On April 8, 2021, the US Treasury Department published an updated List of Countries Requiring Cooperation With An International Boycott  (the “Treasury List”). Significantly, Treasury announced that it had removed the UAE from the Treasury List following the UAE’s repeal of its law requiring participation with the Arab League Boycott of Israel and subsequent implementation of the new policy.

In connection with its establishment of full diplomatic ties with Israel last year under the UAE-Israel Abraham Accords, the UAE repealed its boycott law by issuing Federal Decree Law No. 4 of 2020, abolishing Federal Decree Law No. 15 of 1972 Concerning the Arab League Boycott of Israel.  Our blog post regarding the Arab League boycott and UAE’s repeal of the boycott law, which includes an overview of US antiboycott rules, can be found here.

The current Treasury List consists of the following countries: Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria and Yemen.

The removal of the UAE is the only change to the Treasury List, which Treasury typically issues quarterly. Treasury had previously announced in its last publication of the Treasury List on October 13, 2020, that it was “monitoring” the UAE’s situation following its repeal of the boycott law.

As a result of the UAE’s removal from the Treasury List, taxpayers are no longer required to report their operations in the UAE pursuant to Section 999 of the Internal Revenue Code. In addition, certain clauses in agreements with UAE entities would no longer be interpreted as agreements to participate in the boycott of Israel, such as an agreement to comply with UAE laws and regulations. As a result, it will no longer be necessary for a US taxpayer to report such a clause in its tax return, and Treasury will not penalize taxpayers for agreeing to such a clause.  While this development limits the types of clauses originating from the UAE that would be considered by the Treasury Department to be boycott-related, it is important for companies to understand that boycott requests can originate from anywhere, even countries not on the Treasury List.  Companies should continue to monitor contracts and other incoming documents from the UAE for potential requests to comply with the boycott.  Treasury’s removal of the UAE from the Treasury List does not impact the anti-boycott rules administered by the US Commerce Department through Part 760 of the Export Administration Regulations.  Boycott requests that were prohibited and reportable to Commerce prior to Treasury’s update of the Treasury List remain prohibited and reportable today.  It is possible, though, that Commerce will update its regulations in the future to reflect the UAE’s repeal of the boycott law.

Authors: Kerry B. Contini, Alexandre (Alex) Lamy, Callie Lefevre, Brandon King and Borys Dackiw.

Author

Ms. Contini focuses her practice on export controls, trade sanctions, and anti-boycott laws. This includes advising US and multinational companies on trade compliance programs, risk assessments, licensing, review of proposed transactions and enforcement matters. Ms. Contini works regularly with companies across a wide range of industries, including the pharmaceutical/medical device, oil and gas, and nuclear sectors.

Author

Callie C. Lefevre is an associate in the Washington, DC office where she is a member of the International Practice Group. Her practice is focused on all aspects of International Trade law, particularly compliance with US export controls, trade and economic sanctions, and US foreign investment restrictions. *Admitted in New York only. Practice limited to matters and proceedings before US courts and federal agencies.

Author