They call it the "Kuwaiti questionnaire"--seven simple questions that most American businesses can answer in seconds. Yet the document terrifies most U.S. businesses. One corporate lawyer calls it "a kiss of death."

The questionnaire is used by the League of Arab States to determine whether a business has ties with Israel, which 16 Arab nations have been boycotting since 1954. If a business refuses to answer the questionnaire, the Central Boycott Office in Damascus, Syria, assumes the firm is "pro-Israel," and there is a good chance that it will be blacklisted.

That may put American firms in a Catch 22 position, however, because under U.S. law they are prohibited from "furnishing any information" that could help a country that is boycotting a "friend of the United States," in this case Israel.

What's more, the law requires any U.S. firm that receives such a query to immediately send a copy of it to the Commerce Department's Office of Anti-Boycott Compliance, along with a letter explaining what the firm plans to do about it.

Various Arab nations have been boycotting Israel since 1945, before that country was officially created. But Congress did not become concerned about the boycott until the 1970s, when the energy crisis suddenly gave the Arabs more buying power and political clout.

Repeated attempts to draft anti-boycott legislation failed until 1977, when the Business Roundtable, an organization of top corporate executives, reached an agreement with the American Jewish Congress and the Anti-Defamation League of B'nai B'rith on a a compromise that eventually became law, but only through 1983. While that law, the Export Administration Act, can apply to any country, all but a handful of cases involve boycotts of Israel.

Since the law was signed, it has proven to be complex and controversial. For example, it prohibits companies from signing a "negative certificate of origin," which means that a U.S. company cannot sign a certificate asserting that its goods were not made in Israel. But it is legal for an American company to sign a "positive certificate," which simply says: "Made in the U.S.A."

"Often," explains William V. Skidmore, director of the Office of Anti-Boycott Compliance, "logic proves to be dead wrong when dealing with this law." The statutes are so sophisticated, he said, that during fiscal 1981 his office received more than 2,000 inquiries about the law from attorneys and companies.

The anti-boycott office has 30 employes, including 12 investigators, and a budget of slightly less than $1 million. Last year, the office received 50,204 copies of anti-boycott documents or demands sent to American firms in connection with $17.3 billion worth of contracts. In 1980, the office received 37,737 documents.

In fiscal 1981, it completed 140 investigations. Officials said the office sent warning letters to 74 companies, settled out of court with 20 and formally charged three companies with violations. The rest of the investigations proved groundless. The office collected $385,500 in fines. By comparison, in fiscal 1980, the office conducted 130 investigations, settled 12 cases out of court, and issued 21 warning letters. No companies were taken to court, and fines totaled $128,500.

So far, the largest anti-boycott settlement, according to officials, was made last year when 3M Co. agreed to pay the government $135,000. The firm had been accused of failing to report in a timely fashion the receipt of 133 questionnaires and the signing of 95 negative certificates of origin.

Since 1981, 12 companies have joined in six lawsuits challenging the constitutionality of the export act. All of the suits contend that because the law prohibits firms from answering the Arabs' questions, it amounts to "prior censorship," a violation of the First Amendment's guarantees of free speech.

Earlier this month, a federal district judge in Wisconsin ruled against Briggs & Stratton Co., a manufacturer of small engines, at the first hearing on the anti-boycott suits. The judge said the government's interests outweigh the company's rights. He said the boycott is not as "cut-and-dried" as the companies contend. When the Arabs need a product from a blacklisted company, the judge said, they often decide to ignore the blacklist.