The Knesset approved a law placing sanctions on individuals and companies involved in boycotts of Israel on Monday.
The law, by Likud parliamentary faction chairman, MK Zeev Elkin, passed 32-12 in its first reading and will now be prepared in the Justice Committee for its final readings.
The law will allow the authorities to levy heavy fines on those calling for or taking part in boycotts and limit the access of firms which refuse to work with Israelis and settlers to government contracts.
One of the reasons for the law was the growing number of calls around the world, supported in some cases by Israeli citizens and organisations, for a boycott of Israeli products and universities. One of the results has been that a group of Israeli firms which serve the Rawabi building project near Ramallah had to sign an undertaking not to do any business with Israeli settlements.
Fifty-three human rights and social action groups wrote to Knesset Speaker Reuven Rivlin, saying: "This is clearly meant to limit the activities of only certain views and political groups, just because their protest challenges the current political consensus." In response, MK Elkin said: "the US also has a law that makes it illegal for its citizens to support boycotts of friendly countries including Israel."