Transcript International Boycotts

International Boycotts.
Title 15 of the Code of Federal Regulations:
Part 760 – Restrictive Trade Practices and Boycotts
Abygail Sunga & Asma Testouri
1
Objective of Anti-Boycott Laws
• The anti-boycott laws were adopted 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 have the effect
of preventing U.S. firms from being used
to implement foreign policies of other
nations which run counter to U.S. policy.1
2
Title 15 of the Code of Federal
Regulations
• Part 760 Restrictive Trade Practices and
Boycotts
• Part 762 Record keeping
• Part 764 Enforcement and Protective
Measures
• Part 766 Administrative Enforcement
Proceedings
3
History of the Anti-Boycott Laws
• During the mid-1970's the United States
adopted two laws that seek to counteract
the participation of U.S. citizens in other
nation's economic boycotts or embargoes.
• These "antiboycott" laws are the 1977
amendments to the Export Administration
Act (EAA) and the Ribicoff Amendment to
the 1976 Tax Reform Act (TRA)
4
What do the Anti-Boycott Laws
prohibit? 2
• 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.
• Agreements to furnish or actual furnishing of
information about the race, religion, sex, or
national origin of another person.
5
Congress
President
Commerce
Treasury
Foreign Policy
Reporting
Anti-Boycott Laws
Investigations
Office of AntiBoycott
Compliance
U.S. Persons
Compliance
6
Parties Involved
• Enforcement of Export Administration
Regulations (EAR)
− Department of Commerce, Bureau of
Industry and Security, Office of AntiBoycott Compliance
• Enforcement of Tax Reform Act
− Department of Treasury, Internal Revenue
Service
7
Parties Involved
• Export Administration Regulations (EAR)
− “U.S. persons” - individuals and companies
located in the United States and their
foreign affiliates whose activities relate to
the sale, purchase, or transfer of goods or
services (including information) within the
United States or between the U.S. and a
foreign country. This covers U.S. exports
and imports, financing, forwarding and
shipping, and certain other transactions
that may take place wholly offshore.
8
Parties Involved
• Ribicoff Amendment to the 1976 Tax
Reform Act (TRA)
− “U.S. taxpayers” (and their related
companies) - taxpayers' "operations" in,
with, or related to boycotting countries or
their nationals. Its penalties apply to
those taxpayers with foreign tax credit,
foreign subsidiary deferral, FSC (Foreign
Sales Corporation), and IC-DISC (Interest
Charge-Domestic International Sales
Corporation) benefits.
-for more info…
U.S. Department of Treasury, Internal Revenue Service.
http://www.irs.gov/irm/part4/ch47s06.html#d0e518718
9
Major Impact of Anti-Boycott Laws
• Strengths of Anti-Boycott Laws
− Encourages & requires U.S. firms from being
used to implement foreign policies of other
nations which run counter to U.S. policy
• Weaknesses of Anti-Boycott Laws
− Relies on companies to report anti-boycott
violations
− Loss of contracts from importing countries
requiring information of origin of goods
− Penalties are imposed on U.S. companies
instead of boycotting countries
10
Arab League Boycott of Israel
11
Case Summary
“ The Arab League has maintained an official
boycott of Israeli companies and Israeli-made
goods since the founding of Israel in 1948. The
United States actively opposes the boycott and
works on both bilateral and multilateral fronts
to end it. The U.S. government also enforces
laws that prohibit U.S. firms from participating
in the boycott.”
Source: www.fas.org
12
Background
• The Arab League is an umbrella organization
comprising 23 Middle Eastern and African
countries and entities,
• It is administered by the Damascus-based
Central Boycott Office, a specialized bureau of
the Arab League,
• and it is justifying the Boycott as a mean of
resistance to the Israeli “occupation & violence”
in the Palestinian territory
13
Boycott Status & enforcement
There are three tiers of the boycott:
• The primary boycott: prohibits the importation of Israeliorigin goods and services into boycotting countries.
• The secondary boycott: prohibits individuals, as well as
private and public sector firms and organizations, in member
countries from engaging in business with any entity that does
business in Israel. The Arab League maintains a blacklist of
such firms.
• The tertiary boycott: prohibits any entity in a member
country from doing business with a company or individual
that has business dealings with U.S. or other firms on the
Arab League blacklist.
14
Impacts of the Boycott
Primary Boycott effect:
•
limited since intraregional trade and investment are small
*However , 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 entities (mainly Egypt, Jordan, and the
Palestinian Authority) totaled $192 million.
Secondary and tertiary boycotts effect:
•
They have both decreased over time, reducing their effect.
