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United States: Treasury Department removes UAE from list of boycotting countries

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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with its establishment of full diplomatic ties with Israel last year under the UAE-Israel Abraham Accords, the UAE repealed its boycott law by issuing Federal Decree Law No. 4 of 2020, abolishing Federal Decree Law No. 15 of 1972 Concerning the Arab League Boycott of Israel.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.

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Kerry Contini is a partner in the Firm’s Outbound Trade Practice Group in Washington, DC. She has served as co-chair of the Firm's Pro Bono committee for several years and has managed award-winning pro bono work involving Baker McKenzie professionals in North America, Europe and Asia. She has written on export controls and trade sanctions issues for several publications, including The Export Practitioner and Ethisphere. Kerry is a co-chair of the Export Controls and Sanctions Section of the Association of Women in International Trade. She joined the Firm as a summer associate in 2005 and became a full-time associate in 2006.

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Alexandre Lamy joined Baker McKenzie in 2009 and currently works in the Firm's International Trade Practice Group. He assists clients with sanctions and export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and he advises clients on corporate compliance matters. Since August 2011, Alex has served on the steering group for the ABA Section of International Law’s Export Controls & Economic Sanctions Committee and is currently a Vice Chair of the Committee. He has organized several events regarding recent developments in US trade sanctions and export controls for the Committee.

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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. Prior to joining Baker McKenzie, Callie worked as a student advocate for the New York University School of Law Environmental Law Clinic. While there, she participated in environmental litigation and advocacy pertaining to water quality and urban runoff under the supervision of attorneys at the Natural Resources Defense Council. Callie’s experience also includes working as a summer associate at Baker McKenzie in 2014, where she participated in all aspects of International Trade law, and working as a legal intern at the United Nations High Commissioner for Refugees in Beirut, Lebanon.

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Borys Dackiw has been a partner of Baker McKenzie since 1995. In 2008 Mr. Dackiw was appointed managing partner of the Gulf offices (including Abu Dhabi, Doha, Riyadh and Bahrain), coordinating the opening of the Abu Dhabi and Doha offices and the merger in the UAE with Habib Al Mulla in July 2013. Mr. Dackiw is head of the Compliance practice in the Gulf and also advises on mergers & acquisitions (including privatizations), private equity and general corporate and commercial law. Borys regularly advises clients across various industries on their compliance and anti-bribery policies and programs and has participated in whistleblower interviews relating to allegations of bribery and other bribery-related investigations. He also works with in house legal teams of multi-national clients to deliver tailored trainings on anti-corruption issues, including legal developments and enforcement trends in the UAE. Prior to this appointment Borys, held the position of managing partner in the Prague (Czech Republic) and Kyiv (Ukraine) offices of Baker McKenzie.

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