Statement of Frank D. Kittredge--free trade, unilateral and economic trade sanctions

Statement Of Frank D. Kittredge
President, National Foreign Trade Council, and
Vice Chairman, USA*ENGAGE

before the
Maryland House Commerce and
Government Matters Committee

March 25, 1998
Mr. Chairman and Members of the Committee, I am Frank Kittredge, President of National Foreign Trade Council, an association of 550 U.S. companies engaged in international trade and investment. I am also appearing today as Vice Chairman of USA*ENGAGE, a broadly-based coalition of 661 companies, trade and agricultural organizations.
USA*ENGAGE represents a new and important initiative in the longstanding debate over the use by the United States of unilateral sanctions to achieve foreign policy objectives. It has come together to encourage policy-makers to find alternatives to unilateral sanctions as a foreign policy tool in light of their demonstrated ineffectiveness and cost to the U.S. economy.
The private sector has undertaken this major, multiyear effort because the companies and organizations that comprise USA*ENGAGE have become seriously alarmed at the overall proliferation of unilateral sanctions at the federal, state and local level. We are convinced that by working with Members of Congress, officials of the Executive Branch, state and local legislators, and opinion leaders in non-governmental organizations and the media, we would arrive at 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 reach a better understanding of the true economic and political cost to the U.S. of this undisciplined use of unilateral sanctions for an ever-increasing number of reasons. More specifically:
--USA*ENGAGE companies and organizations do not in anyway condone the behavior of the foreign governments in question. The 61 federal sanctions measures imposed by the United States on 35 countries since 1993 were undoubtedly intended to serve a wide range of objectives with which few Americans would disagree. We do object to the fact that the means that has been selected to achieve these ends is deeply flawed and often is counterproductive. In many ways it is a "boomerang" approach to foreign policy;
-- unilateral sanctions have a dramatically unsuccessful track record in achieving their own objectives. This is in contrast to multilateral sanctions programs that can show greater impact in some cases such as South Africa, and in certain respects Serbia and Iraq. There are few, if any, countries today that are so economically dependent on the U.S. that acting alone we can coerce them into making changes that they would not otherwise make. This results from the obvious facts 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. export market;
-- often unilateral sanctions merely serve to create greater resistance to change in authoritarian regimes by stiffening their opposition to outside pressure and mobilizing their internal support for standing up to it;
-- unilateral sanctions also provide an easy excuse for the failures of authoritarian regimes that need a scapegoat and find one readily provided by the United States;
-- government officials and ruling elites in sanctioned countries can almost always find ways of circumventing the effects of sanctions on themselves. Ordinary citizens, however, are less lucky and it is they, whom we would most like to help, who often feel the greatest pain of deprivation without any offsetting benefits in changing the policies or character of the regime;
-- the cumulative impact of unilateral sanctions constitutes a significant cost to the U.S. economy. This cost was calculated last year by the Institute for International Economics to be $15 to $20 billion a year in lost exports at the cost of 200-250,000 well-paying export-related jobs. There are also costs that may result from business lost because foreign companies do not believe that they can count on an American partner not to be removed from a project in midstream by a unilateral sanctions imposition.
--there is a longstanding American tradition of "people-to-people" contact based on the belief that individual Americans and private American organizations, be they educational, commercial, philanthropic, religious, or emergency relief institutions, present to the world the true face of our country and best reflect the core values that have always inspired the world. This is what "engagement" is all about.
--unilateral sanctions, on the other hand, assume that we can have more influence abroad by isolating and coercing governments and inflicting pain on their populations than through 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.
Let us turn more specifically to state and local sanctions issues.
-- First, it seems clear, in the face of the fact that unilateral sanctions are basically unsuccessful at the federal level, that state sanctions would have even less chance of success.
-- HB 1273 and similar selective purchasing laws, rather than alter foreign behavior, mainly impact U.S. companies, their employees, and the local economy. Because of the adverse reaction they often provoke abroad, these sanctions laws make it harder for the federal government to marshal international support for American foreign policy objectives or, in matters such as this one, to work cooperatively with allied governments and their business communities to improve the situation in the targeted country.
-- No one would argue that the behavior of the Nigerian leadership is totally offensive and must be changed. But the imposition of ineffective sanctions only makes a statement without any impact. Instead, we would hope the states would work with the federal government to find some other action at the federal level that could have a chance of influencing Nigeria. (Multilateralization, diplomacy, etc.)
-- Increasingly, during the post Cold-War era, trade and investment have proven to be the primary means of influencing economic and political change throughout the world. Much more often than not, the presence of American business has prompted the movement toward liberalization. American companies directly encourage legal reforms, introduce enlightened workplace practices, and provide education and training to local employees. Market-oriented trade and investment leads to the emergence of an independent and educated population, one which depends less on the state for economic advancement and is, as a result, less tolerant of a government’s repressive policies.
-- At the same time, economic disengagement can undermine the humanitarian and religious groups whom sanctions supposedly benefit. Many religious and humanitarian groups, especially those that are actually operating in the countries like Nigeria, believe that economic engagement has opened the door for their presence and made local people more receptive to their message.
-- Lastly, at the very moment that the state’s economy is growing, it would seem that a message is being sent both to companies already located here and to those considering relocating, that does not convey that the state of Maryland is a friendly and predictable place to do business. HB 1273 would disqualify or simply discourage, capable and competitively priced companies from selling their goods and services to the state. As a center for trade, investment and cultural exchange, the state can only lose ground and lose jobs by burdening the relationships its businesses establish abroad.
Finally, it should not go unmentioned that USA*ENGAGE and the National Foreign Trade Council have serious questions about the constitutionality of HB 1273 and similar state and local measures, in that they invade the exclusive federal power over foreign relations and foreign commerce.
Mr. Chairman, in closing let me say that the U.S. private sector makes its greatest contribution to free market democracy through constructive involvement in economies and societies around the world. The business community does have a major role in ensuring that the kind of world that will evolve following the Cold War respects the rule of law, the rights of individuals, and international norms. This is the kind of world in which most of the peoples of the world and certainly the American people aspire to live. Yet, it will not be achieved by the absence of private American institutions, but only by deeper commitment and engagement in the world by the United States.

Return to Top