. I f S . 92 were passed, no American business concern could
subscribed to any Israeli request for a negative certificate of origin. We
support that.
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Senator STEVENSON. The point I was trying to make, and I think you
agreed, is that primary boycotts are common incidents of warfare.
There is no way we are going to stop them.
To me, offhand, it doesn't seem to make much difference whether they
enforce by negative or positive certificates of origin. I n fact, the Arab
States are moving to do it through positive certificates of origin.
Mr. GREENBERG. Mr. Chairman, you have already demonstrated your
comprehensive knowledge of the background of this legislation. I , for
one, in my own investigations of the facts that underlie the need for
this legislation, have not had revealed to me that the Israelis, as a common matter, insist upon negative certificates of origin.
We would all join in subscribing to the concept that this legislation,
particularly S. 92, insofar as i t would outlaw negative certificates of
origin, should be applied to any nation in the world which would insist
on a negative certificate or origin applicable to an ally of the United
States. That would include the Arab States.
We all join in supporting the provisions of S. 92, even i f it is applied
to Israel.
Senator STEVENSON. On the question of intent, it is certainly not
novel in Anglo-Saxon jurisprudence to require intent. The effect of
eliminating any requirement of intent could be to sweep up all sorts
of innocent business relationships between American firms and Arab
firms, affected perhaps by the error of a clerk, with the result that those
that don't have business relationships in Israel, or i f a clerk makes an
innocent mistake, are going to be punished, that with some of the severe
economic consequences that were alluded to by the earlier witnesses.
I trust that that, too, is not your intent, to punish American businesses for routine commercial transactions in Arab States.
A t least it's never been my intent—I am the original author of antiboycott legislation—to bring about a counterboycott. Would you, in
response to those observations about my intent, elaborate on your
earlier remarks about intent ?
Mr. MOSES. Yes, Mr. Chairman. We share your concern, but we feel
the word "intent" in 4-A should be stricken.
We believe that the provisions of the statute which would only reach,
taken pursuant to an agreement with, requirement of, requests from or
on behalf of the boycotting country, would preclude the kind of innocent implication that you refer to in your remarks.
I t would still be necessary to show that the action was taken not
innocently, but pursuant to an agreement, was taken pursuant to a
requirement, was taken pursuant to a request, or taken on behalf of the
boycotting country.
One of those four requirements must be present before a violation
can be found. We don't believe intent which is a subjective criterion
should be applied to these circumstances, given the difficulty of proving
intent.
We have numerous acts on the book, including the Sherman Act,
which prohibit this or prohibit that, without finding an element of
intent.
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Senator S T E V E N S O N . I will ask you to take another look at the bill,
because I think your remarks are addressed to the earlier legislation.
Mr. MOSES. I certainly will take a look at it. I thought I was reading
from S. 69. Let me confer with my colleagues.
Mr. GREENBERG. Mr. Chairman, may I very briefly respond to an
inquiry you made which Mr. Moses commented upon. I go at it a
slightly different way. I look at Senate bill 92 and ask whether this
can be violated in any substantial way by inadvertent action, by
ministerial action by some clerk, and I find at various points in Senate
bill 92, the language of the kind referred to by Mr. Moses takes over to
describe the prohibited behavior. So that even without making the
case of the regulatory agencies extremely difficult by inserting a mental
state as part of the element of proof, it still requires that the prosecuting agency demonstrate that the U.S. person has taken or agreed
to take actions to comply with, further, or support any boycott, fostered
or imposed by a foreign country. That, it seems to me, comes very close
to building in the concept of intent, but the utilization of those words
is avoided.
Senator S T E V E N S O N . I can't prolong this. I t is not unusual or difficult
to prove intent. Prohibited activities can be used as evidence of intent.
Senator Proxmire?
Senator P R O X M I R E . I want to commend both Mr. Greenberg and
Mr. Whitehill for your statements. They are most welcome. You,
Mr. Greenberg, are supporting legislation that Senator Williams and I
introduced. I am delighted to see that.
I think it is necessary legislation. But there is a challenge as whether
or not there is a need for it. I understand the reports filed with the
Commerce Department indicate there is a large and growing number
of requests to U.S. business firms to comply with the boycott and that
an overwhelming portion of those requests are complied with, but the
Commerce Department data doesn't break down compliance by type
of request, so we don't know, for example, how many requests refuse
dealings with the blacklisted firms are complied with.
The data shows that during the 6 months ending September 30 of
last year, some 14,000 requests were received to certify or indicate the
supplier, vendor or manufacturer or beneficiary is not blacklisted or
that the firm is not a parent or subsidiary of a firm that is blacklisted.
What is the strongest available evidence that the Arab boycott is, in
fact, causing discrimination against U.S. citizens? You have this data
to which I have alluded, but we have the testimony, as I say, from responsible business people that this isn't doing much now. Why do we
have to be concerned about its effect on American business.
How about i t ?
Mr. GREENBERG. One of the items offered for the record is a study
which was conducted by the human relations agencies represented here
today, the American Jewish Committee, American Jewish Congress
and A D L , and i t breaks down the kind of boycotts requested and compliances indicated for each boycott report.
281
I t is true that the requirement of negative certificates of origin are
present within 73 percent of the total number of requests.
But, for example, a declaration that a manufacturer or exporter
is not on the blacklist is present in 33.3 percent of the requests and the
compliance with those requests is 84.2 percent, so i f you take 84 percent
of 33 percent you find that approximately 25 or 26 percent of the
persons responding have offered a declaration that the particular
manufacturer or exporter they dealt with is not on the Arab blacklist.
Can I demonstrate there was discrimination by the fact that the
manufacturer or exporter is not on the blacklist ? No, but it is a handy
tool for those who wish to comply.
I t indicates they are aware of the blacklist and they are willing to
certify they didn't deal with a company on the blacklist.
Senator P R O X M I R E . I think that is a helpful response, but I am still
reaching to try and find out what the effect of this really has been.
Maybe we can look at it from the effect on Israel. Is there any indication there of what it's done to their opportunity to deal with American
firms?
Mr. MOSES. Senator, I do not know who decides not to invest in Israel
because of the Arab boycott. We do know that figures with respect to
foreign investment generally in Israel. Since 1973, investment by foreign interests in Israel has decreased from $263 million in the year
1973 to $113 million in the year 1975.
Senator P R O X M I R E . Any indication of how much that decrease was a
decrease in American investment ?
Mr. MOSES. I don't have those figures but I know the difficulty of attracting U.S. industry to invest in Israel, as one of the gentlemen who
testified earlier stated, to his knowledge, and to ours also, i f an American company does invest in Israel, that perforce will result in that company being placed on the blacklist, with exceptions, depending upon
what the Arab nations determine to be convenient for their own needs.
Hotel corporations, defense manufacturers seem to be excepted from
compliance with what is applicable to other companies investing in
Israel.
Senator P R O X M I R E . A S you know, gentlemen, we are all very much
aware of our increasing dependence on the O P E C countries for oil,
including the Arab countries particularly. Saudi Arabia has been cooperative in the last decision on oil pricing.
What adverse effect, i f any, would you feel that we might suffer
from passing either of these bills ?
Mr. GREENBERG. That involves me in speculating about Saudi
Arabian policy, in a very large universe of foreign policy and international contact. I , in my own view, do not believe that any major
change in Saudi Arabian policy will result from the adoption of this
statute other than a realization that the U.S. Congress is not going to
let Israel be beaten down by economic warfare in the coming few years,
and that Congress is unwilling to permit American business to be a
part of that economic warfare against Israel.
I believe that will result in a greater move toward discussions of
long-range peace in the Middle East.
Mr. MOSES. Senator, i f I may add a comment, I too am not prepared
to speculate. I concede it is speculation. Whether there w i l l be a loss of
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800 jobs in Houston or Kansas City I don't know. We certainly hope
there will not be. But we do call to your attention the fact that this
legislation by any rational standard is less repugnant to the Arab nations than our continued support of Israel militarily.
No one has suggested that a 5-percent increase in oil rather than 10percent increase is worth our abandoning our national principles.
When they come forward as prophets of doom and suggest that American industry will lose 110,000 jobs. That hopefully w i l l not be a selffulfilling prediction.
The focus of the legislation does not run to Arab dealings with
Israel, but to constrain Arab dealings with respect to U.S. domestic
concerns.
When foreign countries seek to dictate to U.S. businesses with regard
to where they can sell—where they can invest and in the case of one
company, Xerox, what is a permissible subject for a T Y film—it's on
the blacklist because it made a T V film of one of the member nations
of the United Nations, namely Israel. This becomes a legitimate U.S.
concern. I t seems to me, the Congress of the United States has a right to
legislate in that area, particularly when directed by what it considers to
be right—not the relative cultural prohibitions sought to be imposed
by foreign nations on U.S. industry and citizens.
Senator P R O X M I R E . That's very helpful. As you may recall, a spokesman for Saudi Arabia did, as I recall, indicate that one of the reasons
or a major reason for their differing from their O P E C brethren in
coming irr with a softer position that wTas very helpful to us, was because of the political implications and indicated they thought this
would help; but you feel that would be more directed toward American
military assistance for Israel, something as direct as that, rather than
any boycotting legislation ?
Mr. GREENBERG. I would think so.
Senator P R O X M I R E . Let me ask you, how about the effect on achieving
peace in the Middle East? Our moving in this area? We have been—
we have tried very hard—Dr. Kissinger has, Secreteary Vance has. I'm
sure President Carter is anxious to do all he can to achieve peace in the
Middle East. I n your view, do you think this legislation could prejudice
that goal ?
Mr. GREENBERG. I f any of us believed it would prejudice the potential
for peace in the Middle East, we would not support your legislation.
We are dedicated to the concept of achieving peace among the nations
in the Middle East. Manifestly, we believe part of that peace has to be
a recognition of Israel's right to exist. Part of that right to exist is a
right to engage in normal international business commerce. U n t i l the
Arab nations are willing to, in effect, permit Israel to join the family of
nations in the Mideast, and the sooner they come to realize that an
interchange between Israel and the Arab nations will be helpful and
that the utilization of Israel's technology and advanced industrial capability would be helpful to the Arab nations in improving their economic standards, the sooner we w i l l have real peace in the Mideast.
Senator P R O X M I R E . Why do we need new legislation to stop racial
or religious discrimination when only eight of 51,000 boycott requests
received by American firms involved discriminatory requests? It's
almost an insignificant number.
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Mr. B A U M . Mr. Chairman, the nature of the boycott itself
somewhat problematic. It's difficult to tell what goes into the decision of
the Arab boycott authority in determining whether to place an individual or firm on that list.
People who are on the list are unable themselves to account for their
presence on that list.
We do know on the basis of statements made by Arab boycott officers, that the list is comprised from a variety of sources; newspapers,
U J A publications, et cetera, and they select from these materials
names
Senator P R O X M I R E . They don't use this request route in order to develop the names?
Mr. B A U M . N O ; it's from secondary sources.
Senator P R O X M I R E . One other question I would like to ask you
gentlemen.
It's been reported that the Anti-Defamation League has been working with various business groups to try to work out compromise legislation. Can you tell us anything about any progress you have made?
Mr. GREENBERG. The report as you stated it is incorrect.
We don't work out compromise legislation. The Congress
Senator P R O X M I R E . Of course we do. But you would be helpful i f
you could bring yourselves and the business community along on that.
Mr. GREENBERG. The Anti-Defamation League has been involved in
discussions with a group of American business leaders who have constituted themselves informally in a group called "the Business Round
Table." Those discussions have been of the principles underlying the
legislation proposed here today and the objectives of the Anti-Defamation League have been to reach agreement on those basic principles; we
believe there is among the vast majority of American businessmen, including those we are dealing with, agreement on the basic principles,
so as to obtain the broadest possible basis of support in the American
community for this legislation.
We are hopeful that, even as to some specifics which may find their
way into regulation issued after your legislation is adopted that we
can reach agreement on these principles so that there will be, very,
very broad support in the United States for legislation of this kind.
Senator P R O X M I R E . My time is up, but it would be so helpful i f you
could come forth with any kind of recommendation before we mark
up the bill. We would certainly like to hear it. Do you think there is
any prospect that can be done within the next few weeks ?
Mr. GREENBERG. We have been meeting on a very accelerated basis
and trying as hard as possible to understand where each of us stands
on this matter. We are committed to support Senate bills 69 and 92,
and as you have heard, we believe in the manner in which they differ,
we would support Senate bill 92. We do not encourage any delay in
the adoption of that legislation, but to the extent that our joint understanding of the underlying principles of legislation bears upon the
legislative enactments we will try to bring those to you as promptly as
possible.
Senator W I L L I A M S . Gentlemen, four witnesses here this morning
have either regretted or abhorred these Arab boycotts. The difference
is, what can we do about it ?
85-654 O - 77 - 19
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The first panel suggest that diplomatic discussions could lead us to
the end of the Arab boycott.
You feel legislation is needed.
I am trying to figure out which wray we should go. How long has
there been within the Arab world, this approach, of economic boycott,
their responses, their differences with Israel? How long has there
been an Arab boycott ?
Mr. MOSES. Almost since the inception of the State of Israel.
Senator W I L L I A M S . That is almost 3 0 years.
Mr. MOSES. Yes; sir, it is going forward on an accelerated basis due
to increased exports. We are now dealing with approximately $5 billion of trade, so that
Senator P R O X M I R E . Five billion ?
Mr. MOSES. Yes. More industry is affected by the boycott than ever
before. That will accelerate to the extent the Arab nations are able to
use their liquidity for purchase purposes abroad.
I would suggest, in view of the fact diplomacy has not been successf u l in the past, now is not the time for legislation. I t seems to me, the
legitimate question is wThen.
Diplomatic efforts heretofore have not been successful, there are still
restrictions with respect to Jewish Americans visiting Arab nations
solely because they are of the Jewish faith. We have been unsuccessful in ameliorating that condition.
One of the spokesmen here today stated it should be left to industry
to try to persuade Arab countries to soften their boycott position, but
I failed to hear, and I listened carefully, any testimony by any of the
gentlemen with respect to any efforts any of their companies had taken
in that regard or intended to take, so I would suggest to you that now
is the time for legislation, that i f not now, when ?
I suggest the answer to that is now.
Mr. BRODY. Y O U will recall Senator Williams when you introduced
the legislation in 1965, and when you subsequently held oversight hearings in 1967 and 1969, at that time spokesmen for the Department of
State and Commerce said legislation is not the way. The way to deal
with this problem is through quiet diplomacy.
I think what we have seen in the intervening 10 or 11 years is that
quiet diplomacy simply has not worked. We need a little vocal diplomacy in the form of legislation.
Also about 20 years ago we had a sense of the Senate resolution
adopted unanimously, deploring the Saudi Arabia anti-Jewish activities—their refusal even to admit Jewish servicemen into Saudi Arabia.
The sense of the Senate resolution urged the State Department to take
the principle that there should be no religious distinctions between
Americans in dealings with foreign countries into consideration in
negotiating contracts with foreign countries.
That was ignored.
I think we have reached the point where legislation of the kind that
you and Senator Proxmire and Senator Stevenson have introduced,
we have reached the point where the adoption of that legislation is
necessary and it is the only wTay to deal with the problem.
Mr. GREENBERG. May I also introduce twTo other gentlemen at the
table with me, Senator ?
Your question or some of the prior questions might well have been
better answered by them.
285
I would like at this time to introduce Arnold Forster, general counsel of the Anti-Defamation League; and Mr. Bookbinder, and Washington representative of the American Jewish Committee.
Mr. W H I T E H I L L . Senator Williams, in response to the question
whether this should be left to some type of private diplomacy on the
part of corporations, it was that very question that was raised and the
reason we announced support for legislation, national legislation, well
over a year ago.
The problem that faces a corporation is, No. 1, it does have difficulty
in attempting to quietly negotiate changes in these types of certification and these boycotts, where its competitors may not be doing so. We
would find it almost an asset to many American businesses to put the
policy, as we wish to have it established, nationally, well-known, equal,
and on a fair basis to all corporations.
I t was the uneven and sometimes random transactions and actions
of many American companies that were competitors to other American
companies that causes a number of the companies to seek out ways of
getting this legislation established.
Of course, we think that Senate bill 69 does it on the most rational
and even basis.
I would like to add one additional comment. We have had some discussions on this negative and positive certification question. I may
probably differ a little from my colleagues on the panel here.
What we have been able to discover is that it is the negative certification which uses the name of the country, which is being boycotted,
which is really the factor which is distasteful, but on primary boycotts,
of course, it is a country that is picked out for a particular boycott, and
I would see the distinction being one of, that it isn't relevant as far as
primary boycotts are concerned. I t is relevant in the sense that it does
identify with precision and preciseness the country against which
the boycott is directed.
Mr. FORSTER. Mr. Chairman, on that subject, I think the suggestion
has been made that we can not, for sovereignty reasons, legislate
against primary boycotts. That doesn't mean we like primary boycotts.
We don't want to, but we must permit the targeting by way of primary
boycott, upon nations friendly to the United States.
Now, the fact is that some Arab nations, as Mr. Greenberg indicated,
are now prepared to give up the right of the use of the negative certificate of origin. Obviously, they see a distinction because we have
heard nothing from the Arab nations about giving up the right of
primary boycott.
Are they giving up the right of primary boycott, when four of these
nations say now that they will allow abandonment of negative certificates of origin ?
Of course not. Because while they see it may be an extension of the
primary boycott, they also see a very substantial distinction between
the two. Which is the reason Mr. Greenberg argues for the incorporation of an outlawing of the negative certificate.
I would just briefly address myself to Mr. Proxmire's question about
the damage to Israel that is being done by the Arab boycott. I would
agree with Mr. Moses that it is incalcuable or at least immeasurable,
when no one knows what American countries have refrained from
doing business with Israel, because of the boycott.
286
We can name 011 the fingers of perhaps two hands, the major, the
giant, the very large American companies that are in both countries.
The reason we are limited to two hands is because there are not
too many of the hundreds of major American companies you can
name—for us an honor roll—Raytheon, Sheraton, Hilton, National
Cash Register, Westinghouse, I B M , General Electric, Texas Instrument, after which you begin to run out of very large companies.
The fact is there are a small number. As I recall it, the last time I
was in Israel I heard Israeli newspaper reporters talking about the
inability of the Israeli Government to get a large industrial firm to
build a chemical plant on the Dead Sea.
That may be an indication of the damage done by the Arab boycott.
Mr. BOOKBINDER. I think Senator Proxmire asked a couple of questions earlier that might warrant a few comments. Mr. Moses and Mr.
Greenberg did answer. The questions are not so much about the substance and the merit of the boycott. I t is very, very difficult to get
people, as you say earlier this morning with all respect, i t is very
difficult for witnesses to make a good case against the legislation.
Rather, as Senator Proxmire asks about the question that everybody is rasing, will it hurt American business and hurt the prospects
for peace in the Middle East ?
I f we thought for one moment it would interfere slightly with the
prospects for peace, we would have second thoughts. That question
really warrants a very, very frank comment here. Almost anything
you do m this area, any trade, any tariff considerations, always had a
potential threat that there may be some dire consequences you can't be
sure about in advance, but America has made a very basic judgment
about our relations in that part of the world, our relations with Israel.
Our basic support for Israel is premised on the notion that i t isn't
only Israel being out of favor when we support it, but it is an American interest. I f there is any instance of that similarity of interest
between Israel and America, it is in this area.
As you have said, Senator Proxmire, and each of you have had on
various occasions, this issue of antiboycott legislation is primarily an
American problem.
We serve ourselves i f we say to the world we will not permit you to
do this kind of thing. Especially when you do i t to one of our best
allies, best friends.
So we ought to understand what we are doing. We are saying we
do not think there is any risk that is so great, not great at all, that we
shouldn't do the honorable thing here. I f we are willing in support of
Israel to make very generous contributions of economic and military
assistance, if wTe participate actively in the diplomatic world to advance
this American interest, surely in the area of economic warfare nowT
being conducted against Israel, it would be a violation of everything we
have done, it would be a contradiction if we did make our little American contribution, to stopping this blackmail and economic warfare
against Israel, at the same time we advance American interests.
Senator SARBANES. First, I am interested in your position on the preemption question.
I know it was testified to by Mr. Whitehill, but I don't think you
gentlemen did.
Mr. B A U M . Some of us are interested in the various State enactments,
some of us have helped promote interest in State antiboycott bills.
287
I t is hard to have an opinion on preemption. I think all of us prefer
antiboycott legislation across the country that apply equally to all
American firms no matter where located.
I f Federal legislation before this Congress would be comprehensive
and clear, and broadly applicable, I think we all would endorse preemption. That would allow the States to protect their interests under
the rubric of Federal legislation, but if legislation finally inacted is
not comprehensive, and not broad, I think w^e would say we would
want to reserve for the rights of the States, the opportunity to enact
their own legislation to protect their residents in a way they deem
most appropriate and effective.
I t is difficult now to prognosticate about the utility of preemptions
until we know the nature of the Federal law.
Mr. MOSES. I join in Mr. Baum's statement, with a footnote. Traditionally States have interests with respect to discrimination against
its citizens, and I can foresee preemption reaching the purely economic business relationships, but leaving to the States the right, as they
see fit to prohibit various discriminatory acts that affect their citizens
based on ther citizens' race, religion, and so on.
Maryland, your State, being, of course, one of those States.
Mr. GREENBERG. One other footnote-type comment, California probably has the most comprehensive antiboycott legislation adopted by any
State.
I happen to be a Californian. I t is part of what we describe as the
Cartwright Act, our State antitrust legislation.
Now, manifestly, there is Federal antitrust legislation and yet the
States have antitrust legislation applicable to commerce conducted
within the State of California.
We see no essential inconsistency between the Cartwright Act, the
State antitrust legislation, and the existing Sherman Act and its
sister legislation.
So that it is possible that one could have a uniform and universal
applicable rule under Federal legislation, but with supplemental
State legislation whcih would fit into the area of the Federal legislation and make it a total enforcement program.
Mr. B A U M . One comment about State legislation. My agency has
followed the operation of the New York State antiboycott law fairly
closely. We have attempted to assess whether, in fact, there has
been any substantial diversion of trade away from New York because
of the existence of that law. We have prepared a fairly detailed report
analyzing the activities within the port of New York.
I must say that we found, contrary to all the fearful prophecies
that have been uttered, that there was no substantial or significant
diversion of trade. I was astounded to hear the comment by one
of the witnesses this morning that some Jewish freight forwarders
have moved from the State of New York because of the State law.
I know of no such case.
The only change in place of operation I know about has to do with satellite operations of Aramco. There have been perhaps one
^r two others associated with Aramco that moved out of New York,
but other than that, I know of no change because of the existence of
the State antiboycott law.
To say that the Jewish faiths, if you will, are moving from
New York because of the law is misleading. I have had an oppor-
288
tunity to discuss recently this very matter with the general counsel
of the New York Freight Forwarders Association. I am told he
will appear before the committee. You can question him yourself.
As far as we can tell, neither New York nor any other jurisdiction
that we know about has had any substantial loss of trade within the
State because of the existence of the State antiboycott laws.
Senator SARBANES. H O W has the business community responded to
the boycott and what role is it called upon to play ?
Mr. MOSES. I have had the opportunity to speak to groups of general
counsels. One such group in Pittsburgh and one such group in northern
New Jersey. A t both sessions there were representatives from large
American companies. What I heard—not the very words spoken; my
position on the matter was very clear—but what I heard was that they
don't like the boycott and that they are not opposed to legislation that
Mr. Whitehill referred to, to place all U.S. companies in the same
position in dealing with the boycott.
They don't want to have to curry favor or gain competitive advantage by taking action that would be contrary to the stated principles
in the Export Administration Act, which principles up to now have
not had the force of law.
I cannot speak for American industry, but what I sense is that, the
legislation would not be abhorrent to many major U.S. companies and,
indeed, might even be welcomed for the reasons stated.
Mr. B A U M . My organization has engaged what we call "a shareholder's project," within which we have attempted to introduce proxie
statements on most of the major corporations in most of the United
States on antiboycott legislation.
We have had conversations with the general counsels, presidents,
and chief executive officers of most of those corporations. I n almost
every case they are perfectly willing and eager to abide by the laws of
this country.
They have said they are unwilling to introduce the resolutions, because it requires them to take steps beyond the scope of existing legislation. They would be substantially aided and supported i f they had
legislation that would mandate them to take the action which we request of them, which their shareholders request.
I believe, and Mr. Moses believes, there is a great reservoir of support within American industry, within the business community for
this kind of legislation. I t affords them kind of a defense against
demands by the American boycott authors. I t enables them to say, we
would be willing to comply with the terms of the contract you demand,
but we can't because of the policy, the laws of our country prevent us
from doing so. I t gives them an opportunity to invoke that statutory
defense and to escape reprisal on the ground that the policy and the
laws of the United States prevent them from taking action demanded
of them by foreign customers.
Senator SARBANES. The statute would insure that the entire community would not be brought down to the level of the lowest common
denominator, in the sense that those few companies, or however many
companies there may be, which did not share these concerns and were
prepared to engage in whatever practices they thought were necessary,
to get business. A t the moment, there is no protection against that
legally.
Is that right?
289
Mr. MOSES. That's correct.
Senator SARBANES. I take it that the meetings—I want to be very
clear on this—between the Business Roundtable and the Anti-Deformation League are for the purposes of reaching an understanding of
the principles to be embodied in legislation, a broadening of the considerations involved, and not directed toward the notion that voluntary
action can substitute for statutory prescription?
Mr. GREENBERG. Your perception as stated is absolutely correct.
Mr. W H I T E H I L L . That is correct, Senator. General Mills is a member
of the Roundtable. That is where the efforts have been directed.
Going back to the issue of preemption and State laws, I think, is
really a very simple question. We all know this issue arises out of
international politics and we know where the proper forum is to deal
with those questions.
Senator SARBANES. Thank you, Mr. Chairman.
Senator STEVENSON. Gentlemen, I want to thank you for your calm
and reasoned testimony. I t attempts to recognize the American interests that this legislation is intended to protect. I t was introduced
originally for that purpose, to defend American sovereignty and
American principles. I remain committed to it for that reason.
I want to end up with what may seem like a small question, but a
question that is large in my mind. Your testimony has been refreshing,
because it recognizes American interests. I t hasn't always. We haven't
today discussed American interest in any other part of the world except for the Middle East.
What American interest is served by preventing an American company from certifying to Tanzania that chrome and trucks sold in
Tanzania did not come from Rhodesia ?
Mr. GREENBERG. I f I may try to repeat your question, you asked
what American interest is served by preventing Tanzania from requiring a negative certificate of origin regarding the source of goods
in Rhodesia. I believe that the legislation which we support would
allow Tanzania to ascertain the specific origin of the chrome in your
hypothetical question. So that it could satisfy itself that the chrome
came—I am not stire of other sources of chrome in the world, but I
assume the Soviet Union is a possible source—that they could obtain a
certificate that the chrome had, indeed, come from the Union of Soviet
Socialist Republics.
We see no purpose in permitting the negative certificate of origin.
We think the question is cast in the wrong direction. We see no reason
for American business to be part of the economic warfare between
those two countries, so that Rhodesia is the only country that the
chrome can't come from.
We assume the boycotting countries want to know the country of
origin and to know it's not Rhodesian in origin, but we feel that purpose can be served by permitting the positive certificate of origin.
Mr. MOSES. There is no implication, I ' m sure, in Mr. Greenberg's
remarks that we would support Rhodesian exports to Tanzania contrary to the wishes of the importing country. We are merely suggesting
that the legislation which the committee is considering should be
neutral in its application. I f it should be determined that U.S. interests
are served by taking a position with regard to any controversy between
Rhodesia and Tanzania, that can be addressed in specific legislation
290
or executive order, but legislation which deals with the broad principle
and which addresses itself to boycotts directed against nations friendly
to the United States should, as a point of departure, not permit the
singling out of a single nation for invidious treatment by American
industry by permitting compliance with negative certificates of origin.
Senator STEVENSON. I think you know what you are saying. I hope
this audience doesn't misunderstand what you are saying. What you
are saying is before a company can comply with a boycott of Rhodesia,
by offering or declining to comply with the negative certificate requirement, that a law has to be passed.
M r . MOSES. Y e s .
Senator STEVENSON.
I disagree with you on that. It's never been a
take a moral position, it has to be supported by law.
take a moral position that it has to be supported by law to do so.
Mr. MOSES. No; I am saying the legislation should start with a neutral blotter. I f it were the position of the United States that we should
in fact be discouraging trade with any given country, that can be
handled. Additionally, what moral decision might be made by a U.S.
company that is a unilateral decision which a U.S. company is always
free to make.
Senator STEVENSON. Not under this legislation in this case.
Mr. B A U M . This preserves for American firms
Senator STEVENSON. My legislation does; yes.
Mr. B A U M . We understand i t to mean that American firms are
indeed free to make their own decisions. I f they decide on moral
grounds they want to boycott another country they may do so. I f they
decide.
Senator STEVENSON. Not pursuant to a request for a negative
certificate.
Mr. BOOKBINDER. As the only nonlawyer at the table and maybe i n
the room, may I suggest, I would hope it's not antilegal, but I just
feel that there has got to be a distinction made somehow i n law, and
Executive orders are something, a distinction made between what the
United States does and what the U.S. Congress wants and decides to
do, in actions that w i l l affect a trusted ally and friend of ours. We
have not taken any anti-Israel position as a nation. I n fact, we are
a pro-Israel nation. Therefore, what might be considered appropriate,
in the case when we have ioined with other nations in saying that
there are some problems with Rhodesia, that thing should not automatically apply to our relations with Israel.
Senator STEVENSON. You better not go too far or you will fall i n
the trap that is waiting for you. We're not asking for a dual standard. This legislation isn't going to legislate as to which country is
friendly and not friendly. I don't think there is any implication or
ever been a suggestion that Rhodesia is not a friendly country.
Senator SARBBANES. Mr. Chairman, can I follow up on that
question ?
Senator STEVENSON. By all means. I use this as an example. I mentioned other examples earlier, that could be explored.
Senator Sarbanes.
Senator SARBANES. T understand your emphasis on neutrality to be
within the context of dealing with nations, all of whom were perceived
as being friendly.
291
Mr. MOSES. That's correct.
Senator SARBANES. And the principle of neutrality obviously will
be put aside when you start dealing with nations about whom we do
not have that perception. The extent of that difference may vary.
There may be belligerent warfare, they may be a nation where we
made a decision i n the United Nations that an economic boycott
should be imposed on them by all the countries of the world, in
which we are going to participate, or we may recognize some other
policy in terms of our dealings and we then get into difficult questions.
I didn't understand your emphasis on the sort of neutral aspect of
this, to go beyond the category of countries with whom we are trying
to maintain friendly relations and reaching into that other host of
relationships that might be involved, is that correct ?
Mr. MOSES. That's correct.
Mr. BRODY. The legislation has an exception for a country which
itself may be the object of any form of embargo by the United States.
Senator STEVENSON. Y O U are right. But we are not attempting in
this legislation to legislate a determination as to whether Turkey is
friendly or Taiwan is friendly, or Japan is friendly. I t makes an
exception for mv example. Rhodesia. Are there any further questions?
Gentlemen, thank you.
[Whereupon, at 1:50 p.m., the hearing was recessed to reconvene the
28th of April.]
293
ARAB
BOYCOTT
TUESDAY, FEBRUARY
22,
1977
U N I T E D STATES S E N A T E ,
C O M M I T T E E ON B A N K I N G , H O U S I N G A N D U R B A N A F F A I R S ,
S U B C O M M I T T E E ON I N T E R N A T I O N A L F I N A N C E ,
Washington,
D.C.
The subcommittee met at 10:05 a.m. in room 5302, Dirksen Senate
Office Building, Senator William Proxmire presiding.
Present: Senators Proxmire, Williams, Stevenson, and Sarbanes.
Senator P R O X M I R E . The subcommittee w i l l come to order.
Today we resume hearings on the antiboycott legislation pending
before the subcommittee. Yesterday we heard testimony from business
groups who contend that enactment of any boycott legislation would
seriously affect U.S. jobs and exports. We also heard testimony from
supporters of such legislation who contend that whatever the economic
impact, i t is a price worth paying for the defense of basic American
principles. *
Senator Stevenson, Senator Williams, and Senator Sarbanes and I ,
together with others, believe that we must take forceful antiboycott
measures, that we must not permit American sovereignty and principles to be violated by the dictates of foreign governments. The purpose of these hearings is to help us fashion a firm, workable, and responsible to a highly sensitive and emotional issue.
I apologize for the fact that we weren't able to start the hearings at
10 o'clock and get them through at a more reasonable hour but we had
a previous meeting scheduled of the committee at 9 :30 and that had
to be canceled and it was too late to move the hearings up.
I ' m going to ask with the tolerance of the other witnesses that Mr.
Francis Burch, the attorney general of Maryland, testify first. He has
an urgent commitment that he has to meet and then we will proceed
with the other witnesses. Mr. Burch, go right ahead, sir.
STATEMENT OF FRANCIS B. BURCH, ATTORNEY GENERAL OF
MARYLAND
Mr. B U R C H . My purpose in appearing before vou today is to urge
the launching of a resolute and uniform congressional attack upon the
secondary level of the Arab boycott of Israel. By "resolute" I mean a
statute which employs the f u l l force and effect of the power residing
in Congress to regulate foreign commerce. By "uniform", I mean the
inclusion within such a statute of a provision which explicitly preempts the States from legislating in this area.
As you know, Maryland is one of only six States which has legislatively responded to this very serious problem. Although the approaches
taken by these six States have been far from uniform, they have necessarily been geared toward the protection of civil rights rather than
(293)
294
the regulation of foreign commerce. Consequently, State regulation in
this area of international concern is, although laudatory, an insufficient
substitute for Federal legislation based squarely on the congressional
power to regulate foreign commerce.
I n 1976, the State of Maryland enacted a Foreign Discriminatory
Boycotts Act. The purpose behind this legislation was to purge from
all commercial transactions occurring in our State the foreign imposition of terms and conditions which discriminate against our citizens
because of their national origin, race, religion, or sex. As attorney general of Maryland, I have been charged with the responsibility of enforcing our statute, both civilly and criminally, and granted the authority to promulgate regulations governing that enforcement. I n
order that you may better understand the constitutional limitations
which a State faces in this area, I have made available copies of the
regulations which I have promulgated and adopted. I am confident
that a careful analysis of these regulations, and the Maryland statute
which they interpret, w i l l reveal that the full constitutional powers
available to the State have been employed without unduly burdening
foreign or interstate commerce.
My position on the question of preemption is really quite simple to
state; I favor its inclusion in a Federal statute which is stronger than
the Maryland act, and oppose its inclusion in a statute which is weaker.
This position is based upon a firm belief in the fundamental concepts
of federalism and comity. Those powers which reside in the Federal
Government do so because of the need for uniformity in their application. This need arises when, and only when, Congress determines that
a specific problem is of sufficient national concern to warrant the exercise of constitutional power in excess of that available to the States.
Only then should the States remove themselves from the arena.
Unquestionably, the secondary aspects of the Arab boycott of Israel
constitute a matter of grave, national concern. Consequently, federalism demands that Congress accept the responsibility appurtenant to
the power granted by the commerce clause, and act in a manner which
accomplishes uniformity by preemption.
295
Without close attention to the philosophy of federalism, one might
incorrectly conclude that the proponents of Federal preemption in
antiboycott legislation necessarily place in jeopardy or undermine
those powers still available to the States. The fallacy of such a conclusion becomes apparent when one recognizes that much opposition
to preemption in this area emanates from those States which have not
seen fit to accept the responsibility which adheres to those powers.
States such as Maryland, which have recognized their power and accepted their parallel responsibility, do not act in derogation of those
powers by expecting Congress to do the same.
I t is my belief that the position which I urge today reflects the
views of the majority of Maryland's citizens. A t a public hearing held
on December 20,1976,1 stated the position which I have restated here,
and asked for comment on it. I n essence, the response was that Federal preemption would be appropriate if, and only if, it were included
in strong, effective legislation.
Unfortunately, the enactment of any regulation, State or Federal,
inevitably requires the imposition of an additional layer of bureaucracy. I t is not unreasonable to expect that foreign countries and
businesses will perfer to use the ports of those States where only one
regulatory scheme needs to be satisfied. I t would be both ironic and
manifestly unfair for Congress, through the enactment of weak and
nonpreemptive legislation, to foster discrimination against those
States which have had the fortitude to protect their citizens from it.
Maryland and the five other States which have enacted antiboycott
legislation have placed human rights above economic interests. They
have accepted the responsibility that goes with power. I t is your duty
to do the same.
Thank you for the opportunity to testify on this most important
matter.
[Attachment to Mr. Burch's statement follows:]
296
Final Action O n Regulations
transportation of goods which occurs, without
after:
ADOPTION
Title 02:—
STATE LAW DEPARTMENT
ANTITRUST DIVISION
Authority: Commercial Law Articl*. J11-2A13.
Annotated Coda of Maryland
Notice is given that on January 8, 1977, regulations
under
COMAR
02.04.01 M a r y l a n d
Foreign
D i s c r i m i n a t o r y Boycotts A c t Regulations were adopted
by the State Law Department, Francis B. Burch, Attorney
General.
These regulations, which were proposed for adoption in
.3:24 Md. R. 1394-99 (November 24, 1976), have been
adopted with the changes shown below and become
effective coincident with the issue date of this publication.
[[.01 Effective Date.
The Maryland Foreign Discriminatory
Regulations shall be effective on January
thereafter
as
amended
or
Boycotts Act
1, 1977 and
promulgated.\\
[102\}JH
Definitions.
The following words as used in the Maryland Foreign
Discriminatory
Boycotts Act, Commercial Law
Article,
'ill-2AO I et seq.. Annotated Code of Maryland,
and
COMAR 02.94.01 shall be defined as follows.
