Arab League Boycott of Israel

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

The Arab League, an umbrella organization comprising 23 Middle Eastern and African countries
and entities, has maintained an official boycott of Israeli companies and Israeli-made goods since
the founding of Israel in 1948. The boycott is administered by the Damascus-based Central
Boycott Office, a specialized bureau of the Arab League.
The boycott has three tiers. The primary boycott prohibits citizens of an Arab League member
from buying from, selling to, or entering into a business contract with either the Israeli
government or an Israeli citizen. The secondary boycott extends the primary boycott to any entity
world-wide that does business in Israel. A blacklist of global firms that engage in business with
Israel is maintained by the Central Boycott Office, and disseminated to Arab League members.
The tertiary boycott prohibits an Arab League member and its nationals from doing business with
a company that deals with companies that have been blacklisted by the Arab League.
The U.S. government has often been at the forefront of international efforts to end the boycott and
its enforcement. Despite U.S. efforts, however, many Arab League countries continue to support
the boycott’s enforcement. U.S. legislative action related to the boycott dates from 1959 and
includes multiple statutory provisions expressing U.S. opposition to the boycott, usually in
foreign assistance legislation. In 1977, Congress passed laws making it illegal for U.S. companies
to cooperate with the boycott and authorizing the imposition of civil and criminal penalties
against U.S. violators. U.S. companies are required to report to the Department of Commerce any
requests to comply with the Arab League Boycott. In FY2007, U.S. companies submitted 1,633
reports on boycott-related requests. During the same period, penalties for violating U.S. anti-
boycott legislation worth $194,500 were levied on ten companies. This is an increase from
FY2006, when 1,291 reports were filed and penalties of $95,950 were assessed on nine
companies.
This report provides background information on the boycott and U.S. efforts to end its
enforcement. It will be updated as events warrant. More information on Israel is contained in
CRS Report RL33476, Israel: Background and Relations with the United States, by Carol
Migdalovitz.

Backgr ound ..................................................................................................................................... 1
Current Status of the Boycott..........................................................................................................2
Impact of the Boycott......................................................................................................................3
U.S. Activity to End the Arab League Boycott of Israel................................................................4
U.S. Antiboycott Compliance Legislation.......................................................................................6
Export-Related Antiboycott Legislation....................................................................................7
Tax-Related Antiboycott Legislation........................................................................................8
Table 1. FY2007 Boycott Requests Received by U.S. Companies.................................................6
Author Contact Information............................................................................................................8

The Arab League is an umbrella organization comprising 23 Middle Eastern and African
countries and entities. Arab League members are Egypt, Iraq, Jordan, Lebanon, Saudi Arabia,
Syria, Yemen, Libya, Sudan, Morocco, Tunisia, Kuwait, Algeria, United Arab Emirates, Bahrain,
Qatar, Oman, Mauritania, Somalia, Palestinian Authority, Djibouti, and Comoros. In 2003, Eritrea
joined the Arab League as an observer.
The Arab League was founded in 1944, and in 1945 began a boycott of Zionist goods and
services in the British controlled mandate territory of Palestine. In 1948, following the war
establishing Israel’s independence, the boycott was formalized against the state of Israel and
broadened to include non-Israelis who maintain economic relations with Israel or who are
perceived to support it. The boycott is administered by the Damascus-based Central Boycott ¹
Office, a specialized bureau of the Arab League.
The U.S. government has often been at the forefront of international efforts to end enforcement of
the boycott and to seek the Arab League’s revocation of it. The U.S. government participates in
bilateral and multilateral negotiations with Arab League members regarding the boycott. U.S.
legislative action related to the boycott dates from 1959 and includes multiple statutory
provisions expressing U.S. opposition to the boycott, usually in foreign assistance legislation. In
1965, Congress adopted mandatory reporting of any requests for U.S. companies to participate in
the boycott. In 1977, Congress passed laws making it illegal for U.S. companies to cooperate with
the boycott and authorizing the imposition of civil and criminal penalties against U.S. violators.
According to the Department of Commerce, participation in the boycott includes
• Agreements to refuse or actual refusal to do business with or in Israel or with
blacklisted companies;
• Agreements to discriminate or actual discrimination against other persons based
on race, religion, sex, national origin or nationality;
• Agreements to furnish or actual furnishing of information about business
relationships with or in Israel or with blacklisted companies; and/or
• Agreements to furnish or actual furnishing of information about the race, ²
religion, sex, or national origin of another person.
• Lastly, U.S. taxpayers who cooperate with the boycott are subject to the loss of
tax benefits that the U.S. government provides to exporters. These benefits
include, among others, the foreign tax credit, the benefits for foreign sales
corporation (FSC) since repealed, and the tax deferral available to U.S.
shareholders of a controlled foreign corporation (CFC).

