[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




       IMPACT OF THE BOYCOTT, DIVESTMENT, AND SANCTIONS MOVEMENT

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON NATIONAL SECURITY

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 28, 2015

                               __________

                           Serial No. 114-41

                               __________

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee       CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
TIM WALBERG, Michigan                    Columbia
JUSTIN AMASH, Michigan               WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona               STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee          JIM COOPER, Tennessee
TREY GOWDY, South Carolina           GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas              MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming           TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky              ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida                TED LIEU, California
MICK MULVANEY, South Carolina        BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado                   STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina          MARK DeSAULNIER, California
ROD BLUM, Iowa                       BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia                PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma              MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama

                    Sean McLaughlin, Staff Director
                 David Rapallo, Minority Staff Director
     Art Arthur, Staff Director, Subcommittee on National Security
                           Sarah Vance, Clerk
                   Subcommittee on National Security

                    RON DESANTIS, Florida, Chairman
JOHN L. MICA, Florida                STEPHEN F. LYNCH, Massachusetts, 
JOHN J. DUNCAN, JR., Tennessee           Ranking Member
JODY B. HICE, Georgia                ROBIN KELLY, Illinois
STEVE RUSSELL, Oklahoma, Vice Chair  BRENDA L. LAWRENCE, Michigan
WILL HUR, Texas                      TED LIEU, California


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 28, 2015....................................     1

                               WITNESSES

Mr. Mark Dubowitz, Executive Director, Center on Sanctions and 
  Illicit Finance, Foundation for Defense of Democracies
    Oral Statement...............................................     4
    Written Statement............................................     6
Mr. Daniel Birnbaum, Chief Executive Officer, Sodastream 
  International, School of Law
    Oral Statement...............................................     7
    Written Statement............................................     8
Mr. Eugene Kontorovich,Professor of Law, Northwestern University, 
  School of Law
    Oral Statement...............................................     8
    Written Statement............................................    10
Mr. Matthew Duss, President, Foundation for Middle East Peace
    Oral Statement...............................................    10
    Written Statement............................................    12

                                APPENDIX

Letter to Ron DeSantis and Stephen F. Lynch from Anti-Defamation 
  League.........................................................    24
Statement submitted to the National Security from Josh Ruebner, 
  Policy Director, US Campaign to End the Israeli Occupation.....    28
Letter from Mr. Matthew Duss, President, Foundation for Middle 
  East Peace.....................................................    32



 
       IMPACT OF THE BOYCOTT, DIVESTMENT, AND SANCTIONS MOVEMENT

                              ----------                              


                         Tuesday, July 28, 2015

                  House of Representatives,
                 Subcommittee on National Security,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 2:20 p.m., in 
Room 2154, Rayburn House Office Building, Hon. Ron DeSantis 
[chairman of the subcommittee] presiding.
    Present: Representatives DeSantis, Hice, Russell, Hurd, and 
Lynch.
    Mr. DeSantis. The Subcommittee on National Security will 
come to order.
    Without objection, the chair is authorized to declare a 
recess at any time.
    The chair notes that he is responsible under the rules of 
the House and the rules of the committee to maintain order and 
preserve decorum in the committee room. And we will do that, 
and disruption of business will not be tolerated. Thank you 
very much.
    The chair now recognizes himself for an opening statement.
    BDS is the campaign for boycott, divestment, and sanctions 
against Israel. The BDS movement seeks to target the state of 
Israel for boycotts, divestments, and sanctions. The purported 
goal is to leverage negative treatment of Israel to procure 
peace in the region. However, it is clear that the ultimate 
goal of the BDS movement is not to simply exert pressure on 
Israel to alter domestic policies; they would like to isolate, 
delegitimize, and irrevocably cripple the Jewish state.
    BDS supporter and professor at Cal State University As'ad 
AbuKhalil has said, ``The real aim of BDS is to bring down the 
state of Israel. That should be stated as an unambiguous goal. 
There should not be any equivocation on the subject. Justice 
and freedom for the Palestinians are incompatible with the 
existence of the state of Israel.''
    Another supporter of BDS, writer John Spritzler, stated, 
``BDS' stated goals logically imply the end of Israel as a 
Jewish state.''
    The notion that BDS is simply a harmless political movement 
is not true. BDS is better understood as an attempt to single 
out the world's only Jewish state for negative treatment 
through economic warfare.
    U.S. policy should actively oppose attempts to boycott, 
divest, and sanction Israel. As our most dependable ally in the 
Middle East, the region's only democracy, and a country that 
shares our values, Israel deserves our steadfast support. We 
need to nip BDS in the bud.
    This hearing is timely in light of recent comments by the 
State Department spokesman regarding anti-BDS language 
contained in the trade authority bill recently passed by 
Congress. While the bill specifically mandates that U.S. 
Negotiators pressure potential trading partners to reject BDS, 
the State Department indicated it would not enforce the 
language.
    Congress included the anti-BDS provision because it wanted 
to stymie efforts emanating particularly from European 
countries, where anti-Semitism unfortunately is at a post-World 
War II high, to target Israel. Congress needs to conduct 
oversight of the State Department to ensure compliance with the 
statutory law.
    Now, BDS is not a mainstream position in the United States, 
but it has gained traction on college campuses and in European 
capitals.
    The goals of BDS go beyond the idea of encouraging 
corporations and academic institutions to boycott and divest 
from businesses in Judea and Samaria. Support for BDS is 
curious in light of the fact that many advocates for BDS have 
no qualms with trading with rogue regimes, such as Iran. 
Indeed, these advocates seek to apply a completely separate 
standard to the world's only Jewish state, while turning a 
blind eye to militant Islamic regimes that threaten both Israel 
and the United States.
    According to a recent study by the Israeli Finance 
Ministry, boycotts present a significant threat to Israel's 
economy. Boycotts threaten inflation, layoffs, and a potential 
20-percent drop in exports. If European companies and 
governments were to support BDS, Israeli officials maintain 
such action would constitute a dramatic blow to the Israeli 
economy.
    Israeli and American businesses have been impacted by BDS 
through divestment by major church groups in the United States, 
such as the Presbyterian Church (U.S.A.) and the United Church 
of Christ.
    The bottom line is that support for BDS undermines Israel's 
economy and national security. It is a direct threat to the 
continued vitality and success of the state of Israel.
    Today, we will hear from the CEO of SodaStream, Daniel 
Birnbaum, an Israeli company that has been the target of BDS. 
The BDS campaign has specifically targeted this company, which 
has since moved its factory out of Judea and Samaria, resulting 
in the loss of thousands--the loss of jobs for many of the 
Palestinians and Israelis alike.
    In the case of SodaStream's factory in Judea and Samaria, 
which is now closed, an estimated 500 Palestinian Arabs were 
employed there, out of a total of 1,300 employees. While 
SodaStream is working to secure work permits from the Israeli 
Government for these Palestinians and other former employees at 
their new factory, the future employment opportunities for many 
of these workers remain uncertain. These are the very people 
who BDS claims it intends to help.
    We will also hear from Professor Eugene Kontorovich. He was 
a major force behind the South Carolina law prohibiting 
companies who want to contract with the State government from 
participating in boycotts based on nationality, national 
origin, ethnicity, race, and other categories of 
discrimination. He will also discuss existing Federal law, 
international law, and the potential impact of BDS on the 
international trading system.
    Mr. Mark Dubowitz, the executive director of Foundation for 
Defense of Democracies, will also be joining us. He has written 
extensively on the topic of the BDS movement.
    Mr. Matthew Duss is the guest of my minority colleagues, 
and he is the president of the Foundation for Middle East 
Peace.
    The bottom line is that, one, this hearing will be critical 
in informing Congress about the true nature of the goals and 
underlying motivations of the BDS movement and its impact on 
trade and economic growth. American policy must be designed to 
counteract BDS at every turn.
    And, with that, I now recognize the gentleman from 
Massachusetts, Mr. Lynch, the ranking member, for his opening 
statement.
    Mr. Lynch. Thank you, Mr. Chairman. I would like to thank 
you for you holding this hearing to examine the boycott, 
divestment, and sanctions movement, also known as BDS.
    And I would also like to welcome today's witnesses for 
helping the committee with its work.
    It is the foreign policy of the United States Government to 
oppose boycotts against the state of Israel. Israel is our 
strongest regional ally, and the economic isolation of Israeli 
goods and services will only frustrate our efforts aimed at 
achieving a lasting peace in the Middle East.
    The United States has consistently opposed the boycott of 
Israel declared by the Arab League in 1948. Most recently, 
Congress passed and President Obama signed an omnibus 
appropriations bill in December of 2014 that included language 
opposing the Arab League boycott as an impediment to peace in 
the region and called for its immediate termination.
    As with the Arab League boycott, the United States 
Government opposes the boycott, divestment, and sanctions 
movement that commenced in 2005 under the organization of 
Palestinian civil society groups. As recently stated by State 
Department spokesman John Kirby, the United States has, 
``strongly opposed boycotts, divestments, campaigns, and 
sanctions targeting the state of Israel and will continue to do 
so.''
    Some Members of Congress have questioned the 
administration's willingness to enforce an anti-boycott 
provision included in the fast-track trade bill passed last 
month. The provision seeks to discourage foreign partners from 
implementing economic sanctions against the state of Israel and 
also makes reference to, ``Israeli-controlled territories.''
    In response to this language, the State Department has 
reiterated strong U.S. opposition to boycotts against Israel, 
while also reaffirming similarly longstanding U.S. Policy on 
Israeli settlement activity. As noted by the State Department, 
``Every U.S. administration since 1967, Republican and 
Democrat, has opposed Israeli settlement activity beyond the 
1967 lines. This administration is no different, and our policy 
remains firm and unchanged.'' This policy is in complete 
harmony with the desire for a two-state solution.
    Contrary to the criticism that has been voiced by some of 
our colleagues, I believe that the administration has been very 
clear in consistently applying the longstanding policy of the 
United States to oppose boycotts against the state of Israel.
    I would also note that the bipartisan sponsors of the anti-
boycott language included in the trade bill, Senator Cardin and 
Senator Portman, have been equally clear in stating that they 
never intended their amendment to legislate on settlements or 
contravene U.S. policy on the settlements. Rather, the language 
seeks to further discourage boycotts against Israel in 
accordance with longstanding policy.
    I am aware that the BDS movement has become effective in 
some degree; it has had some impact. The bipartisan 
Congressional Research Service notes that divestment from 
Israel and boycotts of Israeli products and services have 
occurred to a certain extent. Mr. Birnbaum will testify, I am 
sure, on the economic impact of boycotts against his company, 
SodaStream, an Israeli manufacturer that had a manufacturing 
facility in the West Bank.
    In December of 2013, the National Council of the American 
Studies Association, a nationwide academic organization, voted 
to boycott Israeli academic institutions. In recognition of the 
value of academic freedom and cooperation to foster peace in 
the Middle East, 134 Members of Congress, including myself, 
Members from both parties, sent a letter to the association in 
strong opposition to their decision.
    Mr. Chairman, I look forward to discussing these and other 
issues relating to the BDS movement. And I yield back the 
balance of my time.
    Mr. DeSantis. I thank the ranking member.
    I will hold the record open for 5 legislative days for any 
members who would like to submit a written statement.
    Mr. DeSantis. We will now proceed to the witness testimony.
    Welcome to the witnesses.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify, so if you could please rise and raise your 
right hands.
    Do you solemnly swear that the testimony you are about to 
give will be the truth, the whole truth, and nothing but the 
truth, so help you God?
    Thank you. Please be seated.
    All witnesses answered in the affirmative.
    In order to allow time for discussion, please limit your 
testimony to 5 minutes. Your entire written statement will be 
made part of the record.
    Mr. Dubowitz, you are recognized for 5 minutes.

