Article by: Glenn Shearron, Trade Compliance Specialist, ECoP

 

The Antiboycott Regulations are a small, but seldom referenced area of the Export Administration Regulations (EAR). They get their origin from the Ribicoff Amendment to the 1976 Tax Reform Act and have made their way into the current EAR. They can be found in part 760 of the EAR.

The antiboycott provisions prohibit certain actions by US companies regarding dealings with countries that have an active boycott against countries that are friendly to the US. The most notable boycott is, of course, the Arab League boycott of Israel.

As published in the Federal Register in October of 2023, the list of countries that officially participate in a recognized international boycott are:

Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, and Yemen.

US companies are required to report to the Office of Antiboycott Compliance (OAC) any receipt of certain boycott related requests for information designed to verify compliance with the boycott. Reporting requirements can be found in part 760.5. The antiboycott regulations include six prohibitions:

1. Refuse or agree to refuse to do business with another country or entity.
2. Furnish or agree to furnish information about your business relationship with a boycotted country or blacklisted person(s).
3. Discriminate against a US person on the basis of race, religion, sex or national origin.
4. Furnish information about race, religion, sex, or national origin of a US person.
5. Furnish information concerning association with fraternal and charitable organizations.
6. Implement letter of credit containing prohibited condition.

With the current situation in the Middle East between Israel and Palestine/Hamas, we suggest that any contract, questionnaire, or request for information from an Arab League country be reviewed with the utmost care.

The Bureau of Industry and Security (BIS), in recent months, has stepped up export enforcement, which includes cooperation with foreign countries and enforcement of the EAR in general, which includes the boycott regulations of part 760. While there aren’t many monetary penalties issued from violations of the antiboycott provisions of the EAR, the number of violations in 2023 is running at about a violation every two months. While that is certainly not a staggering number, it only reinforces the fact that export enforcement is on the rise. We suggest that everyone have a written Export Compliance Program (ECP), and within this program you should address this small, but important item.

In the case of administrative antiboycott violations, BIS may impose the following penalties:

• A monetary penalty in the amount of the greater of approximately $300,000 per violation or twice the value of the underlying transaction, as appropriate;
• Denial of export privileges; and/or
• Revocation of any BIS export licenses

If you have any question about the antiboycott provisions, or about developing an ECP, please do not hesitate to contact us at tradeinsights@valexander.com.