¹^N^a^ncy^T^u^r^c^k^,^“T^he^Middle^Ea^s^t:^T^h^e^A^r^a^b^B^o^y^c^{ott of}^I^s^r^a^e^l^,”^Fore^{ign Af}^fairs^{, A}^p^r^il¹⁹⁷⁷^.
²^{See h}^t^t^p^://w^ww^.b^is.d^o^c^.g^o^v^/co^m^p^lian^cean^d^eⁿ^f^o^r^cem^en^t/^an^ti^b^o^y^co^ttco^m^p^lian^ce.h^t^m^.

The boycott has three tiers. The primary boycott prohibits citizens of an Arab League member
from buying from, selling to, or entering into a business contract with either the Israeli
government or an Israeli citizen. The secondary boycott extends the primary boycott to any entity
world-wide that does business with Israel. A blacklist of global firms that engage in business with
Israel is maintained by the Central Boycott Office, and disseminated to Arab League members.
The tertiary boycott prohibits an Arab League member and its nationals from doing business with
a company that in turn deals with companies that have been blacklisted by the Arab League. The
boycott also applies to companies that the Arab League identifies as having “Zionist
sympathizers” in executive positions or on the board of the company. According to one analyst,
the “nature and detail of these rules reflect the boycotting countries’ tolerance for only the most ³
minimal contacts with Israel.”
The Arab League does not enforce the boycott and boycott regulations are not binding on member
states. However, the regulations have been the model for various laws implemented by member
countries. The League recommends that member countries demand certificates of origin on all
goods acquired from suppliers to ensure that such goods meet all aspects of the boycott.
Overall enforcement of the boycott by member countries appears sporadic. Some Arab League
members have limited trading relations with Israel. The Arab League does not formally or
publicly state which countries enforce the boycott and which do not. Some Arab League member
governments have maintained that only the Arab League, as the formal body enforcing the
boycott, can revoke the boycott. However, adherence to the boycott is an individual matter for
each Arab League member and enforcement varies by state.
There are indications that some Arab League countries publicly support the boycott while
continuing to quietly trade with Israel. According to Doron Peskin, head of research at InfoProd, a
consulting firm for foreign and Israeli companies specializing in trade with Arab states, “the Arab ⁴
boycott is now just lip service.” This sentiment has been echoed by Arab officials, albeit
anonymously. One official commented to the Egyptian newspaper Al-Ahram that, “boycotting
Israel is something that we talk about and include in our official documents but it is not ⁵
something that we actually carry out—at least not in most Arab states.”
Others assert that enforcement of the boycott waxes and wanes with the level of intensity of the
Israeli-Palestinian issue and that currently interest in boycott enforcement among Arab countries
may be increasing due to the ongoing Iraq conflict. However, the Arab League has acknowledged
that U.S. pressure has affected its ability to maintain the boycott. At the May 2006 Arab League
conference on the boycott, one conference participant reportedly said, “The majority of Arab ⁶
countries are evading the boycott, notably the Gulf states and especially Saudi Arabia.” He added

