Mr. Chairman, thank you for inviting me to testify today. I appreciate the opportunity to participate in your deliberations on this important issue.

For many years now, the Ways and Means Committee has had to take up controversial foreign policy sanctions that originated in the International Relations Committee. I knew it was only a matter of time before you called one of us in for questioning!

Today, I want to highlight several concerns on unilateral sanctions that I believe merit attention by this subcommittee and by the Congress. I will then offer a couple of suggestions on how we can improve our policies.

In that regard, Mr. Chairman, I will make a few remarks about the bill you and I plan to introduce later today.

Changing Character of Sanctions

The United States needs economic sanctions in its foreign policy toolkit.

We need to respond to many international problems. Economic sanctions can be an attractive policy option when military action is not warranted, and diplomacy seems to have failed. In some circumstances, the conduct of a particular country may be sufficiently abhorrent or dangerous that we will feel compelled to respond, regardless of whether other countries join us.

Prior to 1980, several major laws authorized the imposition of economic sanctions for foreign policy purposes. Those laws tended to give the President considerable flexibility to decide when and how to impose sanctions. They also tended to target foreign conduct, rather than specific countries.

During the past two decades, however, and especially since 1990, U.S. sanctions policies have evolved substantially.

First, we impose unilateral sanctions more frequently. In a report prepared earlier this year, the President's Export Council noted that more than 75 countries are now subject to, or threatened by, one or more unilateral U.S. sanctions.

Second, we use a wider variety of unilateral measures to target a wider range of foreign conduct. The Export Council counted 21 specific sanctions covering 27 different target behaviors. We have also given the President less latitude in implementing sanctions.

Third, during the past two years we have adopted unilateral sanctions that are extraterritorial in scope.

In 1996, we departed from our longstanding policy of opposing secondary boycotts by enacting two laws that penalize foreign firms for activities in Cuba, Iran, and Libya. Meanwhile, roughly twenty states and localities have adopted laws prohibiting governmental commercial dealings with U.S. or foreign companies that do business with countries that have poor human rights records.

Fourth, over the past year, several of our colleagues have introduced measures that seek to narrow the presidential waiver or lower the decision threshold in existing sanction statutes. None of these measures has made it to the President's desk. If any do, however, they will raise difficult questions about the roles of Congress and the President in the conduct of foreign policy.

Concerns on Unilateral Sanctions

I have several concerns about the increasing frequency and scope of unilateral sanctions.

First, unilateral measures often cost U.S. exports. The Institute for International Economics estimated earlier this year that restrictions imposed for foreign policy purposes are costing $15-19 billion in export sales annually.

Perhaps the two most widely-cited examples of the costliness of unilateral sanctions are the 1979 decision to embargo grain sales to the former Soviet Union after its invasion of Afghanistan and the ban on U.S. participation in the construction of a Soviet gas pipeline to Europe in the early 1980s:

• Despite our embargo, the Soviets were able to buy all the grain they needed from other countries, and they stayed in Afghanistan. The total cost to the United States? Four billion dollars -- $2 billion in federal crop payments and $2 billion in lost foreign grain sales.
  

• When U.S. firms were barred from the pipeline project, European contractors stepped in. U.S. firms lost hundreds of millions of dollars in sales and a big share of the European turbine market. Thousands of potential jobs were lost. Yet the pipeline was built anyway.

Another example of the cost of unilateral sanctions recently came to my attention. I understand that the five countries currently under total U.S. trade embargoes -- Iran, Iraq, Libya, Cuba, and North Korea -- together account for roughly 11% of the world's wheat export market. That means that 11% of the world wheat market is off-limits to U.S. farmers. But it doesn't mean those countries can't get wheat. If they have the cash, there are plenty of other countries willing to do business with them.

My second concern is that our reputation for unilateral sanctions is costing potential export sales and foreign investment opportunities.

Many executives I have spoken with over the past couple of years have told me that foreign firms and governments are increasingly steering clear of U.S. companies when making procurement decisions. They are concerned that deals with U.S. firms could be jeopardized by subsequent sanctions. I also understand that some European companies have begun to tell prospective customers that U.S. competitors can't be counted on because of U.S. sanctions policies.

Third, exports lost to unilateral sanctions mean lost jobs. Fifteen to twenty billion dollars in export sales would support tens of thousands of American jobs.

Fourth, unilateral sanctions, especially third-party measures like the Helms-Burton and Iran-Libya statutes, can harm important U.S. foreign policy interests.

Both of these laws appear to have deterred some investment in their target countries, but at great cost:

• Both laws have damaged relations with some of our closest friends, countries whose support we count on for many important foreign policy and trade initiatives.
  

