Richard R. Albrecht testifies before the Trade Subcommittee.

Mr. Chairman and Members of the Subcommittee, I am Richard Albrecht, Senior Advisor to The Boeing Company. Until last summer, I served for thirteen years as Executive Vice President for the Boeing Commercial Airplane Group, overseeing all sales, marketing, and customer relations for Boeing's airplane business. I am here today on behalf of USA*ENGAGE, a broad-based coalition of 652 companies and trade and agricultural organizations. We have come together to encourage policy-makers to find alternatives to unilateral sanctions as a foreign policy tool. To be frank, we think unilateral sanctions are ineffective and unnecessarily costly to the U.S. economy. We think there is a better way.

USA*ENGAGE, founded by the leaders of the National Foreign Trade Council, was formed to give a voice to the concerns we in the international business, trade, and humanitarian aid community have about the current sanctions process. Unilateral sanctions that limit or prohibit American activity overseas have been proposed or are already in place for some of the largest potential markets in the world. In addition, we are witnessing a growth in U.S. imposed secondary boycotts, which our nation has long opposed, like we did with the Arab boycott of Israel. These actions are alienating the U.S. from our allies and trading partners, and they conflict with the policy of engagement that has been a tradition of U.S. foreign relations since World War II.

Members of USA*ENGAGE do not quarrel with the goals of most proposed sanctions. Americans support human rights, the rule of law, and religious freedom. All Americans, including our member companies, want to prevent nuclear proliferation. Where we part company with our opponents on this issue is over the means chosen to achieve these goals. Unilateral sanctions have proven to be dismally ineffective in producing social change -- the case of Cuba is a prime example. Sanctions ignore diplomacy, ignore multilateralism, and ignore the benefits of engagement.

Today two-thirds of all Boeing airplanes produced are shipped overseas. We must have continued access to foreign markets, especially those emerging economies with fledgling airlines because their initial purchases usually establish what brand they will buy in the long-run.

Unilateral sanctions are unpredictable, and for our business that spells trouble. The international aerospace market is intensely competitive. Boeing fights head-to-head with Airbus for every airplane order overseas, and those orders mean jobs for U.S. workers. Our customers must be confident their airplanes will be financed, delivered, and serviced. When sanctions raise questions about our ability to deliver, it counts against us in a very concrete way during the bid evaluation process and gives Airbus an undeserved boost.

Boeing's current business is not exempt from the roulette wheel of sanctions implementation. Today we are precluded from selling aircraft in seven countries, and at least eleven more markets are at risk because of current or potential sanctions. We estimate the market potential in these at-risk countries to be about $175 billion during the next twenty years.

What we need is a process that will give our businesses, humanitarian organizations, and NGOs some assurance their investments in a country will not be wiped out indiscriminately by a unilateral sanction. We applaud your efforts, Chairman Crane, and those of your colleagues Congressman Hamilton and Senator Lugar, and all the other co-sponsors who have agreed to sign your legislation requiring a sober and objective examination before sanctions are imposed. This is a turning point in our nation's way of relating to its global neighbors, and your bold leadership will help define a thoughtful and rational method of expressing our views to the rogue states of the world in a way that is constructive, unified, and effective.

American foreign policy leaders need to recall the examples of how engagement has contributed to the spread of democratic ideals and free institutions throughout the world. The post-World War II economic reconstruction of Europe, led by the Marshall Plan, is one of the enduring triumphs of American foreign policy. America did not repeat its earlier mistakes of isolationism and protectionism following World War I and, as a result, more people in every region of the world enjoy more freedom and economic success than any time in our history.

The members of USA*ENGAGE believe we can continue America's tradition of engagement if legislation like the Hamilton/Crane/Lugar bill is adopted. Without remedies like this, I fear the growth in the use of unilateral sanctions will continue to impair our ability to spread ideals like human rights, rule of law, and religious freedom, and all of us, regardless of what country we call home, will suffer because of it.

