Statement of Rep. Phillip M. Crane (R-IL)

Statement of the Honorable Philip M. Crane (R-IL)

Testimony Before the Subcommittee on on Tax, Finance, and Exports
of the House Small Business Committee

"Do Unilateral Economic Trade Sanctions Unfairly Penalize Small Business?"

June 24, 1999

Mr. Chairman and Members of the Subcommittee, thank for you for the opportunity to testify before you on the merits of H.R. 1244, the "Enhancement of Trade, Security, and Human Rights through Sanctions Reform Act," legislation that I, along with you, Mr. Chairman, Congressman Cal Dooley, and nearly 90 of our colleagues have joined on a bipartisan basis in sponsoring in the 106th Congress.

Let’s put the issue at stake into perspective. The United States has applied sanctions for foreign policy purposes more than 115 times since World War I, more than 100 times since World War II, and more than 60 times since 1993. More than half of the sanctions imposed in the last 80 years have been imposed since the mid-1990s. This is why I am pleased that you are holding a hearing today on this important subject – because the proliferation of unilateral economic sanctions is causing lasting damage to America’s reputation as a reliable supplier in the global marketplace.

On May 27th, I chaired a hearing in the Ways and Means Trade Subcommittee on the use and effect of unilateral economic sanctions. The Subcommittee took testimony from a wide range of witnesses on the direct implications that U.S. unilateral sanctions policy has had on their businesses. Among them was Peter Bowe, President of Ellicott Machine Corporation International, a small business employing 125 individuals in Baltimore, Maryland. Ellicott produces dredges for port construction, land reclamation, and mining. More than half of the company’s sales are in export markets. Mr. Bowe told the Subcommittee at our hearing that the cost of U.S. sanctions against countries like the former Soviet Union, Vietnam, India, Iran, and China in some years has exceeded $10 million in lost sales for Ellicott. This cost, in turn, has directly inhibited Ellicott’s growth and hindered job creation at the company to the advantage of Ellicott’s foreign competitors who operate in these countries with the full support of their home governments.

American farmers represent another form of small business, and a witness at our May 27th hearing testified to the effect of U.S. unilateral sanctions on farmers across the country. Keith Kinzer, President of the Idaho Grain Producers Association and a wheat producer from Genesee, Idaho, testified to the lasting implications of U.S. unilateral sanctions, such as the Soviet grain embargo 20 years ago, and the way that third country producers such as those in Canada and Australia shift their marketing strategies to take advantage of U.S. sanctions policy. Specifically, our competitors in the global marketplace in agriculture use the windfall profits that they make because U.S. farmers are crippled by unilateral sanctions to subsidize their pricing in markets where our farmers are able to compete. In these instances, the American farmer loses twice.

Instead of acting alone, the better policy is to pursue our goals through multilateral fora with our allies and our trading partners. By developing a consensus approach to changing the offending behavior of the targeted government, we increase the likelihood of success and ensure that the full brunt of the sanctions is felt by the targeted government, instead of having U.S. firms and workers cede market share to their foreign competitors.

Experience has shown that before we impose unilateral sanctions, we should think long and hard about the direct effect of such sanctions on the U.S. economy and the likelihood of success if we act alone. If we are to maintain credibility and effectiveness in the foreign policy arena, we must re-examine both our use of sanctions as an all-purpose foreign policy tool as well as the notion that the cost of unilateral sanctions is borne by those responsible for the behavior we are seeking to change. That is why I have introduced legislation, H.R. 1244, which seeks responsible reform of the decision making process associated with U.S. unilateral sanctions. The bill’s primary goal is to ensure that Congress and the Administration have better information for more responsible decision making on sanctions bills and initiatives.

Before imposing a unilateral sanction, the bill requires Congress and the President to request relevant information and address certain common-sense questions such as whether the proposed unilateral sanction is likely to be effective and whether its goal is clearly-defined and is a realistic objective. In addition, H.R. 1244 would require an analysis of the economic costs of a proposed sanction for American industry and agriculture, as well as whether the sanction will undermine other U.S. security, foreign policy, and humanitarian objectives, including our relations with key U.S. allies. H.R. 1244 also requires the consideration of other potential alternatives, such as multilateral sanctions or diplomatic initiatives, before a decision is made to proceed with unilateral sanctions. If unilateral sanctions are used, the bill would establish regular reporting and sunset requirements to ensure that action taken remains the most appropriate tool to address the problem at hand. Finally, H.R. 1244 would provide permanent waiver authority to the President under the Glenn Amendment with respect to the mandatory sanctions required by current law against non-nuclear countries that conduct nuclear tests.

It is important to note that H.R. 1244 does not prejudge whether unilateral sanctions are an appropriate tool of U.S. foreign policy. Rather, H.R. 1244 is about making sure that Congress and the Administration have adequate information before making a decision on whether unilateral sanctions are appropriate on a case by case basis. Without the information that this bill would provide us about future sanctions, we risk taking action that is not in our interest, may be counterproductive, and has a very small chance of success. This bill is about establishing effective procedures that will lead to productive results in the way we respond to behavior by nations with which we have concerns.

Thank you again for allowing me this opportunity to testify on this important subject. I would be happy to answer any questions.

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