Emergency Committee For American Trade - Publications

SECTION 8: SANCTIONS REFORM

Increasing global economic integration in the post-Cold War era poses great opportunities and challenges for U.S. trade and foreign policy. Engagement continues to be America’s best tool to meet these challenges and to promote freedom, human rights, and security, as well as continued economic growth. Unlike multilateral sanctions, such as those pursued following the terrorist attacks on the United States on September 11, 2001, unilateral sanctions provide little benefit to the United States, but extract a great cost. Indeed, the imposition of U.S. unilateral sanctions undermines U.S. engagement in the global economy and poses a serious threat to U.S. commercial and foreign policy interests. ECAT is pleased therefore with the noticeable decline in the United States’ use of export sanctions between the late 1990’s and 2004. Yet, unilateral sanctions continue to be proposed and in some cases imposed and/or continued.

As important as the various foreign policy and humanitarian goals that are being pursued through unilateral sanctions may be, without multilateral support the sanctions infrequently achieve their objectives. A study by the Institute for International Economics found that the effectiveness of unilateral sanctions has declined significantly over the last 20 years and that only one-fifth of the sanctions imposed in the 1970s and 1980s had any positive outcome. The U.S. State Department’s Advisory Committee on International Economic Policy also concluded that unilateral sanctions usually fail to change the behavior of target countries. For example, in the case of the Soviet grain embargo, it is estimated that the embargo cost the United States $2.3 billion as the result of lost farm exports and the cost of compensation to U.S. farmers. It is estimated that the increased cost to the Soviet Union of buying embargoed commodities from alternative suppliers was only $225 million, and the embargo did not achieve its objective of compelling Russia to withdraw from Afghanistan.

The increasing ineffectiveness of unilateral sanctions is due largely to the declining economic leverage of the United States and the growing ability of targeted countries to secure critical imports, market access, and financing from countries other than the United States. Targeted countries can almost always find a European, Japanese, or other supplier or investor to provide the restricted goods, services, or investment. Unilateral sanctions are particularly likely to fail to change the behavior of countries with authoritarian regimes that are relatively more isolated from world opinion. Moreover, unilateral sanctions can have the counterproductive effect of strengthening the control of despotic regimes and ruling elites, while inflicting great pain on innocent citizens.

Unilateral sanctions are bad economic policy too because they impose significant costs on U.S. firms and workers. The Institute for International Economics concluded that U.S. sanctions cost between $15 and $20 billion in lost exports in 1995. While this damage estimate is large, it does not reflect collateral costs arising from sanctions, including sales lost due to concerns about the United States as an unreliable supplier and the costs associated with re-entering a market after sanctions are lifted.

When the United States acts alone, it creates market opportunities for foreign suppliers to demonstrate their products and increase their market share. For example, when the United States banned exports of U.S. equipment for use in the construction of the Siberian pipeline, it opened up a previously U.S.-dominated market niche for Arctic drilling equipment to European and Japanese suppliers. Similarly, when the United States cut off sales of American wheat to protest the Soviet invasion of Afghanistan, it created the opportunity for France, Canada, Australia, and Argentina to increase their wheat sales to Russia. Russia and other foreign buyers continue to this day to restrict purchases of American wheat, based on their concerns that the United States may impose a new embargo.

Moreover, the use of unilateral sanctions has cumulatively had an adverse impact on U.S. suppliers in markets throughout the world. It has encouraged the “de-Americanization” of overseas production, particularly in the high technology sector, with foreign firms deliberately designing their products without U.S. parts and know-how in order to ensure that they would not be subject to U.S. unilateral sanctions. Reliability issues are also severely handicapping U.S. companies bidding for infrastructure projects in the developing world.

The negative impact of unilateral sanctions imposed at the U.S. federal level has been compounded by the proliferation of state and local unilateral sanctions laws. For example, some states and localities have enacted bans on procurement from firms engaged in trade with Myanmar or Indonesia. The state and local sanctions laws are subjecting the United States to WTO challenges and putting U.S. exports at the risk of retaliation. Local sanctions legislation is also risking the loss of employment and exports at the U.S. subsidiaries of foreign firms that are an important source of U.S. exports. Unilateral sanctions also jeopardize U.S. foreign policy interests. Unilateral sanctions undermine relations with major U.S. allies, as exemplified by the increased tensions with Canada and the EU over the Helms-Burton Cuba and the Iran-Libya sanctions. These measures have prompted WTO challenges and led to intensive consultations to resolve the disputes.

