Treasury Adds Iraq to List of Boycotting Countries

International Trade & Customs Update

Date: August 22, 2012

Overview

In a Federal Register notice issued August 17, 2012, the U.S. Department of the Treasury added Iraq to the list of countries that request U.S. companies to participate or agree to participate in boycotts prohibited under U.S. law. This action highlights the need for U.S. companies doing business abroad - particularly in the Middle East - to be vigilant for incoming requests to honor international boycotts not approved under U.S. law.

Treasury's addition of Iraq likely is in response to the Iraqi Patent Office's policy of requiring patent applicants to confirm they do not do business in Israel, which has blocked U.S. companies from protecting their intellectual property rights in Iraq. According to leaked diplomatic cables, the U.S. government previously had threatened to list Iraq as a boycotting country because of this policy.

Under U.S. antiboycott laws enacted in 1976 and 1977, U.S. companies may not participate or agree to participate in an international boycott, other than those approved under U.S. law. The laws are separately administered by Treasury and the U.S. Department of Commerce. Under Treasury's regulations, U.S. companies can lose their foreign tax benefits for honoring a boycott request. Under the Commerce Department's antiboycott regulations, U.S. companies are required to report boycott requests on a quarterly basis and may incur substantial fines for failing to report or honoring any such request.

The primary non-U.S. boycott currently in effect is the Arab League's boycott of Israel. Iraq joins Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates and Yemen on Treasury's list of boycotting countries. Treasury's action puts U.S. companies on notice to be alert for boycott requests - usually contained in purchase orders, contracts or letters of credit - originating from any of these countries.