The Arab League Boycott was dealt a severe blow when the United Arab Emirates (UAE) issued a decree ending its involvement in it. This announcement now allows trade between the UAE and Israel. It follows the normalization of relations between Israel and the UAE created by the recent peace accord.
What is the Arab Boycott
The Arab Boycott was formally declared by the Arab League in 1945 as an effort to isolate and weaken Israel. It called for Arab institutions, organizations, merchants, commission agents, and individuals to refuse to deal in, distribute, or consume Israeli products. As the boycott evolved in its efforts to isolate Israel, it focused on three targets:
- Restriction of trade between Israel and Arab states.
- Restriction of trade between companies that trade with Israel and Arab states.
- Boycotting agencies that trade with other companies that trade with Israel.
United States Anti Boycott Regulations
In 1977 President Jimmy Carter signed into law Anti Boycott Regulations to disallow U.S. businesses from participating in the the boycotts. These regulations were incorporated as amendments to the Export Administration Act (EAA). They were also incorporated into the Ribicoff Amendment to the 1976 Tax Reform Act (TRA).
As a result, the Export Administration Regulations (EAR) administered by the Bureau of Industry and Security (BIS) require reporting of any request to participate in the boycott. Additionally, the TRA requires reporting of operations in or related to a country participating in the boycott.
Boycott Looses Momentum but Remains a Concern
As various Arab countries have negotiated peace treaties with Israel, the effectiveness of the boycott has decreased. These nations include Qatar, Oman, Egypt, Jordan, and Morocco. It is expected by many that more Arab states will break away from the boycott in the near future.
Moreover, many non-Arab states have not recognized the boycott. France, Germany, the Netherlands, and Japan have all enacted laws making cooperation with the boycott unlawful.
Effect of Boycott on U.S. Businesses
The boycott, remains a concern for exporters in the United State as boycott requests to comply continue from businesses in Arab states. A 1993 study estimated that U.S. firms lost $410 million in exports due to the boycott. Additionally for that year, another $160 million was spent on costs associated with compliance to the anti boycott regulations. Failure to comply with Anti boycott regulations can result in criminal and administrative fines and penalties including denial of export privileges.
CVG Strategy has been assisting businesses comply with export laws for over a decade. This includes anti boycott compliance. Our experts can help you establish an export compliance program for EAR and International Traffic in Arms (ITAR). We can also provide the training necessary to keep your export team up to date with ever changing regulations.