³^H^o^w^a^{rd N}^.^Fe^ntoⁿ^III,^“^U^nite^d^S^t^a^t^e^s^Aⁿ^tiboy^c^o^{tt L}^a^w^s^:^Aⁿ^A^s^s^e^s^s^m^eⁿ^{t of}^T^h^eⁱ^{r I}^m^pa^c^t^T^e^{n Y}^e^a^r^s^a^f^te^r^A^doptio^n,”
^H^a^s^tings^Iⁿ^te^rⁿ^ati^oⁿ^a^{l &}^C^o^m^par^ativ^e^Law^Re^vⁱ^e^w^{, V}^o^l.¹⁰^,¹⁹^87,^c^ite^{d in}^Eug^e^ne^K^o^ntor^ov^ic^{h, “}^T^he^A^r^a^b^L^e^a^g^ue
^B^o^y^c^{ott a}^{nd W}^T^O^A^c^c^e^s^sⁱ^{on: C}^a^{n F}^o^r^e^igⁿ^P^o^lic^y^Ex^c^u^s^e^Dⁱ^sc^rⁱ^mⁱ^na^tor^y^Sa^nc^tions^,”^C^h^ic^ag^{o J}^o^urⁿ^a^{l o}^f^Iⁿ^te^r^nati^oⁿ^a^l
^Law^,^V^o^l.^{4 N}^o^{. 2}^,^Fa^ll²⁰⁰³^.
⁴^Orly^Ha^lpe^r^{n, “}^A^ra^{b Boy}^c^{ott L}^a^r^g^el^y^Red^u^ced^t^o^‘Lⁱ^p^S^e^rvi^ce,^’”^Jeru^s^a^l^{em P}^o^st^{, Fe}^br^ua^r^y^{28, 20}⁰⁶^.
⁵^Diⁿ^a^E^zzat^,^“Bo^y^co^t^t^Israel^{? No}^t^so^si^m^p^l^e^,^”^A^l^-A^h^r^a^m^Weekl^{y Onl}ⁱⁿ^e^{, A}^p^r^{il 1}¹^-¹^7,²⁰⁰²^.
⁶^“^A^r^a^bs^ev^a^d^ing^e^c^onom^ic^boy^c^o^t^t^of^I^s^r^a^e^l^,”^Uⁿ^ite^d^P^r^e^s^s^Iⁿ^te^rⁿ^a^tⁱ^ona^l,^Ma^y^{16, 2}⁰⁰⁶^.

that a major reason for these countries bypassing the boycott is “growing U.S. pressures in the ⁷
direction of normalization with the Jewish state.”
Some states and entities have formally ended the boycott, or at least some aspects of it. Egypt
(1979), the Palestinian Authority (1993), and Jordan (1994) signed peace treaties or agreements ⁸
that ended the boycott. Mauritania, which never applied the boycott, established diplomatic ⁹
relations with Israel in 1999. Algeria, Morocco, and Tunisia do not enforce the boycott. In 1994,
the member countries of the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia, and the United Arab Emirates—announced that they would only enforce the
primary boycott. In 1996, the GCC states recognized that total elimination of the boycott is a
necessary step for peace and economic development in the region. However, U.S. companies
continue to receive requests to cooperate with the boycott from GCC member countries. Lebanon ¹⁰
enforces the primary, secondary, and tertiary boycotts.

Since the boycott is sporadically applied and ambiguously enforced, its impact, measured by
capital or revenue denied to Israel by companies adhering to the boycott, is difficult to measure.
The effect of the primary boycott appears limited since intra-regional trade and investment are
small. Nonetheless, there is some limited trade between Israel and its Arab neighbors. In 2004,
according to the Manufacturers Association of Israel (IMA), Israeli exports to Arab countries and ¹¹
entities (mainly Egypt, Jordan, and the Palestinian Authority) totaled $192 million.
Enforcement of the secondary and tertiary boycotts have decreased over time, reducing their
effect. A 1996 study by researchers at Tel Aviv University looked at the effect of the Arab boycott
on the Israeli economy through the automobile market. Following a relaxation of boycott
enforcement in the late 1980s through the early 1990s, Asian countries began exporting cars to
Israel. The study found that if the boycott had continued to be enforced, and these cars did not
enter the Israeli market, the Israeli car market would have been 12% smaller – leading to a $790
price increase per car. Total welfare loss for the study year, 1994, would have been an estimated ¹²
$89 million. Thus, it appears that since intra-regional trade is small, and that the secondary and
tertiary boycotts are not aggressively enforced, the boycott may not currently have an extensive
effect on the Israeli economy.

