Israel’s government abuses Free Trade Agreement with US

Ray Hanania

Posted Mar 16, 2009      •Permalink      • Printer-Friendly Version
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Israel’s government abuses Free Trade Agreement with US

Americans lose billions in revenues and thousands of jobs

By Ray Hanania

Free trade agreements (FTAs) are supposed to help American businesses improve their profits, create more jobs and build their industries by opening new markets for export of their products with foreign countries under rules based trade. The US has FTAs with 20 foreign nations, including six added in 2006, Bahrain, El Salvador, Guatemala, Honduras, Morocco, and Nicaragua. Israel lobbied for a bilateral Free Trade Agreement with the US in 1984 and it was approved in 1985. But since then, according to a study conducted by the Washington DC based Institute for Research: Middle East Policy (IRmep) of documents released only last year, the United States has lost more than $71 billion in the deal and the equivalent of an average of 100,000 jobs in each of the past 10 years alone.

This is a staggering discovery considering that the United States is today in one of the worst economic depressions in its history and that the American unemployment rate continues to rise, now past 8.2 percent nationwide.

Worse, IRmep Director Grant Smith explained this week, is the trade secrets provided by American businesses to negotiate a favorable program have been obtained by Israel’s government and by AIPAC, Israel’s powerful lobbying organization that silences Israel’s critics in American business and in the United States House and Senate.

“The US government solicited confidential business information from affected businesses and trade associations to share their trade secrets, market share, and other sensitive information with the US government to negotiate the best deal,” explained Smith who discussed the issue during an appearance Wednesday on RadioChicagoland on WJJG 1530 AM Radio (

“Israel was the very first beneficiary of a free trade agreement with the US. But last year, new details were revealed about how Israel and the lobbying group AIPAC obtained the business trade secrets submitted by American companies.”

Free Trade Agreements basically work like this: Foreign country a manufactures apples and sells them to the US. The US manufactures oranges and, under the Free Trade Agreement, sells them to Israel, bypassing all of the two country’s trade restrictions or tariffs. In the end, both countries get something they don’t have. And total bilateral trade volume should increase as both countries focus on producing merchandise they are most efficient at manufacturing.

Since the agreement was ratified, Smith says, US industry, counter espionage agencies and the US Trade Representative (USTR) continue to combat the misuse of intellectual property of US companies obtained by Israeli companies exporting to the world, and preferentially to the US market.

According to a petition drafted by the American Coalition for Fair Trade to be filed April 6, 2009, the trade deficit with Israel continues to increase at a great cost to the American people.

The report calls the US trade deficit with Israel “an anomaly” among all other bilateral free trade agreements that threatens the economic viability of the American worker and US businesses.

The US-Israel FTA has reversed a formerly balanced trading relationship and produced an ever widening trade deficit to the United States. Translated into American jobs by the standard input-output method, the US-Israel FTA has been disastrous for American workers. In 2008, the $7.8 billion US deficit with Israel was the equivalent of 125,663 American jobs.

In fact, according to a chart of lost revenues and jobs between 1999 and 2008, the last 10 years of the FTA with Israel, the jobs lost to the American public is now an irreversible attribute of the trade relationship.

But, had the FTA and WTO intellectual property provisions been properly monitored and enforced the agreement with Israel, the report concludes, the relationship should have produced mutual, as opposed to one sided benefits.

In 2008 bilateral FTAs produced a cumulative $21.6 billion surplus. If the deficit generated by the US-Israel FTA ($7.8 billion) didn’t exist, the bilateral FTA surplus would have been $29.4 billion, sustaining 471,850 FTA related direct and indirect jobs in the American economy.

Worse is the recognition of this drain on the nation’s economy, which does not take into consideration the billions in funds that the United States gives Israel every year in outright grants and loans that are often later cancelled by the Congress and that Israel does not have to repay.

Additionally, Israeli companies benefitting from the Free Trade Accord are in fact engaged in construction and maintenance of Israel’s illegal settlements in the West Bank, fueled by revenue from US tariff free sales! An agreement that violates the rights of US companies and workers, now finances the expropriation of Palestinian land—in violation of international law and US policy.

Smith noted the USTR has been aware of these violations for years but details of petitions and other information have never been made public: complaints from corporations have been secret for the past 25 years. The original trade secrets report is still classified (though not to AIPAC and the Israeli government.)

The Obama administration will now have to consider the results of this agreement, according to Smith, as his proposed trade representative, Ron Kirk, reevaluates all free trade agreements including Israel’s FTA.

(Ray Hanania is an award winning columnist and Chicago radio talk show host. He can be reached at or by email at .(JavaScript must be enabled to view this email address).)