Since 1979, the Export Administration Regulations (EAR) have prohibited U.S. persons from participating in unsanctioned boycotts imposed by foreign governments on countries friendly to the U.S. Today, the Arab League’s boycott of Israel is the primary concern. The primary area of legal and compliance risk is foreign subsidiaries of U.S. companies that are doing business in Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, and Yemen.
On October 6, 2022, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) made four enhancements to its antiboycott enforcement strategy:
Renewed focus on foreign subsidiaries. In addition to more aggressively attempting to deter foreign parties from making boycott requests, BIS will focus its enforcement efforts on controlled foreign subsidiaries of U.S. parent companies. A foreign subsidiary is subject to antiboycott requirements when it is “controlled in fact” by a U.S. person (i.e., a U.S. person has “the authority or ability to establish the general policies or to control the day-to-day operations”). Foreign affiliates, partnerships, branches, offices, or other permanent foreign establishments of U.S. parent companies may also be “controlled in fact” and subject to antiboycott requirements.