Unilateral sanctions undercut the United States’ ability to promote national security and foreign policy interests through greater engagement. In the post-Cold War era, trade and investment have become the most effective means to promote economic reform and democracy throughout the world. As U.S. policy in China and elsewhere demonstrates, engagement is far more effective in promoting civic and market reforms than punitive economic measures. Similarly, economic disengagement can undermine the efforts of humanitarian and religious groups that are working to assist those living under repressive governments.

The following paragraphs discuss efforts to reform sanctions and sanctions reform legislation, as well as key issue-specific and country-specific sanctions.

Trade Sanctions Reform

In October 2000, the Trade Sanctions Reform and Export Enhancement Act (TSRA) became law. As its name implies, this law seeks to improve the manner in which sanctions are imposed to take into consideration many of the points raised above. In particular, this law:

Restricts the President from imposing unilateral agricultural or medical sanctions, unless the President submits a report to Congress, not later than 60 days before a sanction is to be imposed, and a joint resolution is enacted reflecting Congress’ approval of the sanction.
This restriction does not apply in cases where there is a declaration of war or the authorization of or imminent involvement of the Armed Forces of the United States. This restriction does not apply to products on the U.S. Munitions List, controlled under the Arms Export Control Act, used in the development of chemical or biological weapons.
Requires the President to terminate any unilateral agricultural or medical sanction in effect on October 28, 2000.
Requires the termination of any unilateral agricultural or medical sanctions imposed pursuant to these procedures two years after their imposition unless the President reports to Congress on the need to extend the sanctions and Congress passes a joint resolution approving the President’s report.
Requires that exports of agricultural commodities, medicine, or medical devices to Cuba or any country found to have repeatedly provided support for international terrorism be made pursuant to one-year licenses (except for exports to Syria or North Korea). The Administration is required to report to Congress on such licenses.
Prohibits U.S. assistance, including financing, for exports to Cuba, or for commercial exports to Iran, Libya, North Korea, or Sudan
The President may waive application of this provision with respect to Iran, Libya, North Korea, and Sudan for national security or humanitarian reasons.
Prohibits the financing of agricultural sales to Cuba, except by payment of cash or by third-country financial institutions.
Codifies in statute the existing travel ban on Cuba.

In July 2001, the Treasury Department issued interim rules under the TSRA that require Treasury Department approval of individual end-users and export licenses for exports to Iran, Libya and Sudan. Despite the intentions of this legislation to liberalize exports, these rules restrict exports more than a prior 1999 Executive Order by requiring individual, rather than group, approvals. The Commerce Department’s Bureau of Export Administration (BXA) also published interim regulations under the TSRA that allow for the sale of agricultural and medical exports if the Departments of Defense, State, Treasury, and Commerce and other interested agencies do not raise objections within 11 days. If there are objections within that period, BXA (now the Bureau of Industry and Security (BIS)) will review the sale as a license application, which can take up to 30 days to process. Sales of agriculture and medical products to Iran, Libya and Sudan must receive a one-year license, and requests for these licenses are also subject to an 11-day review period. Office of Foreign Assets Control (OFAC) regulations also require a one-year license for all exports to Iran, Libya and Sudan, subject to a nine-day review. If there is an objection, OFAC will have another 30 days to review the request.

In October 2001, Congress passed and the President signed into law the USA Patriot Act (H.R. 3162) to enhance domestic security and take other measures against terrorism. Section 221 amends the TSRA by extending sanctions to the territory of Afghanistan controlled by the Taliban. Section 221(b) expands the instances when Congressional approval is not required to impose sanctions on “any narcotics trafficking entity” or entities involved in “weapons of mass destruction.”

