Cecily Zamora
The United States has anti-boycott laws that prevent US companies from participating in foreign boycotts that the US does not sanction. These laws are enforced by the Office of Antiboycott Compliance (OAC) within BIS, which administers and enforces the Anti-Boycott Act of 2018 and the antiboycott provisions set forth in Part 760 of the Export Administration Regulations. These provisions prohibit US companies from taking certain actions in support of a boycott maintained by a foreign country against a country that is friendly with the US. US companies must report their receipt of certain boycott-related requests for information to the OAC. These anti-boycott laws also apply to individuals and companies that enter into business contracts with states, requiring them to assert that they will not engage in any boycott activity.
| Characteristics | Values |
|---|---|
| Applicable laws | Anti-Boycott Act of 2018, Part II of the Export Control Reform Act of 2018 (ECRA), Export Administration Act of 1979 (EAA), Tax Reform Act of 1976 |
| Administering authority | Office of Antiboycott Compliance (OAC) within BIS |
| Reporting requirements | U.S. companies must report receipt of certain boycott-related requests for information to OAC; U.S. taxpayers must report operations in or relating to boycotting countries and nationals to IRS |
| Prohibited activities | Agreements to refuse to do business with a boycotted country or blacklisted persons, furnishing information about business relationships with a boycotted country, taking actions with the intent to evade Part 760 of the EAR |
| "U.S. person" definition | Includes all individuals, corporations, and unincorporated associations resident in the U.S., including permanent domestic establishments of foreign concerns; also includes U.S. citizens residing abroad (except when employed by non-U.S. persons) and "controlled in fact" foreign subsidiaries, affiliates, or other permanent foreign establishments of domestic concerns |
| Enforcement | Penalties for violations of the antiboycott provisions of the EAR; anti-boycott laws or policies in 17 states explicitly target companies that refuse to do business with Israel or Israeli settlements |
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What You'll Learn
Reporting boycott requests
The United States has a policy of opposing restrictive trade practices or boycotts imposed by foreign countries against nations that are considered friendly to the U.S. The anti-boycott laws were established to prevent U.S. companies from participating directly or indirectly in such boycotts.
The Office of Antiboycott Compliance (OAC) within the Department of Commerce's Bureau of Industry and Security (BIS) is responsible for enforcing these laws. U.S. companies are required to report any requests they receive to engage in boycott-related activities or support an unsanctioned foreign boycott. This includes requests for information designed to verify compliance with a boycott. For example, a company might be asked to provide information about its business relationships with a boycotted country or blacklisted individuals or entities.
U.S. persons, including citizens and entities, must report boycott requests regardless of whether they agree to participate. Reports can be filed electronically or by mail using Form BIS-621-P for single transactions or Form BIS-6051-P for multiple transactions received in the same quarter. Additionally, the Internal Revenue Service (IRS) requires taxpayers to disclose operations related to boycotting countries and nationals.
To assist companies in identifying boycott-related requests, BIS maintains a public list of entities that have made such requests in the past. This list is updated quarterly and is intended to raise awareness, facilitate reporting, and deter future boycott requests and acquiescence.
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Prohibited activities
The United States has a policy of opposing restrictive trade practices or boycotts imposed by foreign countries against nations friendly with the US. The anti-boycott laws were adopted to discourage and prevent US firms from participating in foreign boycotts that the US does not sanction.
The Office of Antiboycott Compliance (OAC) enforces the anti-boycott provisions set forth in Part 760 of the Export Administration Regulations (EAR). These provisions prohibit US companies from taking certain actions in support of an unsanctioned foreign boycott.
US companies must report their receipt of certain boycott-related requests for information designed to verify compliance with an unsanctioned foreign boycott. The following activities are prohibited:
- Agreements to refuse or actual refusals to do business with boycotted countries or blacklisted companies.
- Furnishing information about business relationships with boycotted countries or blacklisted companies.
- Agreements to discriminate or actual discrimination against other persons based on race, religion, sex, national origin, or nationality.
- Furnishing information about the race, religion, sex, or national origin of another person.
- Furnishing information about any person's business relationships with a boycotted country or blacklisted persons for boycott-related reasons.
- Implementation of letters of credit containing prohibited boycott terms or conditions.
- Taking actions with the intent to evade Part 760 of the EAR.
Any person under US jurisdiction who is asked to enter into an agreement or provide information that would violate anti-boycott laws must report this to the BIS using a form BIS-621-P or form BIS-6051-P. These reporting requirements apply even if the person refuses to participate in the requested boycott action.