                       WITNESS STATEMENTS

                   STATEMENT OF MARK DUBOWITZ

    Mr. Dubowitz. Chairman DeSantis, Ranking Member Lynch, 
members of the subcommittee, on behalf of FDD and its Center on 
Sanctions and Illicit Finance, thank you very much for inviting 
me to testify today.
    I want to step back and take a broader look at this. The 
BDS movement is a tool of political, economic, and financial 
warfare against Israel. Those waging this war seek to, first, 
isolate and delegitimize Israel and to turn it into an 
international pariah. From there, by threatening reputational 
consequences against Israeli business partners, imposing 
economic damages on Israel becomes an easier task.
    Our research has determined that the economic and financial 
warfare campaign currently targeting Israel's relationship with 
Europe is the real goal. That relationship in trade terms is 
valued at about $30 billion.
    My written testimony details the international 
organizations, religious institutions, private businesses, 
sovereign wealth funds, and universities that have joined in 
support of BDS in recent years. Most of them are European. They 
should all be identified publicly as having joined the economic 
and financial war against Israel.
    Notably, several were pressured by BDS activists and the 
Palestinian Authority to terminate their business ties with 
Israel. They have targeted major Israeli financial institutions 
providing services to the West Bank and East Jerusalem through 
local branches. They have targeted international companies 
building the light-rail train system in Jerusalem. They have 
targeted Israeli academics and international entertainers with 
no connection to the West Bank or East Jerusalem. This is not 
just about the West Bank or East Jerusalem. It is about Israel.
    For those well acquainted with economic and financial 
warfare, this is a familiar playbook, as pressure is ratcheted 
up on the target country to inflict increasing pain.
    What is even more striking is that these entities have gone 
out of their way to single out Israel, the only democracy in 
the Middle East, for alleged injustices, while ignoring China, 
Russia, Iran, Syria, Sudan for their massive violations of 
human rights. This smacks of discrimination.
    It is also a bad omen for the United States and our other 
allies, against whom many people around the world have 
grievances. Mr. Chairman, America and its allies must prepare 
for an increasingly dangerous era of political, economic, and 
financial warfare targeting the United States and our allies. 
This type of warfare is America's default instrument of 
coercive statecraft. It is also the new normal in the 
international arena. As always, Israel is the canary in the 
coal mine.
    Many of our allies are involved in territorial disputes 
around the world. We may agree or disagree with their 
positions, but our ability and will to defend them from 
military, missile, cyber, WMD, and terrorist threats, amongst 
others, must never be dependent on our policies with respect to 
these territorial disputes. The same should be said about 
defending them against economic and financial threats.
    Make no mistake: After watching the U.S. Treasury 
Department target Iran, Russia, and Syria with sophisticated 
sanctions and other advanced economic strategies, America's 
adversaries have been developing their own economic weapons.
    Having witnessed the powerful impact of having Iran removed 
from the SWIFT banking system, last year pro-Palestinian 
organizations petitioned SWIFT to disconnect Israeli financial 
institutions. SWIFT explained that it would not take action 
without direction from EU regulators, who for now have refused 
this request. This could change.
    Meanwhile, China has used economic and other coercive 
measures to challenge Japan, the Philippines, and our other 
Asian allies over the South China Sea and frequently has used 
economic and diplomatic pressure to challenge international 
recognition of Taiwan.
    Russia has used political and energy warfare to threaten 
Eastern and Central European allies in order to try and 
reestablish what it considers its sphere of influence. Both 
China and Russia have used cyber warfare against the United 
States and our allies.
    For now, America and its allies are vulnerable but 
buttressed by the fact that the U.S. dominates the global 
economy because of the power of the U.S. Dollar. This will not 
last forever. China, Russia, and others are already looking at 
creating a parallel financial system free from American 
influence.
    Make no mistake: An economic war is undeniably underway, 
and that war is now expanding to America's allies too. As the 
BDS movement has made clear, Israel is among them.
    Mr. Chairman, my written testimony outlines the important 
legislative efforts underway at the State and Federal level to 
protect Israel and our other allies from this economic and 
financial war. Congress must encourage this, but more can be 
done.
    The United States needs to create an economic defensive 
shield to protect us and our allies against economic and 
financial coercion. Congress is well placed to lead that 
effort.
    In my written testimony, I outline a number of 
recommendations, including: establishing a policy planning 
function at the U.S. Treasury Department; standing up an 
economic warfare directorate at the NSC; developing a doctrine 
on the use of economic warfare; and establishing an economic 
warfare command.
    We have entered a new era, and new structures are needed to 
defend the U.S. and its allies from this type of warfare. I 
recommend that this subcommittee work with other relevant 
congressional committees and the administration to institute 
these government reforms.
    In conclusion, BDS is a form of economic and financial 
coercion that should be viewed within a broader problem set. To 
counter it properly, this challenge must be addressed at a more 
strategic level. Failure to do so will leave the United States 
and our allies vulnerable to attack from economic and financial 
warfare.
    Thank you for inviting me to testify. I look forward to 
your questions.
    [Prepared statement of Mr. Dubowitz follows:]
    [For complete submitted testimony, please see the following 
website: http://oversight.house.gov/hearing/impact-of-the-
boycott-divestment-and-sanctions-movement/]
    Mr. DeSantis. Thank you.
    The chair now recognizes Mr. Birnbaum for 5 minutes.

