U.S. Antiboycott Provisions of the Export Administration Act: The Prohibitions

June 27, 2011, 2:11 PM

The Antiboycott Provisions of the Export Administration Regulations (EAR) are yet another set of prohibitions that exporters must be aware of and comply with at all times. The antiboycott provisions are aimed at preventing U.S. persons from taking actions to further, endorse, or support foreign governments economic boycotts of certain countries. For purposes of international trade, there are three different types of boycotts. First, there is a primary boycott, which is when a country refuses to trade with another country. This is NOT the type of boycott that the EAR directly addresses. The EAR directly addresses secondary boycotts, which is when a country refuses to trade with an entity that does business with the country being boycotted. For example, a countrys refusal to do business with a country or company that does business with Israel would be a secondary boycott. The EAR also directly addresses tertiary boycotts, which is when a country refuses to trade with an entity who does business with companies on their blacklist.

To prevent violations of the antiboycott provisions, you should first consider whether these provisions apply to your company. The antiboycott provisions apply to U.S. persons, which include individuals and companies located in the U.S. and their foreign affiliates, involved in the interstate or foreign commerce of the U.S. The export/import of goods or services are examples of activities that fall within the scope of the antiboycott provisions.

If the antiboycott provisions apply to your company, then your company is prohibited from refusing or knowingly agreeing to refuse to do business with a boycotted country or blacklisted companies pursuant to an agreement with or a request from a boycotting country. 15 C.F.R. 760.2, which can be found at http://www.gpo.gov/bis/ear/ear_data.html, includes other prohibitions and detailed examples of prohibitions.

Someone in your company should be responsible for verifying that there are no company violations of the antiboycott prohibitions. Pay close attention to expressed terms or conditions in contracts and letters of credit. If you would like more information on the Antiboycott Provisions of the EAR, please feel free to contact me. --R. Ellen Coley