US opens investigation into Israeli company making Iron Dome parts

The precedential investigation procedure could dramatically impact the entire trade relationship between Israel and the US.

By YEHUDA SHARONI | JPOST | FEBRUARY 28, 2024 11:22

An Iron Dome rocket interceptor battery deployed near the southern Gaza Strip in southern Israel March 29, 2019. (photo credit: AMIR COHEN/REUTERS)

In an unprecedented legal proceeding, the American government opened an investigation into Finkelstein Metals and is examining the government’s conduct, Maariv reported Wednesday morning.

According to the American authorities, grants received by the company due to activities in a development zone constitute a prohibited government subsidy, and they allowed the company to sell its products in the US at inflated prices. The decision to open the investigation and sanctions against Finkelstein has puzzled Israeli officials.

The scope of Finkelstein’s activities in the US is minimal compared to the American complainants, and it holds less than 3% of the market share in the US. However, this is about 75% of its sales volume. The American administration’s claim also contradicts the trade agreement between the two countries, which has existed for decades.

Imposition of sanctions
Sanctions and customs duties have already been imposed on the company, which significantly impair its ability to operate regularly and may endanger the supplies required for the defense industry, such as the Iron Dome. As a result, the Foreign Affairs Ministry and the Association of Manufacturers entered the picture.

In the past, a lawsuit was filed against Dead Sea factories for over-the-top exports, which was ultimately rejected. In an ironic twist, the same parties suing Finkelstein previously defended the Dead Sea factories. Ron Tomer, the President of the Manufacturers’ Association, contacted the relevant authorities in the Economy Ministry and warned of the unusual situation that could lead to damage to other companies.

According to Tomer: “This is an unfounded lawsuit, which may lead to the closure of the factory. If this case is successful, it may harm other Israeli companies and is contrary to existing trade agreements.”

Finkelstein’s production
Finkelstein is defined as an essential enterprise for the industry and is the only Israeli company that produces brass, bronze, and copper alloy products. It employs 80 workers from the northern region, and its products are used by defense companies. The company operates in the Alon Tavor industrial zone near Afula.

Rockets seen frired from the Gaza Strip into southern Israel on October 7, 2023. (credit: LIRON MOLDOVAN/FLASH 90)

The company is Rafael’s sole supplier of metal bars for the purpose of producing ammunition for Iron Dome batteries. The company is controlled by the family, but about a decade ago, half of its shares were purchased by Leader Investments, owned by Dan David’s heirs, for NIS 25 million.

Potential effects on trade relations
The precedential investigation procedure could have a dramatic impact on the entire trade relationship between Israel and the US and have broad implications for Israeli exporters to the US, including the defense industry.

Government benefits for industrial plants in development areas are often a necessary condition for the establishment of the plants. If the American government does decide that benefits of this type constitute a prohibited subsidy and therefore require the imposition of customs duties on the products exported to the US, this could lead to a wave of additional lawsuits by Israeli exporters to the US.

US sanctions on Israelis and Israeli firms are becoming more familiar, as it was recently announced that the US imposed sanctions on settlers who attacked Palestinians, and as a result, their bank accounts were restricted. As these new policies become realities for Israel, there may be deeper implications for Israel’s economic sphere.

February 29, 2024 | 8 Comments »

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8 Comments / 8 Comments

  1. @Harris Well said. Reminds me of what my late father, during our intra-family civil war, said about Nixon during Watergate, “He may be a crook but he’s our crook.” 😀 Though, I, personally, am not put off by Trump’s personality and I don’t believe he’s a crook. In fact, sometimes his jokes tickle me pink. I loved it when he tossed Angela Merkel some Starbursts on his way out and said, “Don’t say I never gave you anything.” and when he invited the dog who tracked down Soleimani and Baghdadi to the White House and pinned a medal on him in contrast to Obama who gave Bin Laden an honorable burial at sea and a multiple gun salute to him after he gave the order to take him out.

