Antiboycott Regulations in the United States

General Considerations

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).

Conduct that may be penalized under the Tax Reform Act and/or prohibited under the Export Administration Regulations (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 Tax Reform Act does not “prohibit” conduct, but denies tax benefits (“penalizes”) for certain types of boycott-related agreements.

What Must Be Reported?

The Export Administration Regulations 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 Tax Reform Act 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.”

How To Report:

The Export Administration Regulations requires reports of receipts of boycott requests to be filed quarterly.  Reports may be filed electronically or by mail on form BIS 621-P for single transactions or BIS 6051P for multiple transactions involving boycott requests received in the same calendar quarter.

Forms for both electronic transmission and/or mail submission may be accessed from the forms request page.  Paper/carbon paper forms may be obtained by request to the Office of Antiboycott Compliance/Report Processing Unit at (202) 482-2448.

The Tax Reform Act reports are filed with tax returns on IRS Form 5713. This form is available on PDF from local IRS offices.

Penalties

The Export Admnistration Act 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 Export Administration Regulations 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 Export Administration Act 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 Export Administration Regulations is provided for in Part 764.8 of the Regulations. If you believe you may have violated the antiboycott provisions the Bureau of Industry and Security 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 Office of Antiboycott Compliance, the Bureau of Industry and Security (BIS) will inform the party making the disclosure of any action it intends to take. The criteria the Bureau of Industry and Security 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, the Bureau of Industry and Security encourages Voluntary Self Disclosures 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 the Office of Antiboycott Compliance, Washington D.C.

Export Regulations

The United States has an established policy of opposing restrictive trade practices or boycotts fostered or imposed by foreign countries against other countries friendly to the United States. In general, these laws prohibit U.S. persons from participating in foreign boycotts or taking actions that further or support such boycotts. The laws are administered by the Bureau of Industry and Security.

Anti-boycott and Economic Sanctions Laws

Find more information on Anti-boycott and Economic Sanctions Laws in relation to the Anti-boycott Laws in the legal Encyclopedias.

Antiboycott Regulations and the International Trade Law

Resources

See Also

Further Reading

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