In the 106th Congress, several members introduced the “Enhancement of Trade, Security, and Human Rights through Sanctions Reform Act” to establish a more deliberative and disciplined approach to U.S. sanctions policy by creating a common- sense procedural framework for considering unilateral sanctions. It would:

Require -- before a unilateral sanction is imposed -- that the Congress and the President request information and report on the effectiveness of the proposed sanction; the economic costs to U.S. agriculture and industry; whether it would create a backlash against U.S. security, humanitarian, or foreign policy objectives, including undermining multilateral cooperation on the objectives; and whether other policy alternatives have been tried;
Set out guidelines for future sanctions initiatives, including providing adequate presidential waiver authority, contract sanctity, and compensation for the agricultural sector, when U.S. sanctions hit a major agricultural export market;
Authorize the Department of Agriculture to boost export promotion programs whenever the United States sanctions a major foreign agricultural market to offset losses by American farmers;
Establish the general principle that food exports, including financing of such exports, should be excluded from future U.S. sanctions and that humanitarian factors should be taken into account so that sanctions target only those engaged in improper behavior and not the innocent;
Specify that Congressional and Executive branch sanctions should sunset after two years, but may be reauthorized or intensified if appropriate;
Provide general waiver authority from mandatory sanctions imposed under the Glenn amendment regarding nuclear proliferation; and
Require a report from the Congressional Budget Office on the costs and benefits of the proposed sanctions (otherwise the legislation would be subject to a point of order).

This legislation has not been reintroduced in the 109th Congress.

Issue-Specific Sanctions Legislation

Religious Persecution

The International Religious Freedom Act (IRFA) of 1998 created a Special Representative of the Secretary of State for International Religious Freedom who is charged with the responsibility of opposing overseas violations of religious freedom and recommending policies to promote religious freedom abroad. The IRFA also created a bipartisan Commission on International Religious Freedom to make recommendations and issue a report to the President in May of each year on violations of religious freedom abroad. The IRFA requires the Administration to prepare an annual report by September 1st of each year on countries engaged in violations of religious freedom and the actions the United States is taking in each country to promote religious freedom. The Administration is required to impose sanctions against countries identified in the annual report as violators of international religious freedom. Sanctions under the Act include limiting U.S. development assistance, restricting export licenses, prohibiting loans by U.S. financial institutions, and requiring U.S. votes against loans from international financial institutions to countries violating religious freedom. The IRFA also provides the President with authority to waive sanctions when to do so is in the national interest and to use existing human rights sanctions against a country to satisfy the requirements of the IRFA.

In September 2004, the Commission on International Religious Freedom issued its annual report on its monitoring activities, which recommended that the State Department re-designate Burma, China, Iran, North Korea, and Sudan as “countries of particular concern” for having engaged in or tolerated particularly severe violations, for the fifth consecutive time. The Commission also recognized Afghanistan, Georgia, India, Turkey, and Turkmenistan for making significant improvements in the promotion of religious freedom.

In June 2004, the Secretary of State removed Iraq from this list of countries “of particular concern” from the 2003 designation. In September 2004, the Secretary of State, acting under the authority of the President, designated eight countries--Burma, China, Eritrea, Iran, North Korea, Saudi Arabia Sudan and Vietnam—as “countries of particular concern” under the Act for having engaged in or tolerated particularly severe violations.

Narcotics Enforcement

The Foreign Assistance Act of 1961 requires the President to certify by March 1st of each year whether countries that are major drug producers or drug transshipment areas are fully cooperating with U.S. narcotics enforcement activities. Under the original standard, if a country is found not to be cooperating, it is subject to a range of sanctions, including the loss of foreign assistance. This standard was modified for one year by section 591 of the FY 2002 Foreign Operations Export Financing and Related Programs Appropriations Act, which required the President to identify any major drug producer or transshipment country that has “failed demonstrably to make substantial efforts during the previous 12 months to adhere to international counternarcotics agreements and to take certain counternarcotics measures set forth in U.S. law." The President’s certification decisions may be overturned if Congress passes a joint disapproval resolution within 30 days of the President’s certification announcement. If a country does not meet the certification criteria, the President can waive the criteria if he determines a waiver is in the national interest. If a country is decertified, U.S. aid is suspended, except for humanitarian assistance and counter-narcotics aid, and the United States is required to vote against any assistance loans from multilateral development banks for such country. The United States may also impose trade sanctions on decertified countries.

In September 2002, Congress modified this program as part of the Department of State authorization legislation to require an additional report on September 15, 2003 in which the President makes the same certification determinations also required on March 1st.