⁷^Ibid^.
⁸^Eg^y^p^tian^{-Israeli p}^{eace treat}^y^,^M^a^rch²⁶^,¹⁹⁷⁹^,^A^r^{ticle III,}^p^a^ragrap^h³^;^T^r^eat^y^o^f^P^{eace b}^e^tween^th^{e S}^t^{ate o}^f^Israel
^a^{nd t}^h^e^H^a^s^h^e^m^ite^Kⁱ^ng^dom^o^f^J^o^r^d^aⁿ^,^O^c^tobe^r²⁶^{, 1}⁹⁹⁴^{, A}^r^tic^le^{7, Se}^c^tⁱ^on^2,^pa^r^a^g^r^a^{ph A}^;^D^e^c^l^a^r^a^tion^of^P^r^incⁱ^p^l^e^s^,
^Se^pte^m^be^r^{10, 1}⁹⁹³^.
⁹²⁰^{07 N}^a^ti^on^{al Tr}^ade^Es^tⁱ^m^a^te^R^e^por^{t o}ⁿ^F^o^r^e^ig^{n Tr}^a^d^e^Bar^rⁱ^e^r^s^,^Unⁱ^t^e^d^S^t^at^{es T}^r^ad^{e Rep}^r^esen^t^a^tⁱ^v^e,^M^a^rch³⁰^,
²⁰⁰^7.
¹⁰^Ibid^.
¹¹^“^E^x^ports^f^r^om^Is^ra^e^l^U^p^{, U}^p^{, U}^p^!^,^”^Br^idge^s^for^Pe^ac^e^,^Jun^e²⁷^,²⁰⁰⁵^.^U^.^S^.^ef^f^o^rt^{s t}^oⁱⁿ^{crease t}^r^ad^{e i}ⁿ^t^h^{e regi}^on
^inc^l^u^d^e^the^Q^u^a^lif^ie^{d I}ⁿ^d^u^s^t^rⁱ^a^l^Z^one⁽^Q^I^Z⁾^pr^og^r^a^m^,^w^h^ic^{h a}^llow^s^g^oods^j^oⁱⁿ^tly^pr^od^uc^e^d^by^I^s^r^a^e^l^a^{nd e}^ithe^r^J^o^r^d^aⁿ
^or^Eg^y^p^{t to e}ⁿ^te^r^t^h^e^Uⁿ^ite^{d Sta}^t^e^s^duty^f^r^ee^{. Se}^e^C^R^S^R^e^por^{t R}^S²²⁰⁰^2,^Q^ual^ifyⁱⁿ^{g In}^dustri^a^l^Zo^ne^{s in J}^o^r^d^aⁿ^aⁿ^d
^Egy^p^t^,^by^Ma^r^y^J^a^ne^B^o^lle^{, A}^l^f^r^{ed B}^.^Pr^a^dos^,^a^{nd J}^e^r^e^m^y^{M. Sha}^r^p.
¹²^Chaⁱ^m^Fe^rshtm^a^{n a}^{nd Ne}^{il G}^a^nd^a^l^{, “}^T^he^Eff^e^c^t^of^the^A^r^a^b^Bo^y^c^{ott o}ⁿ^Isra^e^{l: T}^h^e^A^u^tom^obile^Ma^rk^e^t^,”^Te^{l Av}^iv
^Uⁿ^iv^e^r^sⁱ^t^y^{, J}^a^nua^r^y^1996.

Despite the lack of economic impact on either Israeli or Arab economies, the boycott remains of
strong symbolic importance to all parties. Many Arab countries want to deny normalization with
Israel until there is a final resolution to the conflict in the Palestinian territories. Israel, on the
other hand, asserts that it wants to be accepted in the neighborhood both in political terms and as ¹³
a source of, and target for, foreign investment.

The U.S. government officially opposes the boycott and works to end its enforcement on multiple
levels. For many years, language has been included in successive foreign operations
appropriations legislation concerning the boycott. Section 635 of the Consolidated
Appropriations Act, 2008 (P.L. 110-161), states that it is the sense of Congress that (1) the Arab
League boycott is an impediment to peace in the region and to United States investment and trade
in the region; (2) the boycott should be revoked and the Central Boycott Office disbanded; (3) all
Arab League states should normalize relations with Israel; and (4) the President and the Secretary
of State should continue to oppose the boycott vigorously and encourage Arab states to assume
normal trading relations with Israel; and (5) the President should report to Congress annually on
specific steps being taken by the United States to encourage Arab League states to normalize their
relations with Israel to bring about the termination of the boycott.
The U.S. government also works to end the boycott through bilateral and multilateral trade
agreements. During FTA negotiations with Bahrain, Oman, and the United Arab Emirates, the
status of the boycott was an issue of concern and these countries reaffirmed their position not to ¹⁴
comply with the boycott. However, the credibility of their position has been questioned since all
three countries outwardly continue to support the boycott. In June 2006, an Omani customs
official reportedly told The Jerusalem Post, “Products from Israel are not permitted because of ¹⁵
the boycott ... If someone brings products from Israel, they will be confiscated.” In reported
remarks before Bahrain’s Chamber of Commerce, Bahraini Foreign Minister Sheikh Khalid bin
Ahmed Al Khalifa stated that “relations would be normal with Israel when the Arab League
orders the Arab countries to end the boycott, and until then the Kingdom was sticking to the ¹⁶
boycott.”
The United States began negotiating an FTA with the United Arab Emirates (UAE) in 2005 and
their enforcement of the boycott has been a contentious issue during the negotiations. In February
2006, at the height of debate in the United States over whether to allow Dubai Ports World to
have control over six U.S. ports, Muhammad Rashid a-Din, a staff member of the Dubai Customs
Department reportedly told The Jerusalem Post, “Yes, of course the boycott is still in place and is
still enforced ... if a product contained even some components that were made in Israel, and you

