Anti-Boycott Regulations - Explained
What is an Anti-Boycott Regulation?
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Table of ContentsWhat are Anti-Boycott Regulations?How do Anti-Boycott Regulations Work? Anti-Boycott Actions that Are Prevented or InappropriateUnderlying Penalties in the Anti-Boycott RegulationsAcademics Research on Anti-Boycott Regulations
What are Anti-Boycott Regulations?
Anti-boycott regulations are a set of rules that prevent customers from restraining their patronage of a business. Simply put, it is a regulation that prevents any effort by customers to stop purchasing products or selling products to a particular business they've been previously involved with.
The United States anti-boycotting regulations are mainly focused on resisting opposing restrictive trade activities against business in Israel. The Arab League is a set of regulations that require its member countries to boycott trades with Israeli businesses but allowed them to trade with nations that Israel does business with, based on a 1948 agreement.
This created a prompt response from the United States, as it implemented anti-boycott laws in the mid-1970s to prevent U.S. companies and firms from boycotting trade activities and practices with Israeli-based businesses. The law also prevents the refusal to hire U.S. employees in these companies, as a mode of discrimination based on nationality, religion, or race.
Back to: INTERNATIONAL BUSINESS, LAW, & RELATIONS
How do Anti-Boycott Regulations Work?
The U.S. anti-boycott regulations and the criminal and civil penalties (fines, incarceration, and refusal of export privileges and permissions) were enacted by the Export Administration Act (EAA) for companies and employees that refuse to comply with the laws set up by the agency.
The Act was created as an effort to curb companies in the United States from implementing or initiating the actions of other nations foreign policies if those policies disagree with policies of the United States as regards trade and business activities both domestically and internationally. Another Act the 1977 Ribicoff Amendment to the Tax Reform Act of 1976 that is supervised by the Internal Revenue Service (IRS), denies tax benefits and favorable treatments to businesses and firms that go against the rules laid down in the anti-boycott regulations.
Anti-Boycott Actions that Are Prevented or Inappropriate
The United States anti-boycott policy was enacted as a result of the differences or trade wars implemented on some countries that are friendly to the United States by other foreign countries. Under the anti-boycott policy, the following actions are not allowed. First, the Act states that an individual is refused the right or freedom to discriminate against, or take part in discriminating against any citizen or resident of the United States on the basis of religion, race, sex, or nationality. They are also refused the right from refraining to do business with any company or entity that has been boycotted or blacklisted by foreign nations. Also, the Act states that a person is not allowed to furnish details about the working process of a business relationship with a boycotted nation or a blacklisted entity. Also, the United States Department of Commerce requires a notification or a message from an individual who has been asked to comply with an unsanctioned foreign boycotted nation or in most cases, a blacklisted person or business entity.
Underlying Penalties in the Anti-Boycott Regulations
There are a number of penalties for the violation of anti-boycott regulations. These penalties were initiated by the Export Administration Act (EAA). Most penalties involve a fine of $50,000, or sometimes up to five times the export value, with a possible period of incarceration ranging up to five years. Also, in a case where the President of the United States enacts actions from the International Emergency Economic Powers Act, the criminal sentencing period can increase from five years to a duration of ten years maximum. Boycott agreements can result in a removal or refusal of foreign tax benefits, as well as a refusal of export privileges and permissions, and in some cases an exemption from trade practices.
Academics Research on Anti-Boycott Regulations
- US Regulation of Arab Boycott Practices, Williams, J. L. (1978). US Regulation of Arab Boycott Practices.Law & Pol'y Int'l Bus.,10, 815.
- The Arab Boycott in US Law: Flawed Remedies for an International Trade Restraint, Kestenbaum, L. (1978). The Arab Boycott in US Law: Flawed Remedies for an International Trade Restraint.Law & Pol'y Int'l Bus.,10, 769.
- Analysis and Application of the Anti-Boycott Provisions of the Export Administration Amendments of 1977, Beasley, M. W. (1977). Analysis and Application of the Anti-Boycott Provisions of the Export Administration Amendments of 1977.Law & Pol'y Int'l Bus.,9, 915.
- Continuing controversies over state and local foreign policy sanctions in the United States, Kline, J. M. (1999). Continuing controversies over state and local foreign policy sanctions in the United States.Publius: The Journal of Federalism,29(2), 111-134. Recent state and local government sanctions on business with Burma and certain Swiss banks renews a debate over foreign policy powers in federal systems that operate in an integrated global economy. International business promotion has become an accepted function of state and local governments. More controversial is the imposition of foreign policy sanctions, where economic involvement becomes a lever to pursue political goals rather than an objective in itself. When compared with past cases, including South Africa and the Arab boycott, recent state and local initiatives demonstrate both continuity and fresh departures in federalism's evolving adjustment to the global economy. These developments can be used to examine theoretical concepts such as constituent and multilayered diplomacy. They also argue for improved practical cooperation among the multiple and diverse actors engaged in foreign policy issues.
- US Regulation of International Financial Institutions: It's Time for an Integrated Approach to Compliance, Husisian, G. (2010). US Regulation of International Financial Institutions: It's Time for an Integrated Approach to Compliance.Banking LJ,127, 195.