Current Status of the Boycott
The boycott has three tiers. The primary boycott prohibits citizens of an Arab League member from buying from, selling to, or entering into a business contract with either the Israeli government or an Israeli citizen. The secondary boycott extends the primary boycott to any entity world-wide that does business with Israel. A blacklist of global firms that engage in business with Israel is maintained by the Central Boycott Office, and disseminated to Arab League members. The tertiary boycott prohibits an Arab League member and its nationals from doing business with a company that in turn deals with companies that have been blacklisted by the Arab League. The boycott also applies to companies that the Arab League identifies as having “Zionist sympathizers” in executive positions or on the board of the company. According to one analyst, the “nature and detail of these rules reflect the boycotting countries’ tolerance for only the most minimal contacts with Israel.”

The Arab League does not enforce the boycott and boycott regulations are not binding on member states. However, the regulations have been the model for various laws implemented by member countries. The League recommends that member countries demand certificates of origin on all goods acquired from suppliers to ensure that such goods meet all aspects of the boycott.

The Boycott, Divestment, and Sanctions (BDS) Movement
A “BDS” (boycott, divestment, and sanctions) movement against Israel—ostensibly linked to its treatment of Palestinians—has gained support among civil society organizations in a range of countries. Some divestment from and boycotts of Israel or Israeli goods have resulted. For example, the American Studies Association, a scholarly organization devoted to the interdisciplinary study of American culture and history, voted for an academic boycott of Israeli institutions in December 2013, amplifying the controversy surrounding the issue with lawmakers and with U.S. higher education institutions and student councils. Some who oppose BDS measures against companies in Israel because of concerns that the movement’s demands could endanger Israel’s identity as a Jewish state nevertheless support efforts to divest from Israeli companies doing business in West Bank settlements. Additionally, some European countries’ pension funds and companies have withdrawn investments or canceled contracts owing to concerns regarding connections with settlement activity. However, some reports have questioned whether such developments are properly characterized as constituting a boycott or a significant threat to Israel’s economy.

Critics, including some Members of Congress, argue that the BDS movement is discriminatory and are seeking legislative options to limit its influence. For example, a bill introduced in February 2015, H.R. 825, United States-Israel Trade and Commercial Enhancement Act, would, among other things, discourage prospective U.S. trade partners from engaging in “commercial discrimination” against Israel and require executive branch reports on politically motivated instances of BDS acts. At least two U.S. states have passed legislative measures or resolutions aimed at countering or criticizing BDS measures.

Israel has been concerned that the labeling is a form of boycott and that it predetermines the final borders of the two state solutions. It believes those borders can only be set by Israelis and Palestinians through direct negotiations.

Mogherini assured Netanyahu that she agreed that Israel’s final borders should be set through such talks and that the labeling was not intended to prejudice any final status issues. The consumer labels do not constitute a boycott and should not be interpreted as such, Mogherini told Netanyahu.