¹³^Aⁿ^j^u^S^.^Baw^a^,^“Israel^E^m^b^a^{rks o}ⁿ^P^R^F^ace-lⁱ^f^t^,^”^The^W^a^s^hⁱⁿ^gtoⁿ^Tim^e^s^{, D}^e^c^e^m^b^e^r^{5, 20}⁰⁶^.
¹⁴²⁰^{07 N}^a^ti^ona^{l T}^r^a^d^e^Es^tim^a^t^e^,^{op. c}^it.^Fo^r^m^o^{re in}^f^o^rmatioⁿ^,^see^{CRS Rep}^o^r^t^RS2¹⁸⁴⁶^,^U.^S.^-^B^ah^r^aⁱⁿ^F^r^ee^T^r^a^d^e
^A^g^reemen^t^{, by}^Ma^{rtin A}^.^W^e^is^s^.
¹⁵^Mic^h^a^e^l^Fre^u^nd^{, “}^B^oy^c^o^{tt of}^Isra^e^l^{still in}^e^f^f^e^c^t^{, O}^m^aⁿ^{i off}ⁱ^cⁱ^a^l^te^l^l^{s ‘}^P^ost’,”^T^h^{e Jeru}^s^a^l^{em P}^o^st^{, J}^u^ne^8,²⁰⁰⁶^.
¹⁶^Mⁱ^ch^ael^F^r^eun^d^,^“Bah^raiⁿ^{’s Israel}^Bo^y^c^o^t^t^t^o^C^oⁿ^tⁱⁿ^u^e^,^”^T^h^{e Jeru}^s^a^l^{em P}^o^st^{, M}^a^y¹¹^,²⁰⁰⁶^.

wanted to import it to Dubai, it would be a problem.”¹⁷ As of July 2008, the U.S.-UAE FTA talks ¹⁸
are on hold, and it is expected that talks will not resume during the Bush Administration.
Multilaterally, the United States has used Saudi Arabia’s accession to the World Trade
Organization in return for its agreement in November 2005 that it would cease participation in the
boycott. Despite this concession, it appears that Saudi Arabia’s enforcement of the boycott is
ongoing. The Bush Administration argues in the 2007 National Trade Estimate Report (NTE) that
Saudi boycott violations “appear to reflect out-of-date language in recycled commercial and ¹⁹
tender documents.” However, in June 2006, The Jerusalem Post said that Saudi Arabia’s
ambassador to the United States told a luncheon audience at the Brookings Institution that Saudi
Arabia intends to continue enforcing the primary boycott. Reportedly, Prince Turki Al-Faisel
stated that he believed “the primary boycott is an issue of national sovereignty guaranteed within ²⁰
the makeup of the WTO and its rules.”
Lastly, concerns have emerged that Iraq has increased its own enforcement of the Boycott in the ²¹
past several years, due to increasing frustration with the ongoing violence and U.S. presence. In
FY2007, the number of requests from Iraq for U.S. companies to comply with the boycott was 72,
an increase from 31 in FY2006 and 8 in 2005. The Commerce Department reports that for all
boycott countries, during FY2007, U.S. companies submitted 1,633 reports on boycott-related
requests from Arab League members and other countries that enforced the boycott on Israel
(Table 1). The United Arab Emirates remained the largest source of boycott-related requests with ²²

682 requests.