On September 15, 2004, the President issued the annual Presidential Determination on Major Drug Transit or Major Illicit Drug Producing Countries for 2005. The President identified the following countries as major drug transit or major illicit drug producing countries: Afghanistan, the Bahamas, Bolivia, Brazil, Burma, China, Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, India, Jamaica, Laos, Mexico, Nigeria, Pakistan, Panama, Paraguay, Peru, Venezuela, and Vietnam. The President also removed Thailand from the list of major drug transit or producing countries. The President designated Burma as a country that has “failed demonstrably” to adhere to its obligations under international counternarcotics agreements and take appropriate measures. Haiti, which had been listed along with Burma last year, was removed from this designation given the significant counter-narcotics activities taken by the new Haitian President.

Country-Specific Sanctions

Iran-Libya Sanctions

In 1995, the United States imposed sanctions against Iran, prohibiting U.S. persons from engaging in trade and investment with Iran. The 1996 Iran-Libya Sanctions Act (ILSA) broadened the existing Iran sanctions by imposing mandatory sanctions against companies that invest in the Iranian or Libyan oil and gas sectors. The Act requires the President to impose two or more of the following sanctions on companies which make investments over a certain dollar threshold in Iran or Libya that contribute to the development of their petroleum sectors: (1) denial of Ex-Im Bank credits; (2) denial of U.S. export licenses; (3) denial of certain loans from U.S. financial institutions; (4) restrictions on financial institutions, including denial of designation as a primary dealer and repository of government funds; (5) a government procurement ban; and (6) import restrictions. The sanctions must remain in effect for two years and can be waived by the President if he determines a waiver is in the national interest.

The Act also imposes sanctions on companies that engage in trade with Iran in goods, services, or technology listed in the applicable UN resolutions, if the trade significantly and materially contributes to Iran’s ability to develop its petroleum or aviation sectors or acquire chemical, biological, or nuclear weapons. The President is required to impose two or more of the sanctions previously listed on companies that engage in prohibited trade with Iran.

As part of the agreement reached between the United States and the EU in May of 1998 to resolve the dispute over the Iran-Libya and Helms-Burton sanctions provisions, the United States agreed to waive the imposition of sanctions against the European firms investing in the Persian Gulf South Pars gas field development. The United States also waived sanctions against Malaysian and Russian firms investing in South Pars. The Clinton Administration said that it would not grant automatic waivers to EU firms investing in pipelines that run through Iran to the Caspian Sea. It also declined to give any automatic future waivers to Russia, due to ongoing concerns about the weakness of its export controls. The waivers for the EU, Russian, and Malaysian firms put American companies at a disadvantage, since under a 1995 executive order U.S. firms are prohibited from investing in Iran.

As a result of the Administration’s decision to ease restrictions on commercial sales of food, medicine, and medical equipment under U.S. sanctions, the United States has begun to allow such sales to Iran, Libya and Sudan. In August 1999, the U.S. Department of Agriculture approved a sale of 50,000 metric tons of corn to Iran. The new policy will open the door to a combined agricultural market in Iran, Libya, and Sudan worth nearly $1.7 billion per year. The Administration’s efforts to ease restrictions continued in 2000, following the February 18, 2000 victory of Iran’s reform party in parliamentary elections. In March 2000, the Administration announced that it would ease some trade sanctions against Iran, lifting, in particular, restrictions on imports of carpets and food products, including dried fruit, nuts, and caviar. The Administration left in place restrictions against U.S. investment in Iran’s energy sector because of continuing concerns over Iran’s efforts to acquire nuclear weapons.

The Act was scheduled to expire in August 2001, but was extended for another five-year period on August 8, 2001. The extension also requires the President to report to Congress 24 to 30 months after the enactment of the bill in order to evaluate the effectiveness of the sanctions, their humanitarian impact, and their impact on U.S. allies and foreign policy interests.

ECAT supports efforts to try to normalize trade relations with Iran, while efforts continue to address important national security concerns.

