Deep within the bowels of the Bureau of Industry and Security there is a rather obscure and quiet office called the Office of Antiboycott Compliance (OAC). For many years this has been an almost forgotten subsection of EAR export compliance, mainly because enforcement cases for violations of the Part 760 antiboycott regulations have been few and far between. Based on a review of the Electronic Freedom of Information Act (EFOIA) index of documents, over the past five years there have only been eleven enforcement cases for Part 760 violations [two cases in 2021 (i.e., none in 2022), three cases in 2020, four cases in 2019 and two cases in 2018]. With that sort of track record, the OAC has been like a floating buoy bobbing up and down but rarely lifting its head above water. But be careful as the OAC seems to be on the march and ready to flex its muscles here in 2023. Over the past couple of months three significant enforcement cases have been formally settled that have involved rather painful fines for antiboycott violations.
Case #1: On May 18,2023 The OAC published the final terms of a final order and settlement agreement against Regal Dubai, a subsidiary of U.S. based Regal Beloit America, Inc. based on allegations set forth in a December 2022 charging letter that cited eighty-four violations of the antiboycott regulations. Most of the violations were a result of the company’s failure to file required reports with BIS when they received Purchase Orders that contained a clause which stipulated that “no Israeli parts or components are allowed to enter the Kingdom of Saudi Arabia” The simple existence of such a clause on a PO requires reporting under the EAR 760 regulations. Failure to report is a violation and the settlement agreement resulted in a civil fine of $283,500 for 760 non-compliance.
Cases #2 & #3: On July 12, 2023 the OAC published a final order and settlement agreement against two U.S. Defense contractors (B.F. Meyers and Co., Inc. and Profense, LLC). Both companies settled charges related to their compliance (in violation of the EAR) with a request to:
- Certify on trade documents (invoice and packing list) that “no Israeli, labor, capital, parts or raw materials were used in the printing, publishing or manufacture of goods that were exported to Bahrain for exhibition in a trade show” and
- Certify that no items exported were from companies on the Israeli boycott blacklist.
Both companies were hit with a $48,500 civil fine for furnishing this boycott related information to a freight forwarder and failure to report the request-to-comply with this boycott to BIS as is required under the EAR.
- Do not comply with any request to certify any information related to the Arab league boycott of Israel.
- You are REQUIRED under the EAR the report such requests to BIS
- Use caution when attending trade shows in the Arab Gulf region. Do not certify anything (orally or in writing) related to doing business with Israel and report all requests using Form 621-P.
For more information on the Antiboycott regulations see this BIS Guidance or contact TSI Global Consulting, LLC.