Three decades ago, the Arab nations launched their economic boycott of Israel as part of their prolonged war to drive the Jewish nation from their midst.
Last summer, moved by increasing demands from Arabs that U.S. firms join in the boycott, Congress passed and the President signed legislation aimed at preventing discrimination against U.S. businesses and Jews as part of the anti-Israel boycott.
Today, detailed regulations implementing that legislation take effect. But sources in government, industry and private groups say that despite the apparently opposing policies of the Arab governments and the United States, no one experts any significant impact on the billions of dollars a year in U.S. trade with the Middle East.
"We're expected to be able to continue to do business (and) abide by the law," says Don G. Wason, president of Aramco Services in Houston, which purchases goods and services worth more than a half billion dollars a year for the Arabian American Oil Co., in Saudi Arabia. "A lot of people won't know the difference."
Broadly, the anti-boycot law is designed to prevent discrimination against U.S. businesses and individuals as part of the Arab boycott of Israel, Jews and those doing business with Israel. For example, a company could not refuse to solicit bids from a "blacklisted" firm; nor could the company sypply information on the nationality or religion of its owners or directors.
The Commerce Department has drawn up specific regulations for implementing the anti-boycott law. The final version of those regulations is due to be released today, with publication in the Federal Register later in the week. Many portions of the regulations take affect today, a few in June.
Many people in government and here in Houston, where firms have billions of dollars in contracts with Middle East nations, say that the eventual impact may be determined by the current peace negotiations and by the Arabs themselves - how willing they will be to adapt the boycott to the law will determine the extent to which U.S. businesses will be allowed to continue to operate in the Middle East.
For while the regulations, as proposed last September, forbid a U.S. firm from excluding certain businesses from supplying goods for a Middle East contract as part of the boycott, they do, for example, allow the Arab customer to specify that it wants, say, tires, from a given company, which is not on the Arab blacklist. Thus, enforcement of the boycott is shifted from the U.S. businessman to his Arab customer.
"A number of (Arab) countries have indicated they will accept" such arrangements, says Jackson Hearn, a Commerce Department expert on the boycott. A Houston source said that even Iraq, one of te most strident anti-Israeli and anti-American Middle East nations, has indicated some flexibility so it can obtain U.S. technology.
But the anti-boycott law has already resulted in some business being lost to companies in other countries. Industry and government sources say that although the total dollars involved is unknown, it appears there has been no large-scale dislocation of trade and there may never be.
Ted C. Rogers, president of the National Supply Co., a division of Armco Steel Corp. that makes oil and gas well drilling equipment and valves here, says his firm has lost one equipment sale although he declined to detail it.
Another industry source says a major construction firm here, apparently because of the anti-boycott law, lost a Middle East contract, a project totaling hundreds of millions of dollars. It went to a U.S. competitor's subsidiary in Europe, the source said.
J. William Stewart, an attorney with Hughes Tool Co., a supplier of drilling bits worldwide, says he expects some Arab nations to modify their boycott procedures but that some salss by U.S. companies will be lost - except in cases where other nations or companies cannot supply comparable goods.
Those who may be most affected by the new anti-boycott regulations may be small exporters for whom the amount of business does not warrant the chance of a violation. Breaches of the anti-boycott law carry a maximum penalty of $25,000 in fines and a one year prison term or both. Subsequent violations call for five years as well as a $50,000 fine or three times the value of the exports involved, whichever is greater.
"It's devastating to a small company," says Atef Gamal-Eldin, president ot the American-Arab Chamber of Commerce here. Eldin, an American citizen, said companies not already doing business in the Middle East may also be closed out if Arab nations insist on such information as religion of owners, officials and directors as a condition of beginning to do business.
The United States exported goods worth $7.2 billion to the Arab nations in the first 11 months of 1977, compared with $6.3 billion in the same period of 1976. Israel in the first 11 months of 1976 imported $1.3 billion worth of goods from the United States and also $1.3 billion in the same 11 months of 1976.
One government analyst says that despite the boycott, both the Arabs and the Israelis have been able to import from the United States whatever they have been able to absorb into their economics. "What Israel has needed, Israel has been able to get," says Commerce's Hearn, and the growth in exports from this country to the Middle East has been consistent with Arab import capacity.
(For years, with little business between U.S. firms and the Arabs, the boycott was generally ignored, but after the 1973-74 oil embargo and the use by the Arabs of oil as a diplomatic weapon, companies have paid more attention to it.)
One person suggested that, with the jail terms and fines and new wariness on the part of U.S. contractors, a company may find it safer if less lucrative to just not do business in all parts of the Middle East - for example, refusing to deal with Israel on its own - an irony that would make the boycott more effective as a result of the anti-boycott legislation.