Lifting of Libya Sanctions

On April 23 2004, President Bush lifted economic sanctions against Libya as a result of Colonel Qadhafi’s acknowledgement of his government’s complicity in the bombing of Pan Am flight 103 and his Government’s commitment to abandon its weapons of mass destruction. Most of the sanctions in place on Libya were covered by a 1986 executive order by former President Reagan that prohibited the export of any goods, services or technology with the exception of donations of clothing, food, medicine and medical supplies for humanitarian purposes. The order also prohibited U.S. citizens and permanent residents from visiting Libya and restricted flights to and from Libya.

In agreeing to eliminate all aspects of Libya’s chemical and nuclear weapons program, Libya must declare all nuclear activities to the International Atomic Energy Agency (IAEA) and accept international inspections to determine strict adherence to the Nuclear Nonproliferation Treaty and sign the IAEA Additional Protocol. It must also agree to the Chemical Weapons Convention and eliminate ballistic missiles that are in the 300 kilometer range.

In March, 2005, Representative Lantos (D-CA-12) introduced the United States-Libya Relations Act, (H.R. 1453) to strengthen U.S. relations with Libya and help integrate it into the international community. H.R. 1453 calls for the establishment of diplomatic and cultural services and the participation of scholars through exchange programs. It would also effectively remove ‘Libya’ from the Iran and Libya Sanctions Act of 1996. If enacted, the Secretary of State along with other executive agencies are required to submit a report to the Committee of International Relations of the House and Committee on Foreign Relations of the Senate on the implementation of this Act every 90 days until January 1, 2006. The bill has been referred to several committees, with no additional action.

On March 22, 2005, the Bureau of Industry and Security (BIS) announced final revisions to the Export Administration Regulations (EAR) establishing new license requirements for exports and re-exports to Libya, with some changes from the interim rule issued in April 2004. In particular, BIS:

Establishes a review policy and licensing process for so-called “installed base” items (those that may have illegally been exported before the embargo ended)
Modifies License Exception Temporary Imports, Exports and Reexports (TMP) to clarify that certain software (controlled under ECCN 5D992) may be exported to any destination that permits use of License Exception TMP.
Revises the License Exception Aircraft and Vessels (AVS) to permit vessels to make temporary stays to Libya without a license.
Clarifies language in the License Exception Temporary Imports, Exports and Reexports (TMP) regarding software.
Modifies licensing policy for the export or reexport of U.S. origin civil aircraft and helicopters subject to EAR to Libya on a case-by-case review.
Requires licenses for portable electric power generators, software and technology for export or reexport for anti-terrorism reasons.

Libya still remains on the State Department’s list of states that sponsor terrorism. Nations on this list are barred from receiving arms-related exports and receive any U.S. economic assistance. On September 10, 2004, President Bush waived sanctions on Libya and allowed EX-IM bank financing.

Helms-Burton Cuba Sanctions

The Cuban Liberty and Democratic Solidarity Act of 1996 reaffirmed the existing embargo against Cuba and created a private right of action for U.S. nationals to sue persons who traffic in property expropriated from those U.S. nationals by the Castro regime. The act also requires the Administration to deny visas to foreign nationals who are corporate officers, principals, or controlling shareholders of companies that have been involved in the confiscation of, or trafficking in, expropriated property. The President has the authority to waive the private-right-of-action provisions under Title III of the act for six-month periods, if he determines it is in the national interest and would expedite the transition to democracy in Cuba. The President has no authority to waive the immigration restrictions imposed by the Act.

The private right-of-action provisions under Title III have been waived since their enactment.

In May 1998, the United States and the EU reached an agreement to resolve the EU’s WTO challenge to the Helms-Burton legislation; under this agreement, the EU agreed to acknowledge the U.S. claims of seized property in Cuba certified by the Foreign Claims Settlement Commission based on certain conditions, to accept a set of Disciplines for Strengthening of Investment Protection, and not to challenge the Cuba or Iran-Libya sanctions laws in the WTO. The set of disciplines agreed to would prohibit governments from providing loans, subsidies, risk insurance, or other support to firms that invest in expropriated property in Cuba and elsewhere. It also would establish a new international registry where individuals or firms could list their expropriation claims, and have governments require companies to check the registry before making foreign investments.

Under the agreement reached with the EU, the United States is required to keep the Title III waiver in effect, seek permanent waiver authority for the immigration sanctions under Title IV, and take no action against EU companies or individuals under the Iran-Libya Sanctions Act. There has been insufficient Congressional support to date to pass the necessary legislation.