A. Document.
f l ) As used in Commercial Law Article,
§311-2A02(E)
and 1I-2A12, Annotated Code of Maryland, ".Document"
means any writing in due form purporting to be a bill of
lading, policy or certificate of insurance, official weigher's
or inspector's certificate, consular invoice, certificate of
origin, letter of credit, or any other negotiable or
non-negotiable writing authorized or required by the parties
to an agreement,
understanding
or
contractual
arrangement to be made by a third party and which is
prima
facie evidence of its own authenticity
and
genuineness.
<2) As used in Commercial Law Article, H11-2A04 and
11-2AOS, Annotated Code of Maryland, "Document" means
any tangible recordation, notation, or other evidence which
directly or indirectly relates to an event described by the
Attorney General in his demand and which is reasonably
calculated to lead to the discovery of admissible evidence of
the event.
B. "Goods" means all tangible things other than the
money in which the price is to be paid and investment
securities.
C. "Bill of Lading" means a document evidencing the
receipt of goods for shipment issued by a person engaged in
the business of transporting or forwarding goods, and
includes an airbill.
means a document serving for
air
D. "Airbill"
transportation as a bill of lading does for marine or rail
transportation, and includes an air consignment note or air
way bill.
E. International and Not Intrastate Transit.
'1) With respect to export transactions, "International
and Not Intrastate Transit" means that portion of the
MARYLAND REGISTER, VOL 4, ISSUE 2
interruption,
<a> The issuance of a bill of lading for the goods at
the shipping point: or
ib) The loading of goods not covered by a bill of
lading, or for which a bill of lading will be issued at the
destination point, on board the railroad car. truck, airplane,
vessel or other vehicle which moves the goods beyond the
United States border.
>2) With respect to import transactions, ~International
and Not Intrastate Transit
means that portion of the
transportation of goods which occurs, without interruption,
before the arrival of the goods at the ultimate destination
point specified by the shipper.
F. As used in Commercial Law Article.
l-2A03fa>,
Annotated Code of Maryland, "Participate'
means the
entering into or carrying out of any provision, express or
implied,
fat Is part of an agreement, understanding,
or
contractual arrangement for economic benefit between the
parties thereto, ot least one of which is a foreign
government, foreign person, or international
organization:
and ([u'/ucAll
(b) Is required or imposed directly or indirectly,
overtly or covertly, by the foreign government, foreign
person or international organization; and [{u-A/cA||
fc) Has as one of its purposes the restricting,
conditioning or prohibiting of, or the interfering with, an
existing or potential business relationship in the State
between a person and a domestic individual because of the
race, color, creed, religion, sex or national origin of the
domestic individuaI; [{but 11 and .
(2) Which is not:
la) Specifically authorized by the law of the United
States; or
(b) Limited to the manner in which goods are to be
handlecTor shipped in international and not intrastate
transit.
G. As used in Commercial Law Article,
Ul-2A03tb),
Annotated Code of Maryland, "Aid or Assist"- means the
taking of any overt act in furtherance or observance of a
provision outlined in %F, above, by a person not a party to
the agreement, understanding or contractual arrangement
of which the provision is part.
[[.03 H
Applicability
of Commercial
Law
Article.
§/1-2Am, Annotated Code of Maryland.
In determining
whether
the Maryland
Foreign
Discriminatory Boycotts Act has been violated by knowing
participation in, or knowing aid or assistance given to one
participating in, a discriminatory boycott, the Attorney
General shall be guided by the principles set forth in the
examples in §B, below.
A. Any indication contained in the examples set forth in
§B, below, that a transaction does not violate the Maryland
Foreign Discriminatory
Boycotts Act should not be
construed as saying or implying that the transaction does
not violate other State or federal laws.
B. Examples.
< 1) Assume: Ajax, a Delaware corporation with a plant
in Maryland, agrees to sell widgets manufactured in its
Maryland plant to a Saudi Arabian company. The only
discriminatory provision of the sales agreement demanded
by the Saudi Arabian company requires that the widgets be
shipped by an ocean vessel which employs no Jews.
WEDNESDAY. JANUARY 19,1977
297
82
FINAL ACTION C 4 REGULATIONS 85
Payment is to be made by a letter of credit issued by a Saudi
Arabian bank (the "issuer") with advice of the credit being
given to Ajax (the "beneficiary") by a Maryland bank (the
"advising bank"). The advice states that Ajax must present
bank with a certificate issued by the
the Maryland
Maryland-Saudi
Arabian chamber of commerce stating
that the ocean vessel used to ship the widgets employs no
Jews.
RESULT:
Ajax
has not participated
in a
discriminatory boycott because the only discriminatory
provision of its sales agreement pertained to the handling or
shipping of goods in international transit. For the same
reason, neither the Maryland bank nor the owner of the
ocean vessel has participated in a discriminatory boycott.
(2) Assume; The facts are the same as §8(1), above,
except that the sales agreement also contains a second
discriminatory provision demanded by the Saudi Arabian
company. This second provision is that Ajax will employ no
Jew in the Widget manufacturing process. Additionally, the
owner of the ocean vessel who is subject to Maryland
Jurisdiction knows of this second provision and agrees to be
bound by the first provision, that is, he agrees to employ no
Jew on his vessel.
RESULT: Ajax has agreed for economic benefit to a
foreign person's demand the purpose of which is to prohibit
a business relationship between Ajax and another domestic
individual because of the religion of that individual. Thus,
Ajax and the Saudi Arabian company have knowingly
participated in a discriminatory boycott. The Maryland
bank has not violated the Maryland Foreign Discriminatory
Boycotts Act because it has neither knowingly participated
in the discriminatory boycott nor knowingly aided or
assisted the participation of Ajax or the Saudi Arabian
company. The bank's activity has been limited to (a)
entering into a non-proscribed agreement with the Sau3l
Arabian bank, and (b) the execution and delivery of a
document pertaining to the handling or shipping of widgets
in international transit, neither of which activity may
constitute a discriminatory boycott.
As the statutory definition of discriminatory boycott is
confied to the offending provisions of an agreement, as
opposed to the entire agreement which contains those
provisions, the Maryland bank has not violated subsection
(b) of Commercial Law Article, U1-2A03, Annotated Code
of Maryland. This is so because the bank's agreement to
obtain the certificate did not aid or assist the boycotting
parties in accomplishing the discriminatory boycott, that is,
the provision requiring that no Jews be hired in the widget
manufacturing process.
The owner of the ocean vessel has not participated in a
discriminatory boycott, even though he has agreed with
Ajax to employ no Jews, for two reasons, either of which is
sufficient: One, Ajax is not a foreign person, and two, his
agreement was with respect to the handling or shipping of
widgets in international transit. Nor has he violated
subsection (b) of Commercial Law Article,
S11-2A03,
Annotated Code of Maryland,
by knowingly aiding or
assisting Ajax or the Saudi Arabian company in their
participation in a discriminatory boycott. Although he
knows of the discriminatory boycott, namely the provision
not to hire Jews in the manufacture of the widgets, and by
agreeing to hire no Jews for his vessel does more than
merely handle or ship the widgets, nevertheless his activity
aids the participants only in their first, non-proscribed,
discriminatory
provision, namely that no Jew will be
employed on the vessel.
MARYLAND REGISTER, VOL 4, ISSUE 2
<3> Assume: The facts are the same as aB'l/, above.
Additionally, the Saudi Arabian company contracts directly
with the owner of the vessel, a Maryland resident, for-the
international shipment of the widgets and requires that he
employ no Jew on his vessel.
RESULT:
The owner of the vessel has knowingly
agreed to a provision of a contract, for economic benefit,
imposed by a foreign person (the Saudi Arabian company)
which provision prohibits the establishment of a business
relationship by a domestic individual because of his
religion. The vessel owner has not participated, however, in
a discriminatory
boycott because the
discriminatory
provision was with respect to the handling and shipping of
goods in international transit. By definition, such a
provision may not constitute a discriminatory boycott.
(4> Assume: The facts are the sart« as iB>2), above,
except that the Saudi Arabian bank requires tne Maryland
bank to obtain from the Maryland-Saudi Arabian chamber
of commerce, before paying Ajax, a certificate of Ajcufs
compliance with both discriminatory provisions.
RESULT: The Maryland bank violates subsections (a)
and (bt of Commercial Law Article, U1-2A03, Annotated
Code of Maryland. Subsection (a) is violated because the
Maryland bank has knowingly agreed, for economic benefit,
to the Saudi Arabian bank's demand concerning the
certification of non-employment of Jews by Ajax. This
demand is not with respect to the handling or shipping of
widgets in international transit and its purpose is to
prohibit a business relationship between Ajax and another
domestic individual
because of the religion of that
individual. Subsection (b) is also violated because the
Maryland bank knowingly and overtly aids or assists the
participation of Ajax and the Saudi Arabian company in
the proscribed provision not to employ Jews in the
manufacture of widgets (the discriminatory boycott) by
agreeing to police it.
Assuming that the Matyland-Saudi Arabian chamber
of commerce is controlled by a foreign person and, due to
that control, agrees with Ajax to certify to the proscribed
provision (the discriminatory boycott), it also violates
subsections (a) and (b) of Commercial Law
Article,
511-2A03, Annotated Code of Maryland. If however, the
chamber knows of the second, proscribed provision but
agrees to certify to only the first, non-proscribed provision,
namely the provision not to employ Jews on the ocean
vessel, it violates neither subsection (a) nor (b,. This is so
because its aid or assistance
went only to the
non-proscribed, albeit discriminatory, provision.
(5j Assume: The facts are the same as in $B'4) above.
Additionally, the widgets are to be painted by a third party
located in Maryland before they go into international
transit. Ajax explains to XYZ Trucking Company all the
provisions of the Ajax-Saudi
Arabian company sales
agreement before requesting XYZ to transport the u idgets
to the Maryland painter, XYZ agrees to so transport the
widgets.
RESULT: XYZ has not violated the Act because the
trucking company has merely handled or shipped the goods
of Ajax. The fact that the widgets were in intrastate and not
international transit is immaterial because the proviso"to
Commercial Law Article, S11-2A03, An no tared Code of
Maryland, is not so limited.
16) Assume: The facts are the same as in iB'o), above.
Additionally, a third requirement imposed by the Saudi
Arabian company on Ajax is that no Jew shall be employed
in any aspect of the transportation of the widgets. XYZ
WEDNESDAY, JANUARY 19, 1977
298
FINAL ACTION C
knows of this third requirement and agrees with Ajax to
employ no Jeus in transporting the widgets to the
Maryland painter.
RESULT: As the third requirement is not limited to
international transit, it is a discriminatory boycott and
XYZ violates subsection <b) of Commercial Law Article,
U1-2A03.
Annotated Code of Maryland,
by knowingly
aiding or assisting Ajax's participation therein. Because
XYZ complied with the illegal provision, it did more than
merely handle or ship the widgets and thus lost the
protection of the proviso to Commercial Law
Article,
U1-2A03, Annotated Code of Maryland.
(7) Assume: Ajax, located in Maryland, desires to sell
widgets to Baker Noivlty Company, also a Maryland based
business. Baker demands that Ajax employ no black in the
widget manufacturing process, and Ajax so agrees.
RESULT: Neither Ajax nor Baker has participated in
a discriminatory boycott because the party requiring the
discriminatory provision is not a foreign person.
(8) Assume: The facts are the same as in $B(7), above.
Additionally, Baker has, as a corporate director, a resident
of Rhodesia.
RESULT:
Baker is a foreign person because Us
Rhodesian director has the power to influence the
management or policies of Baker. U is not apparent,
however, that either Ajax or Baker has participated in a
discriminatory boycott because there has been no showing
that the influence of the foreign director of Baker
proximately caused the discriminatory demand. But, upon a
showing that the foreign director had exercised any degree
of influence in causing Baker to make its demand, both
Ajax and Baker would violate Commercial Law Article,
911 -2A03f at, Annotated Code of Maryland.
19) Assume: The facts are the same as given in IB(8>,
above, except that the discriminatory demand is made by
Ajax instead of Baker.
RESULT:
The agreement does not violate the
Maryland Foreign Discriminatory Boycotts Act because the
person making the discriminatory demand is not a foreign
person.
(10) Assume: The facts are the same as given in iBflt,
above, except that the Ajax-Saudi Arabian company sales
agreement contains an additional provision not normally
found in a commercial transaction. The provision requires
that Ajax shall employ no Zionist sympathizer.
RESULT:
The determination of whether such a
provision constitutes a discriminatory boycott depends on
whether the phrase "Zionist sympathizer" has been used
euphemistically for the word "Jew". The Attorney General
would investigate the circumstances surrounding
the
requirement in order to make such a determination.
(11) Assume: The facts are the same as given in \B(2>,
above, that is, that the two discriminatory provisions of the
Ajax-Saudi Arabian company sales agreement prohibit (1)
the employment by Ajax of any Jews in the widget
manufacturing process, and l2± the employment of any
Jews in the shipment of the widgets. Additionally,
the
nature of the widget is such that during transit it may be
necessary to apply a chemical spray at the direction of the
freight forwarder. Ajax requests that, should such spraying
become necessary, the Baltimore freight forwarder agree
4 REGULATIONS
85
that no Jew be employed in the spraying process. The
freight forwarder, having knowledge of both discriminatory
provisions in the sales agreement, agrees to the Ajax'request
to apply or arrange to have applied, the chemical spray on
the carrier, dock or vessel.
RESULT: The freight forwarder has not participated
in a discriminatory boycott because Ajax is not a foreign
person, and because the agreement between the freight
fortvarder and Ajax was with respect to the handling or
shipping of goods in international
and not intrastate
transit. Nor has the freight forwarder violated subsection
ibi of Commercial Law Article, U1-2A03, Annotated Code
of Maryland. Although he has lost the protection of the
proviso to Commercial Law Article, S11-2A03, Annotated
Code of Maryland, because hit agreement to hire no Jew
exceeds the mere handling or shipping of goods, he kns not
aided or assisted Ajax's participation in its discriminatory,
boycott, specifically the provision of the Ajax-Saudi
Arabian
sales agreement which prohibited the employment of Jews
in the widget manufacturing process.
(12) Assume: Universal Widget, Inc., a New York
corporation located in Ohio» enters into a sales agreement
with a Saudi Arabian company. The foreign party requires
that the sales agreement contain a provision
which
prohibits the employment by Universal of any Jew in the
manufacture of the widgets to be identified to the contract.
Mr. Smith, a resident of Maryland at the time Universal
executed its sales agreement, travels to Ohio in search of
employment by Universal. Mr. Smith is refused employment
by Universal because he is Jewish and his employment
of the
would violate the discriminatory
provision
Universal-Saudi Arabian company sales agreement.
RESULT:
Universal
has not participated
in a
discriminatory
boycott because even absent
the
discriminatory provision, the business relationship (Smith's
employment by Universal) would not have taken place in
Maryland.
(13) Assume: The facts are the same as given in
$B(12), above. Additionally, the sales agreement requires
that the widgets are to be shipped through the port of
Baltimore and a freight forwarder located in Baltimore is to
provide the Maryland-Saudi Arabian chamber of commerce
with certificates stating (JJ. that the insurer of the widgets
while in transit is not on the blacklist established by the
Arab League Boycott Office, (%) that the ship transporting
the widgets is not an Israeli vessel and is not scheduled to
call at any Israeli port during the voyage, and (31 that the
widgets are not of Israeli origin and do not contain Israeli
materials. The Baltimore freight forwarder agrees to supply
the Maryland-Saudi Arabian chamber of commerce with
these certificates.
RESULT:
By agreeing to provide the first two
certificates pertaining to the choice of insurer and vessel, the
Baltimore freight forwarder has aided or assisted Universal
only in the implementation of the provisions regarding the
shipment of widgets in international transit. Consequently,
the freight forwarder has not thereby violated Commercial
Law Article, U1-2A03, Annotated Code of Maryland.
By agreeing to provide the certificate of the non-Israeli
origin of the widgets and the materials contained therein,
the Baltimore freight forwarder has not aided or assisted
SYMHOLOOY: Italics indicate new matter. (Single brackets | indicate mutter stricken from existing rule.
( (Double bracket* I I indicate matter -tncken from proposed rule-making.
Underlining indicates amendment- in propped rule-makin>;.
MARYLAND REGISTER, VOL. 4, ISSUE 2
WEDNESDAY. JANUARY 19,1977
299
94
FINAL ACTION C 4 REGULATIONS 85
Universal in its ixzrticipation in a discriminatory boycott
because the certificate does not evidence any intent to
discriminate against a domestic individual.
11.0/II ,/tt Applicability
of Commercial
Law
Article,
y 1-2A12, Annotated Code of Maryland.
In determining whether any provision of any contract or
other document or other agreement is null and void, the
Attorney General shall be guided by the principles set forth
in the examples in 5B, below.
A. Any indication contained in the examples set forth in
S£, below, that a transaction does not violate the Maryland
Foreign Discriminatory
Boycotts Act should not be
construed as saying or implying that the transaction does
not violate other State or federal laws.
B. Examples.
il) Assume: AJax, a corporation located in Maryland,
contracts to sell widgets to a Rhodesian company. As part of
the sales agreement the Rhodesian company requires that
no black employed by AJax may perform any work on the
widgets to be identified to the contract. The widgets are to
be paid for by a letter of credit issued by a Rhodesian bank
(the "issuerwith
confirmation of the credit being given to
AJax tthe ~beneficiary")
by a Maryland
bank (the
~confirming bank"). The Rhodesian bank instructs the
Maryland bank to pay AJax only when presented with an
affidavit stating that no black employed by AJax has
performed any work on the widgets sold to the Rhodesian
company. AJax can present no such affidavit because it has
in fact employed a black in breach of its contract. AJax has
complied, however, with all other terms of its sales
agreement and presented all necessary documents, other
than the affidavit, to the Maryland bank. The Maryland
bank refuses Ajax's demand for payment solely because the
affidavit is missing.
RESULT:
That
portion
of
the
Maryland
bank—Rhodesian bank agreement which is imposed by the
foreign bank and requires the affidavit constitutes a
discriminatory boycott. By entering into that provision the
Maryland bank violates subsection (a) of Commercial Law
Acticle,
H1-2A03,
Annotated
Code of
Maryland.
Consequently, the provision is, without regard to observance
by the person intended to be bound, null and void due to the
operation of Commercial Law Article, U1-2A12, Annotated
Code of Maryland. AJax has complied with all the lawful
conditions imposed upon it as a "beneficiary" and is entitled
to have its demand for payment honored. .
(2) Assume: The facts are the same as given in %B'l),
above, except that the "issuer" is located in New York
instead of Rhodesia.
RESULT: As there is no showing that the New York
bank imposing the discriminatory provision is a foreign
person, the provision is not a discriminatory boycott. Thus,
the Maryland bank does not violate Commercial Law
Article, $ll-2A03, Annotated Code of Maryland, merely by
its agreement. If, however, the provision were observed by
bankj,
the person intended to be bound (the Maryland
subsection <b) of Commercial Law Article,
M1-2A03,
Annotated Code of Maryland, would be violated through
the aid or assistance thereby given to participants in a
discriminatory boycott <the discriminatory provision of the
Ajax-Rhodesian company sales agreement). Consequently,
the discriminatory provision of the Maryland bank—SeuYork hank agreement is null and void due to the operation
of Commercial Law Article. §11-2A12, Annotated Code of
Maryland. Ajax has compliod with all the lawful
conditions
MARYLAND REGISTER, VOL. 4, ISSUE 2
85-654 O -11
- 20
i"ip'-<ed upon it as a "beneficiary" and is entitled to have its
d? ".end for payment honored.
i .0> j| M£ Suspected Violations to lie Reported to Attorney
Central.
A. Definitions.
The following
words as used in
COT~:ervial Law Article, MI-2A04.
Annotated Code of
\izr;!and,
or in these regulations shall be defined as
follows:
' 11 "Promptly" means within IS days of the event or
occurrence.
2 > "Political Subdivision" means each of the counties,
the City of Baltimore, and each incorporated city or town.
'3> "Organisational
Unit"
means any
agency,
department, board, commission, bureau, division, office,
un::. or other entity of any political subdivision or of the
Executive Branch of State government.
'4) "Chief Administrative
Officer"
means
that
individual
having immediate
responsibility
for the
performance of the duties or affairs of any organizational
unit.
'Si "Officer* means any non-clerical employee of any
organizational
unit who, in the normal course of
employment, reports directly to a chief administrative
off.cer.
Person"
means any
individual,
>6) "Private
partnership, joint venture, unincorporated
organization,
charity, labor union, international labor organization,
chamber of commerce, mutual company,
joint'Stock
cornpany, educational institution, trust, corporation (other
thzn a political subdivision or organizational unit), or other
en:ity recognized at law or in equity in Maryland.
B. Reports by Officers or Chief Administrative Officers.
Commercial Law Article, UI-2A04,
Annotated Code of
Maryland,
requires officers and chief
administrative
officers to report apparent violations of the Maryland
Foreign Discriminatory
Boycotts Act to the Attorney
General.
<1) Report Contents. Every report shall be written,
submitted under oath, dated, and shall contain the
following:
(a) The name, address, telephone number, and
governmental organizational unit or other identification of
the reporting officer or chief administrative officer;
tb) A full,
complete statement
of the facts
constituting the apparent violation of the Maryland Foreign
Discriminatory Boycotts Act, Commercial Law Article,
HI-2API
et seq., Annotated Code of Maryland, listing the
section or sections believed to be violated;
<c) Copies of all relevant documents; and
<d) The signature of the reporting officer or chief
administrative officer.
'2> Promptly Filed. Every apparent violation of the
Ms-y land
Foreign
Discriminatory
Boycotts
Act,
Cor: Tiercial Law Article, U1-2AO I et seq.. Annotated Code
of Maryland, shall be reported in the form outlined above to
the Attorney General or the Assistant Attorney General and
Chief. Antitrust Division, within 15 days of receipt of
knowledge by an officer or chief administrative officer of
tk:s information.
•i> Additional Obligation. The reporting officer or
chief administrative officer shall provide the Attorney
General
upon written request with any
additional
infestation or documents that the Attorney General may
de~r->. relevant.
C. Reporting
Compliance
bv Chief
Administrative
Officer.
WEDNESDAY, JANUARY 19,1977
300
FINAL ACTION C 4 REGULATIONS
<l) Duty of Chief Administrative
Officer to Secure
Reporting Compliance. Each chief administrative
officer
shall have the duty to see that his organizational unit has
complied with its reporting obligations, and ||/iell is urged
to seek from those private persons with whom his
organizational unit normally comes in contact information
relevant to apparent violations of the Maryland Foreign
Discriminatory
Boycotts Act, Commercial Law Article,
ill-2AO I et sea., Annotated Code of Maryland.
(2) Annual Affidavit Concerning Compliance,
fat On or before the first day of September of each
year, the Attorney General, by written notice, may require
any chief administrative officer to file on [[A/*]] behalf of his
organizational
unit an Affidavit concerning compliance
setting forth the chief administrative officer's continuing
diligence in seeing that his organizational
unit has
complied with the reporting obligations imposed by the
Maryland
Foreign
Discriminatory
Boycotts
Act.
Commercial Law Article, M1-2A01 etseq., Annotated Code
of Maryland, and these regulations.
(b) When Filed. Each chief administrative officer so
notified shall file his Affidavit concerning compliance on or
before the last dav of October of the year of notification.
(ct Where'Filed. The Affidavit shall be filed with the
Assistant Attorney General and Chief, Antitrust Division,
One South Calvert Street, 11th Floor, Baltimore, Maryland
.21202.
(d) Forms of Affidavit:
fit The Affidavit shall be directed to the Attorney
general;
fii) The Affidavit shall describe the steps taken by
officer and his agents and
the chief administrative
employees to obtain and report information relevant to
apparent
violations
of
the
Maryland
Foreign
Discriminatory
Boycotts Act, Commercial Law
Article,
§11-2A01 et se'q., Annotated Code of Maryland; and
(iiij The Affidavit
shall state either: [[of the
following:]]
faaj T o the best of my knowledge, information
and belief, the linsert name of organizational unit/ has
during the 12 months immediately preceding notification
fully complied in all respects with its obligations
to
promptly and thoroughly report to the Attorney General all
information
regarding any apparent violations of the
Maryland
Foreign
Discriminatory
Boycotts
Act,
Commercial Law Article, U1-2A01 et seq., Annotated Code
of Maryland, and under COMAR 02.04.01.05B," or
(bb> the full and complete reasons why he is
unable to make an affidavit
in the form set out in
h[[C'2>(ctd> 11 Q2i'd><iii/aa),
above.
D. Reports by Private Persons.
(I) The Attorney General encourages and will consider
for investigation all reports by private persons of potential
or suspected violations
of the Maryland
Foreign
Discriminatory
Boycotts Act, Commercial Law
Article,
$U-2A01 et seq.. Annotated Code of Maryland.
<2) Report Contents. Every report by a private person
must be written, submitted under oath, dated, and contain
all of the following:
(a) The name, address, and telephone number of the
person making the report:
<b» .4 full, complete statement of the facts, patterns of
activity, or other information thought to constitute the
potential violation;
(ci Copies of all relevant documents should be
attached to the report; and
(d) The signature of the person making the report.
(3) Filing. A report by a private per ton should be sent
to the Assistant Attorney General and Chief, Antitrust
Division. Reports received later than 6 months after the act
or occurrence believed to constitute a violation will not
normally be investigated.
(U>5J1
Businexs Review Procedure.
([A.]1 The Attorney General is not authorized to give
advisory opinions to private parties. The Attorney General
will, however, respond to inquiries from private parties tvith
respect to proposed
business conduct
under
the
circumstances
and procedures
set forth
in these
regulations.
A- Request. A request for a business review letter
must be submitted in writing to the Assistant Attorney
General and Chief, Antitrust Division.
[[C.H 5 . Proposed Business Conduct. The
Attorney
General will consider only requests with respect to proposed
business conduct. Hypothetical problems will not be
considered for review.
!tf>.J] (X, Applicability. A business review letter may not
have any application to any party uhich does not join in the
request therefor.
[[£•11 D. Obligation of Requesting Party. The requesting
parties are under an affirmative obligation to make full and
true disclosure with respect to the business conduct for
which review is requested. All parties requesting the review
. letter must provide the Attorney General with whatever
additional information or documents the Attorney General
may thereafter request in order to review the matter. This
additional
information,
if furnished orally, shall be
promptly confirmed in writing, In connection with any
request for review the Attorney General will also conduct
whatever
independent
investigation
he believes is
appropriate.
[[J3.ll
[[F.ll E. Content of Request. Each request shall be
accompanied by;
(1) All
relevant
data
including
background
information; and
(2) Complete copies of all operative documents and
detailed statements of all collateral oral understandings, if
any.
([G.II F^ Oral Clearance Xot Binding. So oral clearance,
release, or other statement purporting
to bind the
enforcement discretion of the Attorney General may be
given. The requesting party may rely upon a written
business review letter signed by the Attorney General,
Deputy Attorney General, or Assistant Attorney General
and Chief of the Antitrust Division.
[[//•II G. Response by Attorney General. After review of a
request submitted hereunder the Attorney General may do
the following:
(1) State his present enforcement intention with respect
to the proposed business conduct;
SYMBOLCXJY: Intuvs indicate new matter. ISiru'kr-acket
m
' s] indieate matter stricken fr-.m
exist ins: rule.
: : Doube
l brackets I I indicate matt,
-trtcken from proposed rule-making.
I'nderlininij indicates at:!"{Hhr...-rr.>•t<proposed rule-making.
85
MARYLANO REGISTER, VOL 4. ISSUE 2
WEDNESDAY, JANUARY 19, 1977
301
FINAL ACTION C 4 REGULATIONS 85
12) Decline to pass on the request; or
13> Take another position or action that he considers
appropriate.
[{/.J]
Commitment of Attorney General. A business
review letter shall recite the facts upon which it is issued,
and shall state only the enforcement intention of the
Attorney General with respect to the facts as recited. The
•Attorney General remains completely free to bring whatever
action or proceeding he subsequently comes to believe is
required by the public interest as the result of a change in
the law or a variance from the facts upon which the letter
was based.
[[J.]\J^ Request May Be Withdrawn at Anytime. Any
requesting party may withdraw a request for review at any
time. The Attorney General remains free, however, to
submit such comments to the requesting party as he deems
appropriate. Failure
to take action after receipt of
documents or information whether submitted pursuant to
this procedure or otherwise, does not in any way limit or
estop the Attorney General from taking any action at any
time thereafter that he deems appropriate.
[[/£.]] J. Documents Retained. The Attorney General
reserveslhe right to retain documents submitted to him
under this procedure or otherwise and to use them for all
purposes of enforcement of the Maryland
Foreign
Discriminatory Boycotts Act.
([.07]]. gg Annual
Report to General Assembly.
A. The Attorney General shall report annually to the
General Assembly on his enforcement of the Maryland
Foreign Discriminatory Boycotts Act.
B. When Filed. The report shall be filed on or before the
last day of December of each calendar year after January 1,
1977.
C. Contents of Report. The Attorney General's Annual
Report shall summarize his enforcement actions during the
preceding calendar year, including all of the following:
(DA
statistical summary of complaints received,
actions instituted, and other dispositions taken;
(2) A listing of all actions instituted;
(3) A listing of the substance of all Business Review
Letters issued; and
(4) A listing of the substance of all complaints received
for which a determination of no-action has been made.
D. Matters Not Reported. The Attorney General will not
report upon complaints currently under investigation or
upon which appropriate action has not been determined.
F R A N C I S B. B U R C H
Attorney General
State Law Department
(Md. R. Doc. No. 77-100. Filad January 12, 1977.1
S Y M B O L O G Y : Italics indicate now matter. [Single brackets] indicate matter stricken from existing rule.
[ [Double brackets] J indicate matter stricken from proposed rule-making.
Underlining indicates amendments to proposed rule-making.
MARYLANO REGISTER, VOL 4, ISSUE 2
WEDNESOAY, JANUARY 19, 1977
302
Mr. B U R C H . I would point out, however, that I do believe—and this
is not in my prepared statement—I do believe that subparagraph 2(a)
(i) of the mandatory exemptions from regulation contained in your
act must be clarified. The exemption granted for the importation of
boycotted goods clearly should only apply where those goods are to
be resliipped by the U.S. person to the boycotting country. As presently drafted, however, the exemption would seem to swallow up a
substantial portion of the proposed law and I ' m sure that this is not
your intention.
Senator P R O X M I R E . Well, thank you very much. What specific evidence is there, sir, first to support the argument that cargo traffic has
been diverted to ports and States which do not have any boycott
statutes? For example, what evidence is there that California port
traffic has declined since the California boycott statute—or not only
California, but Baltimore and New York and Boston or Chicago—
on the basis of the information you have of these ports having lost
business to ports in States which do not have boycott statutes ?
Mr. B U R C H . Senator, I would say that I believe you w i l l have Mr.
Halpin, of the Maryland Port Authority, who will be testifying later
today, but I would say that on the basis of the suggestions that we
have had with not only the custom brokers and shippers and the port
authority representatives, that when the Maryland act was first enacted did not take effect until January 1 of this year, following
regulations which we were directed to promulgate under the statute,
there wras according to the Maryland Port Authority and the chamber of commerce and other shipping interests that there has been a
significant dropoff in the amount of traffic because of the fear that's
the interpretation that would be placed upon the Maryland act.
We think we have clarified it somewhat by the regulations that we
have promulgated. However, of course, I believe that although the
Port of Baltimore has been hurt somewhat, the clarification of the
regulations have alleviated some of the fears that existed, but we believe there has to be a uniform act throughout the United States and
we think, as I said earlier, we are interested in human rights even
more so than economic rights, and those human rights know no State
borders. I t doesn't make any difference whether it's Maryland or California or Newr York or Louisiana. The human rights should be given
the same consideration throughout the United States.
Senator P R O X M I R E . H O W about the possibility that private enforcement might raise a danger of unwarranted accusations, possibly politically motivated ? Does the Maryland statute have a private right of
action provision ?
Mr. B U R C H . Yes; they do. There is a private right of action provision.
Senator P R O X M I R E . What's been the experience under that ?
Mr. B U R C H . Well, we have had no experience because the act just
took effect on January 1 of this year. So we don't have any indications of violations. But we have promulgated regulations which
provide for a very comprehensive reporting system, not only with
respect to various agencies throughout the State government but also
we encourage those who have been the victim of the boycott to report
those incidences to our office.
Senator P R O X M I R E . H O W about in drafting this legislation or your
observations of the debate when the legislation was drafted, was there
303
any discussion, any concern with the possibility that private enforcement might raise a danger of unwarranted accusation ?
Mr. B U R C H . Quite frankly, we had 2 days of hearings on this subject and we had all segments of the industry, whether you talk about
the Arab Chamber of Commerce, shipping industries, the custom
brokers, the banks, and so on and so forth, and we really saw no real
fear insofar as the private enforcement rights were concerned.
Senator P R O X M I R E . Does that mean there was no opposition by
business groups?
Mr. B U R C I I . I can't recall any. I t wasn't even mentioned. We thought
it was rather interesting. But the important thing is that what all
parties were looking for was some clarification as to exactly how the
law
Senator P R O X M I R E . Y O U said this was a good representative sweep
of business representatives ?
Mr. B U R C H . I would say it was 1 0 0 percent representation. I would
say the two hearings that we had, we probably had something like 75
people. We had groups representing I would say
Senator P R O X M I R E . Of course, when a State acts in this way there
would be particular concern. We had opposition yesterday by some
business groups who were concerned that we might lose jobs and business and profits, but of course the effect on a State which decided to
go the route that Maryland has would be more serious than i t would
be on the business people throughout the country i f we have a national
provision. And yet you say in your State the business community did
not indicate that concern ?
Mr. B U R C H . They did not, sir. I would say your law is stronger than
the Maryland law in what it purports to do, but I don't know whether
the representatives of the State of New York will be testifying as
to exemption, but I think the general concensus is certainly as to the
six States that have the antidiscriminatory boycott rights that they
believe rightfully so that the preemption and as strong a bill as possible is the thing that really must be enacted by the Congress in order
to have uniformity throughout the country.
Senator P R O X M I R E . Some of those who favor the preemption favor
it only i f the Federal statute is stronger than the State statute. I n your
judgment is S. 69 stronger than existing State statutes?
Mr. B U R C H . I think it would except insofar as the right of enforcement of private rights.
Senator P R O X M I R E . I n what specific way ?
Mr. B U R C H . I don't know that the Federal act would preempt the
State statute. So far as the right of the private person who's been
harmed to institute an appropriate action because of a discriminatory
boycott, but that would be a question we would have to study after we
see the final legislation that was passed by the Congress.
Senator P R O X M I R E . But are there specific ways in which the Federal statute would be stronger ?
Mr. B U R C H . Well, as I mentioned earlier, the question with respect
insofar as the import permits and what not, the Congress of the United
States would have the power to do that which the State of Maryland
would not have because of the interstate law.
Senator P R O X M I R E . That's enforcement we're talking about, the substance of the coverage of the bill.
304
Mr. B U R C H . We think that the basic bill as introduced, subject to
the exemption exception that I mentioned earlier which I think should
be looked at very carefully because I think it w i l l cut out a good bit of
the substance of the bill i f the exemption is permitted to stand as set
forward in the bills.
Senator P R O X M I R E . The Maryland statute as I understand provides
two particular provisions—No. 1, violation of the law to knowingly
participate in a discriminatory boycott; and No. 2, to knowingly
assist another to participate in the discriminatory boycott. I ' m advised that's stronger than either S. 69 or S. 92.
Mr. B U R C H . I think insofar as it provides for the nonaid or assisting the boycott, it would be somewhat stronger than S. 69 or S. 92. I
also, in reviewing the two bills, noted there's a difference i n the language. One of them is a provision that i f they form a particular act
with intention
Senator P R O X M I R E . Would you like to see the Federal law modified
to provide this stronger Maryland language ?
Mr. B U R C H . Yes, I would, because, again, I think then we have the
question as to how far the Federal statute goes with respect to the
whole question of aiding and assisting which i n effect would mean
that maybe the Maryland statute would not be 100 percent exempted.
I think the only way is to have a uniform statute throughout the
United States and a strong statute.
Senator P R O X M I R E . Very good. Thank you, Mr. Burch, for excellent
testimony. A n d I want to apologize for Senator Sarbanes. As you
know, he's very interested in this legislation. He's a cosponsor of the
Williams bill, which I am too, and he was here yesterday and I ' m sure
he would like to be here to welcome you but couldn't be, and we wTill
tell him you were here and did a fine job. Thank you very much.
Our next witnesses are a panel consisting of Mr. Robert McNeill,
Emergency Committee for American Trade, executive vice chairman ; Mr. Cecil J. Olmstead, Chamber of Commerce of the United
States, Mr. L. A. Fox, National Association of Manufacturers; and
Jack Carlson, I should say my old friend—it's good to have you.
I understand, gentlemen, that you have been made aware of the fact
that we would appreciate i t very, very much i f you could condense
your remarks to 5 minutes. We w i l l be happy to accept your f u l l statement for the record. That w i l l give Senator Williams and me an opportunity to question you.
First, Mr. McNeill.
STATEMENT OF ROBERT L. McNEILL, EXECUTIVE VICE CHAIRMAN,
EMERGENCY COMMITTEE FOR AMERICAN TRADE, WASHINGTON,
D.C., ACCOMPANIED BY RAYMOND GARCIA
Mr. M C N E I L L . Thank you, Senator Proxmire. I have with me today
M r . Raymond Garcia who is ECAT's vice president. We are delighted
to be here to testify on the legislation before this committee, S. 69 and
S. 92. We are strongly supportive of that part of the bill extending the
President's export control authority. We think it's necessary and desirable and that it would be of assistance to U.S. exporters.
We'd like to spend most of our time this morning discussing the foreign boycott provisions of S. 69 and S. 92. We believe that the time
has come to establish a consistent national policy on foreign boycotts.
