Current Economic Developments
Negotiation of Treaty of Friendship, Commerce and Navigation With Israel2
Formal negotiations for a treaty of friendship, commerce and navigation with Israel were opened with officers of the Israel Embassy late in November. The negotiations have proceeded rapidly and have already disclosed so broad an area of agreement that signature of the treaty by the end of January is becoming a distinct possibility. In large measure, the rapid progress to date appears attributable to the business-like attitude of the Israelis toward the negotiations, to the [Page 1091] thorough advance study they gave to our negotiating proposals, and to the exploratory conversations which were held with representatives of the Israel Embassy last spring and which appear to have cleared up most of the questions and uncertainties the Israel Government may have had with respect to our draft.
The principal difficulty which has developed during the formal negotiations involves Israeli requests for the right to accord preferences to those countries which in 1914 were included within Asiatic Turkey and Arabia, and for the elimination from the treaty of the customary reservation for possible future US policies in furtherance of the objectives of GATT and the ITO Charter. For the present, discussion of these points is being deferred until the Economic Counselor of the Israel Embassy, who is conducting the negotiations for his government receives clarification and amplification of his instructions respecting these matters.
The current negotiations are the outgrowth of an informal approach by the Israel Embassy late in the summer of 1949. Last April the Embassy formally proposed that negotiations be undertaken, and a definitive draft shortly was given to it for consideration. During the course of the informal talks and later during the negotiations, the Israeli representatives have frequently alluded to the conviction of their government that private capital is essential to the economy of Israel and to its awareness that private capital, in order to be attracted to Israel, needs specific assurances of the kind embodied in the treaty under negotiation. They have told us, moreover, that in shaping its economic legislation Israel has sought an orientation compatible with the basic objectives of the treaty and that it had proposed the negotiation immediately upon enactment by the Parliament of certain legislation favorable to foreign capital (so-called investment law of March 29, 1950).