Easing of Cuba Embargo

U.S. restrictions on trade with Cuba were eased somewhat in 2000 by permitting exports of agricultural goods, medicines, and medical devices under 12-month licenses. This legislation built upon the 1999 Administration decision to allow the sale of food and agricultural products on a case-by-case basis to non-governmental organizations, re-establish direct mail service, authorize charter flights to Cuban cities other than Havana, and license U.S. citizens and non-governmental organization to send up to $300 per quarter to non-governmental entities. The Treasury Department also simplified somewhat the regulations regarding travel to Cuba. These travel regulations were codified as part of the Trade Sanctions Reform and Export Enhancement Act, which prevents the President from easing these travel restrictions without Congressional approval.

Several members of Congress continue to be interested in easing restrictions on trade with Cuba, including through introduction of the following legislation in the 109th Congress:

H.R. 579, to lift the trade embargo with Cuba, introduced by Representative Paul (R-TX)
H.R. 719 and S. 328, Agricultural Export Facilitation Act of 2005, introduced respectively in the House by Representatives Moran (R-KS), Otter (R-ID) and Flake (R-AZ) and in the Senate by Senators Craig (R-ID), Baucus (D-MT), Lugar (R-IN), Hagel (R-NE), Crapo (R-ID), Lincoln (D-AR), Dorgan (D-ND), Hutchison (R-TX), Johnson (D-SD), Nelson (D-NE), Chafee (R-RI), Enzi (R-WY), Pryor (D-AR), Thune (R-SD), Conrad (D-ND), Roberts (R-KS), Murray (D-WA), and Talent (R-MO), to facilitate agricultural sales to Cuba.
H. 1339 and S. 634, introduced by Representative Emerson (R-MO) in the House and by Agriculture Committee Chairman Chamblis (R-GA), in the Senate, to clarify permissible payment terms for agricultural sales to Cuba

On February 21, 2001, the U.S. International Trade Commission released its report, The Economic Impact of U.S. Sanctions with Respect to Cuba (Inv. No. 332-413, USITC Pub. No. 3398), which was prepared at the request of the House Ways and Means Committee. The principal findings of the report were that:

U.S. economic sanctions on Cuba had a “minimal overall historical impact” on the U.S. economy, as the United States found alternative suppliers and markets to replace Cuba. Some U.S. industries, including the rice and wheat industries, would likely benefit from the removal of sanctions.
U.S. economic sanctions had a “minimal overall historical impact on the Cuban economy,” as Cuba quickly turned to support from the Soviet Union. The loss of Soviet assistance in 1990 had significant adverse effects on the Cuban economy, forcing Cuba to adopt some economic reforms to attract foreign investment. Cuba’s restrictions on investment and economic activity are likely to limit somewhat bilateral U.S.-Cuba economic relations if sanctions are lifted.
In the absence of sanctions, U.S. exports to Cuba would have been approximately $658 million to $1 billion annually, equal to 17 to 27 percent of Cuba’s total imports. In the absence of sanctions, U.S. imports from Cuba would have been (excluding sugar) approximately $69 to $146 million annually.

On January 28, 2002, the Cuba Policy Foundation released a report finding that the U.S. embargo against Cuba costs U.S. farmers $1.24 billion dollars a year and the U.S. economy up to $3.6 billion annually in economic output.

Iran Nonproliferation Act

While the United States has made overtures to Iran, it also has demanded that Iran disavow terrorism and cease its efforts to develop weapons of mass destruction. The United States has been constrained in outreach efforts by Congressional concerns over Iran’s support of terrorism and efforts to develop missile technology, and chemical, biological, and nuclear weapons. In 2000, the House and Senate unanimously approved and the President signed H.R. 1883, the Iran Nonproliferation Act. This Act authorizes the President to impose sanctions against any entities that help Iran develop missile and weapons technology. Sanctions include prohibitions of (1) sales of defense items on the U.S. Munitions list and defense articles and defense services controlled under the Arms Export Control Act; (2) export of controlled goods and technology under the Export Administration Act; and (3) U.S. agency payments to the Russian Space Agency in connection with the International Space Station or any other Russian government organization without Presidential authorization. While the original legislation was aimed primarily at Russian companies, the United States sanctioned three Chinese entities for transferring to Iran equipment and technology used in making chemical and biological weapons in 2002.