                  STATEMENT OF DANIEL BIRNBAUM

    Mr. Birnbaum. Chairman DeSantis, Ranking Member Lynch, 
members of the subcommittee, good afternoon, and thank you for 
the opportunity to testify on the BDS today.
    For the past 8 years, I have been the CEO of SodaStream 
International, a company publicly traded on the NASDAQ and 
headquartered in Israel. SodaStream is the world's leading 
manufacturer and distributor of home carbonation systems. Our 
products are available in 45 countries around the world and 
sold at 70,000 stores, including 13,500 here in the United 
States. The products are manufactured at 12 facilities around 
the world, including 1 in New Jersey. However, our largest 
facility is in the Mishor Adumim industrial zone of the West 
Bank.
    I am speaking to you today because SodaStream has been a 
primary target of the BDS and its affiliates since my early 
days with the company 8 years ago. Here is the story in a 
nutshell.
    In all the craziness of the Middle East, in the midst of 
all the distrust, separation, hate, and violence, there is one 
factory that proves that things can be different, one factory 
that is an island of peace, where Palestinians and Israeli Jews 
work side-by-side--equal wages, equal benefits, and equal 
opportunity. In total, this factory employs 1,300 people, of 
whom 400 are Israeli Jews, 400 are Israeli Arabs, and 500 are 
Palestinians from the West Bank. We eat together in the same 
dining hall, and we celebrate each other's festivals.
    The wages we pay in this factory are according to Israeli 
law--wages which are three to four times higher than what our 
Palestinian workers could earn if they had a job in the PA. We 
provide a healthcare package for all our workers and their 
families that includes physician home visits, prescription 
drugs, overseas treatments, and even organ transplants--all 
that at zero copay.
    More broadly speaking, this factory, which may be the 
largest private employer in the West Bank, could also very well 
be the seeds of the budding economy of the future Palestinian 
state.
    This factory is, or should I say was, a true gem in many 
ways, but the BDS thought otherwise. They have been attacking 
this factory in various campaigns and schemes all over the 
world, calling for its closure and effectively calling for the 
termination of its 1,300 employees.
    The BDS have thrown all possible war crimes at us, accusing 
us of ethnic cleansing, stealing land, perpetuating the so-
called occupation and profiting from it, exploiting our 
Palestinian workers, acting against international law, 
representing apartheid. Such a long and horrible list of 
infractions make it almost futile to defend.
    BDS tactics include intimidating, harassing, and 
threatening of our retail partners around the world. BDS 
activities have been vandalizing our products in stores, 
stickering them with hate images, throwing product on the 
floor, stickering, picketing, chaining themselves to the 
entrances to the stores, conducting violent demonstrations and 
flash mob events, circulating pamphlets and utilizing social 
media to spread vile videos on YouTube, mobilizing mainstream 
media--all to manipulate our retailers to drop our product.
    To provide the appearance of ``moral grounding and 
substantiation of international law,'' the BDS garnered support 
from churches, including churches here in the United States, 
from well-known NGOs, and support from European governments.
    The BDS are in the business of manipulation, violence, and 
destruction, but, instead of using bullets and bombs, they use 
vicious lies and half-truths.
    I would like to share with you just one example of a 
grotesque image broadly distributed in Europe and which is also 
featured at this very moment on a BDS Web site. On page 13 of 
my written submission, you will see this image that shows 
SodaStream product smeared with blood, and it reads in French, 
``SodaStream: A product that kills. One product bought equals 
one family massacred.''
    Are these not libelous statements that cross a line? A 
French court ruled in January 2014 that this conduct, 
specifically this image, is abusive and illegal, and the BDS 
was issued a cease-and-desist order and a punitive fine.
    Last October, we took a business decision to relocate this 
facility to a much larger facility inside the 1967 
international borders of Israel--a business decision. And how 
did the BDS respond? Well, as expected, they celebrated a big 
victory. They did not care that 5,000 Palestinians will lose 
their sustenance.
    But what is really revealing is that the attacks are 
continuing even after we announced our departure from the West 
Bank. This shows the true agenda of the BDS.
    To our amazement, we are now being accused of stealing land 
for our new factory from the adjacent Bedouin town of Rahat 
within Israel. This is simply preposterous. The reality is that 
we were invited here. In my written statement, you will see a 
letter by the mayor of Rahat, Talal El-Garnawi, stating that 
these claims are not only false but that are our factory is a 
blessing, bringing economic prosperity to his town.
    Finally, the story of the 8-year hate campaign against 
SodaStream really exposes the true face of the BDS. It is 
evident that the BDS and its affiliates use the Palestinian 
people as a proxy to advance their political agenda grounded in 
the hate of Israel. Indeed, the BDS leaders have said many 
times that their true agenda is not to liberate the West Bank 
but, rather, to end the existence of the Jewish state of 
Israel. We shall not let that happen.
    Chairman DeSantis, Ranking Member Lynch, subcommittee 
members, this concludes my prepared statement. I will be happy 
to answer any questions you may have.
    [Prepared statement of Mr. Birnbaum follows:]
    [For complete submitted testimony, please see the following 
website: http://oversight.house.gov/hearing/impact-of-the-
boycott-divestment-and-sanctions-movement/]
    Mr. DeSantis. I thank the gentleman.
    The chair now recognizes Mr. Kontorovich for 5 minutes.

