Looks like my 'opinion' on how the law is applied is shared by some in the 
government:

U.S. urges UAE to end its boycott of Israel
http://www.washingtontimes.com/world/20060301-113324-4242r.htm

Dubai's Israel ban violates U.S. law
http://www.nydailynews.com/03-01-2006/news/story/395737p-335453c.html

It seems that the boycott affects more than just the UAE. They've asked 
American ships docked in the UAE if they were carrying goods from Israel. As 
long as the goods are not coming off the ships, that should be a clear 
violation and a clear sign as to how they may view things at the American 
ports. In addition, they block anyone with an Israeli passport from coming off 
a ship or entering the country at all. But that's normal for our allies like 
Saudi Arabia who will not accept an ambassador who's Jewish.

But this goes on to the connections between the UAE and terrorism. 

Hamas More Don’t We Know?
http://www.nationalreview.com/mccarthy/mccarthy200603010741.asp

No, I don't have my mind made up already. I'm willing to accept the UAE if they 
show they have no connections to terrorism and reject their boycott, but....

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