furnishing of information or the signing of agreements, that has the effect of furthering or supporting a restrictive trade practice that discriminates against U.S. citizens or firms on the basis of race, color, religion, sex, or national origin, and to require reports of receipt of such requests to be filed with the Office of Export Administration, Department of Commerce, within 15 days of receipt of each request.

The regulations were revised further to require reports from all service organizations (such as banks, insurers, freight forwarders, and shipping companies) that become in any way involved in a restrictive trade practice request related to an export from the United States or commodities, services, technical data, or other information. Previously service organizations had been required to report such requests to the U.S. exporter, who was then required to report to the Office of Export Administration. Under the amended regulations both the exporter and the service organization were required to report.

The amended regulations are at 15 CFR 369.1 to 369.5; see Fed. Reg., Vol. 40, No. 229, Nov. 26, 1975, pp. 54769-54770. They provide examples of restrictive trade practice requests, compliance with which is prohibited, and examples of documents in which such requests might originate. Issuance of the regulations was at the direction of the President in furtherance of antidiscriminatory measures announced on Nov. 20, 1975. See ante, Ch. 3, § 6, pp. 199–200.

On December 12, 1975, the Board of Governors of the Federal Reserve System sent a letter to the presidents of all Federal Reserve banks and the officers in charge of branches, concerning the involvement of banks in foreign boycott practices. It directed their attention to U.S. policy, as reflected in the President's antidiscriminatory measures announced on November 20, 1975, and the amended Export Administration Regulations, supra, and stated:

The Board of Governors strongly supports the President's statement. . . . Banking is clearly a business affected with a public interest. Banking institutions operate under public franchises, they enjoy a measure of governmental protection from competition, and they are the recipients of important Government benefits. The participation of a U.S. bank, even passively, in efforts by foreign nationals to effect boycotts against other foreign countries friendly to the United States-particularly where such boycott efforts may cause discrimination against United States citizens or businesses-is, in the Board's view, a misuse of the privileges and benefits conferred upon banking institutions.

One specific abuse that has been called to the attention of the

Board of Governors is the practice of certain U.S. banks of participating in the issuance of letters of credit containing provisions intended to further a boycott against a foreign country friendly to the U.S. The practice appears to have arisen in commercial transactions between U.S. exporters and foreign importers, in which the importer has arranged for the issuance of a bank letter of credit as a means of making payment to the exporter for the goods he has shipped. In some cases the importer has required, as one of the conditions that must be satisfied before payment can be made by the U.S. bank to the exporter, that the exporter provide a certificate attesting that it is not connected in any way with a country or firm being boycotted by the importer's home country, or is otherwise in compliance with the terms of such a boycott. Such provisions go well beyond the normal commercial conditions of letters of credit, and cannot be justified as a means of protecting the exported goods from seizure by a belligerent country. Moreover, by creating a discriminatory impact upon U.S. citizens or firms who are not themselves the object of the boycott such provisions may be highly objectionable as a "secondary" boycott.

While such discriminatory conditions originate with and are imposed at the direction of the foreign importer who arranges for the letter of credit, U.S. banks that agree to honor such conditions may be viewed as giving effect to, and thereby becoming participants in, the boycott. The Board believes that even this limited participation by U.S. banks in a boycott contravenes the policy of the United States, as announced by the President and as set forth by Congress . . . in the Export Administration Act of 1969 (50 U.S.C. App. 2402(5)). . . . The Board also notes that the agreement by a U.S. bank to observe such discriminatory conditions in a letter of credit may constitute a direct violation of the Federal antitrust laws or of applicable State anti-boycott laws.

You are requested to inform member banks in your District of the Board's views on this matter, and, in particular, to encourage them to refuse participation in letters of credit that embody conditions the enforcement of which may give effect to a boycott against a friendly foreign nation or may cause discrimination against U.S. citizens or firms.

In a followup letter on Jan. 20, 1976, the Board stated that its Dec. 12 letter was not intended to create new legal obligations for banks, but rather to ensure that they are familiar with their existing obligations under the Export Administration Regulations and other pertinent laws. It added that the Board fully supported the regulation that encourages and requests exporters and their banks not to participate in boycott practices.

On November 28, 1975, the Department of Commerce announced that Secretary of Commerce Rogers C. B. Morton had ordered that, effective December 1, 1975, the Department would no longer disseminate foreign trade opportunities containing boycott provi

sions. The announcement said that the ban was undertaken with the cooperation and concurrence of the Department of State, which was instructing all foreign service posts not to forward any documents or information on trade opportunities obtained from documents or other materials known to contain boycott provisions.

Dept. of Commerce News, Nov. 28, 1975.

Byron Keith Huffman, Jr., Assistant Legal Adviser for Near Eastern and South Asian Affairs, wrote a memorandum of law on March 7, 1975, in which he outlined the statutory and regulatory basis on which the Department of State was consistently refusing requests from companies and individuals for authentication of documents containing statements required by foreign governments as part of their implementation of restrictive trade practices or boycotts against countries considered friendly to the United States. An excerpt from his memorandum follows:

The relevant regulations prohibiting authentication of documents related to the boycott are found at 22 Code of Federal Regulations 131.2 which provides:

(a) The Department will not certify to a document when it has good reason to believe that the certification is desired for an unlawful or improper purpose. It is therefore the duty of the Authentication Officer to examine not only the document which the Department is asked to authenticate, but also the fundamental document to which previous seals or other certifications may have been affixed by other authorities. The Authentication Officer shall request such additional information as may be necessary to establish that the requested authentication will serve the interests of justice and is not contrary to public policy.

