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AIPAC, Espionage and the US-Israel Free Trade Agreement

Documents

The following document case file tracks the first US Free Trade Agreement signed with Israel in 1985.  The lobbying battle pitted  large US corporations, American industry associations, small fruit and vegetable growers and thousands of individual petitioners against the "American-Israel Chamber of Commerce and Industry, Inc." and American Israel Public Affairs Committee, or AIPAC.  American industries were shocked when the FBI began investigating AIPAC for obtaining and distributing the 300 page report containing their trade secrets titled "Probable Economic Effect of Providing Duty Free Treatment for U.S. Imports from Israel, Investigation No. 332-180" in the midst of the negotiations.  The ITC later confirmed that the Israeli government also obtained the still-classified report.  The document contains business confidential trade secrets, market share, inventory, delivery costs, internal production costs and other highly sensitive data US industries submitted under strict confidence to urge the best possible outcome for US businesses.

Since the agreement was signed, US trade with Israel swung from surplus to a $71 billion cumulative deficit in 2008—an anomaly among all other US bilateral agreements.

AIPAC and US Trade Secrets

Document/File Date Pages Contents
1/31/1984 2 US Trade Representative William E. Brock's letter to US International Trade Commission Chairman Alfred Eckes.

"During the recent visit of Prime Minister Yitzhak Shamir of Israel, President Reagan agreed that the Government of the United States would enter into negotiations with the Government of Israel with a view to the establishment of a free trade area between the United States and Israel.....I request the Commission to conduct an investigation, pursuant to section 332(g) of the Tariff Act of 1930, and to advise the President, with respect to each item in the Tariff Schedules of the United States as to the probable economic effect of providing duty free treatment for imports from Israel on industries in the United States producing like or directly competitive articles and on consumers."

2/15/1984 2 Federal Register / Vol. 49, No. 32/ Notices

"[332-180] Probable Economic Effect of Providing Duty-Free Treatment for Imports from Israel...Institution of an investigation..."

3/05/1984 1 R. L. Di Napoli, President, Sun Garden Packing Co. Letter to U.S. International Trade Commission Secretary:

"On behalf of our principals, company suppliers and nine hundred, long-time employees, we urge you to do all that you are empowered to do in order to obtain a statutory exemption for import sensitive, agricultural products such as: canned tomatoes, tomato products and apricots, regarding the Reagan Administration's proposal for free-trade legislation with Israel."

3/8/1984 1 Foster Furman, Chairman of the Board, Furman Canning Company to US International Trade Commission Secretary:

"We employ about 150 people year round, 550 people during tomato processing season, and have 261 farmers growing tomatoes for us.  I would hate to see us all put out of work because of an agreement with Israel or any other country."

3/23/1984 1 Sidney N. Weiss, partner of Robert M. Gottschalk P.C. to US International Trade Commission Secretary Kenneth R. Mason:

"The American-Israel Chamber of Commerce and Industry, Inc. requests to appear and testify before the International Trade Commission during its hearing on the proposed United States-Israel Free Trade Area.

4/10/1984 36 Partial Official Transcript: Proceedings before the U.S. International Trade Commission - The Probable Economic Effect of Providing Duty-Free Treatment for Imports from Israel.  Investigation No. 332-180 (pages A-36)

US Senator Dale Bumpers:  ".. all of us are concerned about the potentially serious consequences that an FTA could have upon the United States bromine industry, a small but vital sector of the American economy..."

"The Israeli bromine industry enjoys a series of subsidies and other special advantages...To begin with, the Israeli bromine industry is government-owned."

Governor Bill Clinton: "So I would just plead with you to consider the enormously concentrated adverse economic impact of including bromine in this FTA, because 85 percent of the production is concentrated in two small rural counties..."

4/10/1984 11 Written Testimony of Thomas A. Dine, Executive Director American Israel Public Affairs Committee (AIPAC) before the International Trade Commission Hearings on a Proposed Free Trade Area Between Israel and United States:

…"because of Israel's small size and limited production capacity relative to the U.S., there is little reason to fear major short term negative effects from increased Israeli imports into the U.S….The proposed Free Trade Area is therefore a two-way gain—both countries will reap the benefits from the pact..." "...keeping the proposed FTA as 'clean' as possible and avoid gutting the agreement by carving out exception after exception."

