Peterson Institute research staff
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
RSS News Feed Search

Case Studies in Sanctions and Terrorism: Arab League

Case Studies in Sanctions and Terrorism

<< Case Studies Index

Case 76-3 (formerly 65-4)
US v. Arab League
(1979–: Antiboycott Measures)

| Chronology of Key Events | Goals of Sender Country | Response to Target Country |
Attitude of Other Countries | Legal Notes | Economic Impact | Assessment |
Author's Summary | Bibliography |

Chronology of Key Events


US Under Secretary of State George Ball: “In our judgment [S. 948, an antiboycott amendment to the Export Control Act] could interfere seriously with the programs of economic denial that we are now conducting against several communist countries.” (Lowenfeld 1977, 34)
30 June 1965 Amendment to Export Control Act of 1949 calls for US firms to report boycott requests to Secretary of Commerce “for such action as he may deem appropriate.” (Lowenfeld 1977, 34)
30 December 1969 Congress approves Export Administration Act of 1969 that extends inter alia antiboycott provisions of Export Control Act. (US Department of Commerce 1977, 15)
1975 US Secretary of Commerce Rogers C. B. Morton, in response to congressional pressure, modifies regulations to require reporting as to whether the exporter had complied with boycott request. Previously, exporter merely reported request. (Lowenfeld 1977, 36)
1975 President Gerald R. Ford, quoting President Washington, says the Ford administration would give “to bigotry no sanction.” Subsequently, Secretary Morton issues new regulations prohibiting discrimination, as among US citizens, on basis of race, color, religion, sex, or national origin. (Lowenfeld 1977, 36–37; Federal Register 54770)
January 1976 US v. Bechtel Corp. Civ. No. C-76-99 (N.D. Calif.), case filed by US Justice Department, alleges antitrust violation by Bechtel on account of discrimination; case is settled by consent decree 10 January 1977. (New York Times, 17 January 1976, A5)
October 1976 Tax Reform Act of 1976 is enacted with antiboycott provision (amendment by Sen. Abraham Ribicoff [D-CT]) providing that foreign tax credits, tax deferral on earnings of foreign subsidies, and domestic international sales corporation (DISC) benefits be denied to firms that comply with foreign boycott not sanctioned by US government (Sec. 999, Internal Revenue Code). Some companies complain that the legislation, which targets the Arab League boycott of Israel, will cause them to lose business in the Arab world. (New York Times, 17 September 1976, A1; 30 September 1976, 41; 5 October 1976, A24)
22 June 1977 Amendments to Export Administration Act of 1969 (PL 95-52) prohibit compliance with most foreign boycott requirements—including those involving handling of letters of credit by US banks—and provide substantial penalties for violations. These amendments “constitute the most extensive set of antiboycott provisions enacted in any jurisdiction in the world.” (US Department of Commerce 1977, 16; Stanislawski 1985, 234–5)
1979 Export Administration Act of 1979 is enacted with antiboycott provision. (US Department of Commerce 1980, 1)
11 October 1991 The Commerce Department releases an internal report that concludes that it may have been lax in its enforcement of the anti-boycott laws, stating “The [anti-boycott] office’s record of no successful criminal prosecutions in its 12-year history may be a record that is difficult to defend.” The office receives 80 cases of violations per year. (New York Times, 11 October 1991, D5)
November 1991 A defense appropriations bill proposes a provision that would deny Pentagon contracts to foreign companies complying with the Arab Boycott of Israel. (Financial Times, 28 November 1991, 8)
25 March 1993 Baxter International Inc., the world’s largest medical supplies company, agrees to pay civil and criminal fines of $6.5 million for having tried to evade the US anti-boycott law. Baxter admits to the Commerce Department that it violated US law by providing information to the Arab League regarding its business involvement in Israel and by trying to get off the Arab blacklist. The company will also accept a two-year ban on exports to Syria and Saudi Arabia. (New York Times, 11 May 1993, A11, New York Times, 26 March 1993, D1)
15 November 1994 The US Treasury Department removes Jordan from the list of countries sanctioned under anti-secondary sanctions provisions of the Internal Revenue Code after it signs a peace agreement with Israel. (International Trade Reporter, 22 November 1995, 1945)
30 April 1995 Pursuant to the 1994–95 Foreign Relations Authorization Act, the sale or lease of military equipment to any country that enforces the non-primary levels of the boycott of Israel may be denied unless the president determines that the country does not maintain such a policy or issues a waiver in the interest of national security. (USITC, Effects of The Arab League Boycott of Israel on US Businesses, 1994)
30 August 1995 The cosmetics company L’Oreal, SA agrees to pay $1.4 million in penalties to settle allegations by the US Commerce Department that it cooperated with the Arab League’s economic boycott of Israel. The firm denies the charges, but says would prefer to pay the fine and avoid a costly legal defense. After the Arab League placed L’Oreal on its blacklist, the company’s headquarters asked a US affiliate to send information to Paris about its previous activities in Israel. The US Commerce Department alleges that the subsidiary violated US law by providing information about operations in Israel and by failing to report the request for information to the federal government. This will be one of the largest penalties ever assessed by the Office of Antiboycott Compliance. (Washington Post, 30 August 1995, F1)
22 November 1995 Commerce Department removes Jordan from the list of countries cooperating with international boycotts, because of its recent accords with Israel. The countries remaining on the list are Bahrain, Iraq, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, and the Republic of Yemen. (International Trade Reporter, 22 November 1995, 1945)
29 November 1995 The Commerce Department levies a $550,000 fine on the Sundstrand Corp. and its French subsidiary for more than 275 violations of anti-boycott measures for exports of aerospace components to the UAE, Bahrain, and Yemen. (International Trade Reporter, 20 December 1995, 1214)
29 November 1996 The Clinton Administration threatens to block Saudi Arabia’s admission to the World Trade Organization until the country abandons its participation in the Arab boycott of Israel. (Washington Post, 29 November 1996, A34)
March 1997 The Commerce Department announces that the Justice Department and the US Air Force violated US antiboycott laws by suggesting that no Jewish Americans be part of a team to microfilm documents in Saudi Arabia. An independent contractor, CACI Inc, is fined $15,000 for its participation in the project. (Washington Trade Daily, 7 March 1997, 3)
1997 “Antiboycott enforcement by the Commerce Department reached its lowest point since 1980. During 1997, 15 different parties entered into consent agreements and a total of $190,000 in fines was imposed for 83 separate violations. Of the 83 violations, 45 were failures to file required reports and 21 were routine documentary-type violations; $91,000 of the total $190,000 in fines was suspended.” (Middle East Executive Reports, 1 February 1998, 8)
November 2002 Arab League's Boycott Office pledges to revive its program against Israel. Commerce Department's Bureau of Industry & Security, formerly known as Bureau of Export Administration, issues a reminder to US companies that the department “will use all of its resources to vigorously enforce U.S. antiboycott regulations.” (Communications Daily, 6 November 2002)

<< top of page