*It appears that since intra-regional trade is small, and that the secondary and
primary boycotts are not aggressively enforced, the boycott may not currently
have an extensive effect on the Israeli economy
Conclusion 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 a source of, and for, foreign investment.`
15
U.S efforts to abort the Boycott
The U.S. government opposes the boycott and works to end its
enforcement on multiple levels through language inclusion in
successive foreign operations legislation concerning the boycott.
Section 535 of the Foreign Operations, Export Financing, and
Related Programs Appropriations Act, 2006 (P.L. 109-102), 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;
16
.....Continued
• (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.
17
Other ways to pressure the Arab
League’s countries
Bilateral as well as multilateral trade agreements are other ways used
by the U.S. government to end the boycott:
• Bahrain, Oman and the United Arab Emirates during the FTA
negotiations, reaffirmed their position not to comply with the
Boycott.
• Saudi Arabia agreed to dismantle all aspects of Boycott in order to
access to the World Trade Organization In 2005
18
Latest Developments
•
In June 2006, an Omani customs official reportedly told The
Jerusalem Post, “Products from Israel are not permitted because of
the boycott ... If someone brings products from Israel, they will be
confiscated.”
•
In February 2006, Muhammad Rashid a-Din, a staff member of the
Dubai Customs Department 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
wanted to import it to Dubai, it would be a problem.”
•
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 the makeup of the WTO and its rules.”
19
Increasing Concerns
•
The Commerce Department reports that for all boycott
countries, during FY2006, U.S. companies submitted 1,291
reports on boycott-related requests from Arab League members
and other countries that enforced the boycott on Israel.
• In FY2006, the number of requests from Iraq for U.S. companies
to comply with the boycott increased 287% from FY2005, from 8
to 31 requests.
• For many countries, the figure increased from FY2005. Requests
from Lebanon were up 33% to 125; from Bahrain, up 32% to 37;
and from Qatar, up 32% to 90. The United Arab Emirates
remained the largest source of boycott-related requests with
486 requests. Requests from Saudi Arabia decreased 49% to 42
from 85 in FY2005.
20
Congressional Actions
• The recent rise in boycott requests received by U.S. business and
statements of support for the boycott from U.S. trading partners in the
region has continued to keep the boycott an issue of interest for
Members of Congress.
• In addition to legislative provisions directing U.S. officials to pursue
diplomatic negotiations to end the boycott’s enforcement and those
preventing U.S. companies from cooperating with the boycott,
Members of Congress periodically introduce Sense of Congress
legislation related to the boycott.
• During the 109th Congress Representative Clay Shaw introduced a
concurrent resolution (H.Con.Res. 370) expressing the sense of
Congress that Saudi Arabia, which joined the World Trade Organization
(WTO) in 2005, is not living up to its WTO commitments by continuing
to support the boycott. he resolution passed the House unanimously on
April 5, 2006. No boycott-specific legislation has been introduced
during the 110th Congress.
21
Specific Examples:
(1) Kenclaire (West) Electrical Agencies,
•
Violations of the provisions of the Export Administration Regulations
between April 1992 and February 1993
•
Agreeing not to do business with manufacturers banned under the Arab
boycott rules
•
The DOC found the following language contained in 11 purchase orders
from Saudi Arabia: "No items or components thereof made by the
manufacturer covered and banned under the Arab Boycott Rules shall
be sold to the Buyer. Seller shall be fully responsible to replace all such
items at no costs to Buyer. Seller shall be further responsible to pay for
all penalties and expenses for defying the Arab Boycott laws."
•
On June 15, 2000, the DOC imposed a $104,000 civil penalty on
Kenclaire (West) Electrical Agencies, Inc.
(2) BDP International, Inc.
(3) Panalpina, Inc.
Details on examples (2) & (3) are available at: http://www.bis.doc.gov
22
Conclusions..
• Political reasons stand behind the Arab
boycott vis-à-vis Israel
• Economic Impacts on Israel are “negligible ”
and difficult to determine
• Sanctions on U.S. companies that
“participate” with the Arab boycott are
irrational and inaccurate
23
Policy Proposal
• Office of Anti-Boycott Compliance
− Make reporting of violations easy and
efficient
− Keep agency information up to date
(website)
• Department of Commerce
− Study the possible consequences (loss of
revenues) on U.S. persons as a result of
Anti-Boycott laws (EAR does not track
losses)
24
Questions or Comments?
-for more info…
Office of Anti-Boycott Compliance
Bureau of Industry and Security, U.S. Department of Commerce
http://www.bis.doc.gov/antiboycottcompliance/default.htm
25