(b) In accordance with Section 3, paragraph 5 of the Export Administration Act of 1969. . . documents which have the effect of furthering or supporting the restrictive trade practices or boycotts fostered or imposed by foreign countries against countries friendly to the United States shall be considered contrary to public policy.

These specific regulations override any general obligation of the Department and U.S. Embassies to provide consular services to U.S. citizens.

In their present form, these regulations were promulgated following adoption of Section 3(5) of the Export Administration Act of 1969.

The foregoing statutory and regulatory provisions reflected Section 2(4) of the Export Control Act of 1949 as amended in 1965 by P.L. 89-63 and regulations promulgated thereunder. (See Federal Register, Vol. 30, page 12732, October 6, 1965.) As a consequence, the Department, since October 6, 1965, has consistently refused authentication for documents containing statements required by foreign governments as part of their implementation of restrictive trade practices or boycotts against

countries considered friendly to the United States. The files of the Authentication Office of the Department disclose approximately 429 written denials of requests for such authentication services to date, though a greater number may have been returned informally.

Dept. of State File No. P76 0013-532.

Antidiscrimination laws relative to boycotts were enacted by the State of New York and the State of Illinois on August 4 and September 12, 1975, respectively. The New York statute (Assembly Bill 7640-B) makes it "an unlawful discriminatory practice (i) for any person to discriminate against, boycott or blacklist, or to refuse to buy from, sell to or trade with, any person, because of the race, creed, color, national origin or sex of such person, or of such person's partners, members, stockholders, directors, officers, managers, superintendents, agents, employees, business associations, suppliers or customers, or (ii) for any person willfully to do any act or refrain from doing any act which enables any such person to take such action." Boycotts connected with labor disputes or to protest unlawful discriminatory practices are excluded from its application. It provides further that the prohibitions of the State Human Rights Law will apply to discriminatory acts committed against New York residents and domestic corporations, when such acts are committed outside the State, and it prohibits any nonresident person or foreign corporation violating the provisions from transacting business within the State. Should any portion of the law be adjudged invalid or unconstitutional, a separability clause retains the remainder.

In Illinois three laws were enacted for the purpose of preventing blacklisting of Illinois businesses by firms honoring economic boycotts ordered by foreign or domestic governments or corporations. House bill 2590 prohibits discrimination by any State chartered bank against individuals or businesses because they appear on a blacklist issued by any domestic or foreign corporation or government. House bill 2591 enacted the Illinois Blacklist Trade Law which prohibits financial institutions, government agencies, and shipping companies from entering into contracts which discriminate or appear to discriminate against any persons on religious or ethnic grounds or because of their race, color, creed, national ancestry, or sex. It declares invalid any contract containing discriminatory provisions and prohibits financial institutions from accepting letters of credit or other transfers of funds or credit which contain any discriminatory provisions. House bill 2592 makes blacklisting activity a violation of the Illinois Antitrust Act.

Arab Boycott

On February 26, 1975, Senator Frank Church, Chairman of the Senate Foreign Relations Subcommittee on Multinational Corporations, made public a Saudi Arabian edition of an Arab boycott list of more than 1,500 American companies. The list had been furnished by the Department of State, along with the regulations of the boycott office of the Arab League in Damascus, under which Arab countries were not to trade with companies on the boycott list if they had significant investments in Israel, if they helped Israel militarily, if they sold to Israel and not to Arab countries, if they distributed pro-Israeli publications or films, or if they were otherwise deemed to be "Zionist." The regulations provided for exceptions in certain circumstances, for example, where an Arab country finds that an exception would be politically or economically advantageous. Although the Arab League and its boycott office were nongovernmental, they had received the political support of Arab Governments.

President Gerald R. Ford, at a press conference in Hollywood, Florida, the same day issued the following statement:

There have been reports in recent weeks of attempts to discriminate on religious or ethnic grounds against certain institutions or individuals in the international banking community.

I want there to be no doubt about the position of the United States. Such discrimination is totally contrary to the American tradition and repugnant to American principles. It has no place in the free practice of commerce as it has flourished in this country and in the world in the last thirty years.

Foreign businessmen and investors are welcome in the United States when they are willing to conform to the principles of our society. However, any allegations of discrimination will be fully investigated and appropriate action taken under the laws of the United States.

In hearings before the Subcommittee on February 26, 1975, Harold H. Saunders, Deputy Assistant Secretary of State for Near Eastern and South Asian Affairs, testified that the lifting of the boycott was linked to resolution of the Arab-Israeli territorial dispute and expressed the view that the boycott is best dealt with through quiet diplomacy and persuasion, making clear U.S. opposition but without following a policy of confrontation. At the same hearings, representatives of the Army Corps of Engineers testified that the Corps did not take the boycott into consideration in making lists of eligible companies available to Saudi Arabia for construction projects, but indicated that the Saudi policy against