• The U.S.-EU dispute over Helms-Burton continues to pose a threat to the World Trade Organization. If ongoing U.S.-EU talks on an "out of court settlement" fail, the case may return to the WTO, where just about every scenario points to a weakening of the rules-based international trading system.
  

• U.S. sanctions on the firms investing in the Iranian energy development project would also probably send us back to the WTO, and retaliation against U.S. exports or investment seems likely.
  

• U.S. leadership on trade issues has also been weakened. Some of our closest friends have been talking about the need to rein-in U.S. policies. In OECD talks on the Multilateral Agreement on Investment, for example the EU and Canada have pressed for provisions that would prohibit measures like Helms-Burton and the Iran-Libya Sanctions Act.

Fifth, in addition to antagonizing foreign governments, some of our state and local sanctions are raising difficult questions concerning the constitutional authority to conduct U.S. trade and foreign policy.

All of us in Congress want to respect the legitimate moral concerns that are motivating state and local sanctions. We want to support local initiative and public involvement in foreign affairs.

But it is one thing for state and local governments to express concern about foreign policy matters. It is quite another for them to take foreign policy actions that impact U.S. national interests, but that are not authorized by the one institution that is responsible for safeguarding and promoting those national interests: the federal government. U.S. national interests are not likely to be served by the emergence of distinct foreign and trade policies at the state and local level.

Ineffectiveness of Unilateral Sanctions

Unilateral sanctions might be worth their price in exports, jobs, and foreign policy interests if they succeeded in achieving their aims. They rarely do. In fact, they are sometimes counterproductive and harmful to the very people we are trying to help.

A number of studies have concluded that sanctions, both unilateral and multilateral, have worked less than half the time since the early 1970's. One of the most thorough and credible of these studies, from the Institute for International Economics, found that unilateral and multilateral sanctions together have succeeded less than 20% of the time since 1990.

Unilateral measures have been especially ineffective. Consider three prominent examples:

• The U.S. trade embargo has failed to bring about a change of government in Cuba in more than 35 years.
  

• U.S. non-proliferation sanctions did little to stop Pakistan's nuclear program.
  

• After two years, a total U.S. trade embargo has had no apparent impact on the policies of Iran.

Unilateral sanctions rarely work because the world economy has become to interdependent. When we deny a country access to our products or our markets, it has plenty of alternatives.

Multilateral sanctions are a different story. They can be an effective foreign policy tool in certain circumstances. When we impose sanctions with other countries, the results can sometimes be impressive:

• Multilateral sanctions hastened the end of apartheid in South Africa.
  

• UN sanctions against Libya have sharply limited the Qadaffi government's military adventurism and terrorism.
  

• Multilateral sanctions on Iraq have not toppled Saddam Hussein, but they have kept him and his military in a tight box.
  

• UN sanctions helped restore democracy to Haiti and motivated Belgrade to pressure the Bosnia Serbs.

Weak Information Base

One of the most alarming aspects of U.S. sanctions policy, in my view, is the weak information base upon which most unilateral sanction decisions are typically made.

Several dozen U.S. laws authorize the President to impose sanctions of one kind or another. Few of these laws require the President to assess the foreign policy, humanitarian, or domestic economic impact of a proposed sanction -- before or after it is imposed. There are few, if any, opportunities for public comment. This stands in marked contrast to our trade sanction and trade remedy laws, which often require an economic impact assessment and public comment before the President imposes any measures.

Congress does not usually have before it a detailed assessment of new sanctions bills when it takes them up. We hold hearings and we debate proposals in mark-ups. But our review of sanctions is rarely systematic or comprehensive.

Proposals

What should be done about the increasing frequency and scope of unilateral sanctions?

First, we need to reinvigorate multilateral diplomacy. Many unilateral sanctions have been devised by members of Congress exasperated by the slow pace of diplomatic efforts to curb terrorism, human rights abuses, or proliferation. Our Presidents need to be more aggressive and creative in their diplomatic approaches to these problems.

Second, Congress needs to be patient with diplomacy, and it need to exercise greater discipline in its legislative initiatives. We have become very fond of sanctions. It is relatively easy for us to pass bills authorizing sanctions, but these bills often hand the President extremely difficult decisions on when to impose measures. We are taking the easy way out. A more constructive approach for Congress would be to work with the President to develop policy alternatives to unilateral sanctions and inducements for multilateral cooperation.

Third, we need to take a close look at state and local sanctions. This committee has considerable expertise here, and I would urge you to give this matter some attention. I recognize, however, that this issue may ultimately need to be addressed by the courts.

