Statement of House Small Business Committee Subcommittee Chairman Donald Manzullo

Statement of the Honorable Donald Manzullo

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

The Subcommittee will come to order.

Imposing unilateral economic sanctions is foreign policy on the cheap. For the past six years, both the Legislative and the Executive Branch have been all too quick to impose unilateral economic sanctions. The National Association of Manufacturers estimated that in just a four year period between 1993 and 1996, 61 U.S. laws and executive actions enacted unilateral economic trade sanctions against 35 countries. The Institute for International Economics and the Congressional Budget Office agree that the cost of sanctions to our economy is as high as $20 billion, resulting in the loss of up to 250,000 jobs. American workers and sound U.S. foreign policy are the losers in this vain exercise. Small businesses are particularly hurt either directly as exporters or indirectly as supply orders to larger firms dry up because of sanctions.

Most of our economic sanctions focus on denying our agriculture, manufacturing, or service exports to the offending country to send a message that we do not like their behavior. Yet, many countries of the world grow or make similar products. The real-life practical effect of our sanctions is simply to shift production away from the United States to another country. Plus, the offending country does not change its ways.

Last year, Congress received a stark lesson on sanctions. Because Congress was in session, we intervened just in the nick of time to preserve the sale of $37 million worth of winter wheat to Pakistan. Yet, few know that since last November, the US did not export $65.1 million worth of manufactured products to India and Pakistan because of the remaining sanctions on those two countries. The ripple effect on other US exports not subject to direct sanctions to India and Pakistan remains to be seen.

Thus, the Sanctions Process Reform bill is needed now more than ever. We have a record trade deficit. We should seek to maximize every export opportunity within the boundaries of national security concerns. That’s why we need to know the costs and ramifications of potential unilateral economic sanctions. The US seems to keep forgetting the lessons of previous sanctions. It’s time we finally learn from our mistakes and pass this legislation.

I recognize the ranking minority Member for the purposes of an opening statement.

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