This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 CAIRO 009386 
 
SIPDIS 
 
STATE FOR NEA/ELA and EB/MTA 
USTR FOR BLUE AND SAUMS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EG USTR
SUBJECT:  2006 NATIONAL TRADE ESTIMATE REPORT FOR ARAB 
LEAGUE 
 
REF: STATE 193384 
 
¶1.  The impact of the Arab League boycott of Israel on U.S. 
trade and investment the Middle East and North Africa varies 
from country to country.  While it remains a serious barrier 
for U.S. firms attempting to export to some countries in the 
region from Israel, the boycott has virtually no effect on 
U.S. trade and investment in many other countries in the 
region.  This is particularly true for the many countries 
that have chosen not to enforce the secondary aspect of the 
boycott that discriminates against foreign firms doing 
business with Israel.  Arab League members include the 
Palestinian Authority and the following states: Algeria, 
Comoros, Djibouti, Egypt, Iraq, Jordan, Lebanon, Libya, 
Mauritania, Morocco, Somalia, Sudan, Syria, Tunisia, Yemen, 
and the Gulf Cooperation Council (GCC) countries (Bahrain, 
Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab 
Emirates). 
 
¶2.  The United States continues to oppose the boycott, and 
U.S. government officials have urged Arab League members to 
end its enforcement.  Toward that goal, U.S. embassies and 
government officials raise the boycott with host country 
officials, noting the persistence of illegal boycott 
requests and the impact on both U.S. firms and on the 
countries' ability to expand trade and investment.  Under 
U.S. antiboycott legislation enacted in 1978, U.S. firms are 
prohibited from responding to any request for information 
that is designed to determine compliance with the boycott, 
and are required to report receipt of any such request to 
the U.S. Department of Commerce's Office of Antiboycott 
Compliance (OAC). 
 
¶3.  The primary aspect of the boycott prohibits the 
importation of Israeli-origin goods and services into 
boycotting countries.  This conflicts with the obligation of 
Arab League member states that are also members of the World 
Trade Organization to treat Israeli imports on a Most 
Favored Nation (MFN) basis.  The secondary and tertiary 
aspects of the boycott discriminate against U.S. and other 
foreign firms that wish to do business with both Israel and 
boycotting countries.  These constrain U.S. exports to the 
region.  The secondary aspect of the boycott prohibits 
individuals -- and private and public sector firms and 
organizations -- in Arab League countries from engaging in 
business with U.S. and other foreign firms that contribute 
to Israel's military or economic development.  Such firms 
are placed on a blacklist maintained by the Damascus-based 
Central Boycott Office (CBO), a specialized bureau of the 
Arab League.  The tertiary aspect of the boycott prohibits 
business dealings with U.S. and other firms that do business 
with blacklisted companies. 
 
¶4.  While the legal structure of the boycott in the Arab 
League remains unchanged, its enforcement varies widely from 
country to country.  Some member governments of the Arab 
League have consistently maintained that only the Arab 
League as a whole can revoke the boycott.  Other member 
governments support the view that adherence to the boycott 
is a matter of national discretion, and a number of states 
have taken steps to dismantle some aspects of it. 
 
¶5.  Enforcement of the boycott remains the responsibility of 
individual member states and enforcement efforts vary widely 
from country to country.  Egypt has not enforced any aspect 
of the boycott since 1980, pursuant to its peace treaty with 
Israel, although U.S. firms occasionally find some 
government agencies using outdated forms containing boycott 
language.  Jordan ended its enforcement of the boycott with 
the signing of its peace treaty with Israel in 1994. 
Algeria, Morocco, Tunisia, and the Palestinian Authority do 
not enforce the boycott. 
 
¶6.  In September 1994, the GCC countries announced an end to 
the secondary and tertiary aspects of the Arab League 
boycott of Israel, eliminating a significant trade barrier 
to U.S. firms.  In December 1996, the GCC countries 
recognized the total dismantling of the boycott as a 
necessary step to advance peace and promote regional 
cooperation in the Middle East and North Africa.  Although 
all GCC states are complying with these stated plans, some 
commercial documentation continues to contain boycott 
language.  U.S. companies are required to notify the U.S. 
Department of Commerce's Office of Antiboycott Compliance 
when they receive such documentation. 
 
¶7.  Bahrain does not have any restrictions on trade with 
U.S. companies that have relations with Israeli companies. 
Outdated tender documents in Bahrain occasionally refer to 
the secondary and tertiary aspects of the boycott, but such 
instances are usually quickly remedied.  Israeli products 
are occasionally found in the Bahraini market.  Kuwait no 
longer applies a secondary boycott of firms doing business 
with Israel, and has taken steps to eliminate all direct 
references to the boycott of Israel in its commercial 
documents.  Kuwait still applies a primary boycott of goods 
and services produced in Israel. 
 
¶8.  In January 1996, Oman and Israel signed an agreement to 
open trade missions in each country.  However, in October 
2000, following the outbreak of the second Intifada, Oman 
and Israel suspended these missions.  Omani customs formerly 
processed Israeli-origin shipments entering with Israeli 
customs documentation.  However, Omani firms have recently 
reportedly avoided marketing any identifiably Israeli 
consumer products.  Israeli immigration stamps in third 
country passports are not an issue.  Telecommunications 
links and mail flow normally between the two countries.  In 
April 1996, Qatar and Israel agreed to exchange trade 
representation offices.  The Israeli trade office opened in 
May 1996 and remains open.  Qatar does not practice the Arab 
Boycott, but some government tender documents and laws still 
include outdated boycott language. 
 
¶9.  Saudi Arabia enforces only the primary level of the Arab 
League boycott on Israeli products.  If a foreign company is 
found to have imported an Israeli-made product, or a product 
with some Israeli content, the Saudis will ban that company 
from exporting to the Kingdom.  Usual practice has been that 
the Saudi government will remove its ban after the company 
agrees to stop shipping Israeli products.  In 2003, 
according to press reports, Saudi Arabia banned three 
American companies for violating the primary boycott.  Saudi 
Arabia acceded to the WTO in December 2005, and is now 
obligated to accord all imports, from Israel or other WTO 
member states, MFN treatment.  Further Saudi enforcement of 
the boycott would thus violate the terms of the WTO. 
 
¶10.  U.S. firms have faced boycott requests in the United 
Arab Emirates as a result of bureaucratic and administrative 
inefficiencies, rather than efforts to circumvent UAE 
government policy not to enforce the secondary and tertiary 
aspects of the boycott.  The UAE is taking steps to 
eliminate these prohibited boycott requests. 
 
¶11.  A U.S. soft drink manufacturer operating in Iraq is 
reportedly encountering problems with the Iraqi Interim 
Government due to the boycott. 
 
JONES