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Who does US person include?
The term "US person" is a broad classification that includes:
- All individuals, including foreign nationals, who are resident in the United States.
- Corporations and unincorporated associations that are resident in the United States, including the permanent domestic establishments of foreign concerns.
- US citizens residing abroad (unless they are employed by non-US persons).
- The "controlled in fact" foreign subsidiaries, affiliates, or other permanent foreign establishments of domestic concerns. The "controlled in fact" test refers to the authority or ability to establish general policies or control the day-to-day operations of the foreign entity.
In the context of anti-boycott laws, any person under US jurisdiction who is asked to enter into an agreement or provide information that would violate these laws must report it to the relevant authorities. This includes US citizens and entities, as well as any person or entity within the United States, regardless of their citizenship or nationality.
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Penalties for violations
The United States has a policy of opposing restrictive trade practices or boycotts by foreign countries against nations friendly with the US. The anti-boycott laws were established to discourage and prevent US companies from participating in such boycotts.
The Office of Antiboycott Compliance (OAC) within BIS is responsible for enforcing these laws. In the case of violations before August 13, 2018, sanctions are outlined in the International Emergency Economic Powers Act (IEEPA). The maximum monetary penalty under IEEPA is $307,922 per violation or twice the value of the transaction, whichever is greater. For violations after August 13, 2018, the sanctions are specified in Section 1774(b) of the ECRA, with a maximum monetary penalty of $300,000 per violation or twice the value of the transaction.
Additionally, the US government may impose criminal penalties for anti-boycott violations. These can include fines of up to $1 million for individuals or companies, with individuals also facing up to 20 years of imprisonment. The Export Administration Act (EAA) also specifies penalties for anti-boycott violations, including criminal and administrative sanctions. Criminal penalties under the EAA can be up to $50,000 or five times the value of exports, whichever is greater, and imprisonment of up to five years. During certain periods, the criminal penalties for "willful" violations can increase to a $50,000 fine and up to ten years of imprisonment.
It is important to note that there are strict reporting requirements for US individuals and entities, even when they refuse to participate in a requested boycott action. Failure to report such requests may also result in penalties.
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Anti-boycott laws in individual states
Many US states have anti-boycott laws or policies that extend to individuals and companies that enter into business contracts with states. These laws require people entering into contracts to assert that they will not engage in any boycott activity. More than 250 million Americans, or 78% of the population, live in states with anti-boycott laws or policies. Twenty-seven states have laws or policies that penalize businesses, organizations, or individuals that engage in or call for boycotts against Israel.
For example, in April 2016, the Iowa General Assembly passed a law prohibiting state investment and procurement with companies that boycott Israel. The bill mandated the setup of a list of "scrutinized companies" from which state-managed public funds must divest. In 2023, the governor of New Hampshire, Chris Sununu, issued an executive order forbidding the state from working with entities involved in anti-Israel boycotts. In 2018, Wisconsin passed a law prohibiting the state from entering into a contract with any non-governmental entity unless the contract includes a written certification that the entity is not currently engaged in a boycott of Israel or territories it controls.
Some states have challenged the constitutionality of anti-boycott laws as violations of freedom of expression. The American Civil Liberties Union (ACLU) has challenged the laws in several states, including Texas, Kansas, and Arizona. In Texas, the ACLU represents two university students who want to judge high school tournaments but are required to sign a certification that they are not engaged in boycotts of Israel or settlements. US federal courts issued preliminary injunctions blocking the enforcement of anti-boycott laws in Kansas and Arizona, leading legislators in both states to scale back their laws.
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Frequently asked questions
Anti-boycott laws are designed to prevent US businesses from directly or indirectly participating in boycotts of countries that are friendly with the US, such as Israel.
Prohibited activities include refusing to do business with a boycotted country or blacklisted companies, furnishing information about business relationships with boycotted countries, and discriminating against individuals based on race, religion, sex, or national origin.
US companies must report their receipt of requests to engage in boycott-related activities or to support an unsanctioned foreign boycott. Reports can be filed electronically or by mail using specific forms, such as BIS-621-P or BIS-6051P.
Domestic companies can comply with anti-boycott laws by avoiding prohibited activities, reporting boycott-related requests, and refraining from participating in boycotts of countries friendly with the US. They should also be aware of state-specific anti-boycott laws and policies that may apply to their operations.
