Compliance with US Anti-Boycott Laws and Regulations

AuthorMelissa Proctor and Kim Strosnider
Chapter 7
Compliance with US Anti-Boycott Laws and Regulations
Melissa Proctor and Kim Strosnider*
I. Executive Summary
The United States maintains two sets of anti-boycott laws designed to prevent US
companies from supporting or participating in boycotts of countries friendly to the United
States.1 The first is maintained by the US Department of Commerce in the Export Administration
Regulations (EAR).2 The second was implemented in Section 999 of the US Treasury
Department’s Internal Revenue Code.3 The US anti-boycott laws impose far-reaching restrictions
on certain actions, agreements, and the furnishing of certain information by US persons, and
impact US companies and their foreign affiliates overseas. Although both laws were drafted
without reference to any particular boycott, the key boycott of concern today is the Arab
League’s long-standing economic boycott of Israel. Penalties for violations of US anti-boycott
laws can include civil and criminal fines, imprisonment, denial of export privileges, and, for
engaging in boycott participation penalized by the tax code, loss of tax benefits.
This chapter provides an overview of the anti-boycott laws and regulations administered
and enforced by the US Commerce and Treasury Departments, government reporting
requirements, consequences of anti-boycott violations and boycott participation by US
companies and their foreign affiliates, and recommended “best practices” for ensuring anti-
boycott compliance. These anti-boycott laws and regulations will be of particular concern to
government contractors that are doing business in the Middle Eastern countries that boycott
Israel, or those that must certify under federal government contracting rules that they do not
comply with certain aspects of the boycott.
II. The US Anti-Boycott Legal Regimes
A. Export Administration Regulations
1. Overview
The US Commerce Department’s Office of Anti-Boycott Compliance (OAC), which is
part of the Bureau of Industry and Security (BIS), is responsible for administering and enforcing
the US anti-boycott regulations, found in Part 760 of the EAR (“Restrictive Trade Practices and
Boycotts”).4 These regulations implement Section 8 of the Export Administration Act (EAA).5
Section 8 of the EAA was enacted to prevent US persons from furthering, endorsing, or
supporting foreign governments’ boycotts that are not sanctioned by the US government.
Generally, the term “boycott” refers to a type of economic coercion. There are three
distinct levels or types of boycotts: primary, secondary, and tertiary. A primary boycott is one in
which a country uses its sovereign authority to refuse to trade with another country. In a
secondary boycott, a country refuses to trade with any individual or firm that does business with
another country that is subject to a boycott. Tertiary boycotts exist where a country refuses to do
business with blacklisted individuals or firms. The US anti-boycott law and regulations were
intended to counteract the secondary and tertiary parts of the Arab League’s boycott of Israel.
On a quarterly basis, the Treasury Department publishes in the Federal Register a list of
countries that are known to support or require cooperation with foreign boycotts that are not
sanctioned by the United States. The current list includes nine countries: Iraq, Kuwait, Lebanon,
Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen. All documents

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