Antiboycott Laws

Antiboycott Laws in the United States

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.

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.

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 Export Administration Regulations, as defined by Section 8 of the Export Administration Act, is limited to actions taken with intent to comply with, further, or support an unsanctioned foreign boycott.

The antiboycott laws apply to all boycotts imposed by foreign countries that are unsanctioned by the United States.

Comparison of Commerce and Treasury Antiboycott Laws & Regulations/Guidelines

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:

Authorities and Provisions

Authorities

    • In the case of the 1977 amendments to the Export Administration Act: Commerce
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Treasury

Statutory provisions

    • In the case of the 1977 amendments to the Export Administration Act: Section 8 of the Export Administration Act of 1979, as amended, 50 U.S.C. app. §§ 2401 – 2420 (2000), International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1707 (2000)
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: “Ribicoff Amendment” to the Tax Reform Act of 1976, adding § 999 to the Internal Revenue Code.

Regulatory provisions

    • In the case of the 1977 amendments to the Export Administration Act: Part 760 “Restrictive Trade Practices and Boycotts” of the Export Administration Regulations (15 C.F.R. Part 760) (2008)
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Treasury Guidelines (TG)

Principal Features

Persons applicable

    • In the case of the 1977 amendments to the Export Administration Act: U.S. persons, including individuals who are U.S. residents and nationals, businesses, and “controlled in fact” foreign subsidiaries, with respect to activities in the interstate or foreign commerce of the U.S.
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Any U.S. taxpayer or member of a controlled group which includes such taxpayer. Also includes U.S. shareholders of foreign companies. Not limited to activities in U.S. commerce.

Intent required

    • In the case of the 1977 amendments to the Export Administration Act: Yes, for prohibitions. (“intent to comply with, further or support an unsanctioned foreign boycott”)
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: No intent required.

Form of implementation

    • In the case of the 1977 amendments to the Export Administration Act: The Export Administration Regulations contain prohibitions, with certain limited exceptions.
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Denial of certain tax benefits for boycott agreements.

Sanctions

    • In the case of the 1977 amendments to the Export Administration Act: Criminal and civil penalties and/or denial of export privileges.
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Denial of tax benefits such as foreign tax credit and foreign subsidiary deferral benefits. If the U.S. taxpayer has no such tax benefits, there is no sanction – but still has to report.

Reporting requests

    • In the case of the 1977 amendments to the Export Administration Act: Required to report receipt of boycott-related reauests on a quarterly basis on BIS Form 621-P.
    • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: On IRS Form 5713, required to report annually operations in, with, or related to boycotting countries and any boycott-related requests and agreements. Plus operations and requests of entire controlled group in, with, or related to boycotting countries.

Reporting requests

  • In the case of the 1977 amendments to the Export Administration Act: Reporting of requests on multiple transaction basis permitted on BIS Form 6051-P. Reports publicly available. Failure to report can lead to imposition of sanctions (even if there is no violation of law’s prohibitions).
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Reporting of operations required on a country-by-country basis. Boycott requests and agreements must also be reported. Reports kept confidential as part of tax return. Failure to report can subject taxpayer to fines and criminal proceedings.

Principal Differences in Treatment of Conduct

“Vessel Eligibility” Certificates

  • In the case of the 1977 amendments to the Export Administration Act: Permitted if furnished by owner, master or charterer of the vessel; exporter may request and pass on such a certificate. No restrictions on such certificates for shipments to Saudi Arabia since the Saudi Government does not consider the requirement to be boycott-related under its laws. Not reportable.
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Can constitute boycott agreement which results in denial of certain tax benefits unless certificate is requested by Saudi Arabia, which has explained that it applies only to maritime matters such as the condition and safety standards of the vessel.

Local Law Clauses in Contractual Documents:

Agreement to comply generally with laws and regulations of a boycotting countr:

  • In the case of the 1977 amendments to the Export Administration Act: Permitted
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Penalized

Agreement that laws of a boycotting country shall apply:

  • In the case of the 1977 amendments to the Export Administration Act: Permitted
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Not penalized

Agreement to comply with boycott laws of a boycotting country:

  • In the case of the 1977 amendments to the Export Administration Act: Prohibited
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Penalized

Agreement that boycott laws of a boycotting country shall apply:

  • In the case of the 1977 amendments to the Export Administration Act: Prohibited
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Not penalized

Furnishing Information

  • In the case of the 1977 amendments to the Export Administration Act: Furnishing and/or agreeing to furnish certain boycott-related information prohibited.
  • In the case of the Ribicoff Amendment to the 1976 Tax Reform Act: Not penalized, as §999 penalizes agreements to refrain from doing business, not furnishing information. However, an agreement to furnish boycott-related information at a later date will be penalized.

Differences in the activity that is prohibited

Find more information on Differences in the activity that is prohibited in relation to the Anti-boycott Laws in the legal Encyclopedias.

Antiboycott Laws and the International Trade Law

Furnishing information

Find more information on Furnishing information in relation to the Anti-boycott Laws in the legal Encyclopedias.

Historical perspective

Find more information on Historical perspective in relation to the Anti-boycott Laws in the legal Encyclopedias.

International context

Find more information on International context in relation to the Anti-boycott Laws in the legal Encyclopedias.

Resources

See Also

Further Reading

  • Antiboycott Laws entry in the Dictionary of International Trade Law (Raj Bhala)
  • Antiboycott Laws entry in the Gale Encyclopedia of U.S. Economic History (Thomas Carson; Mary Bonk)
  • Antiboycott Laws entry in the Dictionary of International Trade
  • Antiboycott Laws entry in the Dictionary of International Trade: Handbook of the Global Trade Community (Edward G. Hinkelman)

 


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