On Monday, President Obama signed into law the sweeping Trade Promotion Authority, a measure with broad significance for future international trade deals with Europe. It also includes important new federal legislation, the United States-Israel Trade and Commercial Enhancement Act, opposing boycotts and other economic warfare against Israel.
The law will significantly increase the legal and economic risks for the E.U., and companies world-wide, to pass discriminatory sanctions and restrictions against Israel.
The central provision requires U.S. trade negotiators, when negotiating trade agreements, to seek to “discourag[e] politically motivated actions to boycott, divest from or sanction Israel and to seek the elimination of politically motivated non-tariff barriers on Israeli goods, services, or other commerce imposed on the State of Israel.” This measure is particularly timely as the law will apply to a major future trade negotiations with the European Union, which has long been threatening to impose economic restrictions on Israel.
The laws apply equally to “Israel” and “Israeli-controlled territories.” This is in keeping with existing U.S. policy, as articulated in several laws including the 1979 amendments to the Export Administration Act. Moreover, given the White House’s persistent refusal to recognize Israeli sovereignty inside the 1949 Armistice Lines (the Green Line), such language is necessary for Congress to ensure the laws apply even to western Jerusalem.
The trade negotiation provision is, to be sure, almost impossible to enforce in the face of presidential recalcitrance. While it establishes “negotiating objectives,” ultimately the President conducts the negotiations. Nonetheless, while the provision does not constrain the ultimate parameters of a trade deal, it does require the U.S. Trade Representative to make this an issue.
But there are several other interesting provisions of the law. One expresses U.S. “support” for states adopting laws that condition state contracting or investment with boycotting companies. Two states have done this without any federal encouragement, and more will certainly follow. Another provision with immediate effect concerns foreign judgements:
No court in the United States may recognize or enforce any judgment which is entered by a foreign court against a United States person carrying out business operations in Israel or in any territory controlled by Israel and on which is based a determination by the foreign court that the location in Israel, or in any territory controlled by Israel, of the facilities at which the business operations are carried out is sufficient to constitute a violation of law.
In plain English, this means U.S. courts cannot enforce judgements that doing business in or being based in the West Bank or Golan Heights violates international law, or particular European rules. There are not as of yet any such foreign judgements to speak of; indeed, legal challenges to business activities across the Green Line have consistently been rejected by European national courts. The real importance of the foreign judgements provision is establishing and strengthening U.S. state practice on this international legal issue.
That is, one underlying purpose behind the series of relatively minor EU restrictions on business across the Green Line is to establish an entirely novel principle of international law (applicable only to Israel): that these areas are for completely off limits for Israelis. The Europeans claim the mere presence (forget habitation) of Israelis in these areas can be a crime under international law. The new law rejects this contention, event to point that it will not recognize foreign judgements arising from it. This would include, for example, the purchase of property in the West Bank by Americans.
Finally, another under-appreciated provision states that boycotts and divestment of Israel by governments violates the General Agreement on Trade and Tariffs, the cornerstone of international trade law. Such a finding by a major third-parrty state should make the EU quite worried about the possibility of Israel challenging their impending restrictions in the World Trade Organization’s dispute resolution mechanism.
More broadly, the law – and the state laws it will spawn – represents a major refutation of the conventional wisdom that boycott pressure on Israel is growing irreversibly and ineluctably. In this account, it is Israel’s policies, rather than the single-minded animosity of its opponents, that fuels boycott efforts, and nothing short and changing those policies will help. In short, in this view, the boycott pressure is at least in part legitimate. This view was championed by the left-wing J-Street group, which opposed the Roskam Amendment. They did not manage to convince a single congressman. Despite the efforts of such ostensibly pro-Israel groups, Americans understand that the movement to single out Israel for economic punishment is unreasonable, discriminatory, dangerous to Israel’s security, and contrary to long-standing U.S. policy.