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No Changes to International Boycott Country List

Tuesday, September 03, 2013
Sandler, Travis & Rosenberg Trade Report

The Treasury Department has published its semiannual list of countries that require or may require participation in, or cooperation with, an international boycott. This list comprises Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates and Yemen and is unchanged from the previous list.

U.S. law encourages, and in specified cases requires, U.S. firms to refuse to participate in foreign boycotts that the U.S. does not sanction. The Arab League boycott of Israel is the principal foreign economic boycott that U.S. companies must be concerned with today, but the anti-boycott laws apply to all boycotts imposed by foreign countries that are unsanctioned by the U.S.

Under theanti-boycott provisions of the Export Administration Regulations, prohibited conduct 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; and implementing letters of credit containing prohibited boycott terms or conditions. The scope of these provisions is limited to actions taken with intent to comply with, further or support an unsanctioned foreign boycott.

The EAR require U.S. persons to report each quarter requests they have received to take certain actions to comply with, further or support an unsanctioned foreign boycott. U.S. law also requires taxpayers to report operations in, with or related to a boycotting country or its nationals as well as requests received to participate in or cooperate with an international boycott.

Prior to October 2007, under the International Emergency Economic Powers Act (which authorizes the EAR in the absence of the expired Export Administration Act), criminal penalties for each willful violation of the anti-boycott laws included a fine of up to $50,000 and imprisonment for up to ten years. On Oct. 16, 2007, the IEEPA Enhancement Act significantly increased the penalties for anti-boycott violations to a fine of $250,000 per violation or twice the value of the transaction, whichever is greater, for administrative violations and up to $1 million and/or 20 years imprisonment per violation for criminal violations. Violators may also be subject to administrative penalties including a general denial of export privileges and/or exclusion from practice.

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