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DECLASSIFIED: "Probable Economic Effect of Providing Duty -Free Treatment for Imports from Israel"

In the news: 2/20/2023 AIPAC Israeli Economic Espionage Against US Hits $366 Billion

The Interagency Security Classification Appeals Panel (ISCAP) ordered the US Trade Representative to declassify and release most of a secret 300 page trade document.  In 1984 US exporters were urged to submit "confidential business information" (CBI) about their prices, market share, internal costs and market strategy to the International Trade Commission. The USTR guaranteed confidentiality and compiled the sensitive data into a classified report for use in negotiating the US-Israel Free Trade Agreement.

The Israeli government covertly obtained the classified USTR report and passed it to the American Israel Public Affairs Committee to use in lobbying, the development of counter talking-points and a public relations campaign. Declassified FBI investigation files in the petition reveal AIPAC's legislative director made illicit duplications before returning the report by order of the USTR. The FBI interviewed Israeli Minister of Economics Dan Halpern.  Halpern claimed he obtained the classified document, without disclosing the source, and gave it to AIPAC.  

AIPAC and the Israeli government likely wanted the secret file to ward off intense US industry efforts to either receive reciprocal market access, or redirect US trade negotiations toward larger, more developed markets that offered greater return benefits.  Israel and AIPAC were particularly interested at the time in permanently "locking in" zero tariff access to the US market which was tentative and subject to possible future cancellation under the Generalized System of Preferences. 

Stolen Trade Files

Document Probable Economic Effect of Providing Duty -Free Treatment for Imports from Israel
2010-074_1.pdf Preface, table of contents, executive summary. "Trade does not exist between Israel and its immediate neighbors because of its geopolitical situation.  Instead Israel has found its major export markets in the European Community (EC) and the United States."  US accounted for 22% of Israeli exports in 1982.
2010-074_2.pdf "U.S. producers and processors of tomatoes oppose the granting of duty-free tariff treatment to products from Israel because such treatment would accelerate the growth of canned tomato imports (which are already on the rise) and further reduce the demand for domestic products, resulting in a decline of U.S. production , sales and employment." Citrus fruit and fruit product producers in Florida, California and Arizona oppose the proposed free-trade agreement with Israel. "Domestic producers state that the free-trade agreement will establish a devastating precedent for the creation of future free-trade agreements with other countries...The free-trade agreement will permit Israel to hold a tremendous advantage in domestic markets developed by U.S. producers and will not expand U.S. agricultural exports to Israel, according to the producers."
2010-074_3.pdf "The government of Israel price-support program for processing tomatoes, providing a guaranteed minimum price to processors for their output, along with the devaluation of the Israel Shekel in 1983, has added to the competitive strength of the imported canned tomato products from Israel."  "The granting of duty-free status to imported tomato products from Israel would most likely cause a significant adverse effect on domestic tomato growers and processors due to rising imports."
2010-074_4.pdf "Productivity in Israel's apparel industry is, reportedly, lower than in the US apparel industry; productivity per hour in terms of U.S. dollars in 1982 averaged $11.65 in the U.S. industry compared with $4.89 in the Israel industry."
2010-074_5.pdf "The Israel chemical industry began in the early 1920's when a small plant was started to produce potash and bromine from the Dead Sea...Israel ranks as the second largest ..Exports of chemicals from Israel have also been enhanced as a result of direct support from the Government of Israel ..." "Data submitted by the interested parties show that the average manufacturing cost of Israel bromine is 12 cents per pound compared with 26 cents per pound for the three U.S. producers." CBI  "Diamonds exports amounting to 5%  (approximately $1.2 billion) of the Gross National Product in 1982...The Israel diamond industry accounts for more than one-half of the international trade in cut and polished diamonds and the industry is currently expanding into other precious and semiprecious stones..."
2010-074_6.pdf "Certain U.S. producers of telecommunications equipment and electronic components have expressed general opposition to the proposed duty-free treatment for imports from Israel...U.S. producers believe that Western European firms will migrate to Israel and be positioned to export their merchandise to the United States." "Price has played a key role in Israel's exporting success.  The duty-free treatment accorded most Israeli jewelry imports into the United States has been the primary advantage.  Since the inception of the GSP program in 1976, on average of 97 percent of jewelry imports from Israel were duty-free." "Opposition to the duty-free tariff treatment for jewelry was voiced by the largest national jewelry trade association and several domestic producers...Support for the elimination of jewelry tariffs came from an importer and the American Israel Public Affairs Committee." "The implementation of this proposal would eliminate uncertainty about the future of the GSP program, a program which is the key to Israel's competitiveness in the US market."
2010-074_18.pdf Alphabetical Index for Commodity Groupings

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