Antiboycott Compliance

Antiboycott Compliance

From the Office of Antiboycott Compliance (OAC):

The Bureau is charged with administering and enforcing the Antiboycott Laws under the Export Administration Act. Those laws discourage, and in some circumstances, prohibit U.S. companies from furthering or supporting the boycott of Israel sponsored by the Arab League, and certain other countries, including complying with certain requests for information designed to verify compliance with the boycott. Compliance with such requests may be prohibited by the Export Administration Regulations (EAR) and may be reportable to the Bureau.

Antiboycott Laws

During the mid-1970’s the United States adopted two laws that seek to counteract the participation of U.S. citizens in other nation’s economic boycotts or embargoes. These “antiboycott” laws are the 1977 amendments to the Export Administration Act (EAA) and the Ribicoff Amendment to the 1976 Tax Reform Act (TRA). While these laws share a common purpose, there are distinctions in their administration.

Objectives

The antiboycott laws were adopted to encourage, and in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. They have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy.

What do the Laws Prohibit?

Conduct that may be penalized under the TRA and/or prohibited under the EAR includes:

• Agreements to refuse or actual refusal to do business with or in Israel or with blacklisted companies.
• Agreements to discriminate or actual discrimination against other persons based on race, religion, sex, national origin or nationality.
• Agreements to furnish or actual furnishing of information about business relationships with or in Israel or with blacklisted companies.
• Agreements to furnish or actual furnishing of information about the race, religion, sex, or national origin of another person.

Implementing letters of credit containing prohibited boycott terms or conditions.

The TRA does not “prohibit” conduct, but denies tax benefits (“penalizes”) for certain types of boycott-related agreements.

Penalties

The Export Administration Act (EAA) specifies penalties for violations of the Antiboycott Regulations as well as export control violations. These can include:

Criminal:

The penalties imposed for each “knowing” violation can be a fine of up to $50,000 or five times the value of the exports involved, whichever is greater, and imprisonment of up to five years. During periods when the EAR are continued in effect by an Executive Order issued pursuant to the International Emergency Economic Powers Act, the criminal penalties for each “willful” violation can be a fine of up to $50,000 and imprisonment for up to ten years.

Administrative:

For each violation of the EAR any or all of the following may be imposed:

Boycott agreements under the TRA involve the denial of all or part of the foreign tax benefits discussed above.

When the EAA is in lapse, penalties for violation of the Antiboycott Regulations are governed by the International Emergency Economic Powers Act (IEEPA). The IEEPA Enhancement Act provides for penalties of up to the greater of $250,000 per violation or twice the value of the transaction for administrative violations of Antiboycott Regulations, and up to $1 million and 20 years imprisonment per violation for criminal antiboycott violations.

To read more including Voluntary Self-disclosure and Who is Covered by the Laws and more: OAC