¹⁷^Mⁱ^ch^ael^F^r^eun^d^,^“Du^b^aⁱ^P^o^rt^s^Fⁱ^rm^Eⁿ^f^o^rce^s^Israel^Bo^y^c^o^t^t^,^”^T^h^{e Jeru}^s^a^l^em^P^o^st^{, Fe}^br^ua^r^y^28,²⁰⁰⁶^.
¹⁸^S^a^f^u^{ra Rah}ⁱ^mⁱ^,^“US^p^u^t^{s UA}^E^f^r^{ee t}^r^ad^{e d}^eal^oⁿⁱ^ce,^”^Em^ir^ate^s^Bu^sⁱ^ne^s^s^24/⁷^,^Decem^b^e^{r 2}³^,²⁰⁰⁷^.
¹⁹²⁰^{07 N}^a^ti^on^{al Tr}^ade^Es^tⁱ^m^a^te^R^e^por^{t o}ⁿ^F^o^r^e^ig^{n Tr}^a^d^e^Bar^rⁱ^e^r^s^,^Offⁱ^c^e^o^f^t^h^{e Un}ⁱ^t^e^d^S^t^at^{es T}^r^ad^{e Rep}^r^esen^t^a^tⁱ^v^e,
^{p. 1}⁷^.
²⁰^Mic^h^a^e^l^Fre^u^nd^{, “}^S^a^u^dⁱ^Am^ba^ss^a^{dor t}^o^US^a^d^m^{its boy}^c^o^{tt of}^Isra^e^l^{still in}^f^o^rc^e^,^”^T^h^{e Jeru}^s^a^l^{em P}^o^st^{, J}^u^ne²²^,
²⁰⁰^6.
²¹^“Iraq^’^{s E}ⁿ^f^o^rcemen^t^o^f^A^r^ab^Bo^yco^t^t^o^f^Israel^{Is Co}ⁿ^cern^,^IT^A^O^f^fⁱ^ci^al^T^e^l^l^s^Iraqⁱ^s,^”^The^Ex^port^Pr^ac^titio^ne^r^{, Ma}^rc^h
²⁰⁰^7.
²²^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^C^o^m^m^e^r^c^e^,^B^u^r^e^a^u^of^Iⁿ^d^u^s^t^r^y^a^{nd Se}^c^u^r^ity^A^nnua^{l R}^e^por^t^Fis^c^a^l^Y^e^a^r²⁰^07,^A^ppe^ndix^E-^3,^p.
^72.

Table 1. FY2007 Boycott Requests Received by U.S. Companies
^{Number of}^{Requests to}
^Country^{Comply with the Seconda}^ry
^{and Tertiary Boycotts}
^{United Arab E}^{mirates (UAE)}⁶⁸²
^{Lebanon 114}
^{Qatar 94}
^{Syria 79}
^{Iraq 72}
^{Saudi Arabia}⁶⁵
^{Kuwait 56}
^{Libya 50}
^{Bahrain 24}
^{Egypt 1}
^{Jordan 0}
^{Other (Algeria, India, Iran,}³⁹⁶
^{Malaysia, Nigeria, Oman,}
^{Pakistan, Tunisia, and Yemen)}
^Total^1,63³
^Source:^Depart^{ment of Comme}^rce.

The United States passed antiboycott legislation in the late 1970s to discourage U.S. individuals
from cooperating with the secondary and tertiary boycotts. Antiboycott laws apply to “U.S.
exports and imports, financing, forwarding and shipping, and certain other transactions that may ²³
take place wholly offshore.”
Although U.S. legislation and practices were designed to counteract the Arab League boycott of
Israel, in practice, they apply to all non-sanctioned boycotts. According to the Department of
Commerce’s Office of Antiboycott Compliance, the legislation was enacted to “encourage, and in
specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United
States does not sanction. They [the legislation] have the effect of preventing U.S. firms from ²⁴
being used to implement foreign policies of other nations which run counter to U.S. policy.”
U.S. regulations define cooperating with the boycott as: (1) agreeing to refuse or actually refusing
to do business in Israel or with a blacklisted company; (2) agreeing to disseminate or actually
discriminating against other persons based on race, religion, sex, national origin, or nationality;
(3) agreeing to furnish or actually furnishing information about business relationships in Israel or