In January 2005, Representative Ros-Lehtinen (R-FL) along with 107 co-sponsors, introduced the Iran Freedom Support Act (H.R.282) to require the United States to maintain sanctions on Iran until the President certifies that Iran has permanently dismantled its weapons of mass destruction programs and has committed to combating weapons proliferation. The bill would further amend the Iran and Libya Sanctions Act of 1996 by imposing mandatory sanctions on a person or entity that aids Iran in acquiring or developing weapons of mass destruction or destabilizing conventional weapons. It would also revise reporting requirements on individuals aiding Iranian petroleum development.

India-Pakistan Nuclear Proliferation Sanctions

In 1998, the Administration announced that it would impose sanctions under the Nuclear Proliferation Prevention Act of 1994 against India and Pakistan for conducting nuclear weapons tests. The 1994 Act, the so-called Glenn amendment, contains no waiver authority and requires the imposition of sanctions against previously non-nuclear countries that test nuclear weapons. The sanctions imposed against India and Pakistan included termination of economic development assistance; prohibition of Trade and Development Agency (TDA) assistance; termination of military sales; revocation of export licenses for any items on the U.S. Munitions List; suspension of any U.S. government credits or credit guarantees through the Ex-Im Bank and OPIC; prohibition of U.S. exports of dual-use items controlled for nuclear or missile proliferation reasons; and prohibition on U.S. banks extending loans or credits to the governments of India and Pakistan.

Concerns about the adverse impact of the India-Pakistan sanctions on U.S. agricultural exports prompted the enactment in 1998 of the Agriculture Export Relief Act of 1998, which allowed the President to exempt agricultural products from the sanctions for one year. The President exercised this authority and exempted food and other agricultural commodities from the India-Pakistan sanctions. Pursuant to the India-Pakistan Relief Act of 1998, President Clinton also waived some other aspects of the sanctions with respect to India and Pakistan, including the ban on Ex-Im Bank financing, OPIC insurance and TDA assistance.

In 1999, the International Trade Commission released a study on the impact of the India-Pakistan sanctions in 1998 (Pub. 3236) that found that the sanctions had little effect on India and Pakistan, but had detrimental effects on U.S. agricultural exports. The ITC study found that the sanctions imposed a total cost of $161 million on the United States.

In October 1999, the President indefinitely extended the waivers for Ex-Im, OPIC and TDA assistance with respect to India and Pakistan. In March 2000, the Commerce Department removed 51 Indian entities from the list of those subject to export sanctions under the Glenn amendment.

The U.S. war on terrorism that followed the September 11, 2001 terrorist attacks prompted the Administration to re-evaluate sanctions against India and Pakistan, both key allies in South Asia. On September 22, 2002, President Bush announced the waiver of economic sanctions on Pakistan and India as part of the U.S. campaign to strengthen support for its efforts against terrorism. Congress and the President also approved foreign aid to Pakistan over a two-year period.

In February 2003, the United States and India issued a statement of common principles to expand trade in high technology goods, including dual-use items.

Sanctions on Myanmar

In 1996, Congress enacted legislation authorizing the President to bar U.S. persons from making investments in Myanmar (formerly Burma), upon certification to Congress that its government engaged in large-scale repression of its democratic opposition. Pursuant to that law and the International Emergency Economic Powers Act (IEEPA), the President issued an Executive Order in 1997 certifying that the Government of Myanmar had committed large-scale repression against its democratic opposition. The order bars any U.S. person from making new investments in Myanmar.

In the summer of 1997, both the EU and Japan requested consultations with the United States regarding Massachusetts' state procurement law. That law, adopted in 1996, prohibited state agencies from procuring goods or services from companies that do business in Myanmar. In consultations with the United States, the EU and Japan argued that Massachusetts' procurement law violates provisions of the WTO Agreement on Government Procurement (requiring that governments award contracts based on commercial factors). The panel formed in this case was suspended (and its authority has lapsed) while the EU and Japan awaited the outcome of the court challenge to this provision under U.S. law. On June 19, 2000, the Supreme Court struck down Massachusetts’ law in a unanimous decision, finding that the law was preempted by the Federal government’s own sanctions against Myanmar.