T h e enactment o f t h e i n t e r n a t i o n a l boycott amendment t o the t a x code
last year, t h e r i s i n g number o f d i f f e r i n g State statutes seeking t o regulate a n t i b o y c o t t activities, t h e various U . S . D e p a r t m e n t o f Commerce
regulations f o r f i l i n g antiboycott reports, the proposed Justice D e p a r t m e n t consent decree i n the Bechtel case, a n d t h e i n t r o d u c t i o n i n the
Congress o f several antiboycott b i l l s have created u n c e r t a i n t y as t o
w h a t is or is n o t p r o h i b i t e d i n our i n t e r n a t i o n a l trade.
I n l e g i s l a t i n g a n a t i o n a l p o l i c y on f o r e i g n boycotts, we recommend
t h a t antiboycott l e g i s l a t i o n deal w i t h f o r e i g n boycotts as they are a n d
not as some describe t h e m to be. T h e A r a b boycott o f I s r a e l is popul a r l y perceived as i n v o l v i n g religious and r a c i a l d i s c r i m i n a t i o n . I n
fact, its purpose is essentially p o l i t i c a l and economic as is borne out
i n a study published last m o n t h b y the A n t i - D e f a m a t i o n League o f
B ' n a i B ' r i t h . T h a t study o f A D L shows t h a t there was basically no
racial, religious or ethnic d i s c r i m i n a t i o n i n v o l v e d i n t h e i n i t i a l reports
made available b y the D e p a r t m e n t o f Commerce. Nonetheless, disc r i m i n a t i o n i n any instance is a b h o r r e n t t o us. W e , therefore, s t r o n g l y
s u p p o r t those provisions i n b o t h S. 69 and S. 92 p r o h i b i t i n g d i s c r i m i n a t i o n or the f u r n i s h i n g o f i n f o r m a t i o n o f a d i s c r i m i n a t o r y nature.
W e also urge the Congress t o take f u l l y i n t o account the t i m i n g o f
action on a n t i b o y c o t t legislation. T h e M i d d l e East s i t u a t i o n appears
t o be at a delicate p o i n t w h e n the hopes f o r peace are h i g h . T h i s object i v e o f peace seems t o c a l l f o r caution and consultation w i t h A m e r i c a n
negotiators concerning the pace o f the legislative process.
W e f u r t h e r urge the Congress t o consider the f a c t s — a l l too w e l l
k n o w n to business—of t h e fierce c o m p e t i t i o n i n the w o r l d f o r markets.
I n 1975, the A r a b States b o y c o t t i n g I s r a e l b o u g h t $25.5 b i l l i o n o f goods
f r o m f o r e i g n sources. T h e U n i t e d States s u p p l i e d $4.4 b i l l i o n , or 17.3
percent o f t h a t t o t a l . G e r m a n y , France, t h e U n i t e d K i n g d o m , I t a l y ,
a n d J a p a n were o u r most aggressive competitors. T h e U n i t e d States
has a huge stake i n large-scale construction projects i n t h e b o y c o t t i n g
A r a b States. T h e y started about $8 b i l l i o n i n such projects i n 1975, o f
w h i c h an estimated $1.4 b i l l i o n w i l l go t o the U n i t e d States. These
figures are expected to g r o w substantially i n the c o m i n g years, and
could p r o v i d e v i t a l jobs f o r A m e r i c a n workers, earnings f o r A m e r i c a n
firms, and f o r e i g n exchange t o finance o u r i m p o r t s . W e should seek t o
accomplish the purpose o f boycott legislation w i t h o u t sacrificing segments o f t h i s business t o f o r e i g n competitors.
O u r dependence on i m p o r t s o f A r a b o i l is great a n d is g r o w i n g . I n
the f i r s t 9 months o f 1976. U . S . crude o i l i m p o r t s c l i m b e d n e a r l y
30 percent t o 5.2 m i l l i o n barrels a day. A r a b o i l made u p 46 percent o f
t h i s t o t a l , compared w i t h 31 percent i n 1975. A r a b o i l i m p o r t s equaled
14 percent o f t o t a l U . S . o i l demand f o r t h e first 9 months o f 1976.
Estimates are t h a t A r a b o i l w i l l represent a p p r o x i m a t e l y 55 percent o f
U . S . o i l i m p o r t s i n 1980 and about 60 percent i n 1985, w h i c h w o u l d
represent 30 percent or more o f t o t a l o i l demand. C o n t i n u e d access to
t h i s A r a b o i l is v i t a l t o o u r economy. A g a i n , we should seek t o accomp l i s h our purposes w i t h o u t a d d i n g t o uncertainties about the s u p p l y
a n d cost o f oil.
I w i l l now comment on provisions o f the t w o b i l l s before the committee, S. 69 a n d S. 92. B o t h c o n t a i n essentially i d e n t i c a l provisions.
H o w e v e r , S. 92 differs f r o m S. 69 i n three m a j o r respects.
F i r s t , the i n t e n t language i n section 4 A ( a ) ( l ) has been o m i t t e d
i n S. 92.
306
Second, negative certificates of origin are prohibited in S. 92.
And, third, allowance for compliance by an individual with the immigration or passport requirements of the boycotting country has been
deleted in S. 92.
I n general, we prefer the provisions of S. 69 over those of S. 92, and
would like to offer the following recommendations for revising S. 69:
1. Section 4A(a) (1) should be revised by deleting the reference to
taking actions and retaining in lieu thereof the agreeing to take language of S. 92. Thus, section 4A(a) (1) would real in part:
. . the
President shall issue rules and regulations prohibiting any United
States person from agreeing to take any of the following actions . .
This modification would bring the act into conformity and consistency with the proscriptions and penalties of the antitrust laws
and the Tax Reform Act of 1976, which prohibit or provide penalties
for agreements or contracts, combinations, and conspiracies to further
the boycott.
2. I n general, we agree with the prohibitions spelled out in section
4A(a) (1) (A) and (B) concerning refusals to deal. We recommend
below a modification in the exceptions affecting these provisions.
We also agree with the prohibition in section 4A(a) (1) (C) involving discrimination.
I would like to interrupt here, Senator, to indicate that the following
paragraph in my statement on page 5, beginning, "We prefer, however,'' is inaccurate and I would appreciate i t i f that would be deleted
from the record.
We also strongly recommend that the word "other" be inserted between the words "any" and "person" in section 4A(a) (1) ( E ) . Individuals should be permitted to furnish factual information on their
own business activities. To deny them this freedom appears unjust.
We support, however, prohibitions on any U.S. person from furnishing business information about any other U.S. person.
3. The refusals to deal exceptions i n both bills fail to take f u l l
account of the inability of private persons to export goods or services
to or export them from any sovereign country in a manner contrary
to that country's laws and requirements. A n American tractor exporter, for example, should be permitted to equip the tractor with a
tire acceptable to the purchaser. We quite concur, however, that the
company should no be permitted to agree to refuse to do business with
the tire company in other transactions. The U.S. company's failure to
assure the boycotting country that it is no providing goods or services
307
prohibited entry by that country will most likely result in the boycotting country's refusing to accept the whole shipment or confiscating
it. I n such a case, nobody benefits. The United States, however, loses
jobs and exports. We strongly urge the committee to make appropriate modifications in the exceptions to take account of this problem
and we would be glad to recommend language to the committee.
4. We recommend that the committee reconsider the definition of
U.S. person, deleting the references to foreign subsidiaries and
affiliates. Limiting the reach of the bill to domestic concerns as was
provided for in S. 3084, which was overwhelmingly passed by the Senate last year, in our judgment, is the preferable approach. I t would
avoid the possibility of putting overseas U.S. subsidiaries and affiliates
in conflict with foreign laws or policies when they differ from those of
the United States.
5. We also recommend that Federal legislation provide for specific
preemption of State statutes that regulate involvement in foreign
boycotts.
6. U.S. Department of Commerce boycott reporting requirement
should be eliminated or reduced. They were initiated in 1965 to help
the Government in assessing the impact that foreign boycotts had on
the U.S. national interest and at a time when involvement in foreign
boycotts was not prohibited. Now that certain kinds of involvement are
prohibited, the reports should be discontinued. Doing so would not
deprive the Government of information on boycott activities. The tax
code has been amended to require taxpayers to report all such activities annually with their tax returns. The filing of separate reports,
containing essentially similar information to two different agencies is
redundant and costly. I t could lead to higher prices or lower earnings,
or both, with no compensating increase in benefits to the Goverment.
7. Both S. 69 and S. 92 provide the effective date of the act and regulations thereunder is to be no later than 90 days after enactment or in
some cases 90 days after the rules and regulations become effective. We
recommend that this provision be modified, so that the effective date of
application of the act to existing contracts would be January 1, 1978.
This revision would bring the act into conformity with the International Boycott provisions (section 105(a) (2)) of the Tax Reform Act
of 1976.
Mr. Chairman, I thank you very much for having me here.
Senator PROXMIRE. Thank you, Mr. McNeill.
[The complete statement follows:]
308
T E S T I M O N Y O F R O B E R T L . M c N E I L L , ON B E H A L F O F
T H E E M E R G E N C Y C O M M I T T E E FOR A M E R I C A N T R A D E
BEFORE THE INTERNATIONAL FINANCE SUBCOMMITTEE
O F T H E S E N A T E C O M M I T T E E ON B A N K I N G , HOUSING A N D
U R B A N A F F A I R S ON S. 69 and S. 92
F e b r u a r y 22, 1977
M r . C h a i r m a n , I a m delighted to be here to testify on behalf of the
Emergency Committee for A m e r i c a n T r a d e .
E C A T , a.s our committee is
called, is composed of the leaders of 64 of the country 1 s largest f i r m s and
banks engaged in worldwide trade and investment.
We thank you for giving
us the opportunity to state our views on bills to renew the President's
authority to control U . S . exports and to expand his power to take action
against foreign boycotts.
We support renewing the President's export control authority.
The
changes proposed in the bills before this committee for administering the
export control system appear wise and should be helpful to U . S . e x p o r t e r s .
We should like to devote the balance of our testimony to discussing
the foreign boycott provisions.
They touch on v i t a l m a t t e r s .
ECAT members
have carefully studied the provisions and have agreed on a statement of
policy on antiboycott legislation, which is appended to our testimony.
E C A T believes the time has come to establish a consistent national
policy on foreign boycotts.
The enactment of the international boycott
amendment to the tax code last y e a r , the rising number of differing state
statutes seeking to regulate antiboycott a c t i v i t i e s , the various U . S . D e p a r t ment of Commerce regulations for filing antiboycott r e p o r t s , the proposed
Justice Department consent decree in the Bechtel case, and the introduction
309
in the Congress of several antiboycott bills have created uncertainty as
to what is or is not prohibited in our international trade.
In legislating a national policy on foreign boycotts, we recommend
that antiboycott legislation deal with foreign boycotts as they are and not
as some describe them to be.
The A r a b boycott of I s r a e l is popularly
perceived as involving religious and r a c i a l discrimination.
In fact, its
purpose is essentially political and economic as is borne out i n a study
published last month by the Anti-Defamation League of B'nai B ' r i t h .
ADL's
study analyzed 836 A r a b boycott request reports filed with the U . S .
Commerce Department and found that:
"Boycott requests involving religious discrimination
were r a r e - - appearing on three of 836 r e p o r t s , or less
than one-half of 1 percent. "
"In each of the three cases, which originated in Saudi
A r a b i a , the discrimination took the f o r m of a boycottrelated request that a hexagonal or six-pointed star
not appear on the goods or packages to be shipped to
the Saudi i m p o r t e r . "
The study adds:
"None of the reports examined contained requests for
information concerning ownership or control of the
exporting f i r m by persons of the Jewish faith, the
presence of Jews on its board of d i r e c t o r s . None of
the r e p o r t s , likewise, inquired whether the reporting
f i r m used the goods and/or services of a Jewish subcontractor, and there were no reports involving
requests that a f i r m not send persons of a particular
religion to the A r a b country where services were to
be p e r f o r m e d . "
Nonetheless, discrimination in any instance is abhorrent to us.
We,
t h e r e f o r e , strongly support those provisions in both S. 69 and S. 92 prohibiting discrimination or the furnishing of information of a d i s c r i m i n a t o r y
310
nature.
We should, however, be clear as to what can and cannot be accomplished by legislation.
In introducing S. 69 on January 10, you noted, Senator
Stevenson, that the A r a b boycott of I s r a e l " w i l l be ended only when there
is permanent peace in the Middle East, 1 1 and that "just as we seek to
protect A m e r i c a n sovereignty, we should also avoid interference with the
sovereignty of others.
11
We agree and hope that these thoughts w i l l be kept
i n mind as the Congress considers the bills before i t .
We also urge the Congress to take fully into account the timing of
action on antiboycott legislation.
The Middle East situation appears to be
at a delicate point when the hopes for peace a r e high.
This objective of
peace seems to c a l l for caution and consultation with A m e r i c a n negotiators
concerning the pace of the legislative process.
We further urge the Congress to consider the facts - - a l l too w e l l
known to business - - o f the f i e r c e competition in the world for m a r k e t s .
In 1975, the A r a b states boycotting I s r a e l bought $25.5 billion
f r o m foreign sources.
percent of that total.
of goods
The United States supplied $ 4 . 4 billion, or 1 7 . 3
G e r m a n y , F r a n c e , the United Kingdom, Italy and
Japan were our most aggressive competitors.
The U . S . has a huge stake
in l a r g e - s c a l e construction projects in the boycotting A r a b states.
They
started about $8 billion i n such projects in 1975, of which an estimated
$ 1 . 4 billion w i l l go to the United States.
These figures a r e expected to
grow substantially in the coming years, and could provide v i t a l jobs for
A m e r i c a n w o r k e r s , earnings for A m e r i c a n f i r m s , and foreign exchange to
finance our i m p o r t s .
We should seek to accomplish the purpose of boycott
311
legislation without sacrificing segments of this business to foreign competitors.
Our dependence on imports of A r a b oil is great and is growing.
In
the f i r s t nine months of 1976, U . S . crude oil imports climbed n e a r l y 30
percent to 5. 2 m i l l i o n barrels a day.
A r a b oil made up 46 percent of this
total, compared with 31 percent in 1975.
A r a b o i l imports equalled 14
percent of total U . S . o i l demand for the f i r s t nine months of 1976. Estimates
a r e that A r a b oil w i l l represent approximately 55 percent of U . S . oil
imports in 1980 and about 60 percent in 1985, which would represent 30
percent or m o r e of total o i l demand.
is v i t a l to our economy.
Continued access to this A r a b o i l
Again, we should seek to accomplish our purposes
without adding to uncertainties about the supply and cost of o i l .
I now w i l l comment on provisions of the two bills before the
committee, S. 69 and S. 92.
Both contain essentially identical provisions.
However, S . 9 2 differs f r o m S. 69 in three m a j o r respects.
F i r s t , the "intent" language in Section 4A. (a)(1) has been omitted
i n S. 92.
Second, negative certificates of origin a r e prohibited in S . 9 2 .
And, t h i r d , allowance for compliance by an individual with the
i m m i g r a t i o n or passport requirements of the boycotting country has been
deleted i n S. 92.
In general, we p r e f e r the provisions of S. 69 over those of S. 92,
and would like to offer the following recommendations for revising S. 69:
1.
Section 4A. (a)(1) should be revised by deleting the reference to
312
"taking" actions and retaining i n lieu thereof the "agreeing to take"
language of S. 92.
Thus, Section 4A. (a)(1) would read i n p a r t :
. .the President shall issue rules and regulations
prohibiting any United States person f r o m agreeing
to take any of the following a c t i o n s . . . "
This modification would bring the A c t into conformity and consistency with the proscriptions and penalties of the antitrust laws and the
T a x R e f o r m Act of 1976, which prohibit or provide penalties for a g r e e ments or contracts, combinations and conspiracies to further the boycott.
2.
In general, we agree with the prohibitions spelled out in
Section 4A. (a)(1)(A) and (B)
concerning "refusals to d e a l . "
We r e c o m -
mend below a modification in the exceptions affecting these provisions.
We also agree with the prohibition in Section 4A. (a)(1)(C) involving
discrimination.
We p r e f e r , however, the language in Section 4A. (a)(1)(D) of S. 92
over the comparable provision i n S. 69.
S. 92 would p e r m i t individuals to
furnish information on their own r a c e , r e l i g i o n , nationality, or national
o r i g i n if they chose to do so, say in applying for a v i s a , but prohibit the
furnishing of such information for any other U . S . person.
We also strongly recommend that the word "other" be inserted
between the words "any" and ''person" i n Section 4A. (a)(1)(E).
Individuals
should be p e r m i t t e d to furnish factual information on their own business
activities.
To deny them this freedom appears unjust.
We support, however,
prohibitions on any U . S . person f r o m furnishing business information about
any other U . S . person.
313
3.
The "refusals to deal" exceptions in both bills fail to take full
account of the inability of private persons to export goods or services to
or export them f r o m any sovereign country in a manner contrary to that
country's laws and requirements.
A n A m e r i c a n t r a c t o r e x p o r t e r , for
example, should be permitted to equip the tractor with a t i r e acceptable
to the purchaser.
We quite concur,
however, that the company should
not be permitted to agree to refuse to do business with the t i r e company in
other transactions.
The U . S . company's failure to assure the boycotting
country that it is not providing goods or services prohibited e n t r y by that?
country w i l l most l i k e l y result in the boycotting country's refusing to
accept the whole shipment or confiscating i t .
benefits.
In such a case, nobody
The U . S . , however, loses jobs and exports.
We strongly urge
the committee to tnake appropriate modifications in the exceptions to take
account of this p r o b l e m and we would be glad to recommend language to
the committee.
4.
We recommend that the committee reconsider the definition of
"United States person, " deleting the references to foreign subsidiaries and
affiliates.
L i m i t i n g the reach of the bill to "domestic concerns" as was
provided for in S. 3084, which was overwhelmingly passed by the Senate
last y e a r , in our judgment, is the preferable approach.
It would avoid the
possibility of putting overseas United States subsidiaries and affiliates in
conflict with foreign laws or policies when they differ f r o m those of the
United States.
5.
We also recommend that federal legislation provide for specific
preemption of state statutes that regulate involvement in foreign boycotts.
314
A t least six states - - C a l i f o r n i a , I l l i n o i s , M a r y l a n d , Massachusetts, New
Y o r k , and Ohio - - have recently enacted legislation prohibiting c e r t a i n
kinds of boycott-related activity.
legislation.
Other states a r e considering s i m i l a r
The power to control foreign commerce and international
relations is a federal responsibility and the United States must speak with
one voice i n such m a t t e r s .
6.
U . S . Department of C o m m e r c e boycott reporting requirements
should be eliminated or reduced.
They were initiated i n 1965 to help the
government i n assessing the impact that foreign boycotts had on the U . S .
national interest and at a t i m e when involvement in foreign boycotts was
not prohibited.
Now that c e r t a i n kinds of involvement a r e prohibited, the
reports should be discontinued.
Doing so would not deprive the government
of information on boycott activities.
The tax code has been amended to
r e q u i r e taxpayers to r e p o r t a l l such activities annually with t h e i r tax
returns.
The filing of separate r e p o r t s , containing essentially s i m i l a r
i n f o r m a t i o n , to two different agencies is redundant and costly.
It could
lead to higher prices or lower earnings, or both, with no compensating
increase i n benefits to the government.
7.
Both S. 69 and S. 92 provide that the effective date of the Act and
regulations thereunder is to be no l a t e r than 90 days after enactment o r i n
some cases 90 days after the rules and regulations become effective.
We
recommend that this provision be modified, so that the effective date of
application of the A c t to existing contracts would be January 1, 1978.
This
revision would bring the Act into conformity with the International Boycott
provisions (Section 105 (a)(2))of the T a x R e f o r m Act of 1976.
M r . Chairman'and m e m b e r s of the c o m m i t t e e , thank you for having
me here.
I welcome any questions.
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APPENDIX
E m e r g e n c y C o m m i t t e e f o r A m e r i c a n T r a d e 1211 Connecticut Ave Washington DC 20036 (202)659-5147/730 Fifth Ave NYC 10019 (212)541-4040
E C A T S T A T E M E N T O F P O L I C Y ON A N T I - B O Y C O T T
LEGISLATION
Introduction
Since 1965, the United States has d e c l a r e d a policy of opposition to r e s t r i c tive trade p r a c t i c e s or boycotts fostered by foreign countries against other
countries f r i e n d l y to the United States. The E x p o r t A d m i n i s t r a t i o n Act of
1969 (as amended) and its p r e d e c e s s o r , the E x p o r t C o n t r o l A c t , which a r ticulates this policy, encourages and requests domestic e x p o r t e r s to refuse
to take any action, including the furnishing of i n f o r m a t i o n or the signing of
a g r e e m e n t s , which has the effect of f u r t h e r i n g or supporting foreign boycotts
or r e s t r i c t i v e t r a d e p r a c t i c e s .
The policy has been i m p l e m e n t e d by U. S. D e p a r t m e n t of C o m m e r c e r e g u lations. T h e y prohibit U. S. e x p o r t e r s f r o m d i s c r i m i n a t i n g against U. S.
citizens on the basis of r a c e , c o l o r , r e l i g i o n , sex, or national o r i g i n , p u r suant to boycott requests. They also r e q u i r e e x p o r t e r s to r e p o r t receipt
of b o y c o t t - r e l a t e d requests to the D e p a r t m e n t of C o m m e r c e and to state
whether and how they have responded to such requests. Since October 6,
1976, parts of the r e p o r t s have been made available to the public.
The 94th Congress f u r t h e r strengthened United States action against foreign
boycotts. It enacted an i n t e r n a t i o n a l boycott amendment to the T a x R e f o r m
Act of 1976 that deprives U. S. taxpayers of foreign tax c r e d i t s , tax " d e f e r r a l "
and DISC benefits, if they agree to " p a r t i c i p a t e in or cooperate with" an i n t e r n a t i o n a l boycott. The amendment also r e q u i r e s U. S. taxpayers to r e p o r t
compliance actions to the I n t e r n a l Revenue Service and provides c r i m i n a l
sanctions for w i l l f u l f a i l u r e to r e p o r t .
In addition to f e d e r a l legislation, at l e a s t six s t a t e s - - C a l i f o r n i a , I l l i n o i s ,
M a r y l a n d , Massachusetts, New Y o r k , and O h i o - - h a v e r e c e n t l y enacted legislation prohibiting c e r t a i n kinds of b o y c o t t - r e l a t e d a c t i v i t y . Other states
a r e considering s i m i l a r legislation.
Some segments of the A m e r i c a n public and their elected r e p r e s e n t a t i v e s a r e
of the opinion that the c u r r e n t a r r a y of laws and regulations to p r o t e c t A m e r icans against involvement in foreign boycotts a r e not fully effective. Others
believe that the U. S. response deals sufficiently with the p r o b l e m . The fund a m e n t a l question of this debate is to what extent the a d m i n i s t r a t i o n of A r a b
economic laws w i l l be p e r m i t t e d to affect the t r a d i t i o n a l f r e e d o m of A m e r i c a n
citizens and e n t e r p r i s e s to choose without compulsion the persons w i t h whom
and the l o c a l i t i e s w h e r e they do business. The 95th Congress w i l l seek an
answer to this question when it considers the r e n e w a l of the E x p o r t A d m i n i s t r a t i o n A c t . The following is a statement of the position of the E m e r g e n c y
C o m m i t t e e for A m e r i c a n T r a d e on this issue.
85-654 0 - 77 - 21
316
S t a t e m e n t of E C A T P o l i c y
E C A T f i r m l y b e l i e v e s that a l l segments of o u r s o c i e t y tend to b e n e f i t f r o m
a p o l i c y of the f r e e s t i n t e r n a t i o n a l exchange of goods, s e r v i c e s and c a p i t a l .
Boycotts and r e s t r i c t i v e t r a d e p r a c t i c e s d i s t o r t e c o n o m i c g r o w t h and i n h i b i t
e m p l o y m e n t . E C A T , t h e r e f o r e , supports l e g i s l a t i o n t h a t s e r v e s to p r o m o t e
and expand U. S. i n t e r n a t i o n a l c o m m e r c e and d o m e s t i c e m p l o y m e n t o p p o r t u n i t i e s and opposes l e g i s l a t i o n that does o t h e r w i s e .
E C A T r e c o g n i z e s , h o w e v e r , that a l l n a t i o n s , i n c l u d i n g o u r own, do not n e c e s s a r i l y a l w a y s a c c e p t o r p u r s u e these o b j e c t i v e s and t h a t t h e y possess the
r i g h t and the p o w e r to c o n t r o l the i m p o r t and e x p o r t of goods and s e r v i c e s
to and f r o m t h e i r t e r r i t o r i e s i n t h e i r n a t i o n a l i n t e r e s t s . A n y l e g i s l a t i o n to
be e f f e c t i v e m u s t r e c o g n i z e the f u n d a m e n t a l p r i n c i p l e of i n t e r n a t i o n a l l a w
that e a c h s o v e r e i g n n a t i o n m a y r e g u l a t e i t s t r a d e w i t h o t h e r n a t i o n s and d e t e r m i n e who m a y do business w i t h i n i t s t e r r i t o r y .
E C A T b e l i e v e s the t i m e has c o m e to e s t a b l i s h a c o n s i s t e n t n a t i o n a l p o l i c y
t o w a r d s f o r e i g n boycotts. T h e e n a c t m e n t of the i n t e r n a t i o n a l boycott a m e n d m e n t to the t a x code, the r i s i n g n u m b e r of d i f f e r i n g state statutes s e e k i n g to
r e g u l a t e a n t i - b o y c o t t a c t i v i t i e s , the n e w U . S. D e p a r t m e n t of C o m m e r c e r e g u l a t i o n s f o r f i l i n g a n t i - b o y c o t t r e p o r t s , and the i n t r o d u c t i o n i n the C o n g r e s s
of v a r i o u s b i l l s to t i g h t e n a n t i - b o y c o t t statutes a r e compounding a confused
s i t u a t i o n o v e r w h a t is o r i s not p r o h i b i t e d i n i n t e r n a t i o n a l t r a d e .
Interpretations of the m e a n i n g of these statutes and r e g u l a t i o n s a r e being c o n t e s t e d .
V a l u a b l e business and e m p l o y m e n t o p p o r t u n i t i e s f o r A m e r i c a n f i r m s and
w o r k e r s a r e i n d a n g e r of being l o s t u n t i l a c o n s i s t e n t a n t i - b o y c o t t p o l i c y i s
set. E C A T b e l i e v e s that this p o l i c y should i n c l u d e the f o l l o w i n g e l e m e n t s :
1.
2.
I t should be i l l e g a l | o r a U . S. p e r s o n ( i n d i v i d u a l , f i r m , o r c o r p o r a t i o n )
to e n t e r into any a g r e e m e n t that s t i p u l a t e s , as a c o n d i t i o n f o r doing b u s i ness w i t h o r i n a f o r e i g n c o u n t r y , to:
(a)
d i s c r i m i n a t e a g a i n s t a n y U . S. i n d i v i d u a l on the b a s i s of r a c e ,
ligion, creed, color or national origin;
(b)
f u r n i s h i n f o r m a t i o n on any U . S. i n d i v i d u a l ' s r a c e , r e l i g i o n ,
color or national origin;
(c)
f u r n i s h i n f o r m a t i o n on a n o t h e r U . S. p e r s o n ' s business r e l a t i o n s h i p s ;
(d)
r e f u s e to do business w i t h any U. S. p e r s o n ; and
(e)
r e f u s e to do business w i t h o r i n a n y o t h e r f o r e i g n c o u n t r y .
re-
creed,
R e c o g n i t i o n should be g i v e n to the s o v e r e i g n r i g h t s of a c o u n t r y to:
-
r e f u s e to d e a l w i t h o t h e r n a t i o n s ;
-
c o n t r o l its i m p o r t s and e x p o r t s of goods and s e r v i c e s f r o m and to
any s o u r c e ;
317
-
regulate the admission of people into its t e r r i t o r y ; and
-
a d m i t o r exclude any ships intending to c a l l at its ports.
A s a consequence, U. S. persons should be allowed to abide by the laws
and regulations of f o r e i g n countries w i t h r e s p e c t to business transactions
i n o r w i t h those countries; provided, h o w e v e r , that the sovereign r i g h t
of countries to regulate e n t r y and exit of goods, s e r v i c e s , c a p i t a l and
people should not in any way be p e r m i t t e d to dictate or even influence
what U . S . persons do i n any other circumstance or w i t h respect to any
other transaction. U. S. t r a d e r s should be p e r m i t t e d to provide a p p r o p r i a t e documentation r e q u i r e d by f o r e i g n countries to c o n t r o l t h e i r i m ports and exports, including c e r t i f i c a t i o n s regarding the o r i g i n , d e s t i nation, shipment and insurance of goods and s e r v i c e s .
3.
T h e r e should be no e x t r a - t e r r i t o r i a l i t y , i . e . U. S. policy should not
attempt to regulate the actions of f o r e i g n f i r m s owned or controlled by
U. S. companies. This avoids the p o s s i b i l i t y of putting overseas U. S.
subsidiaries and a f f i l i a t e s in conflict w i t h f o r e i g n laws or policies when
they d i f f e r f r o m those of the United States.
4.
F e d e r a l policy should provide for specific p r e e m p t i o n of state statutes
that regulate involvement in f o r e i g n boycotts. The power to c o n t r o l f o r eign c o m m e r c e and i n t e r n a t i o n a l relations is a f e d e r a l r e s p o n s i b i l i t y and
the United States must speak w i t h one voice in such m a t t e r s .
5.
U. S. D e p a r t m e n t of C o m m e r c e boycott r e p o r t i n g r e q u i r e m e n t s should
be e l i m i n a t e d or reduced. They w e r e i n i t i a t e d in 1965 to help the gove r n m e n t i n assessing the i m p a c t that f o r e i g n boycotts had on the U. S.
national i n t e r e s t and at a t i m e when involvement in f o r e i g n boycotts was
not prohibited. Now that c e r t a i n kinds of involvement a r e prohibited,
the r e p o r t s should be discontinued. Doing so would not d e p r i v e the gove r n m e n t of i n f o r m a t i o n on boycott a c t i v i t i e s . The tax code has been
amended to r e q u i r e taxpayers to r e p o r t a l l such a c t i v i t i e s annually w i t h
t h e i r tax r e t u r n s . The f i l i n g of separate r e p o r t s , containing e s s e n t i a l l y
s i m i l a r i n f o r m a t i o n , to two d i f f e r e n t agencies is redundant and costly.
I t could lead to higher p r i c e s or l o w e r earnings, or both, w i t h no c o m pensating i n c r e a s e in benefits to the government.
I n calling for a consistent U. S. policy on f o r e i g n boycotts, E C A T urges our
government to consider the f a c t s - - a l l too w e l l known to b u s i n e s s - - o f the
f i e r c e competition in the w o r l d f o r f o r e i g n m a r k e t s and of how l i m i t e d is
the power of withholding A m e r i c a n goods in f o r c i n g nations to come to t e r m s
w i t h A m e r i c a n w i s h e s . We strongly r e c o m m e n d against hasty action. The
surest way to end boycotts is to bring peace among the b e l l i g e r e n t s . We urge
the Congress, in considering r e n e w a l of the E x p o r t A d m i n i s t r a t i o n A c t , to
take f u l l y into account the i m p a c t that unduly h a r s h f o r e i g n boycotts l e g i s l a tion might have on that objective and, p a r t i c u l a r l y , on achieving a s a t i s f a c t o r y solution to the situation in the Middle E a s t .
F e b r u a r y 1977
318
Senator PROXMIRE. O u r next witness is M r . Jack Carlson of the
Chamber o f Commerce.
STATEMENT OF JACK CARLSON, CHAMBER OF COMMERCE OF THE
UNITED STATES, ACCOMPANIED BY JOHN BREWER
M r . CARLSON. Senator P r o x m i r e and Senator W i l l i a m s , it's a pleasure to be here. I ' m pleased t o have w i t h me J o h n Brewer, the Chamber's
Associate Director f o r Near East and South A s i a n A f f a i r s .
[Complete statement f o l l o w s : ]
STATEMENT
on
EXPORT ADMINISTRATION ACT EXTENSION (S. 69 & S. 92)
before the
SUBCOMMITTEE ON INTERNATIONAL FINANCE
of the
SENATE BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE
for the
CHAMBER OF COMMERCE OF THE UNITED STATES
by
Jack C a r l s o n
I am Jack C a r l s o n , v i c e p r e s i d e n t and c h i e f economist o f t h e Chamber
o f Commerce o f t h e U n i t e d S t a t e s on whose b e h a l f I am a p p e a r i n g t o d a y .
Accompanying me i s John V.E. Brewer, t h e Chamber's A s s o c i a t e D i r e c t o r
for
Near East and South A s i a n A f f a i r s .
We a p p r e c i a t e t h i s o p p o r t u n i t y t o d i s c u s s i s s u e s r e l a t i n g t o
extension
o f t h e E x p o r t A d m i n i s t r a t i o n A c t o f 1969 (as amended) as embodied i n S. 69 and
S. 92.
W h i l e we, on b a l a n c e , oppose those b i l l s i n c u r r e n t f o r m , t h e y n o n e t h e -
l e s s have s e v e r a l i m p o r t a n t and v a l u a b l e p r o v i s i o n s w o r t h y o f s e r i o u s
consideration.
The c h a l l e n g e s f a c i n g t h e Chamber's v a r i e d membership o f o v e r 60,000
b u s i n e s s f i r m s , 2,600 l o c a l , r e g i o n a l and s t a t e chambers o f commerce, 1,100 t r a d e
a s s o c i a t i o n s and 41 American chambers o f commerce a b r o a d , have made i t
acutely
aware o f t h e need f o r b e t t e r u n d e r s t a n d i n g o f , and p o l i c y p l a n n i n g i n
relation
t o , the interdependency of n a t i o n s .
C l e a r l y , a n a t i o n ' s export p o l i c y ,
including
t h e use o f e x p o r t c o n t r o l s , i s an i m p o r t a n t p a r t o f t h a t p o l i c y development p r o c e s s .
The p o l i c i e s w h i c h we develop i n response t o domestic s u p p l y
shortages,
f o r e i g n r e l a t i o n s i s s u e s and i n c o n n e c t i o n w i t h f o r e i g n b o y c o t t s have o b v i o u s
international implications.
Events o f t h e p a s t two y e a r s r e l a t i n g t o p e t r o l e u m
p r i c e i n c r e a s e s and t h r e a t s o f c a r t e l i z a t i o n i n o t h e r b a s i c commodities have
l e n t urgency t o t h e need f o r an e n l i g h t e n e d and f l e x i b l e a t t i t u d e on t h e p a r t
o f Western governments.
R e s t r i c t i v e u n i l a t e r a l p o l i c i e s aimed a t
gaining
s h o r t - t e r m p o l i t i c a l o r economic advantages w i l l be s e l f - d e f e a t i n g i n t h e l o n g
run.
Thus, i t
i s i m p o r t a n t t o frame t h e a p p r o p r i a t e approaches t o such d i f f i c u l t
i s s u e s i n as c o o p e r a t i v e and e n l i g h t e n e d a manner as p o s s i b l e .
In this
spirit,
we submit t h e f o l l o w i n g comments on e x t e n s i o n o f t h e Export A d m i n i s t r a t i o n A c t
and r e l a t e d i s s u e s .
319
A D M I N I S T R A T I O N OF EXPORT CONTROLS
Lack of
Policy
Direction
*
A recent
policy
GAO s t u d y
as a "continuous
criticized
series
of
the
implementation of
ad hoc d e c i s i o n s
export
and f r a g m e n t e d
control
considerations."
T h e GAO n o t e d :
" — a n a b s e n c e o f a g r e e m e n t on c r i t e r i a and s t a n d a r d s f o r
d e t e r m i n i n g w h i c h goods a n d t e c h n o l o g y s h o u l d b e c o n t r o l l e d
and w h e t h e r f o r e i g n p o l i c y , c o m m e r c i a l , o r d e f e n s e c o n s i d e r a t i o n s should dominate export c o n t r o l p o l i c y .
( T h e GAO)
concluded t h a t l a c k of agreement r e f l e c t s fundamental i n t e r agency and i n t e r n a t i o n a l d i f f e r e n c e s r e g a r d i n g l i c e n s i n g
s t a n d a r d s and p r o c e d u r e s t o b e f o l l o w e d i n c o n t r o l l i n g
exports."
It
in
is
understandable
the administration
should be,
especially
administering
there
should be d i f f e r e n c e s
controls
to
as
t o what
trade with
confronted with
additional
of
the correct
opinion
policy
communist c o u n t r i e s .
c o n t r o l program work under
which both r e s t r i c t s
They a r e a l s o
1974 w h i c h p l a c e
that
export
in relation
the export
Administration Act,
goods.
of
a law,
and e n c o u r a g e s
those provisions
restrictions
on o u r
trade
direction
not unique
the
Export
the export
of
posture
Those
of
American
the Trade Act
relations
with
of
communist
countries.
This
process.
coherent
control
l a c k of
clear
process are
focus
of
t h o s e more l a r g e l y
on o b j e c t i v e s ,
poor
is
beyond
symptomatic
Short
addressing
particularly
the
often
issue
of
is,
Office,
a larger,
overall
D.C.,
and
U.S.
-
lack
ineffective
approach to
important
in
the
inter-
consideration
to
understand
export
problem.
consider
licences.
P r o b l e m s and
(February
a
export
t h e Committee should
export
Trade
the
of
Committee's
more s e r i o u s
i n East-West
in
conduct
guidelines
problem,
in obtaining
Washington,
this
control
to conduct
c o o r d i n a t i o n and
tentative
nonetheless,
policy
of
*The Government's Role
General Accounting
the
the government's
that
delays
in
in
scope of
stemming f r o m u n c l e a r
area are
of
reflected
the export
inherent
interdepartmental
the
it
to
organized
The p r o b l e m s
Although r e s t r u c t u r i n g
economic p o l i c y
difficulties
control
inadequately
resulting
the Export Administration Act,
that
is
is
economic p o l i c y .
economic p o l i c y :
implementation.
national
t h e government
international
international
of
policy
Generally,
4,
1976).