4/11/1984 7 Charles Bremer, manager of Marketing Research, Westpoint Pepperell, Inc. statement before the US International Trade Commission:

"I am appearing on behalf of the American Fiber/Textile/Apparel Coalition (AFTAC) which is a national coalition of the U.S. domestic fiber, textile and apparel complex.  Members of the group are located throughout the United States and produce most of the textiles and apparel items made in this country.  On behalf of the coalition, I would like to say that we have had the opportunity most recently to consider and evaluate the proposal to create a Free Trade Area with the State of Israel and have concluded that it is a very bad idea and should not become a reality."

04/30/1984 2 AIPAC memorandum to members about the proposed FTA "As the only such arrangement the U.S. would have with any country in the world, an FTA with Israel would strengthen and reinforce the special political as well as economic bonds shared by the two democracies."
5/02/1984 3 Thomas L. Gossage, Group Vice President and Managing Director, Monsanto International letter to Kenneth Mason, Secretary, US International Trade Commission:

"..a local concern has been able to take advantage of the procedural shortcomings in the Israeli "patent opposition system," the granting of a patent to Monsanto has been blocked."

"Three fourths of Israel's chemical industry is owned by the government and it receives substantial export subsidies....In the decade ahead Israel will become an increasingly active exporter of these products and may cause some market discontinuities in the U.S..."

"our government should make the distinction between the advanced developing and developed countries with a strong current account position (such as Taiwan, Hong Kong and Japan) and those with severe balance of payments problems..."

5/30/1984 1 Letter from Alfred Eckes, Chairman US International Trade Commission to President Ronald Reagan transmitting the report "Probable Economic Effect of Providing Duty Free Treatment for U.S. Imports from Israel, Investigation No. 332-180:"

"Based on the information gathered in the U.S. International Trade Commission's investigation of the proposed free trade area, the Commission does not expect duty-free treatment for U.S.  imports from Israel to have a significant adverse effect at the aggregate level for any of the major sectors examined; however, at the less aggregated commodity level, significant adverse effects are likely in seven different product areas as discussed in the report."

6/07/1984 3 Senator Alan Cranston Letter to William E. Brock, US Trade Representative:

"...I am concerned about possible economic harm to import-sensitive California specialty crops posed by a blanket free trade area...I'm gratified to know that you will consider the possibility of exemptions...and urge you to review carefully the case for exempting certain specialty crops, especially tomatoes, dehydrated onions and garlic, fresh cut roses, artichokes and olives.

06/20/1984 ARCHIVE The FBI investigates Israel and AIPAC for espionage and theft of government property over stolen ITC/USTR documents.
6/27/1984 1 International Trade Commission Chairwoman Paula Stern Letter to Senator Alan Cranston

"As you know, the Commission completed its investigation and sent the report to the USTR on May 30, 1984."

6/30/1984 3 AIPAC Legislative Update: "Despite intense lobbying by some agricultural interests--particularly so-called specialty crops, like dehydrated onion and garlic--over 100 representatives have sponsored HR 5377, a bill authorizing the President to negotiate and implement a Free Trade Area (FTA) agreement with Israel."
8/03/1984 External Link

Article "FBI Investigates Leak on Trade To Israel Lobby" The Washington Post -  Final Edition:

"The FBI is investigating how the major pro-Israel lobbying group obtained a copy of a classified document that spells out American negotiating strategy in trade talks with Israel, government officials said yesterday.

The document, a report from the International Trade Commission to U.S. Trade Representative William E. Brock, contains proprietary data supplied by American industries and other sensitive information for the negotiations, which began early this year.

Trade officials said the report would give Israel a significant advantage in the trade talks because it discloses how far the United States is willing to compromise on contested issues. Some of the proprietary information, moreover, could help Israeli businesses competing with U.S. companies, officials said.

A spokesman for the American Israel Public Affairs Committee (AIPAC), the principal pro-Israel lobbying group in this country, acknowledged that the organization had a copy of the report but said the lobbying group did nothing illegal.
"

11/01/1984 4 U.S. Bromine Alliance letter from Max Turnipseed to International Trade Commission Chairwoman Paula Stern:

"The US Bromine Alliance provided very sensitive cost information to the Commission in response to the Commission's requests for confidential business data in connection with its report on a free trade agreement with Israel.  The Alliance presumes that these data were quoted in the Commission's confidential report to the USTR, a copy of which was obtained by representatives of the American-Israel Public Affairs Committee..."

