Export compliance can be one of the most difficult topics to wrap your brain around; especially when it comes to complex subjects such as boycott regulations. Anyone in the business of supplying goods to the Middle East – by means of freight forwarding or manufacturing and distributing – may be in serious danger of heavy fines and legal penalization from the US government. If you have ever received a request from companies involved in the Arab League requesting knowledge of where your goods were manufactured, continuing operations with these businesses will put you at high risk of running into legal issues if you don’t clearly understand export boycott compliance laws. Here’s what to look for.
US Anti-Boycott Laws:
The United States passed laws in the 1970’s making it illegal to cooperate with boycotts against Israel. While you might assume that these compliance issues may appear more obvious, accepting purchase order or letters of credit with language alluding to any type of discrimination or boycott towards the State of Israel will put you at risk of legal penalization. This could include simple questions or statements such as, “Do you or have you ever had offices operating in Israel?”, “Goods of Israeli origin not accepted,” or, “Have these goods been manufactured or handled by any offices or agencies in Israel?” Accepting documents with prohibited boycott language such as this can cause for a lot of legal trouble including fines up to $250,000 per violation or twice the value of the transaction (whichever is greater.) If the violations are found to be criminal, fines could in extreme cases reach up to $1 million and/or 20 years in prison. These are a few things you should be on the lookout for to avoid issues:
As previously stated, a majority of illegal boycott-compliance business transactions can be easily identified. Any language involved in a purchase order, letter of credit application, letter of credit, repair order, contract, email communication, questionnaire, trademark application form, or other shipping documents that alludes to discrimination or boycott against Israel is illegal to accept in the United States. To stay on the safe side, be on the lookout for any questions or contract clauses that mention Israel; especially those portrayed in a negative light.
According to US Commerce rules and regulations, it is legal to provide information in a certificate of origin or other shipping document regarding where the goods were manufactured or being shipped from. A difference between positive and negative wording in shipping documents could be the point of contention in legal questioning. For example, a question in violation of boycott-compliance (or a “negative” question) might be worded similar to, “Were these goods manufactured, handled, or shipped by any agencies or offices in Israel?” Whereas a legal (or positive) question might be worded as “Were these goods manufactured in the United States?” The latter does not refer to any boycott against the State of Israel and thus does not break any export compliance laws.
Keep in mind that you, as an American business, are not allowed to comply with boycott requests or language involved in foreign business. Signing any documents that contain boycott requests or language is only one of six prohibited forms of conduct. If you receive any requests which seem suspicious in regards to boycott compliance, deny the business and be sure to report the case to the US Department of Commerce. Rejecting and reporting these requests will keep you away from legal accusations and major fines.