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^oa^c^r^e^quir^e^m^e^nts^.^htm^l

with blacklisted companies; and (4) agreeing to furnish or actually furnishing information about
the race, religion, sex, or national origin of another person.
U.S. antiboycott laws are included in the Export Administration Act of 1979 (EAA) and the ²⁵
Ribicoff Amendment to the Tax Reform Act of 1976 (TRA). The export-related antiboycott
provisions are administered by the Department of Commerce and prohibit U.S. persons from
participating in the boycott. The Internal Revenue Service (IRS) administers tax-related
antiboycott regulations that deny tax benefits to U.S. taxpayers that participate in the boycott.
Regulations promulgated under section 8 of the EAA prohibit any U.S. person or company from
complying with an unsanctioned foreign boycott and require them to report requests they have
received to comply with a boycott. Such requests must be reported quarterly to the Department of
Commerce’s Office of Antiboycott Compliance (OAC) in the Bureau of Industry and Security
(BIS). These regulations are implemented in part 760 of the Department of Commerce’s Export
Administration Regulations (EAR).
The EAA prescribes penalties that may be imposed for violation of the antiboycott regulations.
Civil penalties for violating the antiboycott provisions are a maximum fine of $50,000 per
violation and a potential loss of export privileges for a period of time. Particularly egregious cases
may be referred to the Department of Justice for criminal prosecution. Criminal penalties imposed
for each violation can include a fine of up to $50,000 or five times the value of the exports
involved, whichever is greater, or imprisonment for up to five years, or both. Willful violations,
where the violator has knowledge that the items are also intended for any country to which
exports are restricted for national security or foreign policy purposes, are punishable by fines up
to $250,000 or imprisonment for up to ten years.
In FY2007, according to the Department of Commerce, ten companies paid $194,500 to settle
allegations that they violated U.S. antiboycott provisions, an increase from nine cases and
$95,950 in FY2006. In July 2007, BIS amended existing penalty guidelines to introduce a
voluntary disclosure program that could reduce a potential fine levied on an exporter if it
voluntarily discloses its violation of U.S. antiboycott laws. For the disclosure to have a mitigating
effect, notification must take place prior to BIS learning about the violation from other sources
and commencing an investigation. The new guidelines also created a new supplement no. 2 to the
antiboycott provisions that more clearly describes how BIS investigates violations of U.S.
antiboycott laws and determines penalty rates.

²⁵^Se^c^tion⁸^of^T^h^e^Ex^por^{t A}^d^mⁱ^nistr^a^{tion A}^c^{t of}¹⁹^{79 (}^P^.L^{. 9}⁶^-⁷^2;⁵⁰^U^.^S.C^.^a^p^p.^§2⁴⁰⁷⁾^ha^s^e^x^pir^e^d^but^its
^pr^ov^is^io^ns^a^r^e^c^onti^nue^{d u}^nde^r^t^h^e^a^u^thor^iz^a^{tion g}^r^aⁿ^te^{d to}^the^Pr^e^s^ideⁿ^{t i}ⁿ^t^h^e^N^a^tiona^l^Em^e^r^ge^nc^ies^A^c^{t (}^N^E^A⁾⁽^P^.L^.
^94-⁴¹^{2; 5}⁰^U^.^S.C^.^§1⁶⁰^1-¹⁶⁵¹⁾^a^{nd t}^h^e^Iⁿ^te^rⁿ^a^tio^na^{l Ec}^o^nom^ic^Em^e^r^g^e^ncy^P^o^w^e^r^s^A^c^{t (}^I^E^E^P^A⁾⁽^P^.L^{. 95-}²²^3;⁵⁰
^U.^S^.^C.^app^.^§²⁴⁰⁷⁾^,^m^o^st^recen^t^l^y^uⁿ^d^e^{r E}^x^ecu^tⁱ^v^{e Ord}^e^{r 1}³²²²^si^gⁿ^ed^A^u^gu^st¹⁷^,²⁰⁰¹⁽⁶⁶^F^.^R.⁴⁴⁰²⁵^,^A^u^gu^st²²^,
²⁰⁰¹⁾^.^Aⁿ^tiboy^c^o^{tt e}^x^por^{t r}^e^g^u^la^tⁱ^ons^a^r^e^a^t^{15 C}^.^F.R^.⁷⁶^0.^{1 e}^t^s^e^q.^T^h^e^Rⁱ^bic^o^f^f^A^m^e^ndm^eⁿ^{t to the}^T^a^x^R^e^f^o^r^m^A^c^{t of}
¹⁹⁷^{6 (}^P^.L^{. 94-}⁴⁵⁵⁾^a^d^de^{d s}^e^c^tioⁿ⁹⁹⁹^to^the^Iⁿ^te^rⁿ^a^l^R^e^v^e^nue^C^ode^of¹⁹^86,^a^s^a^m^e^nde^{d (}²^{6 U}^.^S^.^C^.^{§1 e}^t^s^e^q)^{. T}^a^x
^r^e^g^u^la^tions^a^r^e^a^t²⁶^C^.^F.R^.^§7.⁹⁹^9-^1.

