Effect of Boycotts on International Law - Explained
What are Boycotts?
Written by Jason Gordon
Updated at April 8th, 2023
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What is the significance of boycotts between foreign countries?
The US issues restrictions on international business relationships through embargoes and targeted business sanctions. The US is not currently a part of an official boycott of countries or individuals. In fact, the US recognizes two prohibitions against US companies taking part in unsanctioned boycotts. These prohibitions are issued by the Department of Commerce or the Department of Treasury.
Next Article: US Laws Prohibiting doing Business in Other Countries Back to: INTERNATIONAL BUSINESS, LAW, & RELATIONS
How does the Department of Commerce (DOC) participate in Boycotts?
The DOC prohibits US companies from participating in any unsanctioned boycott of other countries or its citizens. This rule specifically prohibits US companies from maintaining lists of countries with which they will not do business based upon a non-US sanctioned boycott. The DOC also prohibits discrimination in carrying on business based upon an individuals race, religion, sex or national origin.
Note: Companies who receive specific requests to take action, such as not carrying on business pursuant to a boycott, must report that request to the DOC.
How does the Department of Treasury (DOT) participate in Boycotts?
The DOT prohibits companies from participating in unsanctioned boycotts. Specifically, the DOT requires a US tax-reporting company to report on its income tax return all business activity with or in countries that actively participate in a non-sanctioned boycott of other countries, races, religions, ethnicities, etc. Carrying on business with these countries (or otherwise participating in the boycott activity) can result in the loss of certain foreign tax benefits.
Note: The DOT publishes a list of countries actively participating in non-sanctioned boycotts.
Discussion Question
Why do you think the US does not participate in current boycotts? Why do you think the US prohibits US companies from participating in boycotts or, in some cases, doing business with companies that participate in boycotts? Are these restrictions appropriate?
Practice Question
ABC Corp has had very bad experiences in its business dealings in Turkey. ABC puts out a company-wide memo that it will not do business with any Turkish company or any company with direct ties to Turkey. Is there a legal problem with this stance?
Related Topics
- International Law (Intro)
- What is International Law?
- What are the types of international law?
- United Nations
- United Nations Commission on International Trade law
- United Nations Conference on Trade Development
- North Atlantic Treaty Organization
- International Monetary Fund
- Other Economic Development Organizations
- World Bank
- World Trade Organization
- European Union
- What international courts exist and what are their functions?
- What are the methods of carrying on international business?
- What are the legal risks associated with carrying on international business?
- What major international agreements affect international trade?
- When is carrying on business in a foreign country prohibited by US law?
- What is the significance of boycotts between foreign countries?
- What US laws apply to limit business transactions in foreign countries?
- What regulations apply to exports from the United States?
- What are the legal limitations on importing goods into the United States?
- How are private international business agreements generally enforced?
- How do parties determine the rules, location, and method of resolving disputes?