Issues,
320
The most
control
process
common c o m p l a i n t
is
the delay
technology products
continued
for
to
American
take
to receive
serious
an export
planning
to
licensing
their
of
high
of
the uncertainties
technology
license,
and t h e i r
areas,
of
customers
orders.
timely
firms
companies,
their
sales
are at
a definite
and e f f e c t i v e manner,
our members,
force,
U.S.
for
late
disadvantage
In
products
able
a
to
number
because
the Export Administration Act
whose l i c e n s e
to process would be informed
b y many o f
problem
will
to mention penalties
even consider
applicants
and w h e n a d e c i s i o n m i g h t b e r e a c h e d .
collection,
not
it
smaller
to
have
a critical
how l o n g
relating
high
process.
extended
all
unclear
especially
—
U.S.
The d e l a y s
export
on
i n W e s t e r n E u r o p e and J a p a n who a r e
licensing
last
is
the
especially
and r e p r e s e n t
problems
b u y e r s do n o t
When t h e C o n g r e s s
t h a n 90 days
of
years
When i t
i n a more
our
licenses,
businesses,
competitors
t h e A c t was amended so t h a t
longer
five
business.
decisions
Chamber members a b o u t
export
t o communist c o u n t r i e s .
the past
and c a n c e l l a t i o n
comparison
obtain
of N a t i o n a l
issuing
and m o t i v a t i o n a l
production people
deliveries
in
export
over
international
have
their
for
increase
in
of
the reason for
The u n f o r t u n a t e
in
applications
result
1974,
took
delay
has been
o f w h a t h a v e come t o b e k n o w n a s
the
"90-day
notices."
In
reduce
early
applications.
indecision
from the
t h e Commerce D e p a r t m e n t
and l e n g t h y
delays
A l t h o u g h we a p p l a u d
and t e n t a t i v e
In
example,
this
any l i c e n s e
approved unless
negative
in
not
Section
the
efforts,
a c t e d on i n
the applicant
special
of
steps
export
there w i l l
still
strong policy
the
S.
69 and S .
basis
for
to
license
be
assertion
considerations
degree
of
in
export
of
were n o t i f i e d
had been r a i s e d
Commerce.
responsiveness
license
in writing
comes
to
Such r e q u i r e m e n t s
to
that
the
For
presumed
additional
create
time
necessary.
license,
them p r i o r
could
several
process.
time would be
in regard
to respond
and r e s p o n s i b i l i t y
process.
92 make
this
9 0 - d a y p e r i o d w o u l d be
and t h e r e a s o n why s u c h a d d i t i o n a l
Secretary
106 o f
legislative
a p p l i c a n t would have an o p p o r t u n i t y
the
these
initiated
the processing
implementation unless
connection,
improvements
was r e q u i r e d
by t h e
in
Congress.
desirable
If
1976,
the frequent
the
to f i n a l
a
action
greater
t h a n has been a p p a r e n t
heretofore
321
Section
Act
of
to
provide
the
106 would a l s o
that
specific
as p r e s e n t l y
identify
statutory
phrased,
which of
than not,
the
control
rather
an e x p o r t
the
could r e s u l t
much g r e a t e r
reason,
for
for
criteria
the
it
of
in
the Export
The c r i t e r i o n ,
to
basis,
writing
However,
Administration
consideration.
were phrased
in
Commerce D e p a r t m e n t
the Export
question.
statutory
Administration
be i n f o r m e d
any a p p l i c a t i o n .
i n having the
security
use i f
than the
of
license
denial
under
export
would be t h e n a t i o n a l
would be o f
of
it
basis
the basic
was b e i n g u s e d t o
amend S e c t i o n 4 ( g )
an a p p l i c a n t
Such a n
require
for
an
merely
Act
more
likely
amendment
explanation
a license
denial.
FOREIGN BOYCOTTS
Statement
of
the
Issue
The s t a t e
Arab
countries
opposing p a r t i e s ,
The p r i n c i p a l
of
hostilities
since
of
to
the
policies
to
injure
policies
designed
The d e v e l o p m e n t
"Arab
Boycott"
this
on A m e r i c a n c i t i z e n s
boycott
nonetheless,
their
Israel.
a f i r m on t h o s e
While
lists
in
products
the
prohibited
cause
as a c o n d i t i o n
firms
on t h e b l a c k l i s t .
territories
and t h e
implementation
it
is,
have
or
forbidden
are
for
with
perceived
inclusion
represent,
territories.
import
of
In
apply
this
Israel-sourced
in
any
to
Arab
imports
connection,
goods a n d
they
services
firms.
have been r e p o r t s
to
sovereignty,
the
"blacklists"
grounds
such d e c i s i o n s
with
"Arab
from t r a d i n g
c o n t r o l l e d by I s r a e l i s
applied
their
sell
t o do b u s i n e s s
Apart
the
t h e means a n d
have e s t a b l i s h e d
into
not
effect
While
national
there
sale,
relations
of
their
firms which desire
of
commercial
the
of
the
economic
and r e g u l a t i o n s w h i c h i n d i v i d u a l
as t h o s e o f most b l a c k l i s t e d
to
their
are uncertain,
exercise
Additionally,
sought
either
criteria
the policies
and s e r v i c e s
have g e n e r a l l y
as w e l l
of
various
economically.
t o wage
by law and r e g u l a t i o n ,
in addition,
the
enemy
and
both
a n d among t h e p a r t i c i p a n t s ,
and p e r s o n s w i t h i n
implementation
countries,
time
countries,
f o r e i g n companies w h i c h a r e
case,
of
Arab
U.S.
concern about
and c o m p a n i e s .
over
The A r a b c o u n t r i e s ,
as a i d i n g
of
that
own n a t i o n a l s
Israel.
of
have v a r i e d
clear
their
by
Boycott."
o f more e x t e n s i v e
Arab w o r l d has caused i n c r e a s i n g
of
implementation,
a d o p t e d by t h e Arab c o u n t r i e s
a r e known a s t h e
warfare
which has e x i s t e d between I s r a e l
1948 has extended
from the
that
t h e Arab
countries
goods a n d s e r v i c e s
outside
fact
that
those
there
countries
behavior
have
to
agree,
with
resulting
in
cutting
322
off
any b u s i n e s s
against
that
firm
firm's
from groups o f
interests,
American business p r a c t i c e
discriminate
group o f
generally
U.S.
t h e movement o f
Issues
the
a n d Chamber
they
impede n o r m a l
end,
the
any r e s t r i c t i v e
right
Chamber
trade
Experience
and possess
In
ineffective
the rights
practices
on t h e
this
to
certain
or
foreign,
any
to
particular
is
how t o
protect
compelling
American
Arab c o u n t r i e s
and f r o m t h o s e
the
respecting
countries.
international
to
that
if
apply
their
domestic
movement
or
it
freest
such l e g i s l a t i o n
recognizes
their
policy
jurisdictions,
and e x p o r t
flow of
of
that
is
considerations.
or
reduce
international
effective
other
nations
and law w i t h
including
of
foreign,
t r a d e b a s e d upon economic
impeding the
only
import
freest
the
goods a n d s e r v i c e s
context,
S.
69 and S.
that
in
some r e s p e c t s ,
and power o f
(It
other
have
respect
the
to
prescribing
to
and
from
Chamber h a s c a r e f u l l y
effects
is
its
clear
basis:
of
the boycott
that
full
resolution
result
Chamber h a s d e v e l o p e d a s e t
existing
and companies
that
l a w and
most,
if
regulation.
fully
of
of
this
principles
all,
of
citizens
recognize
against
issues
and
i s s u e depends on
Such a
considerations
Nonetheless,
which the
behavior
These p r i n c i p l e s
l a w on t h i s
these o b j e c t i v e s
the
resolution,
and o t h e r
legislation.)
should be judged.
not
this
from d i p l o m a t i c
of
the various
States
conflict.
w h i c h should be embodied i n any U . S .
impression
potentially
t h e y do n o t
considered
on U n i t e d
the A r a b - I s r a e l i
w o u l d most p r o b a b l y
citizens
under
c o u l d be e i t h e r
nations.
w h i c h a r e beyond t h e scope and e f f e c t
objectives
two m a j o r b i l l s
or harmful because,
of
U.S.
the
enacted,
from the
course,
we n o t e
if
elimination
our
of
debate
without
92,
companies.
the
domestic
against
be
and
l e g i s l a t i o n which would e l i m i n a t e
however,
context
t h e power
The N a t i o n a l
arising
of
law
territories.
consideration,
of
the boycott
commercial
and conduct w i t h i n
regulations
their
or
We o p p o s e b o y c o t t s ,
supports
shows,
international
persons
of
of
supports
and c a p i t a l .
To t h a t
the
both U.S.
Positions
Chamber
because
in
firms
from d i s c r i m i n a t i o n
goods a n d s e r v i c e s
services,
trade.
customers would
i n demands,
U.S.
laws and r e g u l a t i o n s
The N a t i o n a l
goods,
other
question
and companies
to v i o l a t e
Policy
or
citizens.
citizens
firms
suppliers
would be a g a i n s t
to acquiesce
against
The f u n d a m e n t a l
U.S.
it
subject.
define
It
can be a c h i e v e d
is
through
323
(1) U.S. persons should not d i s c r i m i n a t e
on t h e b a s i s o f
race,
color,
a boycott-related request.
legislation,
religion,
against
This p o l i c y ,
jurisdiction.
i n such d i s c r i m i n a t i o n i s
B o t h S. 69 and S. 92 w o u l d p r o h i b i t
f r a i n i n g t o e m p l o y a p e r s o n on t h e b a s i s o f r a c e ,
national origin.
that
law,
While such a p r o h i b i t i o n
it
an a p p l i c a n t
should not i n f r i n g e
for
employment
boycott-related
to
from
of
(2)
a corporation to
color,
boycott-related request.
furnish information regarding
religion,
sex, or n a t i o n a l o r i g i n ,
Adequate s t a t u t o r y
p o l i c y and Commerce D e p a r t m e n t r e g u l a t i o n s
the f u r n i s h i n g of
(3)
t h i s k i n d of
U.S.
require
certain requirements—including
being
the
exists.
U.S. persons should not
U.S. persons's r a c e ,
or
embodied
a b l e t o meet t h e i m m i g r a t i o n o r o t h e r r e q u i r e m e n t s o f a c o u n t r y w h e r e
employment o p p o r t u n i t y
U.S.
re-
nationality,
i s d e s i r a b l e and g e n e r a l l y
on t h e r i g h t
fulfill
to
rights
subject
American f i r m s
religion,
persons
pursuant
a l r e a d y embodied i n c i v i l
i s a p p l i c a b l e t o d i s c r i m i n a t i o n r e s u l t i n g from a
r e q u e s t where t h e conduct r e s u l t i n g
i n current
other U.S.
sex, or n a t i o n a l o r i g i n ,
authority exists
another
pursuant
to a
to enforce
respecting foreign boycotts
this
prohibit
information.
persons should not agree t o r e f r a i n from d o i n g business
with
o r i n t h e b o y c o t t e d c o u n t r y as a c o n d i t i o n o f d o i n g b u s i n e s s i n a b o y c o t t i n g
country.
Any a t t e m p t b y a b o y c o t t i n g c o u n t r y t o c o m p e l p e r s o n s o u t s i d e
jurisdiction
to modify t h e i r
be o p p o s e d .
U . S . p e r s o n s s h o u l d be f r e e t o t r a d e w i t h t h e b o y c o t t e d
as t h e y w i s h ,
the fact
outside
that
is participating
between a U.S.
(4)
the t e r r i t o r y
a company h a s n o t
boycotted country,
participation
conduct
however,
i n regard to a boycotted country
of the b o y c o t t i n g c o u n t r y .
country,
In t h i s
found p r o f i t a b l e business o p p o r t u n i t i e s
should not
i n the boycott.
Thus,
lead to the conclusion that
t h e absence o f a b u s i n e s s
the
connection,
in
the
company
relationship
company a n d t h e b o y c o t t e d c o u n t r y s h o u l d n o t be t a k e n t o
i n the
its
should
imply
boycott.
U . S . p e r s o n s s h o u l d n o t a g r e e t-o r e f r a i n f r o m d o i n g
business
g e n e r a l l y w i t h o t h e r U . S . p e r s o n s as a c o n d i t i o n o f d o i n g b u s i n e s s i n a b o y c o t t i n g country.
An e s t a b l i s h e d p r i n c i p l e o f b o t h U . S .
firms not t o d i s c r i m i n a t e
suppliers.
of
against
Such d i s c r i m i n a t i o n
i s not at
issue here.
S. 69 and S. 92 w o u l d amend S e c t i o n 4 ( a )
p r o h i b i t American f i r m s
l a w and b u s i n e s s p r a c t i c e
any p o t e n t i a l g r o u p o f e m p l o y e e s ,
However,
is
Section
201(a)
of the Export A d m i n i s t r a t i o n Act
f r o m " r e f r a i n i n g t o do b u s i n e s s w i t h any
for
customers,
person."
to
or
324
The a p p r o a c h t a k e n by t h e s e
defining
of
"refraining
a business
law,
they
to-deal.
ship,
S.
if
69,
it
country
relationship
are not
is
even l e s s
of
the
to
reason,
if
arrangements
there
on " a g r e e m e n t s "
is
to
to
service
totally
w h i c h has t h e
trade
effect
practice
reporting
full
opportunity
I n no c a s e s ,
system i s
to
pattern
law i n
is
to
of
furthering
and w h e t h e r
this
made p u b l i c
furnishing
of
that
unrelated
not
of
its
supply
it
in
should
either
the
or
the
of
a boycott
reports
should
state
the nature
of
company i s
charged w i t h v i o l a t i o n
or business
law
69 o r
of
would
S.
and
92.
related
for
an
agreement,
restrictive
the
of
If
reporting
These r e p o r t s
confidential
this
such a r e q u e s t .
give
o n l y when t h e
should p r o p r i e t a r y
conduct.
For
requests
or
92
violation
the
S.
signing
a
S.
concentrate
Exporters
receipt
of
sales
I n t h i s manner,
present
its
or
the
relation-
Section 201(a).
area,
supporting
the
of
refusal-
a business
a n d how t h e y h a v e r e s p o n d e d t o
continued,
a
a f i r m c o u l d be i n
information
or
violation
to boycott matters.
this
report
absence
comply w i t h a b o y c o t t
Reporting Requirements:
are required
the
including
absence of
or
from doing business.
Commerce D e p a r t m e n t
organizations
actions,
the
in
the
in defining
would v i o l a t e
an a l l e g e d
t o be a d d i t i o n a l
refrain
that
difficulty
note that
constitute
than that
a possibility
o n a m e a n i n g and d i m e n s i o n t h a t
(5)
itself,
further
States,
raising
law m e r e l y because of
—
in
implies
the United
explicit,
arrangements
take
example,
a practical
While both b i l l s
would n o t ,
caused by i n t e n t
friendly
presents
a p p r e c i a b l y more s p e c i f i c
for
were
two b i l l s
t o do b u s i n e s s . "
the
firm
should
be
regulations.
information
b e made
public.
(6)
State
Federal
governments
states
have passed
consideration.
is
expressly
clear
to
the
(7)
apply
were
to
such l a w s ,
Under
the
the
Law:
Constitution,
of
The
statutes
the
is
increasing
disturbing.
states
have
the regulation
Federal
tendency
of
At
five
least
them under
of
foreign
Government.
This
active
commerce
s h o u l d b e made
states.
Territorial
incorporated
Application
of
t h e Law:
and a f f i l i a t e s
of
American companies,
under
foreign
law.
company i s b a s e d .
It
B o t h S.
Such s u b s i d i a r i e s
t o make a c h o i c e b e t w e e n v i o l a t i n g
b a s e d and does b u s i n e s s — o r
parent
State
and t w o o t h e r
responsiblity
subsidiaries
o f t e n have
is
Preemption of
t o pass d i f f e r i n g
violating
is neither
the
the
law of
law of
practical
the
nor
69 and
or
S.
92
would
even though
affiliates
they
would
the country where
country where
good p o l i c y
to
it
its
legislate
325
such a s i t u a t i o n .
boycotts
(8)
Jurisdictions:
should
(a)
take
(d)
United States
to conduct w i t h i n
Recognition
United
into
to refuse
services
and
Rather,
should apply
to
account
that
deal with
from any s o u r c e ;
to admit
or
of
States
l a w and r e g u l a t i o n
the United
S o v e r e i g n Power o f
l a w and r e g u l a t i o n
it
cannot
affect
another nation;
(c)
exclude
to regulate
any s h i p s
foreign
right
of
other
to accept
or
exclude
admission of
intending
foreign
Foreign Coutnries Within
respecting
the
(b)
respecting
States.
to
people
call
at
countries
into
its
Their
boycotts
goods
its
and
territory;
ports.
NUCLEAR EXPORTS
The p r o l i f e r a t i o n
dangers
f a c i n g mankind.
potential
for
delicate
one.
differing
required
I I I
approaches:
in nuclear
this
the United
of
Section
export
in
material,
unilateral
productive
that
this
or
desirable,
President
301 sets
agreements.
is
Act.
States
enactment
conciliatory
we u r g e
to
(and T i t l e
I I I
is
of
in
92)
is
greatest
great
reliable
a subtle
appear
an
and
to o f f e r
elements which would
302 u r g e s
is
not
the
the only major
conditions
for
approach
two
be
international
However,
should
t h e Congress
the approach suggested
Section
301.
in
agreement—be
exporter
agreement
appear
internationally.
s h o u l d be c o n s i d e r e d
S.
b e i n g sought does n o t
seek an i n t e r n a t i o n a l
approach described
of
one t h a t
that
countries with
two i s s u e s
out c e r t a i n
Section
the
\
agreement
subject
Administration
69
one o f
power s o u r c e s has
and o t h e r
between these
area.
As t h e U n i t e d
an i n t e r n a t i o n a l
S.
weapons r e p r e s e n t s
of nuclear
States
The t r a d e - o f f
Title
agreement
nuclear
The d e v e l o p m e n t
supplying
and economic e n e r g y .
of
in
at
decide
Section
nuclear
the
t o be t h e
We a r e n o t
the
of
context
even
of
same
time
most
convinced
the
Export
such c o n s i d e r a t i o n
302—mandating
g i v e n more emphasis
than
is
the
the
326
Mr. CARLSON. I might just add, Mr. Chairman, that Senator Stevenson indicated that the consideration of nuclear exports should be
eliminated from these bills. A t this time we concur i n his judgment
on that. We think that appropriately this issue should be relegated to
diplomatic initiatives.
Thank you, Mr. Chairman.
Senator P R O X M I R E . Thank you very much.
Our next witness is Mr. Fox.
STATEMENT OF L. A. FOX, NATIONAL ASSOCIATION OF
MANUFACTURERS
Mr. Fox. Thank you, Senator Proxmire and Senator Williams.
I ' m Lawrence A. Fox, vice president for International Economic
Affairs i n the National Association of Manufacturers. I ' m presenting
the testimony this morning for Mr. W i l l i a m Wearly, chairman and
chief executive officer of the Ingersoll-Rand Co. and chairman of
NAM's International Economic Affairs Committee. Company business
has unavoidably made i t impossible for Mr. Wearly to be here this
morning. Mr. Wearly has asked me specifically to tell you that he
wrould be happy to appear before the committee at some other time
should you wish him to do so.
W i t h your permission, M r . Chairman, I w i l l not read Mr. Wearly's
statement but w i l l simply summarize its major points. I would ask,
however, that the f u l l statement be printed i n the record.
Senator P R O X M I R E . Without objection, that w i l l be done.
[The complete statement follows:]
327
Testimony o f t h e
National Association o f Manufacturers
before the
Subcommittee on I n t e r n a t i o n a l Finance
o f the
Senate Committee on B a n k i n g , Housing and Urban A f f a i r s
on S. 69 and S. 92
B i l l s t o Amend and Extend t h e E x p o r t A d m i n i s t r a t i o n A c t
F e b r u a r y 22, 1977
Mr. Chairman and Members o f t h e Subcommittee,
I am W i l l i a m L.
Wearly,
Chairman and C h i e f E x e c u t i v e O f f i c e r o f t h e I n g e r s o l l - R a n d Company.
I am
t e s t i f y i n g t o d a y on b e h a l f o f t h e N a t i o n a l A s s o c i a t i o n o f M a n u f a c t u r e r s as
Chairman o f NAM'S I n t e r n a t i o n a l Economic A f f a i r s
Committee.
The N a t i o n a l A s s o c i a t i o n o f M a n u f a c t u r e r s i s a v o l u n t a r y ,
o r g a n i z a t i o n o f o v e r 13,000 companies, l a r g e and s m a l l ,
o f the Union.
non-profit
located i n every
state
As t h e r e p r e s e n t a t i v e o f f i r m s w h i c h account f o r n e a r l y 85% o f
American m a n u f a c t u r e d goods and t h e employment o f a p p r o x i m a t e l y 15 m i l l i o n
p e r s o n s , t h e NAM i s concerned t h a t a p r o p e r b a l a n c e be s t r u c k w h i c h m a i n t a i n s
adequate e x p o r t c o n t r o l a u t h o r i t y t o meet n a t i o n a l s e c u r i t y and o t h e r emergency
p u b l i c p o l i c y needs, w h i l e a s s u r i n g American i n d u s t r y e q u i t a b l e c o n d i t i o n s
competing f o r s a l e s i n t h e w o r l d m a r k e t .
A c c o r d i n g l y , we s u p p o r t t h e
o f t h e E x p o r t A d m i n i s t r a t i o n A c t o f 1969 t o c o n t i n u e c u r r e n t e x p o r t
authority.
in
extension
control
We b e l i e v e t h a t p r o p o s e d changes t o t h e A c t c o n c e r n i n g f o r e i g n b o y -
c o t t s a r e l a r g e l y unnecessary and c o u l d p r o v e c o u n t e r - p r o d u c t i v e t o
o f a l o n g e r - t e r m d i p l o m a t i c s o l u t i o n o f t h e M i d d l e East p o l i t i c a l
T h e r e f o r e , we oppose t h e p r o v i s i o n s o f T i t l e I I o f t h e b i l l s under
negotiation
conflict.
consideration.
I f changes are t o be made i n t h e A c t ' s f o r e i g n b o y c o t t s e c t i o n , we would u r g e
m o d i f i c a t i o n on t h e b a s i s o f a s t a t e m e n t o f p r i n c i p l e s as o u t l i n e d i n t h i s
Export A d m i n i s t r a t i o n A c t :
testimony.
Background
The E x p o r t A d m i n i s t r a t i o n A c t o f 1969 e x p i r e d on September 30, 1976,
although
i t s p r i n c i p a l programs have been c o n t i n u e d s i n c e t h a t t i m e by E x e c u t i v e O r d e r .
328
This s t a t u t e authorized the President t o c u r t a i l or p r o h i b i t exports
t h e U n i t e d S t a t e s o f any a r t i c l e s , m a t e r i a l s o r s u p p l i e s on n a t i o n a l
from
security
g r o u n d s , f o r f o r e i g n p o l i c y r e a s o n s , o r because o f c o n d i t i o n s o f d o m e s t i c
supply.
short
Under t h e A c t , as amended and extended by t h e Equal O p p o r t u n i t y A c t
o f 1972 and t h e E x p o r t A d m i n i s t r a t i o n Amendments o f 1974, e x p o r t c o n t r o l s have
f r o m t i m e t o t i m e been i n s t i t u t e d f o r a l l t h r e e o f t h e s e r e a s o n s .
been p l a c e d on m i l i t a r i l y
C o n t r o l s have
s e n s i t i v e p r o d u c t s and t e c h n o l o g y , goods t r a d e d w i t h
u n f r i e n d l y c o u n t r i e s , and t o a l i m i t e d e x t e n t on commodities i n w h i c h t h e r e was
a domestic shortage.
u n t i l September 30,
S. 69 and S. 92 w o u l d e x t e n d t h i s b a s i c c o n t r o l
authority
1978.
General Comments
The NAM r e c o g n i z e s t h e n e c e s s i t y f o r c o n t r o l s i n s t i t u t e d by t h e government
on c l e a r n a t i o n a l s e c u r i t y g r o u n d s .
t u d e o f t h r e a t s t o U.S. s e c u r i t y ,
R e c o g n i z i n g t h e dynamic c h a r a c t e r and magni-
t h e s e c o n t r o l s s h o u l d be c o n t i n u a l l y
reassessed
t o assure t h e i r e f f e c t i v e n e s s , w h i l e a l s o seeking t o minimize n o n - e s s e n t i a l
t r o l s t h a t p r e c l u d e normal m a r k e t t r a n s a c t i o n s .
It
i s NAM's p o s i t i o n t h a t
c o n t r o l s s h o u l d be as c o n s i s t e n t as p o s s i b l e , w i t h i n e s s e n t i a l n a t i o n a l
conU.S.
security
c o n s i d e r a t i o n s , w i t h the i n t e r n a t i o n a l c o n t r o l standards e s t a b l i s h e d by t h e Coord i n a t i n g Committee (COCOM) o f a l l i e d c o u n t r i e s .
Continuing e f f o r t s i n t h i s
and improved p r o c e s s i n g p r o c e d u r e s w i l l h e l p m i n i m i z e any c o m p e t i t i v e
p l a c e d upon U.S. f i r m s .
regard
disadvantage
There i s a r o l e f o r g o v e r n m e n t - i n d u s t r y c o n s u l t a t i o n
e s t a b l i s h i n g t e c h n i c a l s p e c i f i c a t i o n s and s t a n d a r d s r e s p e c t i n g h i g h
in
technology
equipment as w e l l as t e c h n o l o g y t r a n s f e r s h a v i n g s e c u r i t y s i g n i f i c a n c e .
Improved
a d m i n i s t r a t i v e p r o c e d u r e s c o u l d a l s o be h e l p f u l i n a v o i d i n g e x c e s s i v e d e l a y s w h i c h
can hamper o r even cause t h e l o s s o f a c o m m e r c i a l l y c o m p e t i t i v e
sale.
NAM i s concerned w i t h t h e p o t e n t i a l f o r g r e a t e r government u t i l i z a t i o n
of
e x p o r t c o n t r o l s f o r f o r e i g n p o l i c y r e a s o n s , and u r g e s t h a t such a c t i o n be a v o i d e d
329
except where t h e r e are c l e a r l y o v e r r i d i n g n a t i o n a l p o l i c y c o n s i d e r a t i o n s ,
or
where the n a t i o n cooperates and n e g o t i a t e s w i t h o t h e r governments to achieve
common goals and standards o f conduct.
I n the area o f export c o n t r o l s on commodities i n short domestic supply,
we would urge the government t o be cautious and circumspect i n
such t r a d e r e s t r a i n t s .
instituting
The existence o f some a u t h o r i t y i n t h i s area i s proper
to allow an e f f e c t i v e response t o unusual supply shortages which could s e r i o u s l y
d i s r u p t the n a t i o n a l economy.
However, i n t e r n a t i o n a l cooperation must p l a y an
important r o l e , and i n general the needs o f f o r e i g n customers dependent on the
U.S. f o r supplies should be given a p p r o p r i a t e weight i n any short supply actions
the U.S. might consider.
While no easy formula can be s p e c i f i e d i n advance f o r the proper use o f
these c o n t r o l s , t h i s c o u n t r y ' s i n c r e a s i n g involvement i n the world economy
demands t h a t both s h o r t - t e r m and l o n g e r - r u n i n t e r e s t s be weighed on a case-bycase basis where short supply conditions t h r e a t e n market d i s r u p t i o n .
Only a
w e l l - a d m i n i s t e r e d program o p e r a t i n g under a p p r o p r i a t e s t a t u t o r y a u t h o r i t y can
safeguard U.S. producer and consumer i n t e r e s t s i n an interdependent g l o b a l economy.
Government c o n s u l t a t i o n w i t h producers and consumer groups i n u t i l i z i n g short
supply c o n t r o l s should be encouraged, perhaps through an advisory board mechanism.
Foreign Boycotts
Mr. Chairman, we recognize t h a t the purpose o f these hearings i s t o
solicit
testimony on the proposed amendments t o T i t l e I I o f the Export A d m i n i s t r a t i o n Act
concerning f o r e i g n b o y c o t t s .
testimony to t h i s
T h e r e f o r e , we w i l l devote the remainder o f the
subject.
Since 1965 i t has been the declared p o l i c y o f the United S t a t e s as contained
i n the Export A d m i n i s t r a t i o n Act t o oppose f o r e i g n boycotts against
f r i e n d l y t o the U.S.
countries
Domestic e x p o r t e r s have been encouraged to r e f u s e to take
a c t i o n which has the e f f e c t o f f u r t h e r i n g such boycotts and r e p o r t s are made by
330
companies to the Commerce Department when requests f o r boycott compliance are
received.
Implementing r e g u l a t i o n s also now r e q u i r e t h a t these r e p o r t s ,
the response made to the boycott r e q u e s t , be made p u b l i c .
including
Furthermore, a s p e c i f i c
p r o h i b i t i o n e x i s t s regarding any b o y c o t t - r e l a t e d a c t i o n which would d i s c r i m i n a t e
a g a i n s t U.S. c i t i z e n s on the basis o f r a c e , c o l o r , r e l i g i o n ,
,
sex or n a t i o n a l
origin.
The 94th Congress passed an amendment t o the Tax Reform Act o f 1976 which
deprives U.S. taxpayers o f c e r t a i n t a x p r i v i l e g e s i f they "agree t o p a r t i c i p a t e
i n or cooperate w i t h " an i n t e r n a t i o n a l b o y c o t t .
A d d i t i o n a l l y , s i x s t a t e s have
a l r e a d y enacted l e g i s l a t i o n t o p r o h i b i t v a r i o u s b o y c o t t - r e l a t e d a c t i v i t i e s
while
s i m i l a r a c t i o n i s under c o n s i d e r a t i o n i n o t h e r s t a t e s .
With t h i s b r i e f synopsis o f c u r r e n t U . S . law and r e g u l a t i o n r e g a r d i n g forei-gn
b o y c o t t s , we can t u r n t o the s p e c i f i c proposals advanced i n S. 69 and S. 92, whose
p r o v i s i o n s and r e l e v a n t d i f f e r e n c e s w i l l be summarized below.
Summary Comparison: S. 69 and S. 92
Prohibitions:
Both b i l l s would amend the Export A d m i n i s t r a t i o n Act o f 1969
t o p r o h i b i t c e r t a i n a c t i o n s by any U.S. person t h a t comply w i t h , f u r t h e r ,
or
support a f o r e i g n boycott or r e s t r i c t i v e t r a d e p r a c t i c e against a country which i s
f r i e n d l y t o the U n i t e d S t a t e s and which i s not the o b j e c t o f any U . S .
embargo.
Under r u l e s and r e g u l a t i o n s issued pursuant t o the new A c t , i t would be a v i o l a t i o n :
(1)
t o r e f r a i n from doing business w i t h the boycotted country or
i t s r e s i d e n t s pursuant t o an agreement w i t h , requirement o f , or a
request from or on b e h a l f o f any b o y c o t t i n g c o u n t r y ;
(2)
t o r e f r a i n from doing business w i t h any person ( o t h e r than the
boycotted c o u n t r y , i t s n a t i o n a l s or r e s i d e n t s , or any company organi z e d under i t s l a w s ) ;
(3) t o r e f r a i n from employing or otherwise t o d i s c r i m i n a t e against
any person on the basis o f r a c e , r e l i g i o n , n a t i o n a l i t y or n a t i o n a l
origin;
(4) t o f u r n i s h i n f o r m a t i o n r e g a r d i n g any U.S. person's r a c e ,
n a t i o n a l i t y or n a t i o n a l o r i g i n ; and
religion,
331
(5)
to f u r n i s h i n f o r m a t i o n about whether any person does, has
done, or proposes to do business w i t h the boycotted country or
i t s n a t i o n a l s or w i t h any person known or b e l i e v e d t o be boycotted.
One d i f f e r e n c e between the two b i l l s i s the absence o f a requirement
" i n t e n t " to e s t a b l i s h a v i o l a t i o n o f these p r o h i b i t i o n s i n S. 92.
of
There must
be a showing o f " i n t e n t t o comply w i t h , f u r t h e r , or support any boycott
fostered
or imposed by a f o r e i g n country" i n order to e s t a b l i s h a v i o l a t i o n o f any o f the
f i v e enumerated p r o h i b i t e d acts i n S. 6 9 . - The s i g n i f i c a n c e o f t h i s d i f f e r e n c e i s
demonstrated i n the f i r s t two enumerated p r o h i b i t i o n s , which s t a t e t h a t the mere
absence o f a business r e l a t i o n s h i p i s not prima f a c i e evidence o f a p r o h i b i t e d
r e f r a i n i n g from doing business.
relationship
While S. 69 s t a t e s t h a t such absence of a business
"does not i n d i c a t e the presence o f the i n t e n t r e q u i r e d to e s t a b l i s h
a v i o l a t i o n , " S. 92 provides t h a t absence o f a business r e l a t i o n s h i p "does not
alone e s t a b l i s h a v i o l a t i o n . "
The former appears t o r e q u i r e a higher burden o f
proof to e s t a b l i s h the existence o f a v i o l a t i o n .
Permitted Exceptions:
Both b i l l s contain s p e c i f i c exceptions from the pro-
h i b i t i o n s added to the Export A d m i n i s t r a t i o n Act.
pursuant to t h a t Act must provide exceptions
Rules and r e g u l a t i o n s
for:
(1) compliance w i t h (a) the b o y c o t t i n g c o u n t r y ' s r u l e s p r o h i b i t i n g
the import o f goods from the boycotted country or (b) the shipment
o f such goods on a c a r r i e r o f the boycotted country or by a route
other than t h a t p r e s c r i b e d by the b o y c o t t i n g country or r e c i p i e n t
o f the shipment;
(2)
compliance w i t h import and shipping requirements concerning
country of o r i g i n , name and route o f the c a r r i e r , and name o f the
s u p p l i e r o f the shipment;
(3) compliance w i t h the b o y c o t t i n g c o u n t r y ' s export requirements .
. concerning shipment or transhipment o f i t s exported goods t o the
boycotted country;
(4) compliance by an i n d i v i d u a l w i t h the immigration or passport
requirements o f any country; or
(5)
compliance w i t h the l a w f u l terms o f a l e t t e r o f c r e d i t by r e f u s i n g to honor i t i n the event the b e n e f i c i a r y f a i l s to s a t i s f y
the l a w f u l conditions or requirements o f the l e t t e r .
85-654 O - 77 - 22
issued
332
Two d i f f e r e n c e s between S. 69 and S. 92 appear i n these e x c e p t i o n s .
First,
S. 92 would l i m i t the exception f o r compliance w i t h import document requirements
t o "a p o s i t i v e d e s i g n a t i o n o f country o f o r i g i n , " w h i l e S. 69 contains no such
limitation.
The language i n S. 69 i s more i n keeping w i t h a r e c o g n i t i o n o f the
sovereign r i g h t o f any n a t i o n t o e s t a b l i s h the terms and c o n d i t i o n s o f imports
i n t o i t s t e r r i t o r y t h a t i s i m p l i c i t i n t h i s s t a t u t o r y exception.
Second, S. 92
d e l e t e s the e n t i r e exception i n S. 69 f o r "compliance by an i n d i v i d u a l w i t h the
immigration or passport requirements o f any c o u n t r y . "
Enforcement:
Both b i l l s would amend Section 6 o f the Export
Administration
Act to expand the enforcement a u t h o r i t y o f the Department o f Commerce over v i o l a t i o n s o f the r u l e s and r e g u l a t i o n s issued pursuant t o the boycott p r o v i s i o n s o f
the A c t .
V i o l a t o r s o f boycott r e g u l a t i o n s would then be subject t o suspension or
r e v o c a t i o n o f t h e i r export l i c e n s e s
( t h e b i l l s do not l i m i t t h i s p e n a l t y t o
ses f o r b o y c o t t - r e l a t e d t r a n s a c t i o n s ) .
Any p e n a l t y imposed f o r v i o l a t i o n s
licenof
boycott r e g u l a t i o n s could be l e v i e d only a f t e r n o t i c e and o p p o r t u n i t y f o r an agency
h e a r i n g on the record i n accordance w i t h the A d m i n i s t r a t i v e Procedures Act
would e s t a b l i s h the basis f o r immediate j u d i c i a l r e v i e w ) .
(which
F i n a l l y , any charging
l e t t e r or o t h e r document i n i t i a t i n g proceedings f o r v i o l a t i o n s of boycott
regula-
t i o n s w i l l be made a v a i l a b l e f o r p u b l i c i n s p e c t i o n and copying.
Disclosure:
Both b i l l s c o d i f y e x i s t i n g Commerce Department r e g u l a t i o n s on
the r e p o r t i n g o f boycott requests and the p u b l i c a v a i l a b i l i t y o f i n f o r m a t i o n
those r e p o r t s o t h e r than c o n f i d e n t i a l business
Scope:
in
information.
Both b i l l s apply the new law on boycotts t o i n d i v i d u a l s and concerns
i n the U n i t e d States and t o "any f o r e i g n s u b s i d i a r y or a f f i l i a t e o f any domestic
concern which i s c o n t r o l l e d i n f a c t by such domestic concern, as determined under
r e g u l a t i o n s o f the P r e s i d e n t . "
333
Context
I n order to assess the need f o r and p o s s i b l e e f f e c t s of these proposed
changes i n Export A d m i n i s t r a t i o n Act a u t h o r i t y , i t
i s advisable to evaluate
them w i t h i n the s p e c i f i c context o f the Arab b o y c o t t , which i s obviously the
major i m p e l l i n g f o r c e behind t h e i r c o n s i d e r a t i o n .
The e s s e n t i a l nature o f
t h i s problem stems d i r e c t l y from the s t a t e o f h o s t i l i t i e s which has e x i s t e d
between I s r a e l and a number o f Arab nations f o r n e a r l y t h r e e decades.
The
c o n f l i c t i s a p o l i t i c a l c o n f r o n t a t i o n i n which both m i l i t a r y and economic dimensions have been employed as t o o l s by both sides i n pursuing t h e i r
objectives.
respective
These h o s t i l i t i e s represent a grave t h r e a t to the peace and s e c u r i t y
o f the world community, i n v o l v i n g as they do the expressed i n t e r e s t s of many
other n a t i o n s , i n c l u d i n g those o f the United S t a t e s .
