The proposed legislation constitutes a threat of an American counter-boycott against countries, UN organizations and private companies who boycott Israeli products, political or cultural institutions, or scholars.
The bill proposal is led by Republican House representative Peter Roskam from Illinois and has garnered wide support from both Republicans and Democrats in the House.
Israel is the first country in the world to sign a free trade agreement with the United States and the two countries are in talks to strengthen free trade and the unique financial ties. The European Union is currently working on formulating a similar agreement with the US.
Such legislation in Congress could dissuade European countries from promoting initiatives by the Boycott, Divestment and Sanctions Movement (BDS). In the past, American legislation against the Arab boycott aided Israel in overcoming it. European companies that supported the Arab boycott at the time were economically damaged by the American response.
The new legislation is different, but it uses effective American measures against governments, international organizations, companies and individuals who act to promote a boycott against Israel.
The proposed bill "opposes politically motivated actions that penalize or otherwise limit commercial relations specifically with Israel such as boycotts, divestment or sanctions."
It further notes that "the boycott, divestment, and sanctioning of Israel by governments, governmental bodies, quasi-governmental bodies, international organizations, and other such entities is contrary to the General Agreement on Tariffs and Trade (GATT) principle of non-discrimination."
'American threat will deter European companies'
The legislation proposes US examination of companies promoting or abiding by boycotts and orders the president to report to Congress within 180 days of the bill going into effect on BDS actions against Israel.
The president's report, according to the bill, would need to detail the steps the US is taking to encourage foreign countries and international organizations to stop the boycott against Israel and what steps the US is taking to "prevent investigations or prosecutions by governments or international organizations of United States persons on the sole basis of such persons doing business with Israel, with Israeli entities, or in Israeli-controlled territories."
Dr. Adam Reuter, the CEO of Financial Immunities Ltd. which deals with managing financial risks for companies, said Israeli businesses are hardly affected by BDS boycotts, but the proposed American legislation could greatly effect Europe.
"The BDS Movement carries more weight in the academic arena. In Israel, the wave of boycotts is being blown out of proportions as far as its influence is concerned, which is pretty minor. Having said that, the fact the Americans want to help is a good thing for those few cases, and particularly if the issue develops negatively in the future in Europe - then the American threat could be very effective," Dr. Reuter said.
Reuter added that based on the measures the Americans are willing to take - as stated in the proposed legislation - "any company that wants to issue stocks in the US will have to declare it was not and is not boycotting Israel."
In addition, any company that appears before the US court, or is involved in the American banking system, could be sued based on the proposed legislation.
"I believe most of the European companies will hesitate to join a boycott against Israel in light of the American threats," he said.