                STATEMENT OF EUGENE KONTOROVICH

    Mr. Kontorovich. Chairman DeSantis, Ranking Member Lynch, 
honorable members of the committee, thank you for inviting me 
to testify today about the continued campaign of economic 
warfare against Israel.
    The campaign of economic warfare against Israel dates back 
to the birth of the Jewish state. Starting in 1948, the Arab 
League organized a notorious campaign to isolate Israel. Not 
only did they block any economic ties between themselves and 
Israel, they pressured companies in third countries to also 
boycott Israel.
    In the 1970s, at the height of the Arab League's boycott 
campaign, the U.S. passed laws making it a crime for U.S. 
entities to participate in the boycott. Since then, the Arab 
League boycott has fallen into decline and under-enforcement. 
Part of this has been due to these U.S. laws and U.S. pressure 
in trade negotiations. Partly, it has been due to changing Arab 
attitudes towards Israel.
    As Arab states were increasing their trade with Israel, the 
old boycott campaign developed a new face. At the Durban Forum 
in 2001, anti-Israel groups, coordinated by U.N. Agencies, 
adopted boycotts and sanctions as a policy tool to isolate 
Israel. Thus, private actors appear today at the forefront of 
boycott campaigns today, but the strategy is the same as the 
Arab League pursued: to choke off and delegitimize Israel.
    Several legislative initiatives in Congress seek to update 
U.S. Laws to deal with the new face of the boycott movement. 
Part of this legislation has passed in the TPA, and another 
important part, contained in H.R. 1907, is currently in 
conference. These laws are merely mild updatings of the 
traditional U.S. Approach to Israel boycotts. They have 
received across-the-board, unanimous support in Congress.
    Nonetheless, some object to the anti-boycott laws because 
they would also apply to boycotts that also are directed at 
entities in, ``territories under Israel jurisdiction,'' which 
means West Jerusalem, the Golan Heights, and other parts of the 
West Bank. Contrary to the entirely unsupported claims of these 
critics, this is also entirely consistent with U.S. Law and 
policy.
    The existing anti-boycott laws also apply to boycotts of 
any Israeli nationals or companies, regardless of their 
location. No one has ever objected to this or sought to limit 
the application. In signing the 1977 anti-Arab-League-boycott 
law, President Carter observed that the issue goes to the very 
heart of free trade amongst nations and that boycotts were, in 
fact, divisive measures aimed particularly at Jews. President 
Carter and no one else has ever suggested that the anti-boycott 
laws be limited to Israeli companies in any particular 
location.
    Moreover, the U.S.-Israel Free Trade Agreement, passed in 
1985 and expanded in 1996, expressly allows Israeli products 
from the West Bank to receive the same status for U.S. trade 
purposes as any other Israeli products. As reflected in the 
U.S.-Israel Free Trade Agreement Implementation Act, this was 
immediately put into effect by President Clinton.
    Indeed, there is no basis in U.S. law for disallowing 
Congress to apply particular laws, trade laws, or other lawful 
measures to the West Bank or any other territories. Nor does 
this contradict U.S. foreign policy. While the Executive has 
indeed at times opposed settlement expansion or settlement 
construction--that is to say, adding homes for Jews in the 
disputed territory--no administration has ever opposed business 
activity there. Indeed, the U.S. Has long recognized that peace 
depends on increased prosperity and economic integration.
    Moreover, boycotts do not seek to prevent settlement 
growth. Rather, their express goal is to choke off and 
eliminate all Jewish presence, even mere business activity, in 
the disputed areas, including ones that would surely come under 
Israeli sovereignty in any peace deal. This fundamentally 
contradicts U.S. policy, dating back to 1967, that any ultimate 
parameters must be negotiated.
    Finally, this language, this now-controversial language, is 
necessary to prevent anti-boycott laws from becoming 
indeterminate and incoherent. For example, language referring 
to territories controlled by Israel is necessary simply to have 
such laws applies to western Jerusalem. As is well known, the 
position of the administration and several administrations is 
that western Jerusalem is not part of the state of Israel. 
Thus, if Congress wishes to ensure that its trade measures and 
laws concerning Israel apply to western Jerusalem, language 
like ``territories under Israeli jurisdiction'' is needed. And 
that is based on the administration's own view in the 
Zivotofsky case.
    Moreover, boycotts of settlements are not self-limiting, 
because settlements are not businesses. Business is one thing; 
settlements are another. What about the Tel Aviv tour operator 
that goes to the Old City, organizes a tour? That could fall 
within the boycott movement in European sanctions. On the other 
hand, we know that even the President of the United States has 
visited the Old City. This is not what people mean by 
``settlements.''
    There is nothing internationally illegal about doing 
business in the territories. One does not need to be a 
supporter of settlements to understand this. Just last year, a 
prestigious French appeals court ruled that French and 
international law allows French companies and businesses to do 
business with the Israeli Government in these areas.
    Finally, as I elaborate in my written testimony, the 
planned EU trade restrictions, which some of these measures go 
to, would violate multiple provisions of the General Agreement 
on Trade and Tariffs.
    Let me conclude with some brief recommendations. Congress 
should quickly pass H.R. 1907 to make clear that these measures 
are violations of the GATT, to encourage States to continue to 
pass laws dealing with boycotts, and to protect United States 
companies from discriminatory and baseless foreign judgments 
based on perversions of international law.
    [Prepared statement of Mr. Kontorovich follows:]
    [For complete submitted testimony, please see the following 
website: http://oversight.house.gov/hearing/impact-of-the-
boycott-divestment-and-sanctions-movement/]
    Mr. DeSantis. I thank the gentleman.
    The chair now recognizes Mr. Duss for 5 minutes.

