Wednesday, March 1, 2006

The Bush administration said yesterday it is pressing the United Arab Emirates to drop its economic boycott of Israel — a major sticking point in the proposed takeover of key U.S. ports by a UAE-owned firm.

A joint U.S. agency team traveled to the oil-rich Gulf kingdom last month to discuss the boycott, and a senior Commerce Department official will press Dubai again during a visit this month, State Department spokesman Adam Ereli said.

“The United States wants to see the boycott against Israel dropped completely by everybody, and that’s our position,” he said.

Mr. Ereli said the talks on the boycott were part of a larger drive to nail down a bilateral free-trade agreement with the UAE.

But U.S. lawmakers said the country’s participation in the Arab League boycott raises fresh questions about the deal to allow UAE-owned DP World to purchase the management contracts for New York, Baltimore and other major U.S. ports.

“Obviously, it should be a factor” in whether to approve the deal, said Sen. Charles E. Schumer, New York Democrat, who has helped rally bipartisan opposition to the Dubai deal in Congress.

“Security has to come No. 1, but [the boycott’s] something that has to be weighed,” he said.

Sen. Frank R. Lautenberg, New Jersey Democrat, added, “I don’t like the fact the UAE is a party — whether directly or indirectly — to a boycott, which is illegal under all kinds of international agreements, against Israel, and that it is still sticking by that.”

Leading U.S. Jewish groups have long sought to end the boycott.

The boycott “is an anachronistic practice that has been used by the Arab world to unfairly isolate and stigmatize Israel,” said Josh Block, a spokesman for the influential American Israel Public Affairs Committee. “No company should be participating in the boycott.”

Abraham Foxman, director of the Anti-Defamation League, wrote in a Feb. 28 letter to Treasury Secretary John W. Snow, “If Dubai continues its anti-Israel activity, it must be grounds for the cancellation of the deal.”

It has been illegal since 1977 for U.S. companies to comply with the boycott, either by agreeing not to do business with Israel or by certifying that their products do not contain any Israeli materials. Companies are also required to report any requests for such restrictions to the Commerce Department.

Last year, two firms were fined for issuing certifications “in connection with requests by entities in the United Arab Emirates to support the Arab League boycott of Israel,” according to a Commerce Department official authorized to speak to the press.

The official said the requests to honor the boycott did not come from the government of Dubai or the government of the UAE. Such requests sometimes come from purchasing companies.

In 2004, the most recent year for which complete records are available, 118 U.S. companies reported receiving boycott requests from UAE export partners, according to the office of Sen. Bill Nelson, Florida Democrat.

Mr. Nelson pressed Edward H. Bilkey, the U.S. shipping executive who runs DP World, at a Senate hearing Tuesday over the company’s policy concerning the Israel boycott.

Mr. Bilkey said his firm has long worked with Israeli shippers at the ports it managed, but acknowledged that a customs operation in Dubai owned by his company’s parent firm did enforce the anti-Israel ban.

U.S. negotiators have pressed Arab governments to ease or drop the Israel boycott in bilateral trade talks. Saudi Arabia last year agreed to curb its boycott of Israel to win U.S. backing for its World Trade Organization application.

The State Department’s Mr. Ereli said the UAE has already eased its boycott practices by not enforcing “secondary” bans on trade with countries that do business with Israel.

He defended the UAE’s role in the U.S. global war on terror and said the boycott did not affect the main question before U.S. regulators. “All of this we’re talking about has nothing to do with security,” he said.

• Shaun Waterman reported for United Press International.

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