11/29/1984 2 USITC Chairwoman Paula Stern Letter to Max Turnipseed, U.S. Bromine Alliance.

"You requested us to describe, characterize, or specify what business confidential information submitted by the U.S. Bromine Alliance in your letter of April 27, 1984 was included in the U.S. International Trade Commission's confidential report to the U.S. Trade Representative on investigation No. 332-180, Probable Effect of Providing Duty-Free Treatment for Imports from Israel...

Specific business confidential numbers extracted from the Alliance's letter and shown in the report included: (1) the production cost for bromine, (2) production cost, raw material cost, depreciation or manufacturing cost, by-product cost, and shipping cost for the compound TBBPA and (3) the length of time that sales of domestic TBBPA could be supplied from inventory."

1/07/1985 0 Kenneth R. Mason, Secretary, US International Trade Commission terminates investigation 332-180.

"The Commission provided USTR with such advice on May 30, 1984, as a result of investigation No. 332-180.  At the request of USTR, that investigation was conducted in all respects as though the advice had been requested under section 131.  A public hearing was held.  Notice of the investigation and public hearing was published in the Federal Register of February 15, 1984..."

01/09/1985 1 Federal Register / Vol. 50, No. 11/ Notices

"In response to USTR's request received December 10, the Commission has redesignated investigation No. 332-180 as investigation No. TA-131(b)-10, with no change in scope of the investigation.  The Commission has notified USTR that the advice provided on May 30, 1984 in connection with investigation No. 332-180 is to be considered as the Commission's advice for the purpose of this investigation."

1995 External Link "Israel's Unauthorized Arms Transfers" by Duncan Clarke, Foreign Policy Magazine.  Details of violations of US Intellectual Property and stolen designs in Israeli weapons systems and unauthorized sales to third countries.
2005 Internal Link Pharmaceutical industry intellectual property IP violation charges over Israeli copy-cat drug exports to the US.
2006 External Link

Israel is placed on USTR Priority Watch List for “unfair commercial use of undisclosed test and other data submitted by pharmaceutical companies seeing marketing approval for their products.”

2007 External Link

Israel remains on USTR Priority Watch List for “inadequate protection against unfair commercial use of data generated to obtain marketing approval.”

2008 External Link Israel remains on USTR Priority Watch List “The United States remains seriously concerned, however, with Israel’s inadequate level of protection against unfair commercial use of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products.”
8/11/2008 Internal Link US-Israel cumulative trade deficit reaches $62.65 Billion through 2007.
12/29/2008 2 US International Trade Commission denies a  FOIA request for public release of the 1984 report "Probable Economic Effect of Providing Duty Free Treatment for U.S. Imports from Israel, Investigation No. 332-180 (redesignated TA-131(b)-10)"

"We have located the 300+ page probable economic effect report that was issued and are withholding it in its entirety pursuant to exemptions 1, 3, and 4 of the FOIA, 5 U.S.C. 552 (b) (1), (3) and (4).  Exemption 1 protects from disclosure all national security information concerning the national defense or foreign policy.  Exemption 4 protects "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential....No reasonably segregable portion of this record can be provided."
12/31/2008 External Link President George W. Bush temporarily renews the US-Israel Free Trade Agreement until December 31, 2009

"In order to maintain the general level of reciprocal and mutually advantageous concessions with respect to agricultural trade with Israel, on July 27, 2004, the United States entered into an agreement with Israel concerning certain aspects of trade in agricultural products during the period January 1, 2004, through December 31, 2008 (the ``2004 Agreement''). The 2004 Agreement reflects an effort by the United States and Israel to address, through 2008, their continuing differences over the meaning of certain provisions in the USIFTA governing access for U.S. agricultural products to Israel's market."

2/23/2009 External Link US-Israel cumulative trade deficit reaches $71 Billion through 2008, equivalent to 126,000 US manufacturing jobs.
03/09/2009 1 USTR rejects FOIA request for the report "Probable Economic Effect of Providing Duty Free Treatment for U.S. Imports from Israel, Investigation No. 332-180 (redesignated TA-131(b)-10)"

"The report is being withheld in full pursuant to 5 U.S.C. 552(b)(1), which pertains to information that is properly classified in the interest of national security pursuant to Executive Order 12958."

 

 
 
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