                   STATEMENT OF MATTHEW DUSS

    Mr. Duss. Chairman DeSantis, Ranking Member Lynch, members 
of the subcommittee, thank you very much for inviting me here 
to speak to you on this timely issue.
    In the 10 years since it commenced, the BDS movement has 
slowly but steadily risen in visibility. I would like to focus 
today on the role that this movement has been playing recently 
in the United States, particularly with regard to recent 
congressional legislation.
    In order to do that, I want to first take a moment to 
identify just what we are talking about when we discuss BDS.
    This movement has three main demands. The first is an end 
to the occupation that began in 1967. The second is equal 
rights for Palestinian citizens within Israel. The third is 
protecting and promoting the rights of Palestinian refugees to 
return to their homes in what is today Israel.
    This movement is distinct from many peace activists in 
Israel, Palestine, the United States, Europe, and elsewhere who 
support boycotts of settlement products and divestment of 
businesses profiting from the 48-year-old occupation of the 
West Bank, Gaza, and East Jerusalem as part of an effort to 
preserve the possibility of a two-state solution to the 
Israeli-Palestinian conflict.
    Crucially, the BDS movement is also distinct from the 
recent moves by the European Union to more aggressively 
distinguish between Israel within the pre-1967 lines, known as 
the Green Line, and the occupied territories.
    This is where we come to the recent trade legislation by 
Congress and the response from the State Department. With the 
stated intention of protecting Israel from BDS, the recently 
passed Trade Promotion Authority contained a provision that 
implied a significant shift in the policy of the United States 
since 1967. The provision requires the U.S. Trade 
Representative to discourage European Union countries from 
boycotting, ``Israel or persons doing business in Israel or 
Israeli-controlled territories.''
    This is why I think it was important and appropriate for 
the State Department to offer a clarification, as it did upon 
passage of the trade bill, stating that the U.S. will continue 
to make the distinction between Israel and the occupied 
territories, as the United States has done since 1967.
    Now, I can talk more about this in the Q&A, and my written 
statement contains more detailed analysis, but, to the extent 
that one sees BDS actions as part of an effort to delegitimize 
Israel--and I think that's clearly the case with regard to a 
number of the leaders of the movement--they should certainly be 
addressed but, I would advise, not through legislation. Israel 
has protections it needs and deserves under existing U.S. Law. 
The arguments raised by the BDS movement in academic and other 
civil society institutions should be addressed in the American 
tradition, with thoughtful, considered, and ethical counter-
arguments.
    I would also take a moment here to suggest that it is a 
mistake to focus on the BDS movement while ignoring the main 
reason for its continued growth, which is the failure to end 
the occupation that began in 1967 and achieve Palestinian 
freedom and sovereignty. If one is genuinely concerned about 
the impact of the BDS movement, the surest way to take the wind 
out of its sails and arrest its growth would be to work to 
achieve those goals and act against efforts which prevent or 
foreclose them.
    Moreover, it would be counterproductive to give BDS an 
unearned victory here by cooperating in any way with the 
conflation of Israel and the occupied Palestinian territories. 
We can and must support Israel in defending herself against 
actions that genuinely threaten her security and legitimacy. 
This has been a consistent American position since Israel's 
birth.
    Another consistent American position, however, has been in 
opposing the creation of Israeli settlements, which have been 
deemed illegitimate and an obstacle to peace by every U.S. 
President since 1967. Efforts to blur that distinction are just 
as dangerous to Israel's existence as a Jewish and democratic 
state as attacks on Israel's legitimacy itself. It is entirely 
consistent with longstanding U.S. policy, and, indeed, 
necessary to preserve the ultimate goal of a two-state 
solution, to continue to make that distinction in U.S. Policy 
and law.
    I thank you, gentlemen, for your time and attention and 
look forward to your questions.
    [Prepared statement of Mr. Duss follows:]
    [for complete submitted testimony, please see the following 
website: http://oversight.house.gov/hearing/impact-of-the-
boycott-divestment-and-sanctions-movement/]
    Mr. DeSantis. Thank you.
    The chair now recognizes himself for 5 minutes of 
questioning.
    Mr. Dubowitz, a lot of Americans may not know what BDS is. 
Is there any doubt in your mind that BDS is more than just 
trying to boycott certain policies, that BDS is aimed really at 
the legitimacy of Israel itself?
    Mr. Dubowitz. Chairman, there is no doubt in my mind. I 
mean, this is a familiar playbook for people who have worked in 
the area of sanctions. I've spent over a decade working on 
sanctions, and it is a very familiar playbook. As I said, it is 
about delegitimization at the political level. it is about 
establishing the country as an international pariah. And then 
it is about using a combination of state actions and private 
actions in an economic and financial warfare campaign against 
that country.
    And I would make another point, and that is that many of 
our allies, actually, are involved in territorial disputes 
around the world. I mean, in the South China Sea right now, 
there are huge disputes going on between China and Vietnam and 
the Philippines and Japan and other countries. The United 
States shouldn't be taking a position on territorial disputes 
in the context of economic and financial warfare. We don't, for 
example, when supporting our allies against cyber threats, 
conventional military threats, terrorist threats, or missile 
threats.
    We have a firm policy of defending our allies, when we 
actually fund and sell missile defense systems or cyber defense 
systems to Israel, we expect the Israeli Government to use 
those systems protecting everybody in the region, including in 
the West Bank and West Jerusalem and East Jerusalem. There 
should be no distinction with respect to economic and financial 
warfare.
    Mr. DeSantis. Now, Mr. Birnbaum, you know, you have this 
company. You are employing all these Palestinian Arabs. You get 
targeted by BDS, so then you move operations. But yet they 
still target you. And so I think that that, to me, is very 
revealing. And I really appreciate your testimony, because I 
think that really educates the American people about what is 
really at the heart of this movement.
    But is there any doubt in your mind that this BDS movement 
is targeted beyond just territorial issues but about the 
legitimacy of Israel itself?
    Mr. Birnbaum. Mr. Chairman, there is no doubt in my mind at 
all. And if I had any doubt, it was quenched the moment we 
announced that we were moving away from our West Bank factory 
on October 29, 2014, and a day later there were celebrations 
and new attacks on SodaStream for supposedly occupying the land 
of Bedouins within the state of Israel. And you can see those 
attacks at this very moment on certain BDS Web sites.
    And, for me, that is evidence that the BDS is not after 
freeing the supposed occupied West Bank, but the BDS is after 
the destruction of the state of Israel. They are not going to 
leave us alone. But we are going to continue doing what we are 
doing, because we are doing the right thing for our employees 
and for consumers around the world. They will not stop us.
    Mr. DeSantis. So, because of the movement in response to 
BDS, how many fewer Palestinian Arabs are now employed?
    Mr. Birnbaum. That's a situation that we are discussing 
right now with the Israeli Government.
    At this moment, there are about 400 Palestinians still on 
our payroll in both of the factories. One is in the process of 
being closed, the one in the West Bank. We expect that will 
close around October of this year. And another couple of 
hundred are already working in the new facility under temporary 
work permits. If the Israeli Government is gracious enough to 
grant us work permits for these Palestinians, we can continue 
to employ them.
    And, by the way, each one of them sustain 10 people, 10 
dependents, on average. So right now we are impacting about 
4,000 Palestinian people.
    I am hoping the Israeli Government will come through, but 
it is been a struggle and a debate that we've had with them for 
over 10 months now.
    Mr. DeSantis. So it is possible that there would be less 
jobs for Palestinian Arabs as a result of the----
    Mr. Birnbaum. Absolutely. As it stands right now, Mr. 
Chairman, the work permits we have for the Israeli employees--I 
