U.S. Companies Should Remain Vigilant for Anti-Boycott Provision

May 28, 2024
By: Marvin E. McPherson

The Bureau of Industry and Security (BIS) published an advisory warning U.S companies doing business in Türkiye, of the prohibition of furthering or supporting unsanctioned foreign boycott maintained by a country against a country friendly to the United States.

The advisory was in response to the Turkish government’s announcement that it will boycott all exports and imports to and from Israel, until the Israeli government allows an uninterrupted and sufficient flow of humanitarian aid into Gaza. However, U.S. anti-boycott laws prohibit U.S. persons or companies from participating or supporting such restriction.

Codified in the Export Administration Act, the Antiboycott Law is administered and enforced by the Department of Commerce's Office of Antiboycott Compliance (OAC). Antiboycott provisions are designed to address foreign governments’ economic boycotts of countries friendly to the U.S and to U.S. persons. The regulations prohibit U.S persons from refusing, knowing refusing, or participating in any boycott and discriminatory practices. This includes the prohibition to “refuse to do business or otherwise discriminate against any individual…on the basis of race, religion, sex, or national origin.” 15 C.F.R. § 760.2(b) Similarly, the Internal Revenue Code prohibits any taxpayer from taking certain tax benefits if the taxpayer participates in boycott or discriminatory practices.

The U.S. House of Representatives passed a bill that is now referred to the Senate that would amend the current anti-boycott laws to include boycotts fostered or imposed by International governmental organizations (IGO). Thus, U.S. companies that contract with IGOs would also be held responsible to ensure that none of the contracting provisions foster or support prohibited boycotts of U.S allies.

Boycott provisions are found within supply chain contracts, contract awards, as well as financing terms. It is important to review all contracts dealings of trade in order to ensure, your company is not running afoul of U.S. anti-boycott laws.

If you have any questions surrounding boycott provisions, please contact any attorney at Barnes Richardson and Colburn.