I t i s an area which m e r i t s
the highest d i p l o m a t i c p r i o r i t y which can be accorded i n terms o f seeking an
assured peaceful and long-term s o l u t i o n to the controversy.
In this
connection,
the e f f o r t s undertaken by the U.S. Government to f o s t e r such a settlement deserve
wide p u b l i c support.
I would hope i n p a r t i c u l a r t h a t the new i n i t i a t i v e s o f the
C a r t e r A d m i n i s t r a t i o n i n the Middle East can progress i n tandem w i t h the recogn i z e d concern o f t h i s Congress i n promoting an end to h o s t i l i t i e s i n t h a t area
o f the world.
The context o f the I s r a e l i - A r a b p o l i t i c a l c o n f r o n t a t i o n i s r a i s e d only to
p o i n t out the obvious, though o f t e n underemphasized p o i n t , t h a t a c t i o n taken by
the U.S. i n regard t o the Arab boycott can have d i r e c t and i n d i r e c t impact on the
on-going s e n s i t i v e n e g o t i a t i o n s i n t h a t r e g i o n .
Furthermore, i t i s u n l i k e l y t h a t
any measures d i r e c t e d s o l e l y a t the boycott w i l l prove adequate to remove o b j e c t i o n able economic consequences without a l o n g e r - t e r m r e s o l u t i o n o f the p o l i t i c a l conf l i c t u n d e r l y i n g the b o y c o t t ' s e x i s t e n c e .
As you p o i n t e d o u t , Mr. Chairman,
in
334
your remarks on the Senate f l o o r when you introduced S. 69, the boycott cannot
be ended by l e g i s l a t i o n i n t h i s c o u n t r y ; " i t w i l l be ended only when t h e r e
is
permanent peace i n the Middle E a s t . "
The use o f a primary economic boycott by a n a t i o n engaged i n
hostilities
against another u n f r i e n d l y country i s a device g e n e r a l l y recognized i n
n a t i o n a l law and p r a c t i c e .
inter-
Indeed, sections o f the Export A d m i n i s t r a t i o n Act
p r o v i d e a u t h o r i t y f o r the U n i t e d S t a t e s i t s e l f t o c a r r y out boycott
activities
a g a i n s t u n f r i e n d l y f o r e i g n c o u n t r i e s , as i s c u r r e n t l y done i n the i n s t a n c e o f
r e s t r i c t i o n s on commerce w i t h s e v e r a l n a t i o n s .
T h e r e f o r e , the issues which
should be addressed by the l e g i s l a t i o n b e f o r e t h i s Subcommittee concern
limiting
the e f f e c t s o f a f o r e i g n boycott where they may improperly extend i n t o secondary
or even t e r t i a r y areas t h a t t h r e a t e n to cause d i s c r i m i n a t i o n or u n f a i r
trade
p r a c t i c e s a g a i n s t U.S. persons.
NAM P o s i t i o n
NAM has supported U.S. p o l i c y t o seek e l i m i n a t i o n o f i n t e r n a t i o n a l
which serve t o d i s t o r t m a r k e t - o r i e n t e d t r a d e and investment f l o w s .
boycotts
We b e l i e v e
t h a t a d i p l o m a t i c n e g o t i a t e d approach remains the most a p p r o p r i a t e and u s e f u l
method o f d e a l i n g w i t h such boycotts i n the i n t e r n a t i o n a l framework,
particularly
when they r e s t on non-economic bases r e q u i r i n g s o l u t i o n o f the u n d e r l y i n g p o l i t i c a l
problems as a r e q u i s i t e to s o l u t i o n o f t h e boycott i t s e l f .
The NAM b e l i e v e s
c u r r e n t U.S. laws and r e g u l a t i o n s and c o n t i n u i n g d i p l o m a t i c i n i t i a t i v e s
the best avenues t o f u r t h e r U . S . n a t i o n a l
that
provide
interests.
I n e v a l u a t i n g the l e g i s l a t i v e proposals b e f o r e t h i s Subcommittee, we have
proceeded on the basis o f a statement o f p r i n c i p l e s which we b e l i e v e
constitutes
a balanced and r e a l i s t i c approach t o t h i s a d m i t t e d l y complex i s s u e .
These
principles state
that:
335
(1) U.S. p o l i c y against d i s c r i m i n a t i o n on the basis o f r a c e , c o l o r ,
r e l i g i o n , sex, or n a t i o n a l o r i g i n should p r o h i b i t any b o y c o t t - r e l a t e d
or other agreement t o p r a c t i c e such d i s c r i m i n a t i o n respecting U.S. persons.
(2) No agreement should be made t o f u l f i l l a boycott request f o r informat i o n regarding a U.S. person's r a c e , c o l o r , r e l i g i o n , sex or n a t i o n a l o r i g i n .
(3) U.S. persons should not agree as a c o n d i t i o n o f doing business i n a
boycotting country to r e f u s e t o do business w i t h any U.S. persons, or w i t h
or i n a boycotted country.
(4)
I n accordance w i t h recognized i n t e r n a t i o n a l law and p r a c t i c e , the *
r i g h t o f a n a t i o n t o i n s t i t u t e a primary economic boycott should be r e s pected in terms o f accepting or excluding from i t s t e r r i t o r y any goods,
services or c a p i t a l ; r e g u l a t i n g the admission o f people; and c o n t r o l l i n g
e n t r y of ships to i t s p o r t s .
U.S. persons should not be p e n a l i z e d under
U.S. law f o r agreeing t o abide by a f o r e i g n n a t i o n ' s laws and r e g u l a t i o n s
r e l a t i v e t o these r i g h t s as concerns business t r a n s a c t i o n s i n or w i t h t h a t
country.
(5) Respect f o r a f o r e i g n n a t i o n ' s recognized primary boycott r i g h t s as
o u t l i n e d i n number 4 does not include p e r m i t t i n g t h a t country to i n f l u e n c e
u n r e l a t e d U.S. corporate t r a n s a c t i o n s or j u s t i f y actions i n d i r e c t business
dealings which c o n s t i t u t e a v i o l a t i o n o f the a n t i - d i s c r i m i n a t i o n or r e f u s a l
to deal p r i n c i p l e s .
U.S. l e g a l requirements placed on companies should,
however, recognize the p r a c t i c a l l i m i t s o f a f i r m ' s a b i l i t y to act when
d i r e c t l y subject t o f o r e i g n l e g a l j u r i s d i c t i o n .
(6) U.S. law r e l a t i n g to boycott p o l i c y should not be extended e x t r a t e r r i t o r i a l l y , i n order t o avoid p l a c i n g U.S.-owned a f f i l i a t e s operating
under f o r e i g n j u r i s d i c t i o n i n c o n f l i c t w i t h l o c a l law and customs. The
U.S. Government should consider undertaking discussions w i t h other governments looking toward minimizing areas f o r such p o t e n t i a l c o n f l i c t s .
(7) S t a t e s t a t u t e s r e l a t i n g t o f o r e i g n boycotts should be preempted by
f e d e r a l a u t h o r i t y over f o r e i g n commerce and f o r e i g n r e l a t i o n s to provide
f o r a uniform and c o n s i s t e n t l y a p p l i e d n a t i o n a l p o l i c y .
Examination o f the f o r e i g n boycott p r o v i s i o n s i n S. 69 and S. 92 i n l i g h t of
these p r i n c i p l e s leads us t o express s e v e r a l s p e c i f i c concerns - both
regarding
what i s i n the b i l l s and what i s not - which we would c a l l to your a t t e n t i o n .
F i r s t , we b e l i e v e the p r o h i b i t i o n against domestic d i s c r i m i n a t i o n i s already
covered by e i t h e r s t a t u t o r y p r o v i s i o n s o f the 1964 C i v i l Rights Act or r e c e n t l y
changed a d m i n i s t r a t i v e export c o n t r o l r e g u l a t i o n s .
However, we would support the
restatement o f t h i s p r i n c i p l e i n the Export A d m i n i s t r a t i o n A c t ' s extension and i n
336
p a r t i c u l a r the p r o v i s i o n o f a s p e c i f i c s t a t u t o r y basis to the c u r r e n t
regula-
t i o n s p r o h i b i t i n g the p r o v i s i o n o f d i s c r i m i n a t o r y i n f o r m a t i o n i n response t o
a boycott
request.
The r e f u s a l t o deal p r i n c i p l e i s p a r t l y covered under U . S . a n t i t r u s t
but i t s d i r e c t d e f i n i t i o n i n r e l a t i o n t o a boycott request would h e l p
i t s a p p l i c a t i o n under complex and o f t e n ambiguous c o n d i t i o n s .
law,
clarify
The f u l l
elabora-
t i o n o f t h i s p r i n c i p l e i n the proposed l e g i s l a t i o n would be a b e n e f i c i a l move
toward implementation o f s t a t e d U . S . p o l i c y i n important areas o f p o t e n t i a l
secondary and t e r t i a r y boycott e f f e c t s .
However, we would encourage the Sub-
committee to d e l i n e a t e w i t h g r e a t e r c a u t i o n and p r e c i s i o n t h i s p a r t i c u l a r
area
because o f the obvious p o t e n t i a l c o n f l i c t s which could e x i s t between s p e c i f i c
a p p l i c a t i o n s o f t h i s p r i n c i p l e and the sovereign r i g h t o f a n a t i o n t o c o n t r o l
goods and services coming i n t o i t s country.
A serious e f f o r t should be made to
avoid p l a c i n g U.S, companies i n untenable p o s i t i o n s where they are asked t o somehow introduce p r o h i b i t e d goods and s e r v i c e s i n t o a b o y c o t t i n g c o u n t r y .
A practical
s o l u t i o n must be found which seeks t o avoid secondary boycott e f f e c t s w i t h i n the
U.S. w i t h o u t a t t e m p t i n g t o o v e r r i d e f o r e i g n governmental c o n t r o l o f imports
areas f a r beyond U.S. j u r i s d i c t i o n .
in
We would be happy to work w i t h Subcommittee
s t a f f f o l l o w i n g these hearings to explore p o s s i b l e ways i n which t h e
p r o v i s i o n s could p r o p e r l y recognize these areas o f p o t e n t i a l
A c o r o l l a r y p o i n t t o t h i s discussion concerns the b i l l s '
legislative
conflict.
p r o v i s i o n s which
would attempt t o apply the boycott r e g u l a t i o n s e x t r a t e r r i t o r i a l l y i n o t h e r
where they may c o n f l i c t w i t h l o c a l law and customs.
Past experience w i t h
countries
limited
a p p l i c a t i o n o f U.S. a n t i t r u s t and export c o n t r o l r e g u l a t i o n s have demonstrated the
serious f o r e i g n r e l a t i o n s problems such procedures can cause w i t h even the most
f r i e n d l y and n e i g h b o r l y c o u n t r i e s ( v i z Canada).
We b e l i e v e t h a t t h i s
legislation
337
should be l i m i t e d t o t e r r i t o r i a l enforcement w h i l e the U.S. Government undertakes discussions w i t h other nations to minimize areas o f p o t e n t i a l
conflict
i n p o l i c y p o s i t i o n s and a p p l i c a t i o n .
Two f u r t h e r areas deserve s p e c i a l comment.
Although l e g i s l a t i o n i s u s u a l l y
not the proper place t o s p e l l out complex a d m i n i s t r a t i v e procedures to implement
the s t a t u t o r y o b j e c t i v e s , i t would be extremely u s e f u l i f some r e c o g n i t i o n could
be given to c e r t a i n process problems e i t h e r d i r e c t l y i n the l e g i s l a t i v e
or i n s p e c i f i c references o f Congressional i n t e n t .
provisions
Two examples o f such concerns
are the bases f o r decisions regarding whether a f i r m has v i o l a t e d an a n t i - b o y c o t t
p r o h i b i t i o n and the d i v e r s e r e p o r t i n g requirements now placed on companies. While
the d e t a i l s are again more a p p r o p r i a t e f o r extended discussion a t a s t a f f
level
r a t h e r than i n hearings under t i g h t time c o n s t r a i n t s , we would p o i n t out as examples
o f important process d i s t i n c t i o n s the absence i n S. 92 o f a standard o f
"intent"
t o comply w i t h a f o r e i g n boycott which i s , we b e l i e v e , p r o p e r l y present i n S. 69.
Additionally,
the d r a f t i n g d i f f e r e n c e s between the two b i l l s regarding the i m p l i -
c a t i o n s o f an absence o f a business r e l a t i o n s h i p w i t h a boycotted country p o i n t
up the importance o f c l e a r and f a i r standards f o r e v a l u a t i n g compliance w i t h the
Act's provisions.
We f e e l t h a t the f a i r e s t and most p r a c t i c a l standard would
revolve around agreements to act as a c o n d i t i o n o f doing business w i t h the boyc o t t i n g country.
The o t h e r process concern which I would c i t e i s the confused and c o n f l i c t i n g
r e p o r t i n g requirements placed on companies from f i r s t Commerce Department
regula-
t i o n s and now Treasury Department requirements i n response t o t h e b o y c o t t - r e l a t e d
amendment to l a s t y e a r ' s t a x b i l l .
These r e p o r t s w i l l be p a r t l y d u p l i c a t i v e and
p a r t l y c o n f l i c t i v e i n terms o f d i s p a r a t e concepts and d e f i n i t i o n s of boycott
activities.
As a minimum the c o n f l i c t s should be resolved and the d u p l i c a t i v e
r e p o r t i n g burden on companies reduced.
Should t h i s c u r r e n t l e g i s l a t i o n be adopted,
338
i t would be incumbent upon the Congress, which has i n c r e a s i n g l y recognized the
excessive r e p o r t i n g and r e g u l a t o r y burdens placed on companies i n many a r e a s ,
t o assure t h a t unnecessary or d u p l i c a t i v e r e p o r t i n g requirements a r e e l i m i n a t e d .
F i n a l l y , we would l i k e t o r e g i s t e r our support f o r the f e d e r a l pre-emption
o f a u t h o r i t y i n t h i s area o f f o r e i g n boycott r e g u l a t i o n and urge the Subcommittee
t o add such a p r o v i s i o n i n t o the b i l l s b e f o r e i t .
The s e v e r a l d i v e r s e
state
s t a t u t e s a l r e a d y i n e x i s t e n c e on t h i s subject have v a s t l y complicated normal
business d e a l i n g s and added new degrees o f u n c e r t a i n t y and confusion.
This
situ-
a t i o n w i l l only be exacerbated i f o t h e r s t a t e s continue t o pass t h e i r own p a r t i c u l a r s t a t u t e s on t h i s i s s u e .
C l e a r l y , U.S. p o l i c y on f o r e i g n boycotts i s an
important m a t t e r f a l l i n g under f e d e r a l a u t h o r i t y t o r e g u l a t e i n t e r n a t i o n a l commerce
and f o r e i g n r e l a t i o n s , r e q u i r i n g a uniform and c o n s i s t e n t l y a p p l i e d n a t i o n a l
policy.
Conclusion
The NAM b e l i e v e s a simple extension o f the Export A d m i n i s t r a t i o n Act provides
s u f f i c i e n t l a t i t u d e t o the Executive Branch t o a d m i n i s t e r an export
program necessary t o safeguard important n a t i o n a l i n t e r e s t s .
control
We b e l i e v e
that
c a u t i o n should be e x e r c i s e d i n using the a u t h o r i t y granted under t h i s Act so as
t o avoid undue d i s t o r t i o n o f the i n t e r p l a y o f market f o r c e s .
Deliberations
on the s e v e r a l proposed changes t o the A c t ' s f o r e i g n boycott p r o v i s i o n s
should
proceed o n l y i n f u l l r e c o g n i t i o n o f t h e i r p o t e n t i a l impact on the c u r r e n t
diplo-
matic e f f o r t s which o f f e r the only r e a l , v i a b l e s o l u t i o n t o the Arab b o y c o t t .
Short o f a d i p l o m a t i c s o l u t i o n , any new boycott p r o v i s i o n s i n U . S . law should
embody t h e p r i n c i p l e s o u t l i n e d above.
339
Mr. Fox. Thank you.
Mr. Chairman, N A M supports the extension of the Export Administration Act of 1969 to continue current export control authority.
However, we recognize that the major purpose of these hearings is to
solicit testimony on the proposed amendments to the act contained in
title I I of S. 69 and S. 92 concerning foreign boycotts so I will confine
my oral comments at this time to this issue.
I n order to assess the need for and possible effects of the proposed
boycott authority changes, it is advisable to evaluate them with specific
reference to the Arab boycott, which is obviously the major impelling
force behind this legislation.
The Arab boycott stems directly from the state of hostilities which
has existed between Israel and a number of Arab nations for nearly
three decades in which both sides have employed both military and
economic tools in pursuing their respective objectives. These hostilities, which involve the interests of many other nations, including the
United States, deserve the highest diplomatic priority in terms of
seeking an assured peaceful and long-term solution to the conflict.
Efforts undertaken by the U.S. Government to foster such a settlement deserve wide public support. I would hope in particular
that the new initiatives of the Carter administration in the Middle
East can progress in tandem with the recognized concern of this
Congress in promoting an end to hostilities in that area of the world.
I raise the context of an Israeli-Arab political confrontation only
to point out the obvious, though often underemphasized point, that
actions taken by the United States in regard to the Arab boycott have
direct and indirect impact on the ongoing sensitive negotiations in that
region. Furthermore, it is unlikely that any measures directed solely
at the boycott will prove adequate to remove objectionable economic
consequences without a longer term resolution of a political conflict
underlying the boycott's existence.
As Senator Stevenson pointed out in his remarks on the Senate floor
when he introduced S. 69, the boycott cannot be ended by legislation
in this country: " I t will be ended only when there is permanent peace
in the Middle East."
The use of a primary economic boycott by a nation engaged in hostilities against another unfriendly country is a device generally recognized in international law and prance and is indeed currently used
by the United States in several instances. Therefore, the issues mainly
to be addressed by the legislation before this subcommittee seem to
concern limiting the effects of a foreign boycott where they may
improperly extend to secondary or even tertiary areas that threaten to
cause discrimination or unfair trade practices against U.S. persons.
The National Association of Manufacturers has supported U.S.
policy to seek elimination of international boycotts which serve to
distort market-oriented trade and investment flows. We believe that
a diplomatic negotiated approach remains the most appropriate and
useful method of dealing with such boycotts in the international framework, particularly when they rest on noneconomic bases requiring
solution of the underlying political problems as a requisite to the
solution of the boycott itself.
The N A M believes that current U.S. laws and regulations and continuing diplomatic initiatives provide the best avenues to further U.S.
national interests.
340
I n evaluating the legislative proposals before this subcommittte, we
have proceeded on the basis of a statement of principles which we
believe constitutes a balanced and realistic approach to this admittedly
complex issue. These seven principles are stated in f u l l in the printed
copies of our testimony (see p. 335).
Examination of the foreign boycott provisions in S. 69 and S. 92 in
light of these principles leads us to express several specific concerns,
both regarding what is in the bills and what is not, which we would
call to your attention.
First, we believe the prohibition against domestic discrimination is
already covered by either statutory provisions of the 1964 Civil Rights
Act or recently changed Commerce Department export control regulations. However, we would support the restatement of this principle
in the extension of the Export Administration Act extension arid in
particular the provision of a specific statutory basis for the current
regulations prohibiting the provision of discriminatory information
in response to a boycott request.
The refusal-to-deal principle is partly covered under U.S. antitrust
law at this time, but its direct definition in relation to a boycott request
could help clarify its application under the often complex and ambiguous conditions in which the matter must be dealt with at this time.
A corollary point concerns the bills' provisions which would attempt
to apply the boycott regulations extraterritorially in other countries
where they may conflict with local law and custom. Past experience
with limited application of U.S. antitrust and export control regulations have demonstrated the serious foreign relations problems such
procedures can cause with even the most friendly and neighborly countries such as Canada, We believe that this legislation should be limited
to U.S. territorial enforcement while the U.S. Government undertakes
discussions with other nations to minimize areas of potential policy
conflict.
Two further areas which deserve special comment are the tbases for
decisions regarding whether a firm has violated antiboycott prohibitions and the diverse reporting requirements now placed on a company.
We would point out as examples of important process distinctions the
absence in S. 92 of a standard of intent to comply with a foreign boycott, which is, we believe, prop'erly present in S. 69. Such differences
point up the importance of clear and objective standards for evaluating compliance with the act's provisions. We feel that the fairest and
most practical standard would revolve around agreements to act as a
condition of doing business with the boycotting country.
I would also cite the confused and conflicting requirements placed
on companies by differing Commerce and Treasury Department reporting regulations. These reports are duplicative and conflicting in
terms of disparate concepts and definitions of boycott activities. Should
this current legislation be adopted, it would (be incumbent upon Congress, which has increasingly recognized the excessive reporting and
regulatory burdens placed on companies in many areas, to assure that
unnecessary or duplicative reporting requirements are eliminated.
Finally, we would like to register our supp'ort for the Federal preemption of authority in this area of foreign boycott regulation and
urge the subcommittee to add such a provision to the bills before it. The
several diverse State statutes already in existence on this subject have
341,
vastly complicated normal business dealings and added new degrees of
uncertainty and confusion. Clearly, U.S. policy on foreign boycotts
is an important matter under Federal authority to regulate international commerce and foreign relations requiring a uniform and consistently applied national policy.
I n conclusion, N A M believes a simple extension of the Export Administration Act provides sufficient latitude to the executive branch to
administer an export control program necessary to safeguard important national interests. We believe that caution should be exercised
in using the authority granted under this act so as to avoid undue distortion of the interplay of market forces. Deliberations on the several
proposed changes to the act's foreign boycott provisions should proceed only in full recognition of their potential impact on the current
diplomatic efforts which offer the only real, viable solution to the
Arab boycott. Short of a diplomatic solution, any new boycott provisions in U.S. law should embody the principles we have suggested in
our full N A M statement. Thank you.
Senator P R O X M I R E . Thank all of you gentlemen for your statements,
but I must say that I ' m kind of puzzled by the position that you take.
You seem to agree that the principles embodied in S. 69 and S. 92 are
fine. You support that. You think that we should not, as I think Mr.
Carlson said so well—any attempt by a boycotting country to compel
persons outside its jurisdiction and modify their conduct in regard to
a boycotted country should be opposed. U.S. persons should be free to
trade with the boycotted country as they wish outside the territory of
the boycotting country and so forth. A l l you gentlemen seem to agree
with that and yet it's like the old—I don't know whether it was a poem,
but it was something years ago—when a young lady asked her mother
whether she could go swimming, her mother said, "Yes, my darling
daughter. Hang your clothes on a hickory bush, but don't go near the
water."
I n other words, you're taking the position that what the Arab countries have done is wrong. We ought to act with great firmness to stop it,
but we shouldn't pass any legislation which is the only way we can. I t
seems to me to be contradictory to believe in these principles, to believe
in protecting our own sovereignty and preventing other countries from
interfering and dictating to American firms on how to conduct business or you don't. What astonishes me is we just heard from the attorney general of Maryland who told us that there was overwhelming,
across-the-board business approval—I asked him that specifically for
a stronger antiboycott legislation than either S. 69 or S. 92, no opposition, and yet these two great business organizations representing the
Chamber of Commerce and the National Association of Manufacturers
come in and take a completely contrary position.
How do you explain that, Mr. Carlson ?
Mr. C A R L S O N . Well, I think that we all oppose discrimination based
upon religion, and you will find everybody at this table, including myself, will be strongly opposed to that. We also recognize the fact that
countries have control over their jurisdiction and can dictate products
that may come in, including the tire that may be on a tractor, and
we have to take that into account.
Also, you have to weigh whether your legislation really has leverage effect and when you consider our rather modest share of the im-
342
ports of the boycotting countries, remembering that they can find substitutes in other industrialized countries, it's very doubtful whether
this is going to have any leverage effect at all.
So it's perhaps a statement of principle. Let's have a statement of
principle, but let's recognize what the situation is and the limitation
as to the leverage you might have. As far as the principle is concerned,
let it be very clear we are opposed to discrimination based on religion.
Senator P R O X M I R E . Well, the trouble is, of course, that you have a
situation without legislation in which businesses that do not want to
comply find their competitors do comply and that they are therefore
in a position where it's much harder for them, absent legislation, to
comply with these principles.
One of the purposes of this legislation is to provide that kind of
community of action so that all American businesses can act alike
and together. Without it, they can't. The Arab countries can just put
pressure on. Of course, you say it's gone on for many years, but it's
only in the last couple years that the Arab countries have developed
this fantastic clout, since 1973, with the enormous income they have
earned by the price of oil and the great increase in imports of oil by
this country and other countries from the Middle East have given them
muscle they haven't had before. So it's an entirely new ballgame.
Mr. C A R L S O N . A S far as citizens within the United States, we feel
we have adequate antidiscrimination laws and this can be taken care
of. So we don't think that there is a need for additional legislation per
se. However, i f you felt that our laws on the discrimination among
Americans based on religion were not sufficient we certainly would not
oppose such legislation.
Senator P R O X M I R E . We only have laws against discrimination for
employment and for a few other very limited areas. We certainly don't
have them that apply here.
Let me ask you, Mr. McNeill. You recommend wThat I would construe as a considerably weaker bill than either S. 69 or S. 92 and six
States have already passed antiboycott legislation. Inasmuch as the
proposals you have would apply only to agreements to comply, they
would not apply to foreign subsidiaries. They would permit an American company to exclude goods made bv blacklisted companies. Then
you recommend that you would pass Federal legislation, this weak
legislation, and then have it supersede the legislation in the States
which is stronger inasmuch as California and New York and some of
these other States are very big States in which a great deal of exporting is done.
What youVe proposing would in effect greatly weaken what we already have in effect. I t would fbe a feebler response rather than a
stronger response by this country.
Mr. M C N E I L L . Mr. Chairman, I don't know the provisions of State
law for the States that have these antiboycott statutes.
W i t h respect to S. 69 and S. 92, our disagreement is not as strong
as you have just indicated. There are five general prohibitions provided in both bills and we are in full agreement with three of them. I n
the other two areas of prohibition, B and E, we are suggesting modifications to take account, in the case of B, of the sovereign right of other
countries to legislate and administer their customs with respect to
products they will allow entry.
343,
We do not believe our recommended modifications amount to a substantial weakening. We do, however, differ with both bills with respect
to their extraterritorial application.
So it's agreeing to take, not the action itself that you would prescribe?
M r . MCNEILL.
Yes.
Senator P R O X M I R E . As I point out, it's easy to avoid the law by just
not making any agreement, by just taking the action instead of making the agreement, i f you have proper counsel.
Mr. M C N E I L L . But what follows, Senator, after this in the bill
itself is that i f you agree to do something or i f you act in response to
a requirement of a boycotting country there are other factors in the
act itself that appropriately have to do with action. I f you look at the
bill itself, you will find that after this phrase with respect to the
President you w i l l find under 4A that there are other
Senator P R O X M I R E . Then you do agree that we should prohibit taking action; is that right; taking action with respect to
Mr. M C N E I L L . Pursuant to an agreement or requirement; yes.
Senator P R O X M I R E . Pursuant to an agreement, but i f they haven't
made an agreement they can take whatever action they wish. That's
where you slip away.
A l l right. My time is up.
Senator W I L L I A M S . Well, first of all, one, I ' m encouraged with the
broad agreement here in terms of the principles that prompted the
legislation.
Now there are differences in how we implement principle, here, but
there's enough of a foundation of common though that I believe we,
as legislators, can build on in discussion with you gentlemen with
whom we share broad general principles.
This area of refraining from doing business and whether the nature of the agreement ultimately comes down to how you show whether
it was taken in response to an agreement or a request—burden of
proof. There have been suggestions, one, by the Anti-Defamation
League yesterday, that was directed to a clarification here and their
testimony suggested that the term should be defined to include compliances with a request from a requirement of or on behalf of a boycotting country. Now that suggests that there has to be something
positive to be shown, some request made that the exporting country
do certain things. I don't know whether you followed the testimony
yesterday, the group from the Anti-Defamation League, but it seemed
to give some degree of certainty that might be lacking in what we have
in either bill.
Do you have anv observations on that ?
Mr. M C N E I L . Senator Williams, i f I might, the bill itself includes
the language that you have just used that was referred to yesterday by
the A D L and that was what I had in mind in our discussion about
agreement and action. The bill itself says pursuant to an agreement
with or requirement of or a request from or on behalf of the boycotting
countries, and that is in section 4A, the section that we agree with.
Senator W I L L I A M S . They thought that that was adequate for this
business of proving" whether it was done in response to a request.
Mr. C A R L S O N . I think, Senator, intent is very important, and language to this effect is included in S. 69 which is not in S. 92. To fol-
344,
low up with the philosophy you're pushing, you need to have some sort
of specific agreement to refer to. Just because a person has a trade
pattern that didn't end up with a tire made from one particular company shouldn't, by itself alone, be the basis of prosecution under this
law, and there's a chance that i t could be the way it's written now.
I think it is important to have first the intent and also some sort
of agreement, and the agreement doesn't have to be an overly formalized contractual relationship. I t can be some other kind of agreement, but at least reference to an agreement.
Senator W I L L I A M S . Doesn't it suggest something positive has to be
coming from the boycotting countries, something of specific nature
that you refrain from this, that or the other action would be prohibited
here?
Mr. C A R L S O N . Obviously, that would be source of that kind of an
agreement.
Senator W I L L I A M S . Again, here we are in agreement on principle,
that you do support the proposition that the action prohibited should
be prohibited i f it can be positively shown, to be following a request
and entered into as some kind of agreement that the prohibited action will be agreed to.
Senator P R O X M I R E . Let me just interrupt. Would you apply this
to actions as well as agreements? Would you apply this to foreign
subsidiaries, apply legislation ?
Mr. M C N E I L L . NO. We would prefer not to apply it to foreign subsidiaries.
Senator P R O X M I R E . Well, would you apply this to actions as well as
agreements or just to agreements ?
Mr. M C N E I L L . I'm sorry, sir, I don't understand your question.
Senator P R O X M I R E . Actions to comply with the boycott, would you
apply this or just to agreements ?
M r . MCNEILL. Yes.
Senator P R O X M I R E . Just to agreements ?
Mr. M C N E I L L . T O actions that would implement the boycott, yes,
both.
Senator P R O X M I R E . Y O U would apply it to actions?
M r . MCNEILL. Yes.
Senator P R O X M I R E . Well, that's good to hear. I didn't get that from
your testimony.
Mr. M C N E I L L . Actions pursuant to agreements, but we differ, as
I said, unless modified, with two of the prohibitions and the extraterritorial aspects of both bills.
Senator P R O X M I R E . Why would you prefer to have legislation penalize agreements to take action to comply with the boycott rather than
taking that action itself ? Why do we want to penalize agreements to
take certain actions but not the acts? Wouldn't that just be a trap for
the unwary ? Anyone who's familiar with the law would take care not
to agree in the first instance and therefore it would appear that the
only ones th^t mi<?ht be caught in a prohibition to take action would
be those unfamiliar with the law and those that can afford counsel
to avoid making prescribed agreements where some one inadvertently agrees and draws back—why does that make any sense?
Mr. Fox. I think the law ought to be clear in its application and certainly it would not be our purpose to suggest that entrapment of the
unwary be the purpose of that change that we suggest. Our purpose
2125,
there are some really bad features which, in other forms, you gentlemen would oppose.
Senator W I L L I A M S . On that latter point, you suggest that extending
this law to companies that are incorporated in another country but are
controlled here ?
. . .
Mr. C A R L S O N . N O ; I ' m opposed to that particular provision in your
bill that wTould in fact extend our authority in such a way.
Senator W I L L I A M S . The rub you see is you might find a situation
where our requirements would be on a collision course with the law
in that country where the corporation is controlled here but organized
there was acting.
Mr. C A R L S O N . The independent sovereignty of other countries becomes a problem at times.
Senator W I L L I A M S . D O you have an example to make that real?
I read it and understand what you're saying, but I would like to know
what the reality is, what kind of situation you're talking about.
Mr. Fox. I ' l l give an example, Senator Williams. Take an American firm that has a subsidiary producing a machine in France. It's
the policy of France to maximize its exports in order to meet the balance of payments problems, et cetera, that France has. It's also French
policy to sell its equipment to whoever it can sell the equipment to.
Under the principle of the law here, the American firm would be told
to direct its subsidiary in France to apply American law rather than
apply French law and French policy with respect to the receipt of
certain orders of goods.
Senator W I L L I A M S . You're saying there the subsidiary organized in
France would be violating French law i f it didn't comply with the
boycott ?
Mr. Fox. Well, it would be violating, under certain circumstances,
French policy and, under certain circumstances, French law. I ' m sorry
I can't tell you what would be French law in this instance, but I think
French policy is fairly clear in this regard.
Senator W I L L I A M S . I don't find too much trouble with our law reaching that particular situation when the conflict is one where a country
that promotes an acquiescence in the boycott.
Mr. Fox. Well, Senator, without trying to appear contentious, there
are companies organized in the United States which are subsidiaries
of multinationals of other countries, including France. I don't think
we would regard it as appropriate for French law to determine the
actions of those subsidiaries in the United States in all respects, including some of the points that we're discussing here today.
Senator W I L L I A M S . We could reach into other areas to see that principle you're suggesting.
Mr. Fox. I might say one more word on that, This is an inherent
poblem we have in the modern world where more than one country asserts jurisdiction over the activities of certain private individuals or
corporations and it seems to me it's incumbent on the U.S. Government to do what it can to minimize those inherent conflicting obligations consistent with good policy.
Now one of the suggestions that we have made in this regard is that
we seek agreements with foreign governments to eliminate such conflicts wherever possible and the example given in my summary was
with Canada, a neighbor with whom we have had a dong history of
contentious application of U.S. law extraterritorially with respect to
2126,
is to make it precise what actions are possible under the law or not
permitted under the law.
I n this context, actions taken pursuant to an agreement with a boycotting country would be an explicit and understandable course of
action undertaken voluntarily by a company and the application of
the principles of law would be quite clear. But there are many reasons
why companies might act in a certain way which would have no bearing on the implementation of the boycott.
Senator P R O X M I R E . Let me ask what precisely would constitute an
agreement for these purposes ? For example, assume a company signs
a contract to sell goods to a boycotting country. The contract contains no boycott clause nor does it require the company to comply with
the laws or the regulations of the boycott. The company then refrains
from buying goods from or otherwise dealing with blacklisted companies fulfilling their contract.
Would that be a violation of the law under your formulation? I f
not, why not ?
Mr. Fox. Well, of course, you have asked a difficult hypothetical
question. I n our view, American firms should not be required by any
foreign government to deal or not to deal with particular American
companies. American companies should be free to deal with American
companies as they wish. That's one of the principles which we state
in the text of our full presentation.
Senator P R O X M I R E . Therefore, it should be a violation of law i f they
don't exercise that privilege. Is that right ?
Mr. Fox. No; I ' m saying that this is a matter that requires careful
delineation. One of the points that we made in my summary is that
this subject is susceptible of differing interpretations and precision is
required in defining the terms. Certainly there's quite a difference
between a company agreeing to act and being penalized for that reason from a situation in which a company may act for any number of
reasons, but it would be presumed under the law that it acted in
compliance with the boycott which might not be the circumstance
at all.
Senator P R O X M I R E . Let me get back to Mr. McNeill. I think I ]et
you off the hook. You say in your statement, and I quote: "Section
4A(a)(1) should be revised by deleting the reference to 'taking'
actions and retaining in lieu thereof the 'agreeing to take' language
of S. 92." Thus, section 4 A ( a ) ( l ) would read in part: " * * * the
President shall issue rules and regulations prohibiting any U.S. person from agreeing to take any of the following actions * * *."
Mr. C A R L S O N . Among U.S. citizens, yes; but we do feel we have adequate law to carry that forward. Unfortunately, and this is lamentable,
other countries have the right to specify the import of goods or services
into their country and thereby they can carry out political or other
kinds of boycotts with their own soverign jurisdiction.
Let me make another point that's related to this. We are not proposing a wreaker bill. We're saying that existing law is adequate, with
the addition of a few provisions such as the preemption of State law,
but we do ask for a clearer bill, and we hope you will remove the American imperialism written into this bill, where in fact you would have
the authority of the United States being transferred to corporations
that are actually incorporated under the laws of other countries. So
347,
their exports. Canada faces many of the same, problems in regard to
the boycott that we do, including the important principle in Canada
to protect religious freedom and religious rights and minority rights.
We urge that rather than exercise our jurisdiction outside the United
States willy-nilly wTe attempt to reach agreements where possible to
harmonize the application of U.S. law extraterritorially rather than
simply preempt the field and establish—I would not like to use Jack
Carlson's term of American imperialism loosely—I think that's a
dramatic phrase, but certainly the view of the application of U.S. law
extraterritorially is interpreted that way in certain countries.
Senator W I L L I A M S . Well, I could think of some examples. One would
be American law dealing with corporate bribery in an American-owned
but foreign-organized company in a land that has not reached the
prohibition on corporate bribery. Wouldn't you suggest that our law
should follow that American ownership wherever the company was
organized ?
Mr. Fox. Well, I would look forward to testifying before this
committee or some other on the subject of bribery, but I would say, in
general, the approach that I would take to that subject is that it's the
responsibility of the American company to control its operations worldwide in accordance with appropriate company policies, and I ' m not
aware that it is a policy that is approved by any American company to
engage in bribery abroad.
I think the problem doesn't arise in quite the same way because I
think company policy would be such as to preclude the use of bribery
as a business-gaining technique by American companies at this time.
Senator W I L L I A M S . Thank you. We're about to go here. Mr. Trudeau
from Canada I understand is coming up with a tough antiboycott law.
Maybe we'll hear about that.
Senator P R O X M I R E . Senator Sarbanes.
Senator S A R B A N E S . Thank you, Mr. Chairman. I ' l l be very brief. I
apologize for not being here earlier.
