America's 'Made in Israel' policy that you've probably never heard of

Much has been said about the EU's new guidelines for labeling Israeli settlement goods, but the US has had similar rules for decades.

al-monitor Sen. Rob Portman, R-Ohio, speaks during the Republican Jewish Coalition Spring Leadership Meeting in Las Vegas, April 25, 2015.  Photo by REUTERS/David Becker.
Julian Pecquet

Julian Pecquet


Topics covered

palestinian authority, occupied territories, marco rubio, eu, congress, boycott of israeli goods, ben cardin, bds

Dec 7, 2015

To hear Republicans and not a few Democrats say it, the European Union's recent decision to label West Bank goods is little more than an anti-Semitic ploy to harm Israel.

What none of them will tell you — and few seem to even realize — is that the United States has had similar rules on the books for the past two decades. Now that little-known US labeling policy is poised to become the next battleground as two-state solution champions and hard-line pro-Israel advocates face off over just what it means to be “Made in Israel.”

“There are a number of members of Congress who are interested specifically about how the US rule is or is not being followed,” said Dylan Williams, the vice president of government affairs for the liberal J Street lobbying group. “And, more broadly, how the United States can further sharpen the distinction in US law and policy between Israel and the territories.”

At issue is 1995 guidance — still in force today — from the Treasury Department that requires goods from the West Bank or Gaza Strip to be labeled as such. The guidance, which was last updated in 1997, applies to the 1985 trade pact with Israel and was meant in part to boost support for the fledgling Palestinian Authority created by the Oslo Accord.

US policy differs from the recent EU rules on one key point: It does not mention “settlements” or differentiate between the Israeli or Palestinian origin of the goods, harkening back as it does to a time when the two parties were trying to turn over a new page. In other respects, however, the two policies are remarkably similar.

“Goods which are produced in the West Bank and Gaza … shall not contain the words ‘Israel,’ ‘Made in Israel,’ ‘Occupied Territories-Israel,’ or words of similar meaning,” the US notice of policy states. “The Department of State believes that labeling goods as coming from the ‘West Bank’ or ‘Gaza’ will provide American purchasers with important information indicating their origin.”

The European Commission has made a similar argument in defending its own decision to label goods from Israeli-controlled parts of the West Bank as coming from Israeli “settlements,” which the EU considers to be illegal. That notice has caused a firestorm in Israel and Congress.

For more than a year, the powerful American Israel Public Affairs Committee (AIPAC) has been working with Congress to push back against the pro-Palestinian boycott, divestment and sanctions effort, notably by targeting European policies. The effort has been led by four lawmakers — Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio, and Reps. Peter Roskam, R-Ill., and Juan Vargas, D-Calif. — who have championed legislation that would penalize entities that discourage doing business with Israel and “territories controlled by Israel.”

Critics view that language as a veiled attempt to change longstanding US policy to differentiate between Israel and the territories occupied after 1967. The Obama administration considers Israeli settlements to be illegitimate, and has said it has no issues with the new EU labeling rules.

US lawmakers succeeded in getting similar language passed in its bill authorizing trade talks with Europe this summer. The law earned a rare rebuke from the State Department, which made it clear that it would not enforce a provision of the trade bill making it a “principal negotiating objective” of the United States to “discourage” any actions that would “prejudice” trade with “Israel and Israeli-controlled territories.”

“The US government,” spokesman US State Department spokesman John Kirby told reporters June 30, “has never defended or supported Israeli settlements and activity associated with them and, by extension, does not pursue policies or activities that would legitimize them.”

Some peace activists believe that statement may pave the way for a signing statement by President Barack Obama that would curtail the enforcement of similar provisions in future legislation. The House, in particular, may vote as early as this week on trade legislation that calls on the administration to report on foreign entities that establish barriers to trade with “Israeli-controlled territories.”

The rhetoric has also seeped into the presidential campaign.

“Discriminatory laws that apply only to Jews are now being written into European law for the first time in more than half a century,” Sen. Marco Rubio, R-Fla., told the Republican Jewish Coalition last week. “I believe we need a president who is not afraid to call this out for what it is: anti-Semitism. I will be that president.”

Some pro-Israel lawmakers insist their goal isn’t aimed at treating Israeli and West Bank goods the same.

“Our purpose is just to stop the international effort to put in place the boycotts and the sanctions and the divestments,” Portman told Al-Monitor. “That’s the only thing we’re trying to get at.”

Some of their statements — and bills they’ve pushed — suggest otherwise, however.

“In carrying out the provisions of the US-Israel FTA [Free Trade Agreement], the US government makes no distinction between goods coming into the United States from Israel or Israeli-controlled territories, affording all goods duty-free treatment,” the four lawmakers wrote in a Nov. 12 letter to US Trade Representative Michael Froman, without mentioning the US trade pact's separate labeling requirements. “Trying to differentiate between Israeli products — which may be produced in several regions — creates a slippery slope.”

And in a Nov. 9 letter to EU foreign policy chief Federica Mogherini, 36 senators warned that “differentiating between products made by Israeli companies creates a troubling precedent.”

For J Street’s Williams, the rhetoric is a clear sign that all parties may soon take a fresh look at the US labeling policy.

“Those who are engaged on this [on both sides of the debate] are now aware of this critically important nuance,” said Williams, a former trade specialist with the office of retired Maine Republican Sen. Olympia Snowe. "And I don't expect this issue to go away anytime soon, both because you will continue to have people who want to blur the green line pushing language like this, and you're going to start to see more and more resistance to some of those moves among the most staunchly pro-two-state solution lawmakers."

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