What are Anti-Boycott Regulations
Anti-boycott regulations prevent customers from withholding their patronage of a business. In the United States, anti-boycott regulations primarily deal with opposing restrictive trade practices against Israeli businesses. The Arab League formally requires member countries to boycott trade with Israel and trade with companies that trade with Israel based on an agreement it enacted in 1948. In response, the U.S implemented anti-boycott laws in the mid-1970s to prevent U.S. companies from boycotting trade with Israeli companies. The law also prohibits the refusal to employ U.S. citizens because of their nationality, race or religion.
BREAKING DOWN Anti-Boycott Regulations
The Export Administration Act (EAA) sets forth the U.S. anti-boycott regulations and the criminal and civil penalties (fines, imprisonment and denial of export privileges) for companies and employees who don't comply with the law. The purpose of the regulations is to prohibit U.S. companies from implementing other countries' foreign policies when those policies disagree with U.S. policy. The related 1977 Ribicoff Amendment to the Tax Reform Act of 1976, which is overseen by the Internal Revenue Service (IRS), denies tax benefits to companies that do not comply with anti-boycott laws.
What Anti-Boycott Actions Are Prohibited?
As a result of the two laws dealing with boycotts fostered or imposed by foreign countries against other countries friendly to the U.S., the following actions are prohibited. A person(s) may not discriminate against, or agree to discriminate against, any U.S. person on the basis of race, religion, sex, or national origin. They also may not refuse to do business with a boycotted or blacklisted entity.
According to the regulations, it is also not permitted to furnish information about business relationships with a boycotted country or a blacklisted entity. In addition, the U.S. Department of Commerce must be notified if a person receives a request to comply with an unsanctioned foreign boycotted country or a blacklisted entity.
What Are the Penalties?
The EAA lists a number of penalties for violations of the anti-boycott regulations. Some of the penalties include a fine of up to $50,000 or five times the value of the exports involved (whichever is greater), with a possible imprisonment term of up to five years. Additionally, during times when the U.S. President invokes action from the International Emergency Economic Powers Act, the criminal penalties may double the length of imprisonment for up to ten years.
Boycott agreements may involve the denial of foreign tax benefits, as well as a denial of export privileges, and possible exclusion from trade practices.