Senator P R O X M I R E . Take your time as far as I ' m concerned. I ' m not
going to hear Mr. Trudeau on this day.
Senator S A R B A N E S . I have read the principles and they sound pretty
good. Let me just ask this question. Do you follow from those principles that you're prepared to see them implemented in the law ?
Mr. C A R L S O N . We said earlier in our opening statements that we
are opposed to discrimination on religious grounds and among American citizens the law should be carried out and we have adequate law
to make sure that that does not occur.
Senator S A R B A N E S . Well, I mean, most of the statements enunciated
about a half a dozen principles which you're prepared to subscribe to
and I want to know whether you favor or support having legislation to
implement those half a dozen principles.
Mr. M C N E I L L . I can only speak for my organization, Senator. We
would suport legislation incorporating the principles we have testified
to with the modifications that we have suggested.
Senator S A R B A N E S . Could the other members of the panel respond to
that question ?
Mr. Fox. I would certainly state precisely the same thing.
Mr. C A R L S O N . Our point earlier was that except for a few provisions,
we didn't feel that S. 69 or S. 92 would be necessary other than an
85-654 O - 77 - 23
348,
extension of the Export Administration law that expired September 30,
because we felt discrimination on religious grounds was covered by
domestic law among U.S. citizens. But i f you felt that it's necessary to
strengthen that
Senator S A R B A N E S . NO. I ' m trying to find out what you feel.
Mr. C A R L S O N . Then we would not be opposed to legislation to do
that.
Senator S A R B A N E S . I want to find out what you think and whether
your response to that question is yes or no.
Mr. C A R L S O N . We support the principle of not discriminating on the
basis of religion.
Senator S A R B A N E S . I S that the only principle you put forth ? Maybe
I misread the statement. I thought you also enunciated a broader set of
principles.
M r . CARLSON. W e
did.
Senator S A R B A N E S . A half a dozen.
Mr. C A R L S O N . Do you have a particular one that seems to be in controversy that you would like to refer to ?
Senator S A R B A N E S . NO. I ' m interested and refer to the whole package which I take it was set out in your statement,
Mr. C A R L S O N . Yes. That's correct.
Senator S A R B A N E S . D O you believe we should have legislation to
implement those principles ?
Mr. C A R L S O N . We feel that it's not entirely necessary to have legislation to irfiplement those principles because existing law has implemented those principles, but i f you feel, which is more important, that
they need to be strengthened among U.S. citizens we would support
that.
Senator S A R B A N E S . Is it your position that existing legislation implements all of the principles that you have set out ?
Mr. C A R L S O N . Except for preemption of State law, generally existing
law handles the situation.
Senator S A R B A N E S . Would you furnish us with the legislation that
you think does that ?
Mr. C A R L S O N . I think that i t was brought out in somebody else's testimony that i f you took the existing law, the Export Administration Act
that just passed from enforcement September 30, and extended that
with the Federal preemption of State law and a few minor changes,
perhaps eliminating the duplication of reporting now required by the
Tax Reform Act of 1976 and the Export Administration Act—made
some changes there—that could be an extension of the principles and
adequate protection internationally.
Senator S A R B A N E S . Well, this is a new perception. It's the first one
I've heard that contends that the principles that you have set out,
which sound fine, are all fully covered by existing law. No other party
that's come before us has taken that position. They either have not
been prepared to put out the principles or i f they put them out they
are not willing to see them implemented by law and seek other means
to attain them. They state them as a goal but do not contend that
it is legislatively implemented and I find this a sort of novel position.
Let me ask the other gentlemen, what is i t in this legislation that
goes beyond the implementation of the principles that you have set
out as being desirable?
349,
Mr. M C N E I L L . Senator Sarbanes, there are five general prohibitions
in both bills. We agree with all five of the prohibitions but recommend
modifications in two of them. One prohibition is that you cannot refuse
to deal with Israel or its nationals. We are in f u l l agreement with that.
The second prohibition is that you cannot refuse to deal with any person. We agree with that generally but we would recommend an exception. The exception would be that i f an importing country has a law
that will not permit importation of a particular product, then an
American person in not providing that product should not be subject
to criminal or other penalties of the law. I f , however, an importing
country requested the American exporter not to deal with another
company on a general basis, we would find that reprehensible and we
support that part of the prohibition. We agree with prohibitions three
and four in the bill which have to do with discrimination in employment and having to do with the prohibition against furnishing information about another person's religion or ethnic background.
We agree with the last of the five prohibitions, but object to the
prohibition in both bills that would not allow an American company
to respond to a question as to whether it has business dealings in
Israel. We think that an American business firm should be able to
answer that factual question with a factual answer, but we do not feel
that an American person should be allowed to answer that question
about any other American person.
So we would recommend, as we have in our testimony, that we should
not be permitted to provide information about any other person except
about ourselves. That is how we in EC A T perceive the prohibitions of
the bill.
Senator S A R B A N E S . D O the reservations of the association go further
than that?
Mr. Fox. Actually, Senator Sarbanes, I think the position of N A M
is very much the same as that expressed by Mr. McNeill for ECAT.
I would elaborate on one point that Mr. Carlson referred to for the
purpose of clarification, and he said that extension of the Export
Administration Act which expired on September 30 with a Federal preemption of State law would cover all of the principles that concern
him. That wouldn't quite be the case wTith respect to me because the
Export Administration Act has for many years operated with an extraterritorial impact and it's had an effect on our foreign relations with
neighboring countries such as Canada as well as business relations
with other countries, and I would seek some delimitation, some further delimitation of the extraterritorial application of U.S. law.
Now I recognize that that is a very complex subject, that U.S. law
has applied extraterritorially for reasons of national security and foreign relations, and it's not a simple matter to take the Export Administration Act as it now exists and excise certain features of that law so
that it would apply one way with respect to the boycott provisions and
other ways with respect to national security; but with that qualification I would like you to understand that my position is both similar
to Mr. McNeill's and supportive of Mr. Carlson's statement.
Senator S A R B A N E S . Well, that's difficult for me to see because I don't
see their positions as being consistent with one another. The requirement that American owned companies abroad are subsidiaries and
350,
behave in a certain manner, is that the extraterritoriality that you're
referring to ?
Mr. Fox. Speaking for myself, it is. One normally expects a country's law to apply within the territory of that country.
Senator S A R B A N E S . Within the territory of that country with respect
to that country's nationals ?
Mr. Fox. Correct.
Senator S A R B A N E S . N O W suppose that country seeks to impose a behavior pattern on companies as they deal elsewhere in the world and
at the same time that's a company owned by another country which
seeks to impose a different standard. I agree with you that you have a
tough problem, but I think in your balancing your statement is perhaps overstated. I might have one reaction which perceives that a foreign country's subsidiary in this country as it dealt with Americans
had to follow American law and vice versa, but saw an entirely different perspective when the foreign country sought to regulate the subsidiaries not within its own country but as it dealt elsewhere with the
world.
Mr. Fox. That's the nature of the problem and referring to an authority considerably more expert than myself in this regard I would
refer you to an article by Professor Ray Vernon of the Harvard Business School in Foreign Affairs of a couple months back. He cites this
problem as the number one commercial problem arising from the integration of the world economy and the impact that it has had on Amer ican owned multinational corporations and the multinational corporations of other countries. They are simply subject to conflicting commands from different sovereign jurisdictions and I think, with all the
best intent in the world, which I certainly accept to be the case here,
what we are trying to do and what the committee is trying to do, we
are placing American companies in the untenable position in some instances by the proposed legislation of following U.S. law but not following the law of the country in which they have operations and have
legal responsibilities.
Senator S A R B A N E S . I recognize that. What I ' m trying to draw is a
distinction between following the law within that country and following its laws when that country seeks to apply it to commercial dealings
elsewhere in the world at which point the argument runs up against
an equally strong argument that they ought to pursue the law of the
home country which in effect controls and owns the corporation.
Mr. Fox. Let me just finish. I think the tough cases in law are where
there are two rights and there are two rights in this instance and there
are sovereign powers of different governments with different policies
to be pursued,. To the extent that the United States pursues its policies
in its sovereign territory and with respect to its own nationals, so long
as it does not require its nationals to violate the laws and policies of
other countries, we are OK.
The difficulty arises when conflicting commands are given to American persons and American corporations and that's really the intellectual problem that we will be dealing with, not just on this issue but
in other multinational corporation issues, for the next several decades.
Senator S A R B A N E S . There's a picture on the front of the "Conflicts
of Law" case book that's used in law school which shows a picture of
a courthouse in Tobago and the thrust of the picture is that through
351,
application of conflicts of law, the courthouse on the island of Tobago
can in effect set the commercial law for the entire world. So I appreciate the problem, but I think there's an important distinction to be made
along the lines that I suggested to you.
Senator W I L L I A M S . Y O U cited a reference.
Mr. Fox. Ray Yernon. He is a professor at the Business School at
Harvard, in an article in Foreign Affairs of January of this year on
this subject in which he cites this problem of the conflict of laws as
applied internationally to multinational corporations.
Senator W I L L I A M S . Did he in any way deal with a specific law dealing with the specific subjects as we're dealing with here, such as the
Arab boycott, whether that American law, i f it were to be an American
law, were in conflict with any specific law dealing with the Arab
boycott in other lands ?
Mr. Fox. I ' m sorry, Senator Williams. I don't really recall whether
the articles dealt specifically with that.
Senator W I L L I A M S . Y O U cited here the conflict of this legislation, i f
it were law, with a general principle of promoting trade in France.
This isn't a direct conflict. One is trade promotion. The other is specific
prohibition of specific action.
Mr. Fox. Senator, what I referred to was policy and law and I
stated specifically I didn*t know what the law of France is. The generalization that I was making was really meant to be only a generalization and not to have meaning beyond whatever quality one might associate with that.
Senator S A R B A N E S . I n this connection—if it's a real problem—if you
could cite specific situations it would be helpful.
Mr. M C N E I L L . Just recently with Prime Minister Trudeau we had a
very serious problem that fell under our Trading W i t h the Enemy
Act, which raises the same extraterritorial problem we're discussing
here. About 3 years ago the Government of Cuba placed an order with
a Canadian subsidiary of an American automotive firm for, I believe,
locomotives. A t about the same time Cuba placed an order for automotive products with a subsidiary of another American firm in Argentina. Both the Canadian Government and the Government of Argentina insisted it was their sovereign right to see that that contract
offered by Cuba was fulfilled, and they were insisting that the American subsidiaries in their respective countries fulfill the order placed
with them by Cuba.
I t caused great political and economic problems with those two
countries. The administration made an accommodation to the problem
whereby it authorized the subsidiary in Argentina and that in Canada
to fill the Cuban order in order to avoid the exacerbation of what was
then a very major political problem between the United States and
those two countries.
Passage of the proposed antiboycott legislation with extraterritorial application poses the same problem, as was illustrated by Mr.
Fox in the case of France. Extraterritorial application of United
States law not only poses very great political problems for the U.S.
Government but also for American companies who, thereby, are placed
in the middle.
I think we're all under a misunderstanding when we assume that
because an American company invests in a foreign country and may
352,
have 10 percent of control of that company, which in terms of our Internal Revenue Code I believe is the measure that constitutes control
of a foreign subsidiary—that that constitutes effective control. I f you
control 10 percent of a foreign company and somebody else controls
90 percent of that same company, and American law directs that corporation to do or not to do something with respect to our boycott legislation, then you have a real problem. The American parent quite often
does not have effective control. The management of the American company and, the management of the foreign country are then in opposition. You cannot serve two masters.
Senator W I L L I A M S . It's a good example. Coming down to what control is, I think control under this is different than IRS 10 percent ownership as indicative of control. Here we're talking about control in fact.
So it would probably under regulations come out considerably differently than the IRS but it's a good example.
Mr. M C N E I L L . But even, sir, the 5 0 percent control, somebody else
does own the other half, and the problem, is that we are extending our
jurisdiction, our legal jurisdiction, into that of another nation and
directing what its corporations shall or shall not do. That is what
troubles us.
This bill as conceived a year ago was designed to prevent the application of foreign law; that is, foreign boycotting countries' laws and
regulations, against American citizens. The bill was designed to protect
American citizens from being harassed unjustifiably by a foreign government. We think that is a legitimate purpose and it's that part of
the bill that we strongly support. But when you apply it to persons that
are abroad and are corporate citizens of other countries—just as Hoffman LaRoche in New Jersey is subject to the laws of that State and
this country—you create unnecessary problems. I t would be very difficult for us to accept the Swiss Government directing Hoffman LaRoche
as to what it can or cannot do. Certainly i f it directs that corporation in
New Jersey to take a position different from that of the U.S. Government, we here would find that obiectionable.
Extraterritoriality is very difficult here and abroad. We'd like to see
it eliminated from S. 69 and S. 92.
Senator S T E V E N S O N . Mr. Chairman, I apologize for not being here
earlier. I had to attend a meeting of the Intelligence Committee and I
thank Senator Proxmire for chairing in my absence.
I have just a few questions. One of the bills permits negative certificates of origin. The other does not. Have you addressed yourselves
to that issue and, if not, will you ?
Mr. M C N E I L L . Senator Stevenson, in the case of E C A T , the group
I ' m representing here, I think wTe would not like to see S. 92 requirements that a negative certificate not be allowed if the result of that
would be to put us in direct confrontation with those countries whose
law it is to require negative certificates.
We understand that some of the Arab League countries are changing
their requirements and that they are willing to accept the positive
certificate.
As far as we're concerned, we just don't want to see American companies put in between two political sovereignties. I f a positive certificate is acceptable to the boycotting countries, then it's certainly
acceptable to us. But we would hate to see a law passed that would put
353,
American companies in between two different legal and political
requirements where both cannot be satisfied at the same time.
Senator S T E V E N S O N . Does that answer satisfy all of you?
Mr. Fox. Speaking for the NAM, Senator Stevenson, we would
prefer the language of your bill, S. 69.
Senator S T E V E N S O N . And the other question was about the effect of
provisions in S. 92 with respect to the visa requirements of foreign
countries. Have you analyzed those provisions and, if so, what would
be the effect of them on the business relationship between a U.S. company and a foreign country i f that foreign country denied a visa to
one of its employees for racial, religious, or boycott related reasons ?
Mr. M C N E I L L . Senator Stevenson, again, the visa issue is certainly
part and parcel of the whole problem of boycotts that we're talking
about, but the visa problem has been a problem for about 200 years.
Saudi Arabia for at least that period of time has required visas for its
own political purposes. We prefer that part of S. 69 that recognizes
that there is a visa problem and that allows that problem to be accommodated. That was in the agreement reached between the Senate-House
conferences last fall and we support it.
Without that accommodation, I can conceive of American construction companies, particularly, or companies with service contracts in
Arab lands, being put in extremely difficult positions. I t may be that the
prospective Arab customer may not want to go through all the harassment of the visa problem that would be involved and simply switch
the contract to another country or not even bother to talk with the
prospective American business concern at all. We strongly support the
visa provisions of your bill.
Mr. Fox. Senator Stevenson, N A M also prefers the position of your
bill, S. 69, in that respect.
Mr. C A R L S O N . The chamber feels the same way.
Senator S T E V E N S O N . Any further questions ?
Senator P R O X M I R E . I just would like to take a minute. I realize we
have other witnesses and the hour is very late. It's 12 :30, but I would
like to just point out, in the first place, Mr. McNeill, I think we can
clarify our difference of opinion by pointing out that you and I kind
of missed each other's point a little bit by taking different sections of
the bill. I ' m talking about S. 69. You're right that that refers to a
particularly boycotted country, but where i t affects the boycott of a
particular concern that's where S. 69 reaches the action. I t doesn't have
to be pursuant to an agreement and it's there that it seemed to us, at
least to me, that your position would permit an avoidance of an effective law. Do you see my point?
Mr. M C N E I L L . I see your point but I don't agree with it.
Senator P R O X M I R E . Well, that's direct.
Then the other point with respect to the discussion we have had
about American controlled firms located abroad, No. 1, i f we don't
apply this to American firms abroad we're going to lose jobs. What's
going to happen I suppose is the economic effect is going to be that the
job done by American firms located abroad will be done with foreign
labor and with a great deal of benefit for foreign economies and with
a loss on the part of the American economy. I t would have that practical effect.
354,
No. 2, it seems to me a very practical resolution of this is that i f an
American controlled firm is located in France, for instance, i f it refuses to buy from an American blacklisted firm, then our law should
apply. On the other hand, i f an American controlled firm located i n
France refuses to buy from a blacklisted French firm, then I could
understand why French law would apply. I think that would be a
practical solution.
Mr. M C N E I L L . I think that there is a practical solution possible that
may incorporate some of what you just said, but there are also ways to
accommodate the difference. I f the fear is that by not having an extraterritorial provision in the bill Americans w i l l circumvent the intent
of U.S. law, then there are ways around that. Both statutory language
and legislative history could make i t clear that i f an American firm
purposefully and with intent to avoid domestic law switched, for example, an export order placed wTith it by an Arab customer to an
overseas subsidiary, then that would clearly be a circumvention of U.S.
law and would be prohibited.
On the other hand, i f an Arab customer places an order directly with
a French corporation in which there happens to be U.S. capital, I don't
see why U.S. law should prevent that transaction from being consummated. So I think there is room for accommodation.
Senator P R O X M I R E . I have a number of other questions, Mr. Chairman, I ' d like to submit to this panel. It's a good panel and I ' d like to
get their reactions.
Senator S T E V E N S O N . Very well. The questions w i l l be submitted and
the answers w i l l be entered in our record.
Mr. Fox. I f I might respond to Senator Proxmire, I think that concern of the committee as you expressed them, with respect to the effect
on employment in the United States, is certainly a very important one
and we'd be happy to explore any alternative, the purpose of which was
to make sure that the objectives of the principles which we have stated
in our testimony w i t h respect to nondiscrimination, could be carried out
in such a way as to eliminate or at least minimize any adverse effect
on employment in the United States. It's our desire to maximize employment in the United States, and I think there have been expressed
by others legitimate concerns, that the application of either one of the
two proposals before the committee today might have the effect of adversely affecting employment in the United States.
I think it's very important to t r y to avoid that.
Senator S T E V E N S O N . Y O U might also give us your views about the extent to which, i f any, this legislation would adversely and unintentionally affect the business activities of American-based firms in parts
of the world outside of the Middle East. Leave aside the extraterritorial question you were discussing. How would it affect activities of
American firms in Africa or Turkey or Taiwan or other places where
I don't think it's intended to have an effect, but might unintentionally
now or, as far as you can tell, in the very near future.
Mr. Fox. Senator Stevenson, I think that's a very important question. I ' d like to make this observation. We're talking about an extension of the Export Administration Act. I think a fair reading of the
history of the application of that act extraterritorially could not lead
one to the conclusion other than that it has had the effect of causing
certain other countries to build up their industries because they could
not rely on the United States as a source of supply.
355,
I offer this as a personal opinion, not as a position of the National
Association of Manufacturers. I personally have no doubt that the
building of the computer industry in France was a direct response to
the denial of computer equipment for export from the United States
to France in the periods in which the application of U.S. export controls had as a strategic objective certain points of protection of U.S.
strategic interests involving the use of computers. So there isn't any
question that countries
Senator S T E V E N S O N . But you're answering your own question. My
question is about the antiboycott provisions of this legislation which
have not become law as yet and the extent to which, i f any, they will
adversely affect the American business activities in other parts of the
iworld. Don't give us the answer now unless you've got a quick
answer to that. I think it deserves some more thought. But i f you have
an answer and with some specificity can tell us about unintentional effects in such regions as I have already mentioned or elsewhere, that
would be of interest to the committee.
Any further comments or questions? I f not, thank you, gentlemen.
[The following information was received for the record. Replies to
questions concerning testimony of the National Association of Manufacturers were received for the record and may be found at page 599 of
this volume.]
356,
ADVANCING VOLUNTARY LEADERSHIP IN A CHANGING WORLD
Chamber of Commerce of the United States
« STREET.
N.W.
WASHINGTON, D.C. 20062
JACK CAM.SON
VICE PRESIDENT. CHIEF ECONOMIST
2O20SS-81SO
March 21, 1977
©
®
Senator William Proxmire
Chairman
Banking, Housing and Urban A f f a i r s
Committee
Room 5304
Oirksen Senate O f f i c e Building
Washington, D.C. 20510
Dear Mr. Chairman:
I?
At the conclusion o f my testimony before Senator Stevenson's
subcommittee on i n t e r n a t i o n a l finance on February 22, presenting the
National Chamber's views on the Export Administration Act extension,
you indicated that you would appreciate answers t o s p e c i f i c questions
about the antiboycott provisions o f S. 69 and S. 92.
Some o f the questions s o l i c i t information which i s not a v a i l a b l e
to our association, and can only be answered by businessmen. Others ask
us t o a n t i c i p a t e the reactions o f our members t o s p e c i f i c l e g i s l a t i o n
proposals, and our answers could only be based on speculation. I n general,
we have answered a l l the questions t o the best o f our a b i l i t y , and I hope
that our responses w i l l be h e l p f u l t o you and the members o f your committee
i n your consideration o f t h i s important issue.
Sincerely.
Enclosure
cc:
Committee members
357,
C h a m b e r o f C o m m e r c e o f t h e U n i t e d States o f A m e r i c a
Washington
REPLIES TO QUESTIONS FROM SENATOR PROXMIRE
CONCERNING U.S. CHAMBER OF COMMERCE TESTIMONY on
EXPORT ADMINISTRATION ACT EXTENSION (S. 69, S. 92)
Question 1
Why would you p r e f e r t o have the l e g i s l a t i o n penalize agreements
t o take a c t i o n t o comply w i t h the boycott r a t h e r than the t a k i n g o f t h a t
a c t i o n i t s e l f ? Why i s i t good p u b l i c p o l i c y to penalize agreements to
take c e r t a i n a c t i o n s but not the acts themselves? Wouldn't t h a t j u s t be
a t r a p f o r the unwary? Anyone who i s f a m i l i a r w i t h the law would take
care not to agree i n the f i r s t instance. I t would, t h e r e f o r e , appear t h a t
the o n l y ones who might be caught by a p r o h i b i t i o n s o l e l y on agreements
are those who are u n f a m i l i a r w i t h the law, those who can a f f o r d counsel to
help them avoid making the proscribed agreements, or someone who by inadvertance "agrees" and then draws back. Why does t h a t make any sense?
What p r e c i s e l y would c o n s t i t u t e an "agreement" f o r these purposes?
For example, assume a company signs a c o n t r a c t t o s e l l goods to a boyc o t t i n g country. The c o n t r a c t contains no boycott clause, nor does i t
r e q u i r e the company t o comply w i t h the laws o r r e g u l a t i o n s of the b o y c o t t i n g
country. The company then r e f r a i n s from buying goods from or otherwise
d e a l i n g w i t h b l a c k l i s t e d companies i n f u l f i l l i n g the c o n t r a c t . Would t h a t
be a v i o l a t i o n o f the law under your formulation? I f n o t , why not?
Reply: The Chamber o f Commerce of the United States b e l i e v e s t h a t U.S.
persons should not agree to r e f r a i n from doing business g e n e r a l l y w i t h any
other U.S. person as a c o n d i t i o n o f doing business i n a b o y c o t t i n g country.
The language contained i n the b i l l s c u r r e n t l y being considered by the
Senate i s ambiguous i n t h i s respect. While both S. 69 and S. 92 note t h a t
the absence of a business r e l a t i o n s h i p would not i n i t s e l f be considered a
v i o l a t i o n of the law, S. 92 r a i s e s the p o s s i b i l i t y t h a t a f i r m could be i n
v i o l a t i o n o f Section 201(a) merely because of a p a t t e r n o f i t s supply or
sales arrangements—arrangements t o t a l l y unrelated t o b o y c o t t matters—
which was a l l e g e d t o be the r e s u l t of compliance w i t h the p r o s c r i p t i o n s of
the b o y c o t t i n g c o u n t r y . The language of S. 69 i s s l i g h t l y more s p e c i f i c ,
since i t i m p l i e s t h a t the absence of a business r e l a t i o n s h i p , i f i t were
caused by i n t e n t t o f u r t h e r or comply w i t h a boycott o f a country f r i e n d l y
t o the United S t a t e s , would be a v i o l a t i o n of Section 201(a). I n e i t h e r
case, however, the l e g i s l a t i v e language i s s u f f i c i e n t l y vague t h a t an
American f i r m might f i n d i t s e l f i n the p o s i t i o n o f u n w i t t i n g l y v i o l a t i n g
U.S. law i n the course of operations u n r e l a t e d t o the p r o v i s i o n s of any
boycott of a country f r i e n d l y t o the United States.
358,
The statement of p r i n c i p l e s prepared by the Anti-Defamation League
of B ' n a i B ' r i t h and the Business Roundtable includes the p r i n c i p l e that
"No U.S. person may r e f r a i n from doing business w i t h any other U.S. person
pursuant to an agreement w i t h a f o r e i g n country, i t s nationals or residents
i n order to comply w i t h , f u r t h e r or support a f o r e i g n b o y c o t t . " This language,
c l e a r l y consistent w i t h the National Chamber's stated p r i n c i p l e , supports
the view that the l e g i s l a t i o n should penalize actions taken pursuant to an
agreement. Such actions c l e a r l y would involve i n t e n t to comply w i t h a
boycott requirement, and should be proscribed. Actions taken without
reference to a boycott requirement, and decisions made according to c l e a r l y
recognized and l e g i t i m a t e commercial considerations, should not be proscribed
whether or not they are consistent w i t h boycott requirements, since the i n t e n t
to comply i s not present.
Secretary of State Vance, i n his testimony before the subcommittee on
February 28, said that
"Refusals by American firms to deal w i t h any f r i e n d l y f o r e i g n country,
demonstrably r e l a t e d to a f o r e i g n boycott, should be p r o h i b i t e d . So,
i n general, should refusals to deal w i t h other U.S. f i r m s . "
He went on to say t h a t the p r i n c i p l e raised d i f f i c u l t questions about enforcement, since such enforcement would depend on i n t e r p r e t a t i o n s of a company's
i n t e n t when i t does not do business w i t h a f r i e n d l y f o r e i g n country or w i t h
an American company. For t h i s reason, i t i s necessary t h a t the p r o h i b i t i o n
apply to acts taken pursuant to an agreement to f u r t h e r or to support a f o r e i g n
boycott. The secretary added that i t would be necessary to provide American
companies w i t h " c l e a r and r e a l i s t i c guidance i n b o y c o t t - r e l a t e d s i t u a t i o n s . "
We believe t h a t a p r o h i b i t i o n on "acts taken pursuant to an agreement to
comply w i t h , f u r t h e r or support any boycott" would c o n s t i t u t e c l e a r and r e a l i s t i c guidance.
The d e f i n i t i o n of what would c o n s t i t u t e an agreement f o r the purposes
of the Act i s a d i f f i c u l t one, but any such d e f i n i t i o n must take i n t o account,
as noted i n our testimony, that
"United States law and r e g u l a t i o n . . . c a n n o t a f f e c t the r i g h t of other
countries to accept or exclude goods or services from any source."
Secretary Vance observed t h a t
" s t a t e s do exercise t h e i r sovereign r i g h t s t o regulate t h e i r commerce,
and...have the r i g h t to c o n t r o l the source of t h e i r imports as w e l l as
the d e s t i n a t i o n of t h e i r e x p o r t s . "
L e g i s l a t i o n which does not respect that r i g h t w i l l have the e f f e c t of preventing
American companies from complying w i t h the import regulations of other c o u n t r i e s ,
w i t h no clear b e n e f i t to any of the p a r t i e s involved and at the r i s k of e l i m i n a t i n g
exports to those countries.
359,
I n the example c i t e d i n the question, the American f i r m should not
be subject to the r i s k of prosecution f o r having respected the l e g a l
requirements of the importing country. I f , however, the f i r m r e f r a i n s from
doing business w i t h b l a c k l i s t e d companies i n other transactions unrelated to
f u l f i l l m e n t of* the order destined f o r the boycotting country, i t would v i o l a t e
the Act.
Question 2
What i s your p o s i t i o n on the exception contained i n S. 69 but not
S. 92 f o r compliance w i t h the passport or immigration requirements of the
boycotting country. By i m p l i c a t i o n S. 69 would permit a company whose
employees cannot secure a visa nonetheless to go forward w i t h a project i n
a boycotting country. Do you support that approach or do you f e e l that a
company should be required to refuse the business?
Reply: Our statement noted that corporations should be able " t o require that
an applicant f o r employment f u l f i l l c e r t a i n requirements—including being
able to meet the immigration or other requirements of a country where the
opportunity e x i s t s . " During the hearings on February 22, 1977, Dr. Jack
Carlson, t e s t i f y i n g f o r the Chamber, noted that we found the provisions i n
S. 69 r e l a t i n g to passport and immigration regulations preferable to the
comparable provisions i n S. 92.
Question 3
Some contend that a n t i - b o y c o t t l e g i s l a t i o n should permit a U.S.
company to comply w i t h a requirement that i t s shipments not contain goods
or components produced by b l a c k l i s t e d f i r m s . But such an exception would
v i r t u a l l y n u l l i f y the r e f u s a l to deal provisions of the l e g i s l a t i o n . Why
should an American company be permitted to exclude goods manufactured by
b l a c k l i s t e d companies i n order to gain trade opportunities i n a boycotting
country? Why shouldn't American companies doing business i n the Arab states
be required to provide equal access to a l l companies who can meet required
commercial standards?
Reply: I f the l e g i s l a t i o n does not permit American exporters to provide
negative c e r t i f i c a t i o n where required by the import regulations of an imp o r t i n g country, the l i k e l y r e s u l t w i l l be the loss of such trade opportunities
w i t h no apparent b e n e f i t . I f the law contains a p r o h i b i t i o n on providing such
documentation, the successful e f f o r t s of the business community and the
Department of State to secure voluntary changes i n such documentary requirements by f o r e i g n governments w i l l be undermined. Furthermore, such a p r o h i b i t i o n would not take i n t o account the fundamental d i s t i n c t i o n between refusing
to use the products of a b l a c k l i s t e d company i n f u l f i l l m e n t of an export
order destined f o r a boycotting country, and r e f r a i n i n g from doing business
generally w i t h a boycotted company as a condition of doing business w i t h the
boycotting country. The l a t t e r should be c l e a r l y proscribed, but the former
simply respects the sovereign r i g h t s of foreign countries to regulate t h e i r
foreign trade.
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Question 4. a.
Some recommend the exclusion of f o r e i g n subsidiaries and a f f i l i a t e s
from the reach of the law. But wouldn't doing so open up an enormous loophole by p e r m i t t i n g U.S. companies to source t h e i r Arab country transactions
through t h e i r f o r e i g n subsidiaries and thus avoid U.S. law altogether?
b.
I f the b i l l were to exempt from the reach of the l e g i s l a t i o n the business
dealings of U.S. foreign subsidiaries outside the U.S. (not t h e i r dealings w i t h
U.S. companies), what do you t h i n k the reaction of U.S. companies would be?
Would they source t h e i r transactions w i t h the Arab states wholly outside the
United States? I n other words would the economic b e n e f i t s which otherwise
would have come to the U.S. be d i v e r t e d elsewhere?
Reply: The Export Administration Act should not seek to assert j u r i s d i c t i o n
over f o r e i g n e n t i t i e s , which would place the subsidiaries and a f f i l i a t e s of
American firms i n the p o s i t i o n of possible c o n f l i c t w i t h the laws or p o l i c i e s
of the foreign government. The use of f o r e i g n subsidiaries i n a manner
intended to circumvent the law should, however, be p r o h i b i t e d .
Question 5
S. 69 would permit issuance of negative c e r t i f i c a t e s of o r i g i n ; S. 92
would not. I don't believe any of you addressed t h i s issue i n your testimony,
at least e x p l i c i t l y . What i s your p o s i t i o n on negative c e r t i f i c a t e s of o r i g i n ?
Should they be banned?
Reply: Since the use of negative c e r t i f i c a t e s of o r i g i n t y p i c a l l y r e l a t e s to
the enforcement of a primary boycott—which advocates of the pending l e g i s l a t i o n e x p l i c i t l y exempt from the coverage of the Act—the National Chamber
believes that the language contained i n S. 69 p e r m i t t i n g the issuance of
negative c e r t i f i c a t e s of o r i g i n i s preferable to the comparable provisions of
S. 92 p r o h i b i t i n g the use of such negative c e r t i f i c a t e s .
Question 6
I n testimony before the Committee a number of business representatives
contended that enactment of the pending l e g i s l a t i o n would r e s u l t i n a substant i a l loss of exports and jobs. At least one of them contended that the l e g i s l a t i o n would close them down. What i s your assessment of the impact? Have
you studied the question? I f you conclude that there would be an adverse impact,
please be s p e c i f i c as to how and why? What boycott compliance actions do your
member firms now take t h a t they would be barred from taking under the proposed
legislation?
Reply: The National Chamber believes t h a t the pending l e g i s l a t i o n , since i t
would p r o h i b i t American firms from complying w i t h the import requirements of
boycotting countries, would e f f e c t i v e l y create a counter-embargo. This would
r e s u l t i n considerable loss of exports and jobs. Although the National
Chamber has not made an e f f o r t to q u a n t i f y the extent of t h i s adverse impact,
other witnesses presented well-documented examples of the e f f e c t such l e g i s l a t i o n
would have on s p e c i f i c i n d u s t r i e s . Based on such f i n d i n g s , the National Chamber
believes that the l e g i s l a t i o n could have a severe adverse impact on American
exports and domestic employment.
361,
Question 7
What i s the most common form of boycott compliance among the companies
you represent? C e r t i f i c a t e s of o r i g i n ? C e r t i f i c a t i o n that your shipments
contain no goods or components manufactured by b l a c k l i s t e d firms or that the
transaction i n question did not involve a b l a c k l i s t e d company? Which?
Reply: We do not have t h i s data, but several congressional committees,
together w i t h p r i v a t e organizations, have analyzed the data c o l l e c t e d and
released by the Department of Commerce, and these analyses are i n the public
record.
Question 8
I f the pending l e g i s l a t i o n were enacted, how are the companies which
you represent most l i k e l y to respond? What, i f any, changes i n t h e i r practices
or operations are l i k e l y to ensue? Would they foreign-source t h e i r sales i n
an attempt to escape the law?
What would they do w i t h respect to trade or investment i n Israel?
Would the p r o h i b i t i o n on refusals to do business w i t h I s r a e l have a c h i l l i n g
e f f e c t on t h e i r w i l l i n g n e s s to explore business opportunities there? Would
U.S. companies which otherwise might have explored business opportunities i n
I s r a e l be r e l u c t a n t to do so f o r fear that i f they decided not to go forward
a f t e r making i n i t i a l exploration they might be accused of an i l l e g a l r e f u s a l
to do business?
Reply: The information requested i n t h i s question can only be a u t h o r i t a t i v e l y
provided by the companies involved, since the National Chamber has not conducted
a survey of i t s membership addressing t h i s question. Given the ambiguities
contained i n the l e g i s l a t i o n , however, i t i s reasonable to suggest that
American firms which otherwise might explore business opportunities i n I s r a e l
would r e f r a i n from doing so, since they could be considered to be i n v i o l a t i o n
of the p r o h i b i t i o n against refusing to deal w i t h countries f r i e n d l y to the
U.S. i f no r e l a t i o n s h i p were to r e s u l t from the i n i t i a l exploration.
Question 9
What e f f e c t would the p r o h i b i t i o n against f u r n i s h i n g information
about whether you have or propose to have business r e l a t i o n s w i t h b l a c k l i s t e d
firms or w i t h the boycotted country have on your operations? Would you s t i l l
supply l i s t s of p o t e n t i a l subcontractors to c l i e n t s i n the boycotting country?
I t ' s quite possible that such a c t i o n would be i l l e g a l because such information
i n fact discloses whether you have or propose to have business r e l a t i o n s w i t h
b l a c k l i s t e d firms or a boycotted country. I s t h i s a r e a l problem or merely
hypothetical? Are there frequent occasions where U.S. firms supply l i s t s of
subcontractors or vendors f o r l e g i t i m a t e business reasons, reasons wholly
unrelated to the boycott? I t so, please describe. Have you thought about
ways to modify t h i s p r o h i b i t i o n so as to avoid having i t reach l e g i t i m a t e
information exchange situations? Please describe a l l non-boycott r e l a t e d
information exchange s i t u a t i o n s which might be reached by the proposed
prohibition.
362,
Reply: This question can only be addressed to companies themselves, or
by other groups more f a m i l i a r w i t h the practices of s p e c i f i c i n d u s t r i e s .
Question 10
What e f f e c t would the pending l e g i s l a t i o n have on U.S. companies
a c t u a l l y located i n the boycotting country? The b i l l s contain no exceptions
f o r compliance w i t h l o c a l laws f o r companies s i t u a t e d i n a boycotting
country. Can that problem be dealt w i t h without opening up an i n v i t a t i o n
f o r evasion?
Reply: The l e g i s l a t i o n , as c u r r e n t l y d r a f t e d , would place the s u b s i d i a r i e s
of American firms resident i n boycotting countries i n a c l e a r l y untenable
p o s i t i o n , since business could not be conducted without v i o l a t i n g the law
of the host country or of the United States. Since the subsidiary i s
organized under the laws of the host country and i s expected to behave as
a n a t i o n a l of that country, and because the host country has a c l e a r l y
greater i n t e r e s t i n the behavior of f o r e i g n residents w i t h i n i t s borders
than the foreign country would have, the f o r e i g n resident should not be
p r o h i b i t e d from complying w i t h l o c a l law.
