Cover letter from R. Michael Gadbaw, General Electric 12/4/97
Gadbaw letter 9/29/97


U.S. Unilateral Economic Sanctions:
A Strategic Framework


Report of the Advisory Committee
on International Economic Policy


Submitted to the Department of State
September, 1997



THE VIEWS EXPRESSED IN THIS PAPER ARE THOSE OF THE SANCTIONS WORKING GROUP AND ARE NOT
OFFICIAL POSITIONS OF THE U.S. DEPARTMENT OF STATE

The Sanctions Working Group (SWG) of the Department of State's Advisory Committee on International Economic Policy has completed its assessment of the unilateral use of economic sanctions in support of U.S. foreign policy goals.

Judicious and appropriate use of economic sanctions can contribute to the achievement of U.S. objectives without unduly jeopardizing national economic and strategic interests. However, such measures often are imposed rapidly and reactively, without adequate deliberation and understanding of either the potential impact on the target's behavior or the domestic, foreign and economic costs of the sanctions. Recent reports conclude that unilateral sanctions adversely affect U.S. workers and firms, damage the reliability of U.S. suppliers and undermine U.S. competitiveness.1,2 Also, U.S. unilateral use of economic sanctions has been reported to be on the increase while failing generally to effectively change the behavior of targeted governments.2,3

Sanctions addressed in this report are those undertaken by a government

The SWG concentrated its efforts on devising a strategic framework governing the future use of economic sanctions. Such a framework would help to establish a systematic approach to decision-making. In this context the SWG devoted considerable attention to exploring both alternatives and complementary measures to economic sanctions. Since the success of sanctions in affecting the behavior or policies of the target often depends on the cooperation of other countries, an acceptable framework must also include a built-in multilateral "roadmap."


Recommendations

We recommend implementation of the framework described above through new executive orders and directives and through new legislative initiatives. In particular, the following steps are recommended:

These recommendations are consistent with and complementary to those recently advanced by the President's Export Council.

Conclusions

Economic sanctions should be used as a part of a well thought out and comprehensive strategic framework of measures to achieve U.S. foreign policy and national security goals. Fortunately, a wide range of foreign policy tools is available to design such a framework and fine-tune U.S. leverage on a case-by-case basis.

To be viable and effective, a set of measures designed to exert pressure on a given target should take into account the vulnerabilities of its leaders, which are not necessarily the same as those of the country as a whole. The vulnerabilities of leaders may relate more to their personal styles, their families, their power base, their finances, or other anxieties.

The foreign policy strategist must assess these pressure points and devise a package of measures that is unique to each case. Such a package is more likely to achieve U.S. objectives within a reasonable time frame and enhance the U.S. strategic position. A "response ramp" illustrating the wide range of choices is at Tab 1.

TAB 1

ILLUSTRATIVE MATRIX OF U.S. FOREIGN POLICY TOOLS

Explanatory Note:

The following matrix is best understood as a "menu" of options available to policy-makers in any given case. Various categories of measures are listed