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Log inUS Antiboycott Laws
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US Antiboycott Laws
by Zoya Tue Apr 15, 2014 1:28 am
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.
Primary Impact:
The Arab League boycott of Israel is the principal foreign economic boycott that U.S. companies must be concerned with today. The antiboycott laws, however, apply to all boycotts imposed by foreign countries that are unsanctioned by the United States.
Who Is Covered by the Laws?
The antiboycott provisions of the Export Administration Regulations (EAR) apply to the activities of U.S. persons in the interstate or foreign commerce of the United States. The term "U.S. person" includes all individuals, corporations and unincorporated associations resident in the United States, including the permanent domestic affiliates of foreign concerns. U.S. persons also include U.S. citizens abroad (except when they reside abroad and are employed by non-U.S. persons) and the controlled in fact affiliates of domestic concerns. The test for "controlled in fact" is the ability to establish the general policies or to control the day to day operations of the foreign affiliate.
The scope of the EAR, as defined by Section 8 of the EAA, is limited to actions taken with intent to comply with, further, or support an unsanctioned foreign boycott.
What do the Laws Prohibit?
Conduct that may be penalized under the TRA and/or prohibited under the EAR includes:
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.
What Must Be Reported?
The EAR requires U.S. persons to report quarterly requests they have received to take certain actions to comply with, further, or support an unsanctioned foreign boycott.
The TRA requires taxpayers to report "operations" in, with, or related to a boycotting country or its nationals and requests received to participate in or cooperate with an international boycott. The Treasury Department publishes a quarterly list of "boycotting countries."
Penalties:
The Export Admnistration 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.
Voluntary Self-Disclosure
Voluntary Self Disclosure (VSD) of violations of the antiboycott provisions of EAR is provided for in Part 764.8 of the Regulations. If you believe you may have violated the antiboycott provisions BIS urges you to disclose to the Office of Antiboycott Compliance (OAC) via the procedures described in Part 764.8. These procedures include: timing of the disclosure, requisites for initial notification, nature of the narrative account of the violation, documentation, and certification.
After receipt of the appropriate narrative and supporting documentation, OAC will give the disclosing party written notification of receipt of the disclosure. Following thorough review and any necessary investigation by OAC, BIS will inform the party making the disclosure of any action it intends to take. The criteria BIS uses in determining whether to pursue an enforcement action and what sanctions it will recommend are described in Supplement 2 of part 766. As indicated in Supplement 2, BIS encourages VSDs by giving the disclosing party "great weight" in the assessment of penalties. This may provide significant reduction in administrative penalties.
Voluntary self-disclosures of antiboycott violations shall be submitted to:
Office of Antiboycott Compliance
1401 Constitution Avenue, NW
Room 6098
Washington, DC 20230
Tel: (202) 482-2381
Fax: (202)482-0913[/font][/color]
Where to Get More Information:
U.S. Department of Commerce
BIS/Office of Antiboycott Compliance
Room 6098
1401 Constitution Avenue, N.W.
Washington, D.C. 20230
Antiboycott Advice Line:
Phone: (202) 482-2381
Fax: (202) 482-0913
or by Email
Department of the Treasury
Office of the General Counsel
Room 2015
Washington, D.C. 20220
(202) 622-1945
Source: U.S. Department of Commerce - Bureau of Industry and Security
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.
Primary Impact:
The Arab League boycott of Israel is the principal foreign economic boycott that U.S. companies must be concerned with today. The antiboycott laws, however, apply to all boycotts imposed by foreign countries that are unsanctioned by the United States.
Who Is Covered by the Laws?
The antiboycott provisions of the Export Administration Regulations (EAR) apply to the activities of U.S. persons in the interstate or foreign commerce of the United States. The term "U.S. person" includes all individuals, corporations and unincorporated associations resident in the United States, including the permanent domestic affiliates of foreign concerns. U.S. persons also include U.S. citizens abroad (except when they reside abroad and are employed by non-U.S. persons) and the controlled in fact affiliates of domestic concerns. The test for "controlled in fact" is the ability to establish the general policies or to control the day to day operations of the foreign affiliate.
The scope of the EAR, as defined by Section 8 of the EAA, is limited to actions taken with intent to comply with, further, or support an unsanctioned foreign boycott.
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.
What Must Be Reported?
The EAR requires U.S. persons to report quarterly requests they have received to take certain actions to comply with, further, or support an unsanctioned foreign boycott.
The TRA requires taxpayers to report "operations" in, with, or related to a boycotting country or its nationals and requests received to participate in or cooperate with an international boycott. The Treasury Department publishes a quarterly list of "boycotting countries."
Penalties:
The Export Admnistration 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:
- General denial of export privileges;
- The imposition of fines of up to $11,000 per violation; and/or
- Exclusion from practice.
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.
Voluntary Self-Disclosure
Voluntary Self Disclosure (VSD) of violations of the antiboycott provisions of EAR is provided for in Part 764.8 of the Regulations. If you believe you may have violated the antiboycott provisions BIS urges you to disclose to the Office of Antiboycott Compliance (OAC) via the procedures described in Part 764.8. These procedures include: timing of the disclosure, requisites for initial notification, nature of the narrative account of the violation, documentation, and certification.
After receipt of the appropriate narrative and supporting documentation, OAC will give the disclosing party written notification of receipt of the disclosure. Following thorough review and any necessary investigation by OAC, BIS will inform the party making the disclosure of any action it intends to take. The criteria BIS uses in determining whether to pursue an enforcement action and what sanctions it will recommend are described in Supplement 2 of part 766. As indicated in Supplement 2, BIS encourages VSDs by giving the disclosing party "great weight" in the assessment of penalties. This may provide significant reduction in administrative penalties.
Voluntary self-disclosures of antiboycott violations shall be submitted to:
Office of Antiboycott Compliance
1401 Constitution Avenue, NW
Room 6098
Washington, DC 20230
Tel: (202) 482-2381
Fax: (202)482-0913[/font][/color]
Where to Get More Information:
U.S. Department of Commerce
BIS/Office of Antiboycott Compliance
Room 6098
1401 Constitution Avenue, N.W.
Washington, D.C. 20230
Antiboycott Advice Line:
Phone: (202) 482-2381
Fax: (202) 482-0913
or by Email
Department of the Treasury
Office of the General Counsel
Room 2015
Washington, D.C. 20220
(202) 622-1945
Source: U.S. Department of Commerce - Bureau of Industry and Security
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