Question 11
The p r i n c i p l e s which you espouse are v i r t u a l l y i d e n t i c a l to those
contained i n the pending l e g i s l a t i o n — n o d i s c r i m i n a t i o n on the basis of
race, r e l i g i o n , or n a t i o n a l o r i g i n and no refusals to deal w i t h b l a c k l i s t e d
American companies. Where there appears to be disagreement i s on how those
p r i n c i p l e s can be guaranteed and to whom the l e g i s l a t i o n should apply. But
there seems to be agreement on the basic p r i n c i p l e s . The major d i f f e r e n c e s
seem to be (a) whether the law should apply to agreements to boycott rather
than actions i n support of the boycott; (b) whether the law should apply to
f o r e i g n subsidiaries and a f f i l i a t e s ; (c) whether the law should permit
American companies to exclude the goods or components of b l a c k l i s t e d firms
from shipments to the boycotting country; and (d) whether the law should
permit an exception f o r compliance w i t h v i s a or immigration requirements.
There are other d i f f e r e n c e s , but these seem to be the main ones. Do you
agree?
Reply: The points summarized i n the question are c o r r e c t l y i d e n t i f i e d as
the c e n t r a l issues i n the debate, and the National Chamber's p o s i t i o n on
these and r e l a t e d issues i s as f o l l o w s :
— t o e s t a b l i s h a v i o l a t i o n , the law should require proof of an
agreement to comply w i t h , f u r t h e r , or support a boycott;
—U.S. firms should be able to respect and comply w i t h the passport
and immigration regulations of the countries i n which they do
business;
—U.S. firms should be protected from l e g a l l i a b i l i t y as a consequence of compliance w i t h the import and export regulations
and requirements of f o r e i g n c o u n t r i e s ;
—the law should apply to f o r e i g n subsidiaries only to the extent
that i t would p r o h i b i t the use of subsidiaries to circumvent
the provisions of the law;
363,
— r e p o r t i n g requirements should be s i m p l i f i e d and consolidated; and
—the i d e n t i t y of the reporting person should be kept c o n f i d e n t i a l
except i n cases where v i o l a t i o n s of the law take place.
Question 12
On page 6 of your testimony, you state as a p r i n c i p l e that "U.S.
persons should not agree to r e f r a i n from doing business w i t h or i n the
boycotted country as a condition of doing business i n a boycotting country."
You go on to say that "U.S. persons should not agree to r e f r a i n from doing
business generally w i t h other U.S. persons as a condition of doing business
i n a boycotting c o u n t r y . " (Emphasis added.)
You seem to be placing heavy emphasis on agreeing to r e f r a i n from
doing business. But you also state on page 6 that "any attempt by a boycotting
country to compel persons outside i t s j u r i s d i c t i o n to modify t h e i r conduct
i n regard to a boycotted country should be opposed." (Emphasis added.) You
also say on page 6 that i t i s an established p r i n c i p l e of U.S. law and practice
f o r U.S. firms not to discriminate against any p o t e n t i a l group of employees,
customers, or suppliers.
I f , as you say, we should oppose "any" attempts to coerce U.S. firms
to modify t h e i r behavior and i f i t i s against U.S. p r i n c i p l e to discriminate,
why do you want the law to be confined to agreements to boycott or discriminate?
A r e n ' t you being inconsistent?
Reply: The law must penalize actions taken pursuant to an agreement to comply
w i t h , f u r t h e r , or support a boycott i n order to ensure that an act which
takes place without reference to the requirements of a boycotting country, but
which could be construed as consistent w i t h a p a t t e r n of behavior complying
w i t h boycott requirements, would not be a v i o l a t i o n of the law.
Question 13
On page 7 of your testimony, you state that i f the law applies to
f o r e i g n subsidiaries and a f f i l i a t e s , "such subsidiaries or a f f i l i a t e s would
o f t e n have to make a choice between v i o l a t i n g the law of the country where
i t i s based and does business or v i o l a t e the law of the parent company where
i t i s located." What do you mean by that? We are aware of no f o r e i g n country
outside the Arab League which makes i t a v i o l a t i o n of the law not to comply
w i t h the Arab boycott. So how would f o r e i g n subsidiaries which obey U.S. law
against compliance w i t h c e r t a i n aspects of the boycott v i o l a t e the law of a
foreign country?
Reply: Many foreign countries have adopted formal p o l i c i e s which require the
subsidiaries of f o r e i g n firms operating i n t h e i r countries to behave as i f
they were nationals of the host country. I f coverage of the Export Administration
Act were extended to the f o r e i g n subsidiaries and a f f i l i a t e s of American companies, those subsidiaries and a f f i l i a t e s would be subject to the sovereign
power of the United States and could not behave as nationals of the host country.
85-654 O - 77 - 24
364,
Question 14
On page 6 of your testimony, you s t a t e t h a t e x i s t i n g c i v i l r i g h t s
laws already generally p r o h i b i t d i s c r i m i n a t i o n against persons on the basis
of race, c o l o r , r e l i g i o n , sex, or n a t i o n a l o r i g i n pursuant to a boycott
r e l a t e d request. But that i s not q u i t e r i g h t . The c i v i l r i g h t s laws do
p r o h i b i t employment d i s c r i m i n a t i o n , but as the Justice Department pointed
out i n testimony before t h i s Subcommittee i n 1975, " w i t h l i m i t e d exceptions,
none of which have s i g n i f i c a n t a p p l i c a t i o n to the present problem, Federal
c i v i l r i g h t s laws do not p r o h i b i t p r i v a t e d i s c r i m i n a t i o n i n the s e l e c t i o n
of contractors or the treatment of customers." (Emphasis added.) Do you
agree?
Reply: Boycott-related requests r a r e l y , i f ever, ask f o r information about
the r e l i g i o u s or r a c i a l composition of a c o r p o r a t i o n ' s management or board
of d i r e c t o r s , and several Arab countries have stated that the boycott i s not
d i r e c t e d against any p a r t i c u l a r r e l i g i o u s or r a c i a l group, but against I s r a e l .
Hence, such d i s c r i m i n a t i o n i s not at issue.
Question 15
On page 7 of your testimony, you s t a t e t h a t the boycott reports
should be made public only i f a company i s charged w i t h a v i o l a t i o n of
the regulations. Why shouldn't the public have f u l l information about the
nature and extent of boycott demands and compliance by U.S. companies? Why
should we perpetuate secrecy i n t h i s area?
Reply: Disclosure of the i d e n t i t y of firms f i l i n g boycott reports w i t h the
Commerce Department creates the i n c o r r e c t impression that such firms are
complying w i t h boycott demands when, i n f a c t , they are complying w i t h U.S.
law. The National Chamber believes that disclosure of reports which delete
the name of the r e p o r t i n g f i r m would provide f u l l information to the p u b l i c .
I n the cases where a v i o l a t i o n of the law has taken place, the i d e n t i t y of the
r e p o r t i n g f i r m should be disclosed.
Question 16
On page 7 of your testimony, you appear to r e s t your argument i n
favor of Federal pre-emption on grounds that the r e g u l a t i o n of f o r e i g n
commerce i s the r e s p o n s i b i l i t y of the Federal government. But w i t h l i m i t e d
exceptions, most of the s t a t e statutes are based on c i v i l r i g h t s or a n t i t r u s t n o t i o n s , not the r e g u l a t i o n of f o r e i g n commerce. And there i s ample
precedent f o r s t a t e c i v i l r i g h t s and a n t i - t r u s t laws being sustained against
C o n s t i t u t i o n a l challenge. Are there b e t t e r arguments f o r pre-emption? What
about the d i v e r s i o n of business from states which do have boycott statutes
to those which do not? I s there any evidence of that?
Reply: Although the various state and municipal laws dealing w i t h f o r e i g n
boycotts are based on c i v i l r i g h t s or a n t i t r u s t p r i n c i p l e s , they purport to
a f f e c t the f o r e i g n commerce of the United States. Since t h a t i s the case,
they should be c l e a r l y preempted by federal l e g i s l a t i o n . While business may
have been d i v e r t e d from states which have enacted antiboycott statutes to those
which have n o t , the best argument supporting f e d e r a l preemption rests on the
federal r e s p o n s i b i l i t y to regulate f o r e i g n commerce.
365,
Senator S T E V E N S O N . The next witnesses are Gerald Ullman, National
Customs Brokers & Forwarders Association of America, Inc., general
counsel; W. Gregory Halpin, deputy port administator of the Maryland Port Administration, representing the American Association of
Port Authorities; and Gilbert M. Weinstein, vice president for international affairs, New York Chamber of Commerce and Industry.
Gentlemen, I would hope that you could summarize your statements
in which case the full statements will be entered in the record. May
we proceed with you, Mr. Ullman.
STATEMENT OF GERALD ULLMAN, GENERAL COUNSEL, NATIONAL
CUSTOMS BROKERS & FORWARDERS ASSOCIATION OF AMERICA,
INC.
Mr. U L L M A N . My name is Gerald H. Ullman. I ' m general counsel of
the National Customs Brokers & Forwarders Association of America,
Inc., One World Trade Center, city of New York. The association is
composed of approximately 400 licensed ocean freight forwarders and
customs brokers. Affiliated with our group are 21 local forwarderbroker associations in our major ports. The combined membership of
the national and local associations is responsible for handling the vast
bulk of general cargo exported from the United States.
One of the forwarder's principal roles is to advise his exporter which
port is best suited for the dispatch of his merchandise. I n rendering
such advice in the past, the forwarder concerned himself with such
matters as inland freight costs to the pier, vessel service at the port,
congestion and other factors that would determine the most efficient
port for the movement. Within the last year, however, the forwarder
has been required to advise his exporter with respect to a new area;
namely, the requirements of State antiboycott laws which in varying
degrees limit the ability of exporters to move cargo through certain
ports. A t the present time there are six States that have such laws:
New York, Illinois, California, Massachusetts, Ohio, and Maryland.
I t is reasonable to expect other States to follow.
The serious problem faced by U.S. exporters with respect to these
State laws can best be illustrated by a specific example. Let us suppose that an American supplier has a contract with an Arab purchaser
for a large sized project movement, such as roadbuilding equipment
or a hospital. Let us further suppose that the shipments will move
from an Illinois plant through the ports of Baltimore and New York.
The exporter, and probably his lawyer, and the forwarder must become intimately familiar with the boycott laws of Illinois, Maryland,
and New York, with the regulations issued thereunder and with the
administrative interpretations and decisions by the State regulatory
agencies and courts. This is a most onerous burden for the exporter to
bear and when it is kept in mind that he must also be familiar with
and comply with a Federal antiboycott law and its detailed regulations, it is clear that an American exporter wilHbe enveloped in a mass
of Federal and State regulations which hinder and obstruct his ability to sell his product overseas. Our foreign competitors suffer no
such impediment.
I f I can interpolate for just a second on that, one certification that
is usually required in every shipment to Arab consignees is by the vessel. That is, the vessel certifies that it is not under any Arab blacklist.
366,
That's a standard certification. Well, that certification is probably unlawful in the State of New York. I t would probably be permitted in
the State of Maryland. I don't know, Senator Stevenson, what it would
be in Illinois. Under our Federal law, it would be considered a restrictive trade practice which is reportable, not prohibited but reportable,
and it would have to be reported by not only the exporter but the forwarder, the ocean carrier and the bank that's maybe handled the letters
of credit. So you have four different agencies reporting that same
transaction.
The sale of our merchandise to foreigners involves the movement of
goods in our interstate and foreign commerce and our relationships
with other nations. We believe this to be a matter of Federal concern
exclusively and not an area for nonuniform State regulation. A single,
national policy to be applied uniformly to all citizens of the United
States is obviously required. We recommend strongly, therefore, that
any Federal enactment should include a preemption clause which would
make inapplicable any State law or regulation on boycotts.
Thank you very much.
Senator S T E V E N S O N . Thank you, sir.
Mr. Halpin.
STATEMENT OF W. GREGORY HALPIN, DEPUTY PORT ADMINISTRATOR OF THE MARYLAND PORT ADMINISTRATION, REPRESENTING THE AMERICAN ASSOCIATION OF PORT AUTHORITIES
Mr. H A L P I N . Mr. Chairman, gentlemen, my name is W. Gregory
Halpin. I ' m the deputy port administrator of the Maryland Port Administration but appear before you this morning in my capacity as
chairman of the Committee X I of the American Association of Port
Authorities.
You have our statement and I will simply highlight it, first, by saying that the American Association of Port Authorities is an organization comprised of port authorities both public and private of the
Western Hemisphere. On matters affecting U.S. legislation, only
American members of the association vote. And in line with that, the
association has passed a resolution which we call Resolution F-22
which was passed to deal with the matter of boycotts and which
strongly endorses antidiscrimination legislation; it also strongly
endorses Federal preemption of State laws dealing with restrictive
trade policies and practices. Of course you're well aware of the number of States that have introduced legislation, including my own State
of Maryland.
I might add, and we have given some examples in our testimony to
some of the problems which we feel we'll be faced unless Federal legislation preempts State legislation in this area, we reemphasize again
our strong support of the Federal legislation.
Questions which the association addressed to itself as its convention
when Resolution E-22 was passed, were for instance: What effect has
the law of Ohio had on foreign discriminatory boycotts other than to
make shippers apprehensive about using the Port of Cleveland to
ship goods to a nation espousing such a boycott, even though that
shipper may not have agreed to do one discriminatory activity ? Why
should shippers in a large State with many excellent ports, such as
367,
California, divert the cargoes to ports thousands of miles away for
no other reason than uncertainty over a State antiboycott law being
challenged in Federal court for its constitutionality and not even
being enforced by State officials? How many shippers or steamship
lines have been charged for violating the State antiboycott laws ?
The questions could go on, Mr. Chairman, and understandably
shippers are uneasy knowing that they could be fined $50,000 under
the Maryland boycott law for doing an act which has no fine under
the Massachusetts law or for which there is no law in Virginia. I
could go on with this litany of conflicting legislation, but let it suffice
to say that no two State boycott laws are identical in their scope or
penaity.
The A A P A wants all ports to be on an equal footing in this matter;
moreover, I am told that there is a constitutional obligation on the
Congress to insure nonpreference to any port as a result of a congressional action—a situation which can only be preventive in this case,
in my opinion, by preempting existing State laws on this subject. The
States which have passed boycott laws should be commended for protecting their citizens prior to congressional action on this matter, but
they should also be aware of the fact that the Congress has a duty
to preempt State statutes when they are in conflict with the absolute
lowers of the Federal Government or contribute very little to the
problem to be solved. Recent examples of congressional preemption
^ State law are the Federal Election Campaign Act of 1971 and the
Employee Retirement Income Security Act of 1974. As a personal
note, I might add that I am proud to state that the attorney general
of my own State of Maryland testified earlier today on this matter
of preemption which he strongly favors. Although Resolution E-22
was unanimously passed by the A A P A in convention assembled, I
T
7ill be very frank with the committee 'and tell you that my appearance before you today is over the opposition of certain members of
Committee X I . These few dissenting members are from States not
1
aving boycott laws and who are incidentally doing a large volume of
business with the Middle East. These dissenting positions do not
weaken the A A P A position, but rather I feel exemplifies the need
for preemption.
I am pleased to telf the committee that the AAPA's position on
Preemption has received the endorsement of the Maritime Administration and we were most gratified to note the comments of the President of the United States, who on February 9, 1977 stated at the
Department of Commerce his concern over these conflicting State
boycott laws:
. . . we also need to have as a last t h i n g ( i n any Federal boycott l a w ) unif o r m i t y among the different States of the N a t i o n i n dealing w i t h the (boycott).
Therefore I would urge the committee to recognize a responsibility
to insure effective but equal application of the bill reported to the
Senate and see that the ports of the Nation having antiboycott laws
are not burdened by enactment of a Federal law lacking clear preemption language. We therefore sincerely request the committee to
adopt the following amendment:
The provisions of this Act, and of rules prescribed under this Act, supersedes
and preempts any provision of state l a w w i t h respect t o restrictive i n t e r n a t i o n a l
t r a d i n g practices and discriminatory boycotts.
368,
We appreciate the attention that you have given to us today. Thank
you.
Senator S T E V E N S O N . Thank you, sir.
[The complete statement follows:]
369,
STATEMENT OF W. GREGORY HALPIN, CHAIRMAN, COMMITTEE X I OP THE
AMERICAN ASSOCIATION OF PORT AUTHORITIES, I N C . ON S . 6 9 AND S . 9 2
BEFORE THE INTERNATIONAL FINANCE SUBCOMMITTEE OF THE SENATE
BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE
FEBRUARY 2 2 , 1977
Good m o r n i n g .
Administrator
of
My name i s W. G r e g o r y H a l p i n .
the Maryland P o r t A d m i n i s t r a t i o n
b e f o r e y o u t h i s m o r n i n g i n my c a p a c i t y
o f the American A s s o c i a t i o n o f
I
sincerely
Schultz,
I
Committee X I o f
L.
t h e AAPA.
Titles
w h i c h i n amending t h e E x p o r t A d m i n i s t r a t i o n
establish prohibitions
two
Richard
Our t e s t i m o n y t h i s m o r n i n g w i l l b e c o n f i n e d t o
of both b i l l s ,
before
t h e APPA o n t h e s e
and T r e a s u r e r o f
XI
(AAPA).
am a c c o m p a n i e d t h i s m o r n i n g b y M r .
Executive Director
appear
Committee
appreciate t h i s opportunity to t e s t i f y
t h e Committee on b e h a l f o f
important b i l l s .
am D e p u t y
(MPA) b u t
as C h a i r m a n o f
Port Authorities
I
II
Act
on compliance w i t h f o r e i g n b o y c o t t s
a
matter of great concern to our Association.
The AAPA i s
both public
an o r g a n i z a t i o n c o m p r i s e d o f P o r t
and p r i v a t e ,
of
i n a n t American membership.
i a t i o n has attempted t o
technology,
and a l s o
t h e Western Hemisphere w i t h a predomSince o u r f o u n d i n g i n 1912,
f o r g e bonds o f
exchange m u t u a l l y b e n e f i c i a l
Authorities,
Assoc-
f r i e n d s h i p b e t w e e n members,
information regarding
increase public
the
innovative
awareness o f o u r
Port
organization.
370,
As a n a t i o n a l body we can f r a n k l y and o b j e c t i v e l y a d d r e s s
those
issues o f concern t o a l l P o r t s , w i t h o u t r e g a r d t o r e g i o n a l
terests.
in-
As a v i t a l e n t i t y o f AAPA, Committee X I i s c h a r g e d b y
t h e By-Laws as
follows:
Shall undertake a c t i v i t i e s appropriate i n the
e x p a n s i o n o f f o r e i g n t r a d e and t h e movement o f e x p o r t and i m p o r t commerce, i n l e g i s l a t i v e m a t t e r s
d e s i g n e d t o p r o m o t e i n t e r n a t i o n a l t r a d e and s h a l l
c o o p e r a t e w i t h o t h e r o r g a n i z a t i o n s and w i t h f e d e r a l
d e p a r t m e n t s , and s h a l l c o l l e c t d a t a r e l a t i n g t o t h e
p r o m o t i o n o f i n t e r n a t i o n a l t r a d e , a d v i s e members i n
r e g a r d t h e r e t o , and when so a u t h o r i z e d s h a l l t a k e
a p p r o p r i a t e a c t i o n i n r e s p e c t t o l e g i s l a t i v e and
administrative matters i n t h i s f i e l d of a c t i v i t y .
The membership o f Committee X I i s composed o f P o r t
Authority
o f f i c i a l s f r o m t h e E a s t and West C o a s t , t h e G u l f and t h e G r e a t L a k e s .
On J a n u a r y 1 , 1976, a l a w w e n t i n t o e f f e c t i n New Y o r k
p o p u l a r l y c a l l e d t h e a n t i - b o y c o t t a c t o r t h e L i s a Law, w h i c h
t o p r o t e c t t h e c i t i z e n s o f New Y o r k f r o m d i s c r i m i n a t o r y
p r a c t i c e s imposed o n A m e r i c a n c o r p o r a t i o n s b y f o r e i g n
State,
attempted
trading
governments.
T h i s l a w was p r e m i s e d on t h e b e l i e f t h a t s e c o n d a r y and t e r t i a r y
c o t t s w e r e b e i n g imposed upon A m e r i c a n s as a c o n d i t i o n f o r
business w i t h these f o r e i g n governments
boy-
doing
p a r t i c u l a r l y those o f
M i d d l e E a s t who c o n s i d e r t h e m s e l v e s i n a s t a t e o f war w i t h
the
Israel.
The New Y o r k l a w p u r p o r t e d t o have j u r i s d i c t i o n o v e r any b u s i n e s s
t r a n s a c t i o n w h i c h r e s u l t e d i n d i s c r i m i n a t i o n b a s e d on r a c e ,
religion
371,
o r sex. W i t h i n a few months, t h e l e g i s l a t u r e s o f o t h e r
came aware o f t h i s
States
l a w and p r o c e e d e d t o p a s s s i m i l a r b i l l s .
C o n g r e s s was n o t i d l e ;
t h e Senate and t h e House p a s s e d d i f f e r e n t
y e t , by the
anti-boycott b i l l s ,
c a u s e d t h e S e s s i o n t o end w i t h o u t
California,
States enacted a n t i - b o y c o t t
O h i o and M a s s a c h u s e t t s
dealing w i t h t h i s general area i n e f f e c t
pro-
action
on
laws
since 1965).
Even i f
in this
a p r o p o s i t i o n w h i c h has severe c o n s t i t u t i o n a l q u e s t i o n s
questions are e a s i l y r a i s e d .
Mary-
( I l l i n o i s has had a law
accepts the a u t h o r i t y o f these States t o l e g i s l a t e
its
time
problem.
D u r i n g 1976, f o u r
land,
re-
i n t h e s e b o y c o t t s was r e v e a l e d as b o t h
i n a d e q u a t e and e a s i l y m i s u n d e r s t o o d b y t h e p u b l i c ;
t h i s serious
of
trading
The D e p a r t m e n t o f Commerce r e p o r t i n g
quirements f o r p a r t i c i p a t i o n
on
a keen awareness
t h e e x i s t e n c e and c o n c e r n f o r e n d i n g t h e s e p a t e n t l y u n f a i r
cedural d i f f i c u l t i e s
The
during the course o f hearings l a s t year
b i l l s b e f o r e t h i s C o m m i t t e e and i n t h e House,
d e v i c e s was e v i d e n c e d .
be-
one
area
other
The AAPA r e c o g n i z e d t h e s e p r o b l e m s
a n n u a l c o n v e n t i o n and c l e a r l y
saw s u c h a p r o l i f e r a t i o n o f
i n a S t a t e w i t h an a n t i - b o y c o t t
competitive Port relationships.
convention:
law,
as w e l l as d i s r u p t
These o t h e r q u e s t i o n s
at
State
l a w s w o u l d b r i n g a b o u t c o n f u s i o n and f e a r t o t h e s h i p p e r u s i n g
the
—-
Ports
established
troubled
372,
What e f f e c t h a s t h e l a w o f O h i o h a d o n f o r e i g n
d i s c r i m i n a t o r y b o y c o t t s o t h e r t h a n t o make s h i p p e r s
apprehensive about u s i n g t h e P o r t o f Cleveland t o
s h i p goods t o a n a t i o n e s p o u s i n g such a b o y c o t t , even
t h o u g h t h a t s h i p p e r may n o t h a v e a g r e e d t o do o n e
discriminatory activity?
Why s h o u l d s h i p p e r s i n a l a r g e S t a t e w i t h many
e x c e l l e n t P o r t s , s u c h as C a l i f o r n i a , d i v e r t t h e c a r g o e s
t o P o r t s t h o u s a n d s o f m i l e s away f o r no o t h e r r e a s o n
than u n c e r t a i n t y over a State a n t i - b o y c o t t law being
challenged i n Federal Court f o r i t s c o n s t i t u t i o n a l i t y
and n o t e v e n b e i n g e n f o r c e d b y S t a t e o f f i c i a l s ?
HDw many s h i p p e r s o r s t e a m s h i p l i n e s h a v e b e e n
charged f o r v i o l a t i n g t h e State a n t i - b o y c o t t laws?
The q u e s t i o n s c o u l d go o n M r . C h a i r m a n ,
and u n d e r s t a n d a b l y
s h i p p e r s are uneasy knowing t h a t t h e y c o u l d be f i n e d $50,000
t h e M a r y l a n d B o y c o t t l a w f o r d o i n g an a c t w h i c h h a s n o f i n e
t h e M a s s a c h u s e t t s l a w o r even no l a w i n V i r g i n i a .
with this
litany of conflicting
legislation,
under
I c o u l d go o n
but l e t
s a y t h a t no t w o S t a t e b o y c o t t l a w s a r e i d e n t i c a l
under.
it
suffice
in their
scope
to
or
penalty.
W i t h t h e above i n m i n d ,
E-22
t h e AAPA u n a n i m o u s l y p a s s e d
(attached) which endorses f e d e r a l preemption o f
ing with r e s t r i c t i v e
trade practices
and b o y c o t t s .
recognizes t h a t unless strong a n t i - b o y c o t t
State laws
deal-
The AAPA c l e a r l y
legislation
s u c h as
S . 6 9 o r S.92 c o n t a i n s l a n g u a g e p r e e m p t i n g t h e s e S t a t e l a w s ,
Resolution
those
373,
S t a t e s h a v i n g such laws w i l l i r o n i c a l l y become
a g a i n s t " because o f t h e i r e x i s t e n c e .
"discriminated
The AAPA w a n t s a l l
t o be on an e q u a l f o o t i n g i n t h i s m a t t e r ; m o r e o v e r ,
Ports
I am t o l d
t h a t t h e r e i s a c o n s t i t u t i o n a l o b l i g a t i o n on t h e Congress t o
e n s u r e n o n - p r e f e r e n c e t o any P o r t as a r e s u l t o f a C o n g r e s s i o n a l
action
(Article
I,
S e c t i o n 9 , C l a u s e 6)
a s i t u a t i o n w h i c h can
o n l y be p r e v e n t e d i n t h i s c a s e , i n my o p i n i o n , b y p r e e m p t i n g e x i s t i n g S t a t e l a w s on t h i s s u b j e c t .
The S t a t e s w h i c h have p a s s e d
b o y c o t t laws s h o u l d be commended f o r p r o t e c t i n g t h e i r
citizens
p r i o r t o C o n g r e s s i o n a l a c t i o n on t h i s m a t t e r , b u t t h e y s h o u l d a l s o
be aware o f t h e f a c t t h a t t h e Congress has a d u t y t o p r e e m p t
State
s t a t u t e s when t h e y a r e i n c o n f l i c t w i t h t h e a b s o l u t e powers o f
the
F e d e r a l Government o r c o n t r i b u t e v e r y l i t t l e t o t h e p r o b l e m t o be
solved.
Recent examples o f C o n g r e s s i o n a l p r e e m p t i o n o f S t a t e l a w
a r e t h e F e d e r a l E l e c t i o n Campaign A c t o f 1971, t h e Magnuson-Moss
Warranty A c t ,
and Employee R e t i r e m e n t Income S e c u r i t y A c t o f
As a p e r s o n a l n o t e I m i g h t add t h a t
1974.
I am p r o u d t o s t a t e t h a t
A t t o r n e y G e n e r a l o f my own S t a t e o f M a r y l a n d w i l l t e s t i f y
t h i s Committee on b e h a l f o f p r e e m p t i o n .
the
before
A l t h o u g h R e s o l u t i o n E-22
was u n a n i m o u s l y passed b y t h e APPA i n C o n v e n t i o n assembled,
I
will
b e v e r y f r a n k w i t h t h e Committee and t e l l you t h a t my appearance
374,
b e f o r e y o u t o d a y i s o v e r t h e o p p o s i t i o n o f c e r t a i n members o f
Committee X I .
These f e w d i s s e n t i n g members a r e f r o m S t a t e s
not
h a v i n g b o y c o t t laws and who a r e i n c i d e n t a l l y d o i n g a l a r g e v o l u m e
o f business w i t h the Middle East.
These d i s s e n t i n g p o s i t i o n s do
n o t weaken t h e AAPA p o s i t i o n , b u t r a t h e r
need f o r
I f e e l exemplifies
the
preemption.
I
am p l e a s e d t o t e l l t h e Committee t h a t t h e AAPA's p o s i t i o n
o n p r e e m p t i o n has r e c e i v e d t h e endorsement o f t h e M a r i t i m e
s t r a t i o n and we w e r e most g r a t i f i e d t o n o t e t h e comments o f
Adminithe
P r e s i d e n t o f t h e U n i t e d S t a t e s , who o n F e b r u a r y 9 , 1977 s t a t e d
t h e Department o f Commerce h i s c o n c e r n o v e r t h e s e c o n f l i c t i n g
boycott laws:
" . . . we a l s o need t o h a v e as a l a s t t h i n g
f e d e r a l b o y c o t t l a w ) u n i f o r m i t y among t h e d i f f e r e n t
Nation i n dealing w i t h the
Therefore,
at
State
( i n any
States o f
the
(boycott)."
I w o u l d u r g e t h e Committee t o r e c o g n i z e a r e -
s p o n s i b i l i t y t o insure e f f e c t i v e but equal a p p l i c a t i o n o f the
t h e b i l l r e p o r t e d t o t h e Senate and see t h a t t h e P o r t s o f t h i s
of
Nation
h a v i n g a n t i - b o y c o t t laws are n o t burdened by enactment o f a f e d e r a l
law l a c k i n g c l e a r preemption language.
We t h e r e f o r e
r e q u e s t t h e Committee t o a d o p t t h e f o l l o w i n g
sincerely
amendment:
375,
"The p r o v i s i o n s o f t h i s A c t ,
and o f r u l e s
prescribed
u n d e r t h i s A c t , supersedes and p r e e m p t s any p r o v i s i o n o f
law w i t h respect to r e s t r i c t i v e i n t e r n a t i o n a l t r a d i n g
and d i s c r i m i n a t o r y
State
practices
boycotts."
Thank y o u ahd I w i l l be g l a d t o answer any q u e s t i o n s
you might have.
376,
THE AMERICAN ASSOCIATION OP PORT AUTHORITIES,
(Unanimously
NO.
INC.
passed)
E-22
ENDORSING FEDERAL PREEMPTION OF STATE LEGISLATION DEALING WITH
RESTRICTIVE TRADE PRACTICES OR BOYCOTTS
• WHEREAS, t h e r e h a s b e e n a p r o l i f e r a t i o n o f S t a t e l e g i s l a t i o n
dealing w i t h compliance w i t h f o r e i g n r e s t r i c t i v e trade p r a c t i c e s
and b o y c o t t s ; and
WHEREAS, t h e e x i s t e n c e o f s u c h S t a t e l e g i s l a t i o n h a s c a u s e d
disruption of established competitive p o r t r e l a t i o n s h i p s w i t h
c o n c o m i t a n t a d v e r s e economic e f f e c t s on t h o s e p o r t r e g i o n s e x p e r i e n c i n g t r a d e d i s l o c a t i o n s ; and
WHEREAS, i t h a s b e e n d e c l a r e d U . S . p o l i c y t o o p p o s e r e s t r i c t i v e t r a d e p r a c t i c e s o r b o y c o t t s imposed by f o r e i g n c o u n t r i e s
a g a i n s t o t h e r c o u n t r i e s f r i e n d l y t o the U . S . ; and
WHEREAS, S t a t e l e g i s l a t i o n i n t h i s f i e l d c o n f l i c t s w i t h F e d e r a l c o n s t i t u t i o n a l powers t o r e g u l a t e U . S . i n t e r n a t i o n a l commerce;
NOW, THEREFORE, BE I T RESOLVED t h a t The A m e r i c a n A s s o c i a t i o n
o f Fort A u t h o r i t i e s urges the enactment of a United States s t a t u t e
establishing a single, uniform national policy dealing with res t r i c t i v e t r a d e p r a c t i c e s o r b o y c o t t s f o s t e r e d o r imposed by f o r eign countries a g a i n s t other c o u n t r i e s f r i e n d l y to the U.S. o r
a g a i n s t any d o m e s t i c c o n c e r n o r p e r s o n and r e a f f i r m i n g F e d e r a l
preemption o f S t a t e r e g u l a t i o n i n t h i s a r e a ; and
BE I T FURTHER RESOLVED t h a t t h e E x e c u t i v e D i r e c t o r a n d Comm i t t e e X I , P o r t Commerce, a r e h e r e b y a u t h o r i z e d t o t a k e s u c h
a c t i o n a s may be n e c e s s a r y t o a c c o m p l i s h t h e o b j e c t i v e s o f t h i s
Resolution.
377,
STATEMENT OF J . L . STANTON, MARYLAND PORT A D M I N I S T R A T O R
A T THE HEARINGS ON S . 6 9 AND S . 9 2 BEFORE THE I N T E R N A T I O N A L
FINANCE SUBCOMMITTEE OF THE SENATE, B A N K I N G , HOUSING AND
URBAN A F F A I R S COMMITTEE
FEBRUARY 2 2 , 1 9 7 7
Thank you M r .
Administrator•of
sincerely
S.69
and
the Maryland
appreciate
S.92,
Chairman.
this
The M a r y l a n d P o r t
with
export
t h e . t e n major
Harbor.
terminals
and f a c i l i t i e s
fifty
MPA h a s s i x
cargo
national
and f a c i l i t a t e
of
is
the
cargo
via
facilities
Port
state.
In
owns o r
the
railroads,
and e i g h t y - t h r e e
flow of
in
field
Port
and
I
support
of
bills.
terminals
and i n t e r n a t i o n a l
(MPA)
a state
and l e a v e s
four
the
a division
the Administration
lines,
the
both
through the
of
Cargo e n t e r s
truck
traffic
international
Baltimore
hundred
I I
developing
the waters
these r e s p o n s i b i l i t i e s ,
of
for
Stanton,
to- t e s t i f y
Administration,
and i m p o r t
and e l s e w h e r e w i t h i n
Title
L.
Administration
Transportation,
the responsibility
ment o f
Port
am J .
opportunity
particularly
Maryland Department o f
I
of
the
agency
for
charged
the
of
move-
Baltimore
carrying
out
leases
five
located
in
the
Administration's
approximately
steamship
offices
commerce t h r o u g h o u r
one
lines.
to
The
solicit
Port.
378,
The MPA has made a s u b s t a n t i a l i n v e s t m e n t i n
port
d e v e l o p m e n t , m a i n t e n a n c e and m o d e r n i z a t i o n r e p r e s e n t i n g
in
excess o f $ 1 5 0 , 0 0 0 , 0 0 0 i n p u b l i c t a x and bond monies f o r
the
y e a r s 1956 - 1975 and $ 5 4 , 0 0 0 , 0 0 0 i n p r o j e c t e d e x p e n d i t u r e s
t h e y e a r s 1976 - 1981.
participate
The A d m i n i s t r a t i o n i s a u t h o r i z e d
i n p r o c e e d i n g s b e f o r e F e d e r a l and S t a t e
for
to
Regulatory
Agencies.
We a r e p l e a s e d t o have t h i s o p p o r t u n i t y t o p r e s e n t
v i e w s t o t h i s Committee w h i c h i s a d d r e s s i n g i t s e l f
serious problem.
our
t o a most
S i n c e 1973, t h e i m p o s i t i o n o f s e c o n d a r y and
t e r t i a r y b o y c o t t s and o t h e r r e s t r i c t i v e t r a d i n g p r a c t i c e s
by
c e r t a i n n a t i o n s d o i n g b u s i n e s s i n t h e U n i t e d S t a t e s h a s caused
s e r i o u s concern t o a l l those i n v o l v e d i n i n t e r n a t i o n a l
commerce.
As an agency i n d a i l y c o n t a c t w i t h v e s s e l s , goods, and p e o p l e s
o f a l l n a t i o n s , we have a t t e m p t e d ,
a c c o r d i n g them e q u a l t r e a t m e n t ,
and I b e l i e v e succeeded,
c o u r t e s y and r e s p e c t .
in
We w e r e
t h e r e f o r e r e p e l l e d b y t h e k n o w l e d g e t h a t t h e s e o d i o u s and
d i s c r i m i n a t o r y c o n d i t i o n s w e r e b e i n g imposed b y c e r t a i n
entities
as a c o n d i t i o n f o r d o i n g b u s i n e s s .
foreign
At the time
p r a c t i c e s began t o i n c r e a s e i n b o t h number and s c o p e ,
these
there
e x i s t e d as a remedy o n l y t h e R e g u l a t i o n s i s s u e d b y t h e
Department
o f Commerce p u r s u a n t t o a u t h o r i t y g r a n t e d i n t h e E x p o r t
Adminis-
' t r a t i o n A c t o f 1969.
These R e g u l a t i o n s m e r e l y r e p r e s e n t e d an
379,
an a f t e r - t h e - f a c t r e p o r t i n g Of c o m p l i a n c e w i t h
trading
restrictive
practices.
T h e r e f o r e , more t h a n a y e a r ago a g r o w i n g d e t e r m i n a t i o n
and c o n c e r n f o r t h e p r o t e c t i o n o f A m e r i c a n s 1 c i v i l r i g h t s
American c o r p o r a t i o n s '
and
b u s i n e s s r i g h t s began t o m a n i f e s t
itself.
I t was a p p a r e n t t o many t h a t a f e d e r a l s o l u t i o n was n e c e s s a r y t o *
cure those instances of d i s c r i m i n a t i o n surrounding t h i s
national trade; yet,
t h e Congress p r o p e r l y p r o c e e d e d
and i n t h e f i n a l a n a l y s i s was u n a b l e t o r e s o l v e t h e i r
inter-
cautiously
legislative
differences.
However, s t a t e l e g i s l a t u r e s began t o a c t i n o r d e r
protect their citizens.
to
Most s t a t e b o d i e s r e c o g n i z e d t h a t
federal
a c t i o n was n e c e s s a r y i n v i e w o f t h e U . S . C o n s t i t u t i o n and f e d e r a l
l a w f i / b u t l e g i s l a t u r e s o f many s t a t e s ,
anti-boycott b i l l s ,
i n c l u d i n g Maryland,
o f w h i c h s i x a r e now i n e f f e c t .
passed
Two o t h e r
s t a t e laws appear t o b e on t h e v e r g e o f b e i n g passed and g o i n g
into effect.
legislature,
When t h e M a r y l a n d a n i t - b o y c o t t l a w was b e f o r e o u r
t h e MPA opposed i t s e n a c t m e n t .