am sorry--for the Palestinian employees that are working in 
Israel right now are to expire at the end of this month, in 
just a few days.
    Mr. DeSantis. Professor Kontorovich, I think that you and 
Mr. Duss have a disagreement about longstanding U.S. policy, 
particularly this TPA provision. As he characterized it, this 
was a significant change. The State Department was right to, 
kind of, make the statements that they did. Your position, I 
think, is that this has been pretty consistent, that we have 
not discriminated about particular commerce.
    So would you care to respond to Mr. Duss?
    Mr. Kontorovich. Thank you.
    So the United States position is articulated in laws and 
policies that the United States has adopted. I did not hear Mr. 
Duss cite laws to the contrary. On the other hand, the existing 
anti-boycott legislation applies to companies organized under 
Israeli law, regardless of where they would operate.
    Similarly, the U.S.-Israeli Free Trade Agreement 
Implementation Act gives the President the authority, which 
every President since Bill Clinton has exercised, to give 
Israeli treatment to products from areas under Israeli 
jurisdiction. Thus, every existing U.S. law on the subject has 
extended Israeli national treatment to these areas.
    Mr. DeSantis. Now, Mr. Duss, I mean, regardless of, kind 
of, your views of the situation, I mean, Congress passed a 
specific provision in the trade authority bill. I mean, is not 
the appropriate response for if the State Department does not 
want that to come to Congress and ask them to change it, to 
just try to say you are not going to instruct your trade 
negotiators when they are negotiating deals, particularly with 
the European countries where this is a bigger issue, to simply 
not abide by it?
    Mr. Duss. Thank you for the question.
    I think the principle was that the State Department was 
insisting on continuing consistency in U.S. policy, which is 
one of distinction between Israel, the state of Israel, and the 
occupied territories----
    Mr. DeSantis. But it might not be consistent with what was 
actually passed by the Congress. And I think that what the 
Congress, I think, intended is similar to what Professor 
Kontorovich laid out, was that boycotting Israel, we want to 
target that, we want our trade negotiators to negotiate 
specifically with the European countries, that, you know what, 
you are not going to boycott Israel. And the fact that there 
may be a company located somewhere else, that is not been a 
distinction that the Congress has wanted to draw.
    Let me ask all of you, but, Mr. Dubowitz, the growth of BDS 
in colleges and in Europe, can you give us a sense of--I think 
I was in law school when I first heard about it. It was, like, 
a really fringe thing. I mean, I know it is not mainstream in 
American society, but it seems to have picked up steam on 
college campuses and in European capitals.
    Mr. Dubowitz. I think that's exactly right. And, obviously, 
the goal is--the college campaign is a goal of political 
delegitimization. it is to turn Israel into an international 
pariah. Then it makes it much easier for the BDS movement and 
their supporters to specifically launch an economic and 
financial warfare campaign against Israeli companies with a 
fundamental choice, you either do business with Israel or you 
do business with Europe but you can't choose between--you can't 
have both.
    And so it is very much--the BDS movement at an activist 
level is about political delegitimization. They also, then, 
have now turned their sights not only on Israeli companies but 
international companies that are actually working in Israel. 
And the fundamental goal is to undermine the Israeli economy, 
inflict severe economic damage on Israel, and try to change 
their policies.
    Again, from a U.S. national security point of view, there 
are many people in the world that have grievances against the 
United States. They will turn to economic and financial warfare 
against us and against all our allies. And I think it is 
incumbent upon the U.S. Congress to help create an economic 
defensive shield to protect all of our allies against the use 
of this new weapon.
    Mr. DeSantis. Professor, do you agree that BDS has picked 
up steam on American college campuses over the last decade?
    Mr. Kontorovich. It does seem to be attracting more press 
attention. But one needs to also differentiate between college 
activity and the activity in the European Union, which is 
actually probably the most threatening. In college, there is 
often lots of tumult that does not amount to much.
    Mr. DeSantis. There has been an increase of attention in 
the European capitals, correct?
    Mr. Kontorovich. Yes.
    I would like to offer one clarification about the State 
Department statement about the TPA.
    Mr. DeSantis. Sure.
    Mr. Kontorovich. At least in the public statement--and I 
think it is important to note this and hold them to this--the 
State Department did not say that they would not enforce the 
provisions of the TPA. They did say they didn't like them, but 
they did not come out and say they would not enforce them.
    There has been no Presidential signing statement. So the 
natural assumption, absent such a statement, would be that they 
would continue to enforce and apply it despite not liking it.
    Mr. DeSantis. Spend some time here; that might not be a 
good assumption. But I take your point.
    All right, my time is up. I will now recognize the ranking 
member, Mr. Lynch, for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman.
    I do want to revisit the idea about congressional intent, 
though, and I think you raise an important point. But in 
determining what congressional intent is in a bill, I think it 
is entirely appropriate to ask those legislators what they 
intended. And we did ask. We did ask Senator Cardin and we did 
ask Senator Portman what they intended by their amendment. And 
they intended that there be no change in the State Department 
policy.
    So that is probably why you don't have a clarification on 
what State Department policy is, because they intended no 
change, and the administration saw no change. And the amendment 
passed unanimously, with no controversy whatsoever. And it was 
a consistent continuation of U.S. policy.
    I think one thing we can agree on is the importance of 
reaching a sustainable, peaceful solution between the Israelis 
and Palestinians. The two-state solution offers a vision of two 
secure, coexisting democratic nations. It has been a 
longstanding foreign policy objective of the United States and 
is supported by the vast majority of Congress.
    Mr. Duss, how long has the United States supported the two-
state solution as a matter of official policy?
    Mr. Duss. As a matter of official policy, I believe it was 
President George W. Bush who first articulated specifically and 
explicitly that the two-state solution was the policy of the 
United States.
    Mr. Lynch. Now, I am not as--I know the outward 
manifestations of the BDS movement, but does the BDS movement 
generally support or oppose the two-state solution?
    Mr. Duss. The BDS movement does not make claims about 
outcomes. It claims to be a rights-based movement. I think, 
looking at the statements of a number of BDS leaders, it is 
clear that quite a few of them do not support the existence of 
Israel. They support other solutions.
    This is why I think it was very important, and it is very 
important, as I said in my opening statement, to distinguish 
between those who support economic action against Israel as a 
whole, such as the BDS movement, and those who support targeted 
action against the settlements, such as people in Israel, 
people in the United States, people in Europe, including the 
EU.
    This is exactly what the EU measures being discussed now 
focus on. This is not boycott. This is the EU just enforcing 
its own laws, focusing on its own economic activities with 
Israel. This is the EU saying to Israel, we want to do business 
with you, we want you to continue to be a favored trading 
partner; however, our own laws prevent us from engaging with 
these entities across the Green Line.
    Mr. Lynch. Okay.
    Now, there has already been some discussion of the 
provision in the trade promotion authority bill, and 
specifically the phrase, ``Israel or persons doing business in 
Israel or Israeli-controlled territories.''
    Mr. Duss, your written testimony states, ``Conflating 
Israel and the settlements represents a clear threat to the 
two-state solution itself, undermining our country's ability to 
effectively broker a peace agreement between the Palestinians 
and Israelis. This is why it is important and appropriate for 
State Department to offer a clarification.''
    Can you elaborate or clarify on that?
    Mr. Duss. I think what the State Department was saying--and 
this is a view that we share very closely with our European 
allies--is that, for the U.S. And its partners to be able to 