USA*ENGAGE's Vital Message

The companies and organizations comprising USA*ENGAGE are convinced that by working with Members of Congress, the Executive Branch, state and local legislators, and opinion leaders in non-governmental organizations and the media, we will develop better procedures for making decisions about unilateral sanctions, discover new ways for the public and private sectors to work together toward common goals, such as respect for the rule of law and human rights, and arrive at a better understanding of the true economic, humanitarian, and political cost to the U.S., resulting from the indiscriminate use of unilateral sanctions for an ever-increasing number of reasons. The reasons for the formation of USA*ENGAGE continue to be the core message that I want to convey today:

-- USA*ENGAGE companies and organizations agree with many of the objectives of the unilateral sanctions proposals. Americans support human rights, the rule of law, and religious freedom. All Americans want to prevent nuclear proliferation. Where we part company with most proponents of unilateral sanctions is over the means they have selected - tools that are deeply flawed and often counterproductive. In many ways they are a "boomerang" approach to foreign policy, turning the punishment targeted for the other country back on ourselves.

-- Unilateral sanctions have an abysmal track record in achieving their stated objectives. Multilateral sanctions programs, however, have demonstrated greater impact, such as in South Africa, and in some respects Serbia and Iraq. There are few, if any, countries today that are so dependent on U.S. exports and investment that we can unilaterally coerce them into making changes that they would not otherwise undertake. This results from the fact that in a globalized economy, there are abundant non-U.S. exporters, as well as investors, ready to replace excluded U.S. firms. Likewise, there are few countries that are crucially dependent on the U.S. as a market for their exports.

-- Often unilateral sanctions merely create greater resistance to change. Authoritarian regimes by stiffen their opposition to outside pressure, and use the pressure to rally internal support for themselves.

-- Government officials and ruling elites in sanctioned countries almost always find ways of circumventing the restrictions of sanctions, while ordinary citizens, the very people we hope to help, often feel the greatest pain from the deprivation the sanctions cause.

-- The cumulative impact of unilateral sanctions constitutes significant costs to the U.S. economy. Earlier this year, the Institute for International Economics calculated costs to be $9-$15 billion per year in lost exports and 200,000 well-paying export-related jobs. These jobs pay 12-25 percent more than the average manufacturing wage. Therefore approximately $1 billion in export-related wage earnings are lost each additional year sanctions are in place. These hidden cost do not appear in any budget projections, and these projections include costs that may result from business lost because foreign companies do not believe they can count on an American partner. Though indirect, these costs are real, and ineffective unilateral sanctions are the root cause.

-- At Boeing we have specific examples of how foreign airlines and our company are the unintended targets of indiscriminate U.S. sanctions. Colombia and Vietnam, despite normal relations with the U.S. government, remain stripped of their eligibility for Ex-Im Bank financing. In the case of Colombia, Avianca Airlines is locked out of the Ex-Im Bank because its government has not been certified as cooperating in narcotics intervention - an issue unrelated to Avianca. Likewise in Vietnam, the train to normal relations left the station without one key car - Ex-Im eligibility. Without Ex-Im, American-made aircraft for these developing economies will be nearly impossible to attain. We risk ceding these lucrative markets to Airbus, and the only losers will be the American worker.

-- America must maintain its long-standing tradition of engagement with countries of differing beliefs. Our people-to-people contact is rooted in the belief that individual Americans and private American organizations (educational, commercial, philanthropic, religious, and emergency relief) present our nation's true face to the world reflecting the core values that continue to inspire and change nations around the globe. This effect is evidenced by the outbreak of democracy in the early 1990s in East Europe, Latin America, and Asia.

-- Unilateral sanctions assume we can have more influence abroad by isolating and coercing governments and inflicting pain on their populations rather than by reaching out to them and proving by example and direct involvement that free market democracy and tolerance are the firmest foundation for prosperous and peaceful development.

USA*ENGAGE endorses the legislation offered by Representatives Crane and Hamilton and Senator Lugar. We regard this bill's enactment as a matter of serious national policy because it will require thorough and sober consideration of the impact of unilateral sanctions before they are imposed, including ascertaining their chances for success or failure, their costs, and any alternative means of achieving the objectives of the sanctions.

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