The State Department's response to Israel boycott law—a line-item veto for trade legislation?

The State Department has recently tried to minimize the significance and effect of provisions in the newly enacted trade promotion laws that seek to discourage boycotts and other economic sanctions against Israel. Some have suggested that the State Department's spin on these laws effectively negates them. But while the administration's backtracking on a law it just signed proceeds from inaccurate facts and bad policy, it does not—and cannot—annul the legislation.

Both houses of Congress unanimously introduced the provision as an amendment to the Trade Promotion Authority that instructs that the United States to adopt as part of its trade negotiation policy the goal of "discourag[ing] politically motivated actions to boycott, divest from, or sanction Israel" by foreign countries.

The day after President Obama signed the law, a State Department spokesman expressed disapproval of the provisions that make it clear that the law applies in full to "business in Israel or in Israeli-controlled territories."

To be clear, contrary to some spin put on the statement, it carefully skirted saying that the president will not enforce or will nullify any part of the law. "The U.S. government has never defended or supported Israeli settlements or activity associated with them, and, by extension, does not pursue policies or activities that would legitimize them," the spokesman said.

The State Department statement does not even read the statute accurately. It criticizes the law of "conflating" Israel and the territories. In fact, the opposite is true. The law separately refers to "the State of Israel" and "territories under its jurisdiction," which distinguishes between them. This is quite different from the passport provision recently held unconstitutional by the Supreme Court in Zivotofsky v. Kerry, where the law was challenged for referring to "Jerusalem" as being in "Israel," against the Executive's view of the matter. Such a passport designation would assimilate Jerusalem to Israel and amount to an act of recognition, the administration argued. This statute does no such thing.

What the State Department seems to be suggesting is that Congress cannot legislate a particular trade regime toward particular territories, even when it makes no suggestion about their sovereign status. That proposition has no legal basis. Zivotofsky itself suggests otherwise. Indeed, the Solicitor General conceded in oral argument that Congress could legitimately pass trade laws against the foreign policy of the Executive, indeed, even if it would seriously interfere with his foreign diplomatic efforts. (Tr. at. 27.)

The State Department's comments also badly mischaracterize U.S. policy on the matter. The United States has not consistently opposed settlements. Presidents Ronald Reagan and George W. Bush both expressed varying degrees of support for them. Moreover, the question of whether one opposes or supports settlements is distinct from what the rules dealing with economic activity there shall be.

On this, U.S. policy is longstanding and clear. U.S. laws have long applied the same economic treatment to all areas under Israeli jurisdiction (including Jerusalem). For example, the pair of Anti-Boycott laws passed in the late 1970s treat Israeli companies the same regardless of their location in relation to the Green Line. And the U.S.-Israel Free Trade Implementation Act, first passed in 1985, affords areas under Israeli jurisdiction the same treatment as all "Israeli" products for U.S. trade purposes.

The administration's statement refers broadly to its opposition to "settlements," Jewish communities in the West Bank. But the law has nothing to do with settlements. It is about business activity. One can have settlements without business activity and business activity without settlements. For example, most people living in the West Bank make their living inside the Green Line. These are not remote colonies, but places literally next door to established Israel economic centers. And one can have business activity without settlements—many Israel factories employ local Palestinians, or even Israelis residing inside the Green Line. Only a redefinition of settlements as meaning "Jews having any kind of physical or constructive activity" would cover this.

Indeed, the United Kingdom Supreme Court just last year held that Israeli factories in the West Bank are separate from, and do not cause settlements, for the reasons just mentioned.

The State Department also refers to opposition to "activity associated with" settlements—i.e., any Israeli activity across the Green Line. That is entirely inconsistent with previous administration policy, which opposed the demographic growth of or construction in settlements, not the output of factories. This is a radical new idea. Indeed, if settlements supposedly prejudice the two-state solution by creating demographic realities, then factories, wineries and tourist sites have no such vices. Obama himself has participated in "activity associated with" settlements when he was running for office in 2008—he visited the Western Wall, in what the administration regards as the "settlement" of the Jewish presence in the Old City of Jerusalem.

The administration's criticism of the bill it just signed is particularly striking in light of Zivotofsky. Since Foggy Bottom adamantly refuses to treat Western Jerusalem (i.e. part of "pre-67" Israel) as part of Israel, the only way Congress can make U.S. trade policy toward Israel's capital is by using language like "areas under Israel's jurisdiction." It is the administration policy of not treating the nation's pre-67 capital as part of the country that blurs the Green Line, not Congress's law.

Finally, the State Department repeatedly referred to the "two state solution" and the "Israeli-Palestinian conflict." Presumably it has no objection to the law's application to the Golan Heights, which is not part of that conflict.

If the Executive were considering not enforcing the law, it would be extraordinary constitutional usurpation by the Executive, effectively giving State Department spokesmen line-item veto power over enacted trade laws. Obama's lawyers may have greatly over-read Zivotofsky as holding that the chief executive can nullify laws willy-nilly if they involve foreign affairs, or maybe just Israel. This would be particularly extraordinary as applied to foreign trade laws, all of which by definition have serious foreign policy implications.