Complying with Anti-Boycott Laws

Are your employees prepared to answer questions about your company's compliance with federal anti-boycott laws? U.S. lawmakers adopted anti-boycott laws in the 1970s to discourage companies from participating in boycotts not sanctioned by the federal government. Relevant laws include amendments to the Export Administration Act and the 1976 Tax Reform Act.

Anti-boycott laws prohibit a number of activities related to importing and exporting goods. For instance, a company cannot refuse to or agree to refuse to do business with Israel or refuse to or agree to refuse to do business with a blacklisted company. Providing certain information is also prohibited: A company cannot furnish information about another's race, religion, sex, national origin or nationality, and a company cannot furnish information about another's dealings with Israel or with blacklisted companies.

The U.S. government recognizes primary boycotts, where one country's government officially restricts trade with another country to further a political or humanitarian cause. However, the government draws the line at secondary and tertiary boycotts, where companies refuse to do business with other companies that provide supplies or other goods to a country with whom the U.S. has restricted trade.

For most companies, avoiding the prohibited conduct is relatively easy. However, companies must also be sensitive to requests for information. Complying with anti-boycott laws includes reporting boycott requests to the federal government. In other words, if a customer asks a shipper if it will refuse to do business with a blacklisted company, the shipper may have a duty to disclose the inquiry as a boycott request.

Training your employees to understand their reporting obligations and to recognize boycott-related inquiries can help ensure your company's compliance with these complex federal laws and regulations.

Categories: International Compliance
Tags: International Compliance