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 may be in serious danger of boycott fines and legal penalization from the US government. There are a few things you should take note of if you do business with companies involved in the Arab League. Answering requests for knowledge of where goods were manufactured can put you at high risk with the U.S. government. Most issues stem from contradictions with U.S. boycott compliance laws protecting the state of Israel. 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. And “cooperating” with a boycott against Israel isn’t always obvious. Accepting purchase order or a letter of credit with language alluding to discrimination or boycott towards the State of Israel will put you at risk of boycott fines. 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 can cause for serious legal trouble. Boycott fines can reach up to $250,000 per violation or twice the value of the transaction (whichever is greater.) If violations are found to be criminal, boycott 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:
Direct Boycott-Language Can Lead to Boycott Fines
A majority of illegal boycott-compliance business transactions can be easily identified. Boycott language can appear in a purchase order, letter of credit application, letter of credit, repair order, contract, email communication, questionnaire, trademark application form, or other shipping documents. If they allude to discrimination or boycott against Israel, it 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.
Understand What is Allowed
According to US Commerce law, 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 similarly 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 Israel and thus does not break export compliance laws.
Reject and Report Boycott Requests
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.
Call Us for Questions – It’s Not Worth the Risk
All too many companies are riding the line of legal business and boycott violations – and they don’t even know it. If you do any business with companies in the Middle East, it would be in your best interest to give us a call at Interlog USA, Inc. and ask us how we handle these types of requests.