  2. Agreed!

    @Laura
    For those who are so put off by Trump’s personality, when it comes to voting time:
    Think back to when David Duke ran for Gov of Louisiana. His opponent was a crook – Edwards. The common slogan in Louisiana was, “Hold your nose and vote for the crook.”

  3. @Laura
    For those who are so put off by Trump’s personality, when it comes to voting time:
    Think back to when David Duke ran for Gov of Louisiana. His opponent was a crook – Edwards. The common slogan in Louisiana was, “Hold your nose and vote for the crook.”

  4. Mr. Zorn, I saw that article when it first hit the news. I can’t remember how long ago, but it’s been more than a few days. My thoughts, Israel has to break free from the iron dome… (IRON YOKE) placed around its neck by the nations.

  5. Depending on how that is punctuated, it could also be read as demanding assurances that Israel use U.S. made weapons.

  6. Report: US wants Israeli written assurances on using US weapons in Gaza
    Officials tell Axios that Biden administration gave Israel until mid-March to sign letter that provides assurances that it will abide by international law while using US weapons in Gaza.

    Feb 28, 2024, 2:09 AM (GMT+2)

    The Biden administration gave Israel until mid-March to sign a letter that provides assurances that it will abide by international law while using US weapons and allow humanitarian aid into Gaza, three US and Israeli officials told Axios on Tuesday.

    The assurances are now a requirement under a memorandum issued earlier this month by President Joe Biden. While it does not single out Israel, the new policy came after some Democratic senators expressed concern over the Israeli military campaign in Gaza. If the assurances aren’t provided by the deadline, US weapon transfers to the country will be paused.

    According to Axios, the national security memorandum, published on February 8, states that prior to supplying US weapons, a country must give the US “credible and reliable written assurances” that it will use any such weapons in accordance with international humanitarian law.

    It also stresses that a country that uses US weapons in conflict areas needs to provide “credible and reliable written assurances” that it will “facilitate and not arbitrarily deny, restrict, or otherwise impede, directly or indirectly, the transport or delivery of United States humanitarian assistance and United States Government-supported international efforts to provide humanitarian assistance.”

    Countries engaged in conflicts, like Israel, have 45 days from the day the memo was issued to provide the written assurances and have them certified by Secretary of State Antony Blinken. Other countries have 180 days.

    The memorandum was issued by the White House after pressure from Sen. Chris Van Hollen (D-MD) and other senators who wanted to add these requirements as an amendment to the Senate supplemental funding bill.

    Three US officials told Axios on Tuesday that Senate Majority Leader Chuck Schumer told the White House he was concerned that such an amendment would divide the Democratic caucus in the Senate and asked to take executive action instead.

    Related articles:
    Blinken under fire for reversing ‘settlement’ policy
    ‘We don’t believe in forced displacement of Gazans’
    ‘Settlements inconsistent with international law’
    Rep. Torres quits Congressional Progressive Caucus
    A senior Israeli official said the US request was to have the written assurances by mid-March so that Blinken can certify them by the end of the month. Israel can decide who in the government will sign the letter.

    A State Department official said in response, “We continue to implement National Security Memorandum-20, including having discussions with our security cooperation partners around the world.”

    The Israeli Defense Ministry declined to comment.

    Found a mistake? Contact us

    https://www.israelnationalnews.com/news/385923

  7. This is a despicable, unconscionable move clearly meant to pander to muslim voters in Dearborn, Michigan. Iron Dome is defensive in nature. Why target that unless Biden wants Israel defenseless and to force its hand to end the war in Gaza before it destroys hamas? God only knows what other horrible things will be done to undermine Israel while its fighting for its life as Biden is increasingly desperate to gain back voters he’s lost in Michigan; a needed swing state. This shows that legal immigration is just as problematic as illegal.

    I had flirted with the idea of writing in Ron DeSantis, however it’s imperative that this administration is removed from power. I will have to put my personal feelings aside in this election.