The r e a s o n f o r
1 / A r t i c l e I , S e c t i o n 1, S e c t i o n 8 , A r t i c l e I V , S e c t i o n 1,
X l V t h Amendment; S e c t i o n 19 o f t h e M e r c h a n t M a r i n e A c t ,
(46 USC 8 7 6 ) .
85-654 O - 77 - 25
this
the
1920,
380,
o p p o s i t i o n was based n o t a g a i n s t t h e l a u d a b l e ends o f t h e
bill
w h i c h we r e c o g n i z e d and e n t h u s i a s t i c a l l y s u p p o r t e d , b u t
rather
t h e means.
a
I t was and r e m a i n s o u r b e l i e f
and f e a r t h a t
s t a t e - b y - s t a t e p i e c e m e a l approach t o t h i s s e r i o u s
p r o b l e m w i l l n o t be e f f e c t i v e and w i l l s e r v e t o
national
discriminate
a g a i n s t t h e p o r t s o f t h o s e s t a t e s w i t h l a w s when l a r g e
amounts
o f cargo are b e i n g d i v e r t e d t o a d j o i n i n g s t a t e s w i t h o u t
such
statutes.
It
i s no s e c r e t , M r . Chairman, t h a t we a r e
about t r a d e w i t h t h e n a t i o n s o f t h e M i d d l e East
talking
trade which
r e p r e s e n t s t h e newest and l a r g e s t b u s i n e s s o p p o r t u n i t y i n many
years.
The c a r g o e s m o v i n g i n t h i s t r a d e a r e v e r y h i g h v a l u e b o t h
i n p o r t economic i m p a c t and l a b o r - i n t e n s i v e
usage.
The P o r t o f B a l t i m o r e has been h a n d l i n g a l a r g e amount o f
c a r g o t o t h e M i d d l e E a s t n a t i o n s and p o s s e s s e s t h e b e s t
regularly
s c h e d u l e d d i r e c t ocean s e r v i c e t o t h o s e c o u n t r i e s o f a l l U . S .
Ports.
S i m p l y s t a t e d , we do n o t w a n t t h e P o r t s o f B a l t i m o r e , New Y o r k ,
Boston, Cleveland, Chicago,
San F r a n c i s c o , O a k l a n d , Los A n g e l e s and
o t h e r s m a l l e r ones t o s u f f e r t h e . a f t e r e f f e c t o f S t a t e l a w s e n a c t e d
w i t h the best of i n t e n t i o n s .
T h e r e f o r e , y o u can be a s s u r e d t h a t
support f o r strong a n t i - b o y c o t t b i l l s
such as S.69 and S.92
echoed b y many o t h e r segments o f t h e p o r t i n d u s t r y — management, p u b l i c a g e n c i e s and f i n a n c i a l
institutions.
is
labor,
our
381,
A l t h o u g h we s u p p o r t S.69 o r S.92 as i n t r o d u c e d and b e lieve that the provisions of T i t l e
II
t h e r e o f w i l l be an
adequate and e f f e c t i v e weapon i n f i g h t i n g f o r e i g n
trading practices,
discriminatory
t h e r e i s one e s s e n t i a l e l e m e n t o f t h e b i l l
appears t o be m i s s i n g .
that
T h i s m i s s i n g element i s a preemption c l a u s e
f o r the e x i s t i n g s t a t e a n t i - b o y c o t t
laws I have j u s t
mentioned.
T h i s f a c t was r e c o g n i z e d and d i s c u s s e d b y y o u M r . Chairman,
and
o t h e r Senators on t h e f l o o r o f t h e Senate l a s t f a l l , w h i l e
debating
S.3084.
such
Why, one m i g h t a s k , w o u l d we appear i n s u p p o r t o f
an amendment when we have s t a t e d we a r e p r o u d and s a t i s f i e d
M a r y l a n d has an a n t i - b o y c o t t l a w on t h e books?
based on o u r b e l i e f
a belief
A t t o r n e y General o f Maryland
existence,
that
Our p o s i t i o n
is
shared i n c i d e n t a l l y by t h e
that
w i t h s i x s t a t e laws
t h e t i m e has come f o r a s i n g l e s t r o n g f e d e r a l
in
solution
t o t h i s p r o b l e m and we b e l i e v e e i t h e r o f t h e b i l l s b e f o r e y o u
s a t i s f y t h i s problem.
Instead of six solutions to t h i s
problem,
we have i n e f f e c t s i x c o n f l i c t i n g approaches a t t e m p t i n g t o
t h e same g o a l .
reach
I n t h e f i n a l a n a l y s i s , we have M r . Chairman,
six
l a w s , no two o f w h i c h a r e t h e same, and a s h i p p e r u s i n g t h e b u s i n e s s
r e s o u r c e s and p o r t s o f t h e s e s t a t e s i s c o n f r o n t e d w i t h s i x
very
c o n f u s i n g s t a t u t e s v a r y i n g i n t h e i r p u r p o r t e d scope and r e g u l a t i o n s
382,
.with fines ranging from $500 to $50,000.
To i l l u s t r a t e
this
dilemma, I would l i k e to submit to the Committee (attached,
Appendix A) a copy of each of these laws.
The Maryland l e g i s -
l a t u r e recognizes the need for a n a t i o n a l b i l l by i t s current
consideration of a Joint Resolution on t h i s subject
(attached,
Appendix B) and various n a t i o n a l port organizations of which
the MPA i s a member
such as the American Association of
Port Authorities and the North A t l a n t i c Ports Association
have passed Resolutions urging a n a t i o n a l remedy f o r t h i s serious
problem (attached, Appendix C).
Recognizing these f a c t s , I would urge t h i s Committee t o
i n s e r t i n S.69 or S.92 an amendment along the l i n e s of the one
we have prepared (attached, Appendix D).
I believe t h i s would
bring about a strong u n i f i e d approach to t h i s problem and ensure
that the c i t i z e n s , the business i n t e r e s t s and the ports of those
states which have had the courage to act i n t h i s area, do not
i r o n i c a l l y become the victims of confusion and trading discrimina t i o n once S.69, S.92 or another b i l l i s enacted.
Thank you for your a t t e n t i o n .
any questions.
I w i l l be glad to answer
383
APPENDIX
A
Assembly B i l l No. 3080
CHAPTER 1247
An act to add Sections 16721 and 16721.5 to the Business and
Professions Code, relating to discriminatory trusts and restraints of
trade.
1
[Approved by Governor September 27, 1976. Filed with
Secretary of State September 27, 1976.]
LEGISLATIVE COUNSEL'S DIGEST
AB 3080, Berman. Trusts; restraints of trade.
Existing law does each of the following:
(a) Prohibits the disqualification of a person from entering or
pursuing a business, profession, vocation, or employment because of
sex, race, creed, color, or national or ethnic origin.
(b) Declares all persons to be free and equal, irrespective of sex,
race, color, religion, ancestry, or national origin, and entitled to full
and equal accommodations, advantages, facilities, privileges, or services in all business establishments.
(c) Prohibits discrimination because of race, color, religion, national origin, or ancestry in housing accommodations, or in the terms,
conditions, or privileges of any publicly assisted housing accommodations.
(d) Declares that the opportunity to seek, obtain, and hold employment without discrimination because of race, religious creed,
color, national origin, ancestry, physical handicap, or sex is a civil
right and prohibits employers generally from refusing to hire, employ, or train persons because of race, religious creed, color, national
origin, ancestry, or sex.
(e) Prohibits discrimination in the employment of persons upon
public works because of race, color, national origin or ancestry, or
religion.
(f) Guarantees equal protection of the lavv in respect to state
action. .
This bill, in addition, would make it an unlawful trust and an
unlawful restraint of trade for any person, business, or governmental
agency to grant or accept any letter of credit, or to enter into any
contract for the exchange of goods or services, which contains any
provision requiring discrimination on the basis of sex, race, color,
religion, ancestry, or national origin, or on the basis of a person's
lawful business associations; or to refuse to grant or accept any letter
of credit, or to refuse to enter into any contract for the exchange of
goods or services, on the ground that it does not contain such a
discriminatory provision.
The bill would also prohibit, as an unlawful conspiracy against
trade, the exclusion of any person from a business transaction on the
384,
Ch. 1247
—2—
basis of a policy expressed in any document or writing and imposed
by a third party where such policy requires discrimination against
that person on the basis of the person's sex, race, color, religion,
ancestry or national origin or on the basis that the person conducts
or has conducted business i n a particular location.
A violation of such provisions would constitute a crime.
This bill would provide that no appropriation is made for reimbursement of local agencies for costs incurred by them pursuant
thereto because the Legislature recognizes that during any legislative session a variety of changes to laws relating to crimes and infractions may cause both increased and decreased costs to local
government entities and school districts which, in the aggregate, do
not result in significant identifiable cost changes.
The people of the State of California do enact as follows:
SECTION 1. Section 16721 is added to the Business and
Professions Code, to read:
16721. Recognizing that the California Constitution prohibits a
person from being disqualified from entering or pursuing a business,
profession, vocation, or employment because of sex, race, creed,
color, or national or ethnic origin, and guarantees the free exercise
and enjoyment of religion without discrimination or preference; and
recognizing that these and other basic, fundamental constitutional
principles are directly affected and denigrated by certain on-going
practices in the business and commercial world, it is necessary that
provisions protecting and enhancing a person's right to enter or
pursue business and to freely exercise and enjoy religion, consistent
w i t h law, be established.
(a) No person within the jurisdiction of this state shall be excluded
from a business transaction on the basis of a policy expressed i n any
document or writing and imposed by a third party where such policy
requires discrimination against that person on the basis of the
person's sex, race, color, religion, ancestry or national origin or on the
basis that the person conducts or has conducted business in a
particular location.
(b) No person within the jurisdiction of this state shall require
another person to be excluded, or be required to exclude another
person, from a business transaction on the basis of a policy expressed
in any document or writing which requires discrimination against
such other person on the basis of that person's sex, race, color,
t religion, ancestry or national origin or on the basis that the person
conducts or has conducted business in a particular location.
(c) Any violation of any provision of this section is a conspiracy
against trade.
(d) Nothing in this section shall be construed to prohibit any
person, on this basis of his or her individual ideology or preferences,
from doing business or refusing to do business with any other person
385,
— 3—
Ch. 1247
consistent w i t h law.
SEC. 2. Section 16721.5 is added to the Business and Professions
Code, to read:
16721.5. I t is an unlawful trust and an unlawful restraint of trade
for any person to do the following:
(a) Grant or accept any letter of credit, or other document which
evidences the transfer of funds or credit, or enter into any contract
for the exchange of goods or services, where the letter of credit,
contract, or other document contains any provision which requires
any person to discriminate against or to certify that he, she, or it has
not dealt w i t h any other person on the basis of sex, race, color,
religion, ancestry, or national origin, or on the basis of a person's
lawful business associations.
(b) To refuse to grant or accept any letter of credit, or other
document which evidences the transfer of funds or credit, or to
refuse to enter into any contract for the exchange of goods or
services, on the ground that it does not contain such a discriminatory
provision or certification.
The provisions of this section shall not apply to any letter of credit,
contract, or other document which contains any provision pertaining
to a labor dispute or an unfair labor practice if the other provisions
of such letter of credit, contract, or other document do not otherwise
violate tHe provisions of this section.
For the purposes of this section, the prohibition against
discrimination on the basis of a person's business associations shall be
deemed not to include the requiring of association w i t h particular
employment or a particular group as a prerequisite to obtaining
group rates or discounts on insurance, recreational activities, or other
similar benefits.
For purposes of this section, "person" shall include, but not be
limited to, individuals, firms, partnerships, associations, corporations,
and governmental agencies.
SEC. 2. Notwithstanding Section 2231 of the Revenue and
Taxation Code, there shall be no reimbursement pursuant to this
section rior shall there be any appropriation made by this act because
the Legislature recognizes that during any legislative session a
variety of changes to laws relating to crimes and infractions may
cause both increased and decreased costs to local government
entities which, in the aggregate, do not result i n significant
identifiable cost changes.
O
386,
38 § 5 0 - 1
CHAPTER 38 —CRIMINAL LAW AND PROCEDURE
AERIAL EXHIBITION'S
A N A C T relatiug to safety devices for protection
of aerial exhibitors. Approved Aug. 28, 1963.
L.1963, p. 3453.
lie it cmirtcd by the rcopte of the Slate of Illinois,
represented, in the General Assembly:
6 0 — 1 . Necessity of safety net or other safety
device.]
$ 1. I<Jo person shall participate in a
public performance or exhibition, or in a private
exercise preparatory thereto, on a trapeze, tightrope, wire, rings, ropes, poles, or other aerial apparatus which requires skill, timing or balance
and v.-hich creates a substantial risk to himself or
others of serious injury by a fall from a height in
excess of 20 feet, unless a safety net or othor safety
device of similar purpose- and construction is
placcd between such poison And the ground in such
manner as to arrest or cushion his fall and minimize
the risk of such injury.
5 0 — 2 . Authorization or permission to participate without net—Prohibition.]
§ -2. No owner,
agent, lessee or other person in control of operations
of a circus, carnival, fair or other public place of assembly or amusement shall authorize or permit
participation in an aerial performance, exhibition
or private exercise in violation of Section 1 of this
Act.i
i Section 50—1 of this chapter.
5 0 — 3 . . § 3. Sentence.) Violation of this Act
is a Class A misdemeanor.
Amended by P.A. 7 7 - 2 6 5 1 , § 1, eft. Jan. 1, 1 9 7 3 . .
CONTAINERS
Act of Aug. 3. 1965
Sec.
SO—31.
SO—32.
SO—33.
SO—34.
Sale of products in obliterated containers
—Prohibition—Exception.
Utilization of used containers—requisites.
Sentence.
Construction.
A N A C T in relation to the use of containers and the
labeling thereon. Approved Aug. 3, 1965.
L.
19C5. p. 2469.
Be it cnaetcd by the People ,of the State of
represented in the Ucneral Assembly:
Illinois,
5 0 — S I . finlo of products in obliterated containers—Prohibition—Exception.)
§ 1. No person shail sell or offer for sale any product, article
or substance in a container on which any statement of weight, quantity, (iuality, grade, ingredients or identification ot' the manufacturer, supplier or processor is obliterated by any other labeling unless such other labeling correctly restates
any such obliterated statement.
This Section does not apply to. any obliteration
which is done in order to comply with Section 2 of
this Act.i
l Section 50—32 of this chapter.
5 0 — 8 2 . Utilization of used containers—Itequlsitea.] S 2. No person shall utilize any used con-
P. 1950
tainer for tho purpose of sale of,any product, article
or substance unk-?s\he original marks of identification, weight. trr?.de, quality and quantity have first
been obliterated.
50—33.
§ 3.
Sentence.)
Violation of any
provision of this Act i s a business offense for
which a fine shall be imposed not to exceed
$1,000.
Amended by I . A . 7 7 - 2 6 5 2 , § 1, eff. Jan. 1, 1973.
.">0—34. Construction.]
§ 4. This Act shall
not be construed as permitting the use of any containers or labels in a manner prohibited by any
other law.
SOLICITATION;
CONSPIItACY
AND
ATTEMPT
ANTITRUST ACT
Act of J u l y 21, 1965
Sec.
60—1.
60—2.
60—3.
60—4.
60—5.
60—6.
60—7.
60—7.1
60—7.2
60—7.3
60—7.4
60—7.5
60—7.6
60—7.7
60—7.8
60—7.9
60—8.
60—9.
60—10.
60—11.
Short title.
Purpose.
Violations—Enumeration.
Definitions.
Exceptions.
Violations — Punishments — Prosecutions.
Civil actions and remedies.
Personal service.
Investigation by Attorney General.
Service of subpoena.
Examination of witnesses.
Fees and mileage.
F a i l u r e or refusal to obey subpoena.
Incriminating testimony.
Action by state, counties, municipalities, etc. for damages.
Action not barred as affecting or involving interstate or foreign commerce.
Judgment or decree as prima facie evidence in action for damages.
Violation as conspiracy at common law.
Savings clause.
Construction of federal anti-trust law.
A N A C T to prohibit certain contracts, combinations, monopolies and conspiracies in restraint of
trade or commerce; to exempt certain activities
from the provisions of the Act; to provide criminal penalties and civil remedies for violations o(
the A c t ; and to repeal certain Acts therein
named.
Approved July 21, 1965.
L.19t>5, P1943.
He it enacted by the People of the State of Illinois,
represented in tho General Assembly:
O O — l . Short t i t l e . ]
5 1. This Act shall be
known and may be cited as the Illinois Antitrust
Act.
CO—2. Purpose.] "5 2. The purpose of this
Act is to promote the unhampered growth ot" commerce and industry throughout the State by prohibiting restraints of trade which are securv»l
through monopolistic or oligarchic practices
which act or tend to act to decrcaso competition be-
387,
P. 1051
CIIAPTEK 38 — CRIMINAL LAW AND PJKOCEDURE
twcen and among persons engaged in commerce and
trade, whether in manufacturing, distribution,
financing, and service industries or in related forprofit pursuits.
CO—3. Violations—Enumeration.]
§ 3. Every person shall be deemed to have committed a violation of this Act who shall:
(1) Make any contract with, or engage in any
combination or conspiracy with, any other person
who is. or but for a prior agreement would be, a
competitor of such person:
a. for the purpose or with the effect of fixing,
controlling, or maintaining the price cr rate charged for any commodity sold or bought by the parties
thereto, or the fee charged or paid for any service
performed or received by the parties thereto;
b. fixing, controlling, maintaining, limiting, or
discontinuing the production, manufacture, mining,
sale or supply of any commodity, or the sale or
supply of any servvce, for the purpose or with the
effect stated in paragraph a. of subsection ( 1 ) ;
c. allocating or dividing customers, territories,
supplies, sales, or markets, functional or geographical, for any commodity or scrvice; or
(2) By contract, combination, or conspiracy with
one or more other persons unreasonably restrain
trade or commerce; or
(3) Establish, maintain, use, or attempt to acquire monopoly power over any substantial part of
trade or commerce of this .State for the purpose of
excluding competition or of controlling, fixing, or
maintaining prices in such trade or commerce; or
(4) Lease or make a sale or contract for sale of
goods, wares, merchandise, machinery, supplies, or
other commodities, or services, whether patented
or unpatented, for use. consumption, enjoyment, or
resale, or fix a price charged thereof, or discount
from, or rebate upon, such price, on the condition,
agreement, or understanding that the lessee or
purchaser thereof shall not use or deal in the
goods, wares, merchandise, machinery, supplies, or
other commodity or service of a competitor or
competitors of the lessor or seller, where the effect
of such lease, sale or contract for such sale or such
condition, agreement, or understanding may be to
substantially lessen competition or tend to create a
monopoly in any line of commerce; or
(5) Being an employee, officer or agent of any
foreign government, or an employee, officcr or
agent of a corpora'.icn cr other aniity vhicii does
business with or seer* u> do business with any foreign government or instrumentality thereof; enforce, attempt to enforce, agree to or lake action
to forward the aims of, any discriminatory practice
by the foreign government which is based on race,
color, crced, national ancestry or sex or on ethnic
or religious grounds, whore such conduct, course of
conduct, or agreement tf.kes place in whole or in
part within the United States and atfects business
In this State.
Amended by P.A. 7D-SC5. 5 1, eff. Oct. 1. 1975.
6 0 — I . Definition*:.] 5 4. As u*f.d in this
Act, unless the context otherwise requires:
"Trado or commerce" includes all economic activity involving or relating to any commodity or
service.
38 § 6 0 - 5
"Commodity" shall mean any kind of real or personal property.
"Service" shall mean any activity, not covered by
the definition of "commodity." which is performed
in whole or in part for the purpose of financial
gain.
"Service" shall not be deemed to include labor
which is performed by natural persons as employees
of others.
"Person" shall mean any natural person, or any
corporation, partnership, or association of persons.
00—5. Exceptions.]
§ 5. No provisions of
this Act shall be construod to makei illegal:
(1) the activities of any labor organization or of
individual members thereof which are directed solely to labor objectives which are legitimate under
the laws of either the State of Illinois or the United
States;
(2) the activities of any agricultural or horticultural cooperative organization, whether incorporated or unincorporated, or of individual members thereof, which are directed solely to objectives
of such cooperative organizations which are legitimate under the laws of.either the State of Illinois
or the United States;
(3) the activities of any public utility as defined
in Section 10.3 of the Public Utilities Act i to the
extent that such activities are subject to the jurisdiction of the Illinois Commerce Commission, or to
the activities of telephone mutual concerns referred
to ip Section 10.3 of the Public Utilities Act to the
extent such activities relate to the providing and
maintenance of telephone service to owners and
customers;
(4) the activities (including, but not limited to,
the making of or participating in joint underwriting or joint reinsurance arrangement) of any insurer, insurance agent, insurance broker, independent insurance adjuster or rating organization to
the extent that such activities are subject to regulation by the Director of Insurance of this State
under, or are permitted or are authorized by, the
Insurance Code or any other law of this State;
(5) the religious and charitable activities of any
not-for-profit corporation, trust or organization established exclusively for religious or charitable purposes, or for both purposes;
(6) th* activities of any not-for-profit corporation organized to provide telephone service on a
mutual or co-operative basis or electrification on a
co-operative basis, to the extent such activities relate to the marketing and distribution of telephone
cr electrical service to owners and customers;
(7) the activities engaged in by securities dealers who are (i) licensed by the State of Illinois or
(il) members of the National Association of Securities Dealers or (iii) members of any National Securities Exchange registered with the. Securities and
Hxchange Commission under the Securities Exchange Act of li»34. as amended,: in the course of
their business of offering, selling, buying and selling, or otherwi.-o trading in or underwriting securities. as agent, broker, or principal, and activities of
any National Securities Exchange so registered. Including the establishment of commission rates and
schedules of charges;
388,
38 § 6 0 - 5
CHAPTER 38 —CRIMINAL LAW AND PROCEDURE
P. 1952
( 8 ) t h e a c t i v i t i e s of a n y b o a r d of t r a d e d e s i g n a t e d as a " c o n t r a c t m a r k e t " by t h e S e c r e t a r y of A g r i c u l t u r e of t h e U n i t e d States p u r s u a n t t o S e c t i o n
6 of t h e C o m m o d i t y E x c h a n g e A c t , as a m e n d e d ; '
A m e n d e d by P . A . 7 7 - 2 G 3 9 , § 1, e f f . J a u . 1.
P.A. 7 8 - X 6 3 , § I , eff. Sept. 15. 1 9 7 3 .
( 9 ) t h e a c t i v i t i e s of a n y m o t o r c a r r i e r of p r o p e r t y as defined i n " T h e I l l i n o i s M o t o r C a r r i e r of
P r o p e r l y A c t " , as h e r e t o f o r e or h e r e a f t e r a m e n d e d , *
t o t h e e x t e n t t h a t such a c t i v i t i e s a r e p e r m i t t e d or
a u t h o r i z e d b y t h e Act o r a r e s u b j e c t to r e g u l a t i o n
by the Illinois Commerce Commission;
00—7.
C i v i l actions and r e m e d i e s . ]
§ 7.
The
f o l l o w i n g civil actions a n d remedies a r e a u t h o r i z e d
tinder this A c t :
( 1 ) T h o A t t o r n e y G e n e r a l , w i t h such assistance
as h e m a y f r o m t i m e to t i m e r e q u i r e of t h e State's
A t t o r n e y s i n the. s e v e r a l c o u n t i e s , s h a l l b r i n g s u i t
i n t h e C i r c u i t C o u r t to p r e v e n t arid r e s t r a i n v i o l a t i o n s of S e c t i o n 3 of t h i s A c t . i
I n s u c h a proceeding, the court shall d e t e r m i n e whether a violation
has been c o m m i t t e d , a n d s h a l l e n t e r nucli j u d g m e n t or decree as i t considers necessary to r e m o v e
t h e e f f e c t a of a n y v i o l a t i o n w h i c h i t f i n d s , a n d to
p r e v e n t such v i o l a t i o n f r o m c o n t i n u i n g o r f r o m
being r e n e v e d in the f u t u r e .
T h e c o u r t , i n i t s disc r e t i o n . m a y exercise a l l e q u i t a b l e p o w e r s necess a r y f o r t h i s p u r p o s e i n c l u d i n g , b u t not l i m i t e d to,
i n j u n c t i o n , d i v e s t i t u r e of p r o p e r t y , d i v o r c e m e n t of
business u n i t s , d i s s o l u t i o n of d o m e s t i c c o r p o r a tions o r associations, a n d s u s p e n s i o n o r t e r m i n a t i o n or t h e r i g h t of f o r e i g n c o r p o r a t i o n s o r associat i o n s to do business i n t h e S t a t e of I l l i n o i s .
( 1 0 ) t h e a c t i v i t i e s of a n y s t a t e or n a t i o n a l b a n k
t o t h e e x t e n t t h a t such a c t i v i t i e s a r e r e g u l a t e d o r
supervised by officers of t h e s t a t e or f e d e r a l g o v e r n m e n t u n d e r the b a n k i n g l a w s of t h i s S t a t e o r
the U n i t e d States;
( 1 1 ) t h e a c t i v i t i e s of a n y s t a t e o r f e d e r a l s a v i n g s
a n d l o a n association to t h e e x t e n t t h a i such a c t i v i ties a r e r e g u l a t e d or supervised by officers of t h e
s t a t e o r f e d e r a l g o v e r n m e n t u n d e r t h e savings a n d
l o a n l a w s of t h i s S t a t e o r t h e U n i t e d S t a t e s ; o r
( 1 2 ) t h e a c t i v i t i e s of a n y b o n a fide n o t - f o r - p r o f i t
association, society or b o a r d , of a t t o r n e y s , p r a c t i t i o n e r s of m e d i c i n e , architect's, e n g i n e e r s , l a n d s u r v e y o r s or r e a l estate b r o k e r s licensed a n d r e g u l a t e d b y a n agency of t h e S t a t e of I l l i n o i s , i n recon».
m e n d i n g schedules of suggested lees, r a t e s or commissions f o r use solely as g u i d e l i n e s i n d e t e r m i n i n g c h a r g e s f o r professional a n d t e c h n i c a l services.
1 Chapter 111-4 § 10.3.
2 Title 13 U.S.C.A. J 77a et aeq.
* Title 7 U.S.C.A. ? 7.
* Chapter 95Va. f 282.1 et seq.
00-—0.
Violations—Punishments'—Prosecutions.]
§ 6. E v e r y person w h o s h a l l w i l f u l l y do
a n y of t h e acts p r o h i b i t e d by subsections ( 1 ) a n d
( 4 ) of Section 3 of this A c t i c o m m i t s a Class 4
f e l o n y a n d a f i n e s h a l l be imposed n o t to exceed
?S«;Q00. -
( 1 ) T h e A t t o r n e y G e n e r a l , w i t h such assistance
£S he m a y f r o m t i m e to t i m e r e q u i r e of t h e S t a t e ' s
A t t o r n e y s i n the several counties s h a l l i n v e s t i g a t e
suspected c r i m i n a l v i o l a t i o n s of this A c t a n d s h a l l
c o m m e n c c a n d t r y a l l prosecutions u n d e r this A c t .
P r o s e c u t i o n s u n d e r this A c t m a y be c o m m e n c e d b y
complaint, information, or indictment.
W i t h respect to t h e c o m m e n c e m e n t a n d t r i a l of such prosecutions, t h e A t t o r n e y G e n e r a l s h a l l h a v e a l l of t h e
p o w e r s a n d d u t i e s vested b y l a w i n S t a t e ' s A t t o r neys w i t h respect to c r i m i n a l prosecutions g e n e r a l ly.
( 2 ) A prosecution for a n y o f f e n s e i n v i o l a t i o n
o f Section 6 of t h i s A c t * uiust be c o m m e n c e d w i t h i n 4 y e a r s a f t e r t h e commission t h e r e o f .
( 3 ) T h e A t t o r n e y General shall not commence
prosecutions u n d e r this A c t against a n y d e f e n d a n t
w h o , a t t h e t i m e , is a d e f e n d a n t w i t h r e g a r d t o
a n y - c u r r e n t p e n d i n g c o m p l a i n t , i n f o r m a t i o n or ind i c t m e n t f i l e d by tiie U n i t e d States f o r v i o l a t i o n ,
o r . a l l e g e d v i o l a t i o n , of t h e F e d e r a l
Anti-Trust
S t a t u t e s ( i n c l u d i n g but not being l i m i t e d , Act of
J u l y 2 . 1 S 9 0 . C h . 6 4 7 , 26 U . S . S t a t . 20!). 15 U . S . C .
A . . Sees. 1 - 7 ; Act of Oct. 15, 1 9 1 4 , Ch. 3 2 3 , 3S
U . S . S t a t . 7 3 0 , 15 U . S . C . A . Sees. 1 2 - 2 7 , 4 4 ; A c t of
A u g u s t 1 7 , 1 9 3 7 , C h . G90, T i t l e V I I I , 5 0 U . S . S t a t .
6 9 3 , 15 U . S . C . A . Sec. 1; A c t of J u l v 7, 1 9 5 5 , C h .
2 8 1 , 69 U . S . S t a t . 2S2, 15 U . S . C . A . S.«cs. 1 - 3 ; A c t
Of M a y 2C. 1 9 3 S , Ch. 2S3, 52 U . S . S t a t . 4 4 6 / 1 5 U .
S . C . A . Sec. 1 3 - C ; a u d a n y s i m i l a r A c t s passed i n
the f u t u r e ) involving substantially the same subject matter.
1973;
( 2 ) A n y person w h o h a s been i n j u r e d i n his
business o r p r o p e r t y , o r is - t h r e a t e n e d w i t h such
i n j u r y , b y a v i o l a t i o n of S e c t i o n 3 of this A c t m a y
m a i n t a i n an action in the C i r c u i t C o u r t f o r damages, o r f o r .an i n j u n c t i o n , o r b o t h , ' a g a i n s t any
p e r s o n w h o has c o m m i t t e d s u c h v i o l a t i o n .
I f , in
a n a c t i o n f o r a n i n j u n c t i o n , t h e c o t f t issues a n
i n j u n c t i o n , t h e p l a i n t i f f s h a l l be a w a r d e d costs
a n d r e a s o n a b l e a t t o r n e y ' s fees.
I n a n action for
d a m a g e s , i f i n j u r y is f o u n d t o be d u e t o a v i o l a t i o n of subsections ( 1 ) a n d ( 4 ) of S e c t i o n 3 of
t h i s A c t , t h e person i n j u r e d s h a l l be a w a r d e d 3
t i m e s t h o a m o u n t of a c t u a l d a m a g e s r e s u l t i n g f r o m
t h a t v i o l a t i o n , t o g e t h e r w i t h costs a n d r e a s o n a b l e
a t t o r n e y ' s fees.
I f i n j u r y is f o u n d t o bo d u e to a
v i o l a t i o n of subsections ( 2 ) o r ( 3 ) of S e c t i o n 3
of t h i s A c t , t h e person i n j u r e d s h a l l r c c o v e r t h e
a c t u a l d a m a g e s r a u s e d by t h e v i o l a t i o n , t o g e t h e r
w i t h costs a n d r e a s o n a b l e a t t o r n e y ' s fees, a n d i f
i t is s h o w t i t h a t s u c h v i o l a t i o n w a s w i l l f u l , the
c o u r t m a y , in i t s d i s c r e t i o n , i n c r e a s e t h e a m o u n t
r e c o v e r e d as d a m a g e s u p t o a t o t a l c f 3 t i m e s t h e
a m o u n t of a c t u a l d a m a g e s .
T h i s S t a l e , counties,
m u n i c i p a l i t i e s , t o w n s h i p s a n d a n y p o l i t i c a l subdiv i s i o n o r g a n i z e d u n d e r t h e a u t h o r i t y of t h i s S t a t e ,
a n d t h e U n i t e d S t a t e s , a r e «'onsidered a person havi n g s t a n d i n g to b r i n g a n a c t i o n u n d e r t h i s subsection.
T h e A t t o r n e y G e n e r a l m a y b r i n g a n action
o n b e h a l f of t h i s S t a t e , c o u n t i e s , m u n i c i p a l i t i e s ,
townships and o t h e r political subdivisions organized u n d e r t h e a u t h o r i t y of t h i s S t a t e to recover
t h o d a m a g e s u n d e r t h i s s u b s e c t i o n or by a n y comparable Federal law.
B e g i n n i n g J a n u a r y ] , 1 9 7 0 , a f i l e s e t t i n g out
t h e nanios of a U special assistant a t t o r n e y s g e n e r a l
r e t a i n e d t o prosecute a n t i t r u s t m a t t e r s a n d cont a i n i n g a l l t e r m s a n d c o n d i t i o n s of a n y s r r a n p * "
m e n t o r a g r e e m e n t reg^rdinsj fees o r c o m r e n s a t U ' "
m a d e b e t w e e n a n y such special a s s i s t a n t a t t o r n e y
g e n e r a l a n d t h e o f f i c e of t h e A t t o r n e y C e n t r a l
s h a l l bo m a i n t a i n e d i n t h e o f f i c e of t h e A t t o r n e y
G e n e r a l , open d u r i n g a l l business h o u r s to public
inspection.
"
' '
A n y a c t i o n f o r d a m a g e s u n d e r t h i s subsection I *
f o r e v e r b a r r e d unless c o m m e n c e d w i t h i n 4 years
a f t e r t h o cause of a c t i o n a c c r u c d , except t h a t .
389,
P. 1053
CHAPTER 38 —CKIMINAL LAW AND PKOCEDUBS
w h e n e v e r a n y a c t i o n Hi b r o u g h t b y t h e A t t o r n e y
G e n e r a l f o r a violation of this Act. t h e r u n n i n g of
t h o foregoiuK s t a t u t e of l i m i t a t i o n s , w i t h respect
t o e » r y p r i v a t e r i < h t of a c t i o n f o r d a m a g e s u n d e r
t h e s u b s e c t i o n w h i c h is based Jn w h o l e o r i n p a r t
on any m u t t e r complained of i n t h e action by t h e
A t t o r n e y G e n e r a l , a h u l l be suspended d u r i n g t h e
pendency t hereof. a m ! f o r one year t h e r e a f t e r .
No
c a u s e of a c t i o n barr« tl u n d e r e x i s t i n g l a w o n J u l y
2 1 , 1 9 « 5 s h a l l be r * » i v i d b y t h i s A c t .
( 3 ) Upon a f i n d i n g t h a t a n y domestic o r for*
elgn corporation organized or operating under the
l a w s o f t h i s S t a t e has been e n g a g e d i n c o n d u c t
p r o h i b i t e d hy Suction 3 o f t h i s A c t . o r t h e t e r m s
of a n y i n j u n c t i o n issued u n d e r t h i s A c t , a c o u r t
of c o m p e t e n t j u r i s d i c t i o n m a y , u p o u p e t i t i o n of t h e
A t t o r n e y General, order t h e revocation, f o r f e i t u r e
o r suspension o f t h e c h a r t e r , f r a n c h i s e , c e r t i f i c a t e
of a u t h o r i t y o r p r i v i l e g e s of a a y c o r p o r a t i o n o p e r a t i n g u w ! » r t h e l a w s of t h i s S t a t e , o r t h e d i s s o l u t i o n t»f a n y s u c h c o r p o r a t i o n .
( 4 ) I n l i e u of a n y p e n a l t y o t h e r w i s e p r e s c r i b e d
f o r a v i o l a t i o n of t h i s A c t , a n d i n a d d i t i o n t o a n
a c t i o n t i n d e r S e c t i o n 7 ( 1 ) o f t h i s Act.2 t h e A t t o r ney G e n e r a l m a y b r i n ^ a n a c t i o n i u t h e n a m e a n d
on b e h a l f o f t h e people of t h e S t a t e a g a i n s t a n y
person, t r u s t e e , d i r e c t o r , m a n a g e r o r o t h e r o f f i c e r
o r a g e n t of a c o r p o r a t i o n , or. a g a i n s t a c o r p o r a t i o n ,
d o m e s t i c o r f o r e i g n , t o r e c o v e r a p e n a l t y not t o
exceed $ 5 0 , 0 0 0 f o r t h o d o i n g i n t h i s S t a t e of a n y
T h e a c t i o n m u s t be
act h e r e i n d e c l a r e d i! l e g a l .
b r o u g h t w i t h i n 4 y e a r s a f t e r t h e c o m m i s s i o n of t h e
act u p o n w h i c h i t i s based.
A m e n d e d by P . A . 7 7 - 1 6 7 5 , $ 1 , e f f . J u l y 1 , 1 9 7 2
i Chapter 3,t. } SO—3.
* Chapter 38. § 60—7 (th«« scction).
GO—7.1
Personitl service.]
§ 7.1
Personal
service of a n y process i n an a c t i o n u n d e r t h i s A c t
m a y be m a d e u p o n a n y person o u t s i d e t h e state i f
such person has e n g a g e d i n c o n d u c t in v i o l a t i o n of
this A c t i n t h i s S t a t e .
Sucii persons s h a l l be
d e e m e d to h a v e t h e r e b y s u b m i t t e d t h e m s e l v e s to
t h e j u r i s d i c t i o n of t h e c o u r t s of this s t a t e w i t h i n
t h e m e a n i n g of this section.
A d d e d by P . A . 7 6 - 2 0 8 , § 1, e f f . J u l y 1, 1 9 6 9 .
G O — 7 .IS I n v e s t i g a t i o n l>y A t t o r n e y
General.]
§ 7.2
W h e n e v e r it a p p e a r s t o t h e A t t o r n e y G e n e r a l t h a t a n y person lias e n g a g e d i n , is e n g a g i n g
i n , or is a b o u t to e n g a g e i n a n y act o r practice
p r o h i b i t e d by t h i s A c t , o r t h a t a n y person has assisted or p a r t i c i p a t e d i n a n y a g r e e m e n t o r combin a t i o n of the n a t u r e described h e r e i n , he m a y , i n
his d i s c r e t i o n , c o n d u c t a n i n v e s t i g a t i o n as h e
deems necessary in c o n n e c t i o n
@FedFRASER