Trade compliance: Putting Export Administration Regulation (EAR) 760 in context

George Reed Jr., Director, Trade Compliance How many times have you heard it said, “It’s not just what you say, but how you say it, that counts”? Well, the truth in this adage can go beyond the way that we talk with each other during conversation. It is also relevant to how we comply with U.S. anti-boycott regulations. How a company responds to a boycott related request is critical to avoiding a violation of the Export Administration Regulations (EAR).

Part 760 of the EAR covers “Restrictive Trade Practices or Boycotts.” Although the language pertains to any restrictive trade practice or boycott, in practical terms this primarily concerns the boycott of the nation of Israel by Arab League and Islamic countries. The rules in Part 760 place strict limits upon actions that can be taken and statements that can be made when related to boycotting Israel. In specific regard to statements that may be requested from a consignee or from a buyer’s financial institution, there are certain things you can say, and others you cannot.

For example, the letter of credit opened by your foreign buyer may include the requirement to follow certain shipping arrangements for moving the goods to their ultimate destination. If you are being asked to certify that “the goods will not originate from Israel,” such a statement would not be permissible under the regulations because it includes a boycott against Israel-origin goods. The exporter could not legitimately provide such a certification, and would be required to report to the Commerce Department that this request was received.

However, if the foreign buyer simply requests the exporter to provide “a certification of origin for the goods, stamped by the U.S.-Arab Chamber of Commerce,” then this statement may be provided, and it is not considered to be a reportable boycott request. It reflects a positive statement about the origin of the goods and it does not mention any boycotted country.

So again – bringing us back to “it’s not what you say, but how you say it” – one statement about the origin of the goods would be non-compliant and the other would be permissible. The difference is in how the exporter would speak to the topic of origin.

Since the U.S. anti-boycott regulations can be complex and small differences in requests or responses can impact the outcome. Anytime you come across anything that looks like a boycott request, it’s always a good idea to seek the guidance of a subject matter expert. Don’t hesitate to get in touch with the customs and trade experts at Livingston for more information!