The Ribicoff Amendment to the TRA added section 999 to the Internal Revenue Code. This
section denies various tax benefits normally available to exporters if they participate in the
boycott. In addition, the IRS requires U.S. taxpayers to report operations in, with, or related to
countries that the Treasury Department includes on its annual list of countries that may require
participation in an international boycott, and with any other country from which they receive a ²⁶
request to participate in a boycott.
Denying tax benefits to U.S. firms that participate in the boycott appears to be an effective
antiboycott strategy. According to one study, U.S. legislation reduces overall participation in the ²⁷
boycott by U.S. taxpayers by between 15 and 30%. However, the effectiveness of U.S.
antiboycott tax legislation may diminish since the U.S. government is reducing export tax
benefits that are available to U.S.-based companies to comply with World Trade Organization ²⁸
(WTO) rulings.
^Mar^tin^A^.^W^e^iss
^An^al^y^s^{t i}ⁿ^In^terⁿ^ation^a^{l T}^r^ade^an^{d Fin}^aⁿ^ce
^mw^ei^s^s^@^c^rs^.l^oc.g^ov^{, 7}^-⁵⁴⁰⁷

²⁶^T^h^e^c^u^r^r^e^{nt lis}^{t is}^K^u^w^a^{it, L}^e^ba^{non, L}ⁱ^by^a^,^Q^a^ta^r^,^Sa^{udi A}^r^a^b^ia^{, S}^y^rⁱ^a^,^Uⁿ^ite^{d A}^r^a^b^Em^ir^a^t^e^s^{, a}^{nd Y}^e^m^e^{n. I}^r^a^{q is}ⁿ^o^t
^inc^l^u^d^e^dⁱⁿ^t^h^{is list,}^b^u^{t its sta}^t^us^w^ith^re^spe^c^t^{to f}^u^ture^{lists re}^m^a^{ins un}^de^{r re}^vⁱ^ew^by^the^D^e^pa^r^t^m^e^{nt of}^the^T^r^e^a^s^ur^y^.
^“^L^is^{t of}^the^C^ountrⁱ^e^s^R^e^q^u^irⁱⁿ^g^C^oope^r^a^ti^{on w}^{ith a}ⁿ^Iⁿ^te^rⁿ^a^tio^na^l^B^o^y^c^{ott, D}^e^pa^r^t^m^e^{nt of}^the^T^r^eas^ur^y^,^”^D^e^pa^r^t^m^e^nt
^of^the^T^r^e^a^s^ur^y^,^{73 F.R}^.⁵⁰^{, Ma}^r^c^{h 1}³^,²⁰^08.
²⁷^Ja^m^e^{s R.}^Hiⁿ^e^s,^Jr.^,^“T^axed^A^v^oⁱ^d^aⁿ^ce:^Am^eri^c^an^P^a^rticⁱ^p^a^tio^{n i}ⁿ^Unsa^nc^tione^{d In}^te^rna^tio^na^{l Boy}^c^otts,”^NBER
^W^o^r^k^{ing P}^ape^r⁶¹¹⁶^{, J}^u^ly¹⁹⁹^7.
²⁸^Se^e^C^R^S^R^e^por^{t R}^S²⁰⁷⁴^6,^Ex^p^o^r^{t Tax}^Be^ne^fi^{ts a}^nd^the^W^T^{O: T}^h^e^Ex^trat^e^r^r^itorⁱ^a^l^Iⁿ^c^o^m^e^Ex^c^l^us^io^{n a}^nd^For^e^igⁿ
^Sale^s^C^o^r^por^atio^ns^,^by^D^a^vⁱ^{d L}^.^B^r^um^ba^ug^h.