Executive Summary (Download via PDF)
The economic and social blockade by Saudi Arabia, the UAE, Bahrain, and Egypt against Qatar has catalyzed a hostile political climate in the Gulf region and instigated rumors of an impending Secondary Boycott campaign.
Secondary Boycotts in the context of international commerce refers to an attempt by a foreign government (A) to influence the actions of a company operating in another country (B) by exerting economic or political pressure for that company to cease business operations with or within a third country (C).
In the ongoing Gulf Crisis, this scenario refers to foreign governments attempting to exert pressure on American companies to cease business operations with Qatar or Qatari-owned businesses. Secondary Boycotts are against US law, and failure to report Secondary Boycott requests may result in significant civil/criminal penalties.
This White Paper serves to educate and inform US businesses on:
The US-Qatar Trade Relationship
As Qatar’s largest foreign investor and its single largest source of imports, the United States has developed a robust trade relationship with Qatar, with over 120 US companies operating in-country.
US exports to Qatar include aircraft, machinery, vehicles, optical and medical instruments, and agricultural products. US imports from Qatar include liquefied natural gas, aluminum, fertilizers, and sulfur. The United States and Qatar have signed a trade and investment framework agreement (TIFA) and host annual bilateral Economic and Investment Dialogues.
Qatar plans to invest $45 billion of its sovereign wealth fund in the United States by 2021. In 2016, Qatar’s purchase of $12 billion in F-15 fighters was approved by Congress and Qatar announced an $18 billion of Boeing commercial jets.
US Anti-Boycott Laws Summary
US anti-boycott laws establish the principle that US businesses should not participate in foreign boycotts that are not sanctioned by the United States. The laws prevent US companies from engendering themselves to foreign policy objectives that run counter to American interests abroad.
Originally enacted in the 1970’s, the laws were designed to protect American companies and were kept unspecific— using generic language that applies to all countries.
US businesses that participate, intentionally or in some cases unintentionally, may face a host of civil or criminal penalties. Additionally, failure by US businesses to report to the jurisdictional federal agency requests by foreign entities to comply with an unsanctioned boycott, is itself a crime and may carry civil or criminal penalties as well. Penalties include:
US Anti-Boycott Laws Detailed
The Export Administration Act (EAA) specifies penalties for violations of the Antiboycott Regulations as well as export control violations.
Section 8 of the Export Administration Act of 1979, as amended, 50 USC. app. §§ 2401 – 2420 (2000), International Emergency Economic Powers Act, 50 USC. §§ 1701-1707 (2000)
“Ribicoff Amendment” to the Tax Reform Act of 1976, adding § 999 to the Internal Revenue Code.
US Businesses, Anti-Boycott Laws, & Qatar
The recent economic boycott of the State of Qatar has highlighted the relevance of US anti-boycott laws in 2017. There have been rumors circulating that the embargoing bloc will attempt to pressure US businesses to diminish or cease operations with Qatar or Qatari-owned businesses.
Secondary Boycott demands may not be in the form of enacted laws, but rather in the form of private conversations between foreign business persons and their corresponding US counterpart. They may also be referred to directly or indirectly via purchase orders and other export/import forms or requirements.
US law requires American business operators to report such requests to the Department of Commerce’s Bureau of Industry and Security’s Office of Antiboycott Compliance (OAC). USQBC will be in discussion with relevant government agencies to ensure companies have the right resources for reporting secondary boycott requirements.
US Government Support & Information for Companies in the Context of the Current Crisis
Without concrete directives in place from foreign governments explicitly requiring American companies to cease business with Qatar, the US government cannot necessarily intervene. Further, without explicit trade agreements between the US and any of the aforementioned countries, there is likely little the US government can do in the way of promoting free trade.
The best way to move forward is to encourage American companies to report any secondary boycott requests levied against them (whether directly or indirectly) to the US Department of Commerce. With concrete evidence of American businesses and American jobs being hurt, the US government may be more inclined to take action.
Report anti-boycott law violations:
Department of Commerce’s Bureau of Industry and Security’s Office of Antiboycott Compliance (OAC) — (https://www.bis.doc.gov/index.php/enforcement/oac?id=300)