Sanctions Reform Bill

Finally, we need to improve our decision-making on sanctions. Before they act, Congress and the President should both have in hand better information on the potential costs and benefits of unilateral sanctions proposals. And they should both proceed in a more deliberative and disciplined manner.

As Chairman Crane noted in his opening statement, he and I have drafted a bill that seeks to accomplish these objectives. The bill would reform the process by which both Congress and the Executive Branch consider unilateral sanctions proposals. We plan to introduce this bill later today. Let me say a few words about what it would do.

The bill defines a unilateral sanction as any restriction or condition on foreign economic activity that is imposed solely by the United States for reasons of foreign policy or national security.

For both Congress and the Executive Branch, the bill sets out guidelines for future sanctions proposals and procedures for their consideration and implementation.

The guidelines would be largely similar for both branches. We propose that sanctions bills approved by Congress and sanctions measures imposed by the President:

• Contain a two-year sunset;
  

• Provide waiver authority for the President;
  

• Protect the sanctity of existing contracts;
  

• Be targeted as narrowly as possible on those responsible for sanctionable conduct;
  

• Minimize any interference with humanitarian work performed by non-governmental organizations; and
  

• Include measures to address any costs incurred by U.S. agricultural interests, which are especially vulnerable to foreign retaliation.

With the exception of this agriculture provision, all of the guidelines would be mandatory for the Executive Branch. But the President could waive several of them in the event of a national emergency.

The bill's procedural reforms for Congress would require a committee of primary jurisdiction to include in its report on a sanctions bill an analysis by the President of the bill's likely impact on a range of U.S. foreign policy, economic, and humanitarian interests. The committee would also need to explain in its report why it did not adhere to any of the sanctions content guidelines.

By invoking the Unfunded Federal mandates Act of 1995, the bill would also require a report by the Congressional Budget Office on a sanctions bill's likely impact on the U.S. private sector. Under the terms of the Unfunded Mandates Act, the bill could not be considered on the House or Senate floor until the CBO analysis was completed and made public.

With respect to the Executive Branch, the bill would require the President to report to Congress prior to implementation on the likely impact of a proposed measure on U.S. foreign policy, economic, and humanitarian interests. The President would also be required to consult with Congress and to provide opportunities for public comment. To provide time for this consultation, public comment, and reporting, a sanction could not be imposed -- except in the event of a national emergency -- until 60 days after the President had announced his intention to do so.

It is also important to understand what our bill would not do:

• The bill would not prevent Congress or the President from imposing unilateral sanctions.

• The bill would not impact any sanctions currently in effect.
  
  • The bill's Executive Branch guidelines and procedural requirements would apply, however, to future sanctions imposed by the President pursuant to existing laws.
  
  

• The bill would impose no limitations on the foreign countries or conduct that could be targeted by sanctions.
  

• The bill would have no impact on any of the following kinds of measures -- now or in the future:
  
  • Sanctions imposed under any multilateral agreement to address a foreign policy or national security matter -- including proliferation, human rights, and terrorism.
    

  • Restrictions or controls on the export of munitions.
    

  • Resolutions disapproving a presidential decision to maintain MFN trade privileges for China or any other country.
    

  • Measures imposed under U.S. laws and regulations implementing trade agreements, combating unfair foreign trade practices, and safeguarding the domestic market.
    

  • Import restrictions designed to protect food safety or to prevent disruption of domestic agricultural markets.
    

  • Measures to implement international environmental agreements.
    

  • Import restrictions designed to protect public health and safety.

This bill is not a red light for sanctions. It is a flashing yellow light. Its message is to take a careful look around and proceed with caution.

I hope that members who have supported sanctions in the past -- as I have -- would be able to support this bill. To oppose a measure like this is to say that Congress and the President can't use or shouldn't have better information about sanctions. That is a position neither we nor the President should take. We need not fear information.

This bill would require those who propose sanctions to work harder to justify their proposals. It would ensure that elected officials and the public are better informed about the potential consequences of a proposed measure. Sanctions that receive the kind of careful scrutiny this bill will require are bound to be more effective in achieving their aims and to cause less collateral damage to humanitarian and economic interests. And if they are less costly to the U.S. economy, they will be more likely to retain public support.

Chairman Crane and I will welcome your thoughts on our bill in the coming weeks. We will also be grateful for your co-sponsorship.

Thank you.

  Return to Top

Home |  About Us |  Resources |  Press Releases |  Federal Activity & Legislation
State & Local Activity |  NFTC Lawsuit |  Contact Us |  Site Index