As discussed in section 5, in November 2000, the ILO Governing Body directed ILO Member States to reconsider their relationships with Myanmar and “take appropriate measures to ensure that such relations do not perpetuate or extend the system of forced or compulsory labor in that country.”

Sanctions on Sudan

On November 3, 1997, the President declared a national emergency with respect to Sudan pursuant to IEEPA. Finding that Sudan continued to pose an unusual and extraordinary threat as a result of its record on terrorism, the prevalence of human rights violations (including slavery and restrictions on religious freedom) and restrictions on political freedom, President Bush has extended these sanctions through November 3, 2003.

In June 2001, the Sudan Peace Act (H.R. 2052 and S. 180) was introduced in the House and Senate. The House passed it on June 13 by a vote of 422-to-2 and the Senate passed a similar version by unanimous consent on July 19, 2001. During the lengthy conference, conferees agreed to Senate requests to remove provisions that would ban oil companies doing business in Sudan from selling stocks or bonds on U.S. markets or require companies listed on the U.S. stock exchanges to report on business in Sudan to potential investors. The House passed the conference report by a vote of 359-to-8 and the Senate passed it by unanimous consent in early October 2002. It was enacted into law with the President’s signing on October 21, 2002. The law:

Provides increased assistance to areas of Sudan that are not controlled by the Government of Sudan and directs the President to develop a contingency plan to provide, outside UN auspices, the greatest amount of U.S. Government and privately donated relief to all affected areas in Sudan;
Requires the President to take action against Sudan if he determines and certifies to the appropriate Congressional committees that the Government of Sudan has not engaged in good faith negotiations with the Sudan People's Liberation Movement (SPLM) to achieve a peace agreement, or is not in compliance with the terms of any negotiated peace agreement with the SPLM; and
Directs the Secretary of State to collect information about possible war crimes in Sudan.

As a result of increasing concerns over severe human rights abuses in Sudan, several new bills were introduced in 2005. On March 17, 2005, Representative Donald Payne (D-NJ) introduced the Darfur Genocide Accountability Act of 2005 (H.R. 1424) which would impose sanctions against perpetrators of crimes against humanity and genocide in Darfur through the prohibition of trade and would also allow the use of force to stop genocide in Darfur. The bill currently has 24 co-sponsors and has been referred to the House Committee on International Relations. On March 2, 2005, Senator Corzine (D-NJ) introduced a similar bill (S.495) that would direct the President to freeze the assets of persons and family members identified as perpetrators of crimes against humanity by the International Commission of Inquiry of the United Nations on Darfur. It would also deny visas to and entry to the United States of such persons the President determines have been a part of, or involved with crimes against humanity in Darfur. The bill has been referred to the Senate Committee of Foreign Relations.

On March 17, 2005, Representative Rangel (D-NY) introduced H.R. 1435 which would deny foreign tax credit and other tax benefits to companies doing business directly or through subsidiaries in Sudan until the Government of Sudan takes concrete steps to end genocide. H.R. 1435 has been referred to the House Committee of Ways and Means.

Sanctions on Syria and Lebanon

On March 8, 2005, Representative Ros-Lehtinen introduced the Lebanon and Syria Liberation Act (H.R. 1141), which has been referred to the House Committees on International Relations, Financial Services, Ways and Means, and Government Reform. The bill requires that sanctions on Syria remain in effect until the President certifies that Syria has ceased support for terrorism, has dismantled its weapons programs and that sovereignty been restored to Lebanon. It also directs the President to provide assistance to support a democratic transition in Syria and democratic rule in Lebanon.

ECAT POSITION: ECAT believes that sanctions that do not have multilateral support are generally ineffective and counterproductive. ECAT supports the deliberative and disciplined framework for consideration of unilateral sanctions set out in the sanctions process reform legislation. ECAT supports efforts to try to normalize trade relations with Iran, while efforts continue to address important national security concerns. ECAT welcomes the Administration’s decision to lift sanctions on Libya. ECAT also supports further efforts to exempt agricultural, medical and other products from unilateral sanctions. ECAT supports efforts to terminate existing unilateral sanctions, particularly those with respect to Cuba.