broker a peace in which the disposition of these territories 
will be decided bilaterally between negotiations between 
Israelis and Palestinians, we cannot acquiesce due to the 
conflation of these territories in advance.
    Mr. Lynch. Okay.
    Let me ask you this. Your testimony also indicates that 
blurring the distinction between Israel and its settlements is, 
``precisely what most radical elements in the BDS movement 
strive to achieve. And it would be hugely counterproductive to 
give BDS an unearned win by cooperating in any way with that 
conflation.''
    Can you elaborate on that and clarify?
    Mr. Duss. Yes. Thank you.
    I think for many in the more extreme elements of BDS--and, 
again, this is why I think the distinction between those who 
focus on the settlements in the occupied territories and who 
recognize the legitimacy of Israel, the security, and the 
continued existence of Israel and whose goal is the two-state 
solution--you need to make a distinction between those and the 
BDS, who do not recognize Israel's legitimacy, and they see all 
of Israel and the occupied territories as illegitimate.
    And I think by conflating those things, by treating all 
boycotts and all economic pressure as just another part of BDS, 
you make the BDS movement out to be much stronger and much 
larger than it is.
    Mr. Lynch. Okay.
    I have 12 seconds left. I will yield back. Thank you.
    Mr. DeSantis. I thank the gentleman.
    The chair now recognizes the vice chair of the committee, 
Mr. Russell, for 5 minutes.
    Mr. Russell. Thank you, Mr. Chairman.
    Mr. Chairman, in his submitted remarks, Mr. Duss notes that 
arguments by the BDS should be addressed in the American 
tradition, with thoughtful, considered, and ethical counter-
arguments.
    I would like to note for the record that Mr. Duss' father 
has accused Israel of war crimes and claimed that modern 
Israelis are not descended from Biblical Jews.
    I would also like to note for the record that Mr. Duss' 
brother is infamous for his tweet, ``Why are so many Israeli 
politicians rapists?''
    I would also like to note that Mr. Duss' work with the 
Center for American Progress reacted in the height of offensive 
anti-Semitic rhetoric when he attempted to build his views with 
Nazi-era posters on their ThinkProgress Web site. This drew an 
extremely rare rebuke of the Center for American Progress 
writers from the White House--a very rare thing, indeed--that 
these views and tactics were troubling.
    In fact, this rebuke also further notes that the Simon 
Wiesenthal Center, the Anti-Defamation League, and the American 
Jewish Committee have all termed the anti-Israeli rhetoric of a 
Mr. Jilani and fellow Center for American Progress writers Eli 
Clifton, Ali Gharib, Matt Duss, and Ben Armbruster to be 
infected with Jew hatred and discriminatory policy positions 
towards Israel.
    And so my question would be: Mr. Dubowitz, do you think 
that these types of arguments that are coming from this key 
witness that has been elevated to testify before Congress, are 
these thoughtful, considered, and ethical ways to approach the 
issue? Yes or no?
    Mr. Dubowitz. So, Congressman, I think that it is 
absolutely critical to examine the backgrounds and the writings 
and the research of people who appear before your subcommittee.
    Mr. Russell. Thank you, sir.
    And, Mr. Birnbaum, do you believe such tactics to be 
thoughtful, considered, and ethical counter-arguments?
    Mr. Birnbaum. No.
    And I would take it one step further, and I would like to 
correct for the record something that Mr. Duss said. Now, I am 
not an international scholar, and I am not a lawyer. But Mr. 
Duss said that the BDS does not have a position on the two-
state solution, and they do.
    I do know how to read. And I am reading some quotes from 
Mr. Omar Barghouti, the co-chair of the BDS. And he said, 
``Good riddance. The two-state solution for the Palestinian-
Israeli conflict is finally dead. But someone has to issue an 
official death certificate before the rotting corpse is given a 
proper burial and we can all move on.'' And there are many 
other such quotes.
    Mr. Russell. Thank you, sir.
    Mr. Kontorovich, do you believe that these are thoughtful, 
considered, and ethical approaches for argument?
    Mr. Kontorovich. Well, there is a contradiction in this 
perspective. Mr. Duss, on the one hand, claims that we should 
have discussions and arguments about BDS rather than having 
legislation. On the other hand, he acknowledges that Israel has 
much-deserved protections against boycotts, in the form of the 
anti-Arab League boycott laws, et cetera. That demonstrates 
that the American tradition is not simply to discuss trade and 
strategic problems but to take action about them.
    Mr. Russell. Thank you, sir.
    And so, Mr. Chairman, I am somewhat troubled that we have 
before us today someone elevated to come and testify before 
Congress that might have such a closet to be examined. And I 
find these types of approaches to the BDS problem to be 
unthoughtful, ill-considered, and of questionable tactics. And, 
as a result, I really don't want to hear any more that he might 
have to say in this hearing.
    Thank you, and I yield back my time.
    Mr. DeSantis. The gentleman yields back.
    The chair now recognizes the gentleman from Georgia, Mr. 
Hice, for 5 minutes.
    Mr. Hice. Thank you, Mr. Chairman.
    Mr. Dubowitz, do you believe that the BDS is going to 
positively or negatively impact the peace process between 
Israelis and Palestinians?
    Mr. Dubowitz. Congressman, the short answer is negatively. 
I mean, if you are launching an economic and financial warfare 
campaign against Israel, it is likely to only harden positions, 
it is likely to only exacerbate tensions. And I think, as Mr. 
Birnbaum has eloquently put it, it has a significant cost, not 
just to Israelis but to Palestinians as well.
    Mr. Hice. Okay. Well, would you go so far as to say, again, 
in your opinion, that BDS really is a threat to Israel as a 
Jewish state?
    Mr. Dubowitz. I would certainly go that far. And I would 
say that BDS, again--I want to just sort of broaden the lens 
here. Economic and financial warfare against a close American 
ally is a threat to America, and it is a threat to our other 
allies.
    You know, as I said, there are territorial disputes 
happening all over the world that our allies are involved in. 
it is one thing for the U.S. Government to have a political 
view on those territorial disputes. it is another thing for the 
U.S. Government not to support a close ally that is the target 
of economic and financial warfare or cyber warfare or military 
warfare or any other kind of warfare.
    And we need to defend our allies, or this problem will come 
to our shores. We learnt that problem with terrorism. Terrorism 
was directed against Israelis. They are the canary in the coal 
mine, and eventually these threats come to us.
    Mr. Hice. All right. You mention a couple things. Defending 
our allies is one thing, but you said this is a threat to 
America, as well. In one or two sentences, what is the threat 
to America?
    Mr. Dubowitz. Well, the threat is that there are many 
people in the world that have grievances against the United 
States, and the international order is changing, with the rise 
of China and Russia and the attempt to establish an alternative 
financial order. I can talk a little bit more about what that 
looks like. But, clearly, these rising powers are interested in 
using economic coercion, financial coercion directly against 
the United States.
    So we need to harden our defenses. In my testimony, I 
outline exactly how Congress and the executive branch should 
begin to think about this. We need to create an economic 
defensive shield to protect American national and economic 
interests.
    Mr. Hice. Mr. Kontorovich, let me ask you, how much of a 
threat do you believe that this poses to Israel's economy as 
well as their overall security?
    Mr. Kontorovich. The larger threat to Israel's economy and 
security comes from the planned measures, the discussed 
measures of the European Commission, which are being encouraged 
by BDS groups. In the long run, I think they pose a real threat 
to both Israel and the viability of a two-state solution.
    Like Mr. Dubowitz, I would like to echo that this has a 
particularly strong impact on the United States. What the 
European Union is trying to do is to use trade, trade 
restrictions, and discriminatory trade restrictions, as a tool 
of foreign relations. The central pillar of the GATT and World 
Trade Organization Trading System, which the U.S. is the 
biggest proponent of, is to separate trade policy from foreign 
policy disputes. By allowing for discriminatory, targeted, non-
most-favored-nation treatment of Israel, it would set a 
precedent that would have significant impacts for a major 
trading country like the United States.
    Mr. Hice. Okay. Thank you.
    Let me go back, Mr. Dubowitz, to you, then. Does Congress, 
