Favored nations
Reasons for a new ''free trade'' agreement between the United States and Israel, as proposed by President Reagan and Israeli Prime Minister Yitzhak Shamir, are not hard to find.
The two nations enjoy a vigorous two-way trade. Many US firms would like to protect their market shares in Israel - a market penetration they believe may be threatened when new preferential trading rules between Europe and Israel go into effect during the next few years. Israel, meanwhile, would like to expand its high-technology industries. That would be furthered by easy access to the technology-oriented US market.
In short, both sides could benefit from such a free-trade zone, in which most duties and tariffs would be removed on each nation's goods.
What must now be asked, as the two sides contemplate negotiations to work out such an arrangement, is this: To what extent does the US intend to seek out special trading rules for particular nations rather than work to further a multinational liberalization of trade in general, involving all major trading nations? To what extent should the US use trade as an instrument of foreign policy, as it is clearly doing in the case of Israel?
The question actually predates the current issue of a special US-Israeli trade pact. Over the years the US has often provided special trading rules to particular nations. Canada has long been given a special trading status because it is a neighbor and is the single largest US trading partner. And under terms of legislation enacted by Congress this summer at the request of the Reagan administration, Caribbean Basin nations will be allowed to step up exports to the US free of certain duties.
The proposed Israeli free-trade accord differs somewhat from the Caribbean Basin accord in that, unlike the Caribbean pact, the US would seek reciprocal rights for exports to Israel. Under the Caribbean initiative, the US allows certain goods to enter the US duty free, but US goods are not given the same status in the Caribbean.
On balance then, a US-Israeli free-trade arrangement would work to the economic benefit of both nations. And at a time when protectionism is growing, any moves toward trade liberalization are to be welcomed.
Still, there is a longer-range consideration that must be kept in mind by all parties here - Israel, the US, the Common Market nations.
It is that erecting piecemeal trading arrangements allows trade to become a questionable handmaiden of politics. What would seem most needed in a world of rising trade barriers (over the past decade at least), are trading rules that apply to all, whatever the geopolitical considerations of the moment.
