Published Monday, 18 August 2014
Councillor Hughes said the letters were a "personal initiative". (© Twitter)
Unionists tabled the motion at the council's Monday night meeting calling for Councillor Dáire Hughes to apologise and step down from his position.
Last month, the Mayor sent out a letter urging shops in the area not to stock Israeli goods in response to the country's military actions in Gaza.
There have been growing calls for protest action across NI, with several demonstrations held inside and outside stores which stock Israeli goods.
Councillor Hughes had said the letter was his own "personal initiative" after he was asked for the information from his constituents.
UUP councillor David Taylor described the mayor's call for items to be listed, removed from sale and boycotted by retailers as "disturbing."
He said: "I am acutely aware of the differing views in terms of the complex political situation in the Middle East.
"However, I am extremely conscious, having been afforded the opportunity to serve as deputy mayor, that you are required to represent all the people of our district and therefore where possible stay above the normal rough and tumble of politics.
"Instead councillor Hughes has tarnished and compromised the position of first citizen of Newry and Mourne through his deliberate actions."
Cllr Taylor continued: "My unionist colleagues and I believe, given the significant controversy surrounding councillor Hughes' failure to act duly and appropriately as mayor, that he should offer an immediate apology or consider his position as First Citizen of Newry and Mourne."
Following the motion's defeat, Cllr Hughes said that he will continue to represent all citizens.
"This motion was politically motivated and was not representative of the views of the citizens of the Council, as tonight's vote has shown.
"It was also not about Gaza. This motion was tabled and supported by those who are opposed to Sinn Féin," he said.
"I will continue to represent all the people of Newry and Mourne District Council equally as mayor.
"I will also continue to stand in solidarity with the people of Gaza and to call for a lasting and verifiable ceasefire and an end to violence in the Middle East."
Afterwards, Cllr Taylor expressed his disappointment.
"The Mayor has clearly abused his position and displayed shameless arrogance in attempting to bully traders into removing specific goods from their stores.
"It is extremely disappointing that the majority of Councillors have failed to display the resolve to hold Councillor Hughes to account for his unacceptable behaviour."
He said that the result was "certainly not surprising."
© UTV News