U.S. Discloses Israeli Free Trade Treaty : Pioneering Accord Calls for Ending All Barriers to Commerce

The United States today disclosed the terms of its first free trade pact with a foreign nation--an agreement that calls for the eventual elimination of all trade barriers with Israel.

Under the agreement, all tariffs, subsidies and other barriers to trade would be abolished in 10 years. In 1984 the two countries traded $3.9 billion worth of goods.

The accord will be initialed here Thursday in a private ceremony by U.S. Trade Representative William E. Brock and Israeli Finance Minister Yitzhak Modai, according to Candace Strother, a special assistant to Brock.

Modai will also be seeing Secretary of State George P. Shultz and congressional leaders during his four-day visit.

Hopes for More Such Pacts

Brock said last week that he hopes there will be more American free trade agreements. He added that the idea is to show nations that are reluctant to open up their markets how much benefit there can be to both sides from freer trade.

Although the pact must be reviewed by Congress and the Israeli Knesset, no major changes are expected.

Kathleen Keim, in charge of Israeli affairs at the Commerce Department, said she had received complaints from American manufacturers that they are at a disadvantage in selling to Israel now because of other countries’ free trade agreements.

“Zippers and copper wire are two,” she recalled. “They come into Israel from the European Community under reduced tariffs. Some of those tariffs will disappear altogether by 1990.”

Some will be gone in five years.

Would End Subsidies

Israel, in addition to eliminating its tariffs on American goods, would undertake to end the subsidies it pays on many of the goods it ships to this country. American business people see these subsidies as unfair competition that makes their own products comparatively more expensive to prospective buyers.

The immediate effect of the pact would be small since most products exchanged by the two countries are already free of duty, but in the long run trade experts believe that Israel would be able to sell more goods to the United States, cutting down its need for direct help from the U.S. Treasury.

Unlike similar accords between other countries, the pact includes farm products as well as manufactured items.

The accord also includes a few loopholes. Both countries could put restrictions on trade to promote their farm policies. Israel could restrict its imports to support its kosher food laws .

Under the agreement, more than 80% of U.S. imports from Israel and more than 52% of Israeli imports from the United States would be freed immediately from trade restrictions.