in your opinion, do we have any options? Is there anything 
legislatively that we can or should do towards or against 
private organizations that are funding the BDS movement?
    Mr. Dubowitz. Well, Congressman, I do think so.
    And I want to just echo the comments of Mr. Kontorovich. 
And that is that the European Union, again, is attempting to 
use economic and financial warfare, in this case against 
Israel. And Mr. Kontorovich is right that the European Union 
may use this against other American allies.
    If the Philippines has a major dispute with the Chinese in 
the South China Sea and the European Union decides that, given 
the huge EU-Sino trade and economic relationship, that they are 
going to side with China over the Philippines, they may 
actually be persuaded by the Chinese to use their economic and 
financial leverage against the Philippines. And we would have 
to defend the Philippines, as a close ally economically and 
financially.
    And Congress can do that. We certainly--there is a huge 
amount of expertise in Congress on the issue of sanctions and 
creating not only an offensive sanctions instrument that has 
been the focus of the U.S. Government and Congress for years, 
but creating a defensive architecture, a defensive shield.
    Legislative initiatives that are occurring in Congress 
today at the State level in Illinois, in South Carolina, I 
think are an important first step. But the U.S. Government 
needs to be restructured and reoriented in the way that it 
thinks about this economic warfare doctrine. And the 
institutions within the U.S. Treasury Department and 
elsewhere--I have done a lot of research into this topic, and 
they are ill-prepared to defend the United States and our 
allies against this new threat of economic and financial 
coercion.
    Mr. Hice. Thank you, Mr. Chairman. I yield back.
    Mr. DeSantis. Maybe Professor Kontorovich, the BDS, are 
they trying to boycott regimes like Iran or the Castro brothers 
or North Korea, as well?
    Mr. Kontorovich. Not only are there not such measures 
against countries with massive human rights violations and 
breaches of international law, I think what is important to 
note is, even at the level of the European Union--forget the 
NGOs of the BDS movement for a second--even at the European 
level, the rules that they are seeking to impose against Israel 
they are not imposing even on other areas and situations where 
they believe there are settlements and a military occupation.
    Take Western Sahara, for example. The European Union, like 
the west of the world, recognizes that it is occupied by 
Morocco. The majority of the population there are settlers. On 
the other hand, under European law, Moroccan produce from 
Western Sahara is labeled ``Made in Morocco'' when imported 
into the European. When asked about this, European officials 
have said that's completely consistent with European law.
    Labeling products is one thing. Sovereign status of 
territories is another thing. Indeed, Europe has been entering 
into more and more treaties with Morocco, allowing them access 
to Western Sahara. European parliamentary documents themselves 
concede that Europe's treatment of Israel is inconsistent with 
its treatment of other situations they view as similar, in a 
way which is even problematic under European notions of 
uniformity.
    Mr. DeSantis. Mr. Birnbaum, what about in your experience, 
when BDS was targeting SodaStream, did you notice them also 
targeting soda companies in Iran or North Korea or anything 
like that?
    Mr. Birnbaum. No, never. From my perspective, it appears 
they are blind to any other infractions in the world--assuming 
we are an infraction. We are not.
    But an important case would be, on the contrary, in the 
Nordics, the BDS caused the Nordic retailers, all of them, all 
of the Nordic states, to stop sourcing SodaStream product from 
the West Bank and sourcing it from the mother of human rights, 
China.
    So that's not a problem for the Nordic markets, to import 
product from China. And we had to terminate, at that point in 
time, a few hundred Palestinian workers that could have enjoyed 
employment had we been able to continue to source for the 
Nordic markets from the West Bank.
    Mr. DeSantis. So why the double standard?
    Well, I guess we will let people draw their own 
conclusions. I mean, I think it is odd that Israel, with this 
one country, would have to live under a totally separate 
standard than any other country in the rest of the world, in 
the eyes of some of these people, and I wonder what motivates 
that.
    I am done. Mr. Lynch, do you have any more questions?
    Mr. Lynch. I do.
    Mr. DeSantis. Okay. I will now yield 5 minutes to the 
ranking member, Mr. Lynch.
    Mr. Lynch. Thank you.
    Mr. Duss, there were some very serious accusations made by 
the gentleman from Oklahoma earlier in the hearing. While he 
asked everybody else their opinion of his accusations of you, 
he did not give you an opportunity to address those. So what I 
am going to do is I am going to yield my 5 minutes to you. I 
also know that he made accusations about stuff that your 
brother said. I am not sure how you are going to handle that, 
but take whatever time you would like.
    I think it is fairness. This is Congress. This is an open 
hearing, and we should hear from our witnesses. So I am going 
to yield you the balance of my time for you to address the 
accusations made against you. Proceed.
    Mr. Duss. Thank you, Ranking Member.
    I don't want to waste too much time on those. I would--you 
know, with regard to my father and my brother, they have both 
dedicated their lives to doing humanitarian work around the 
world, and I am very proud of them. So I think there have been 
statements they may have said in the past that have been taken 
out of context.
    And with my own work, as well, I stand behind everything I 
have ever written. And as I have said earlier here in this 
hearing and will continue to say, I stand for a two-state 
solution. The security and the continued existence of the state 
of Israel and the rights and self-determination of the 
Palestinian people--that's the focus of my work, and that's the 
reason I am here today.
    I would like to address the point about the BDS movement 
and is it focusing on any other countries. I think it is quite 
fair to bring up other abusive regimes and are they focused. I 
think Iran, for one, is the focus of a major international 
sanctions campaign on a whole range of issues. Those sanctions 
related to its nuclear program, if the deal goes through, will 
slowly be taken off. But it would still be focused, it will 
still be pressured on human rights issues and terrorism issues.
    But I think the key point to keep in mind here is that the 
BDS movement, agree or disagree with it, is driven by 
Palestinian civil society and a call by Palestinian civil 
society groups from 2005 to focus economic pressure on Israel. 
In that way, I think it is quite easy to understand why the 
Palestinians--they are not being occupied by other countries. 
They are being occupied, in their view, by Israel. That's why 
Israelis the focus of their campaign.
    One other quick response to my colleague Mr. Kontorovich's 
comment about boycotts in law. I think it is important, again, 
that we keep coming back to this point about distinction. I 
would distinguish between civil society actions and law and, 
for example, the Arab boycott. These are countries that are 
boycotting Israel as a state. Those are countries; these are 
not civil society actors.
    And, again, here is the distinction with the EU. The way 
that the EU is defining and enforcing its own laws is with 
regard to making a distinction between the occupied territories 
and with Israel. They are happy and want to increase trade with 
the state of Israel, but they want to be careful to make a 
distinction between Israel and the occupied territories.
    Thank you.
    Mr. Lynch. Thank you.
    I yield back.
    Mr. DeSantis. I thank the gentleman.
    And I thank the witnesses for coming here and your 
testimony.
    I think that this trade is going to be something that 
Congress, we are going to need to conduct oversight over to 
make sure that the law is being applied. I just think it would 
be a complete disaster to be negotiating trade agreements with 
these European countries, violate this provision, allow them to 
do economic boycotts of Israel.
    I mean, we are the one that provides the Europeans with 
their security, with our defense. I mean, they do not defend 
themselves; it is really us. And so I think it is something 
that we need to keep an eye on. And I think that this 
committee, as negotiations go forward, we are going to look to 
conduct the appropriate oversight.
    So I thank everybody, and this hearing is adjourned.
    [Whereupon, at 3:20 p.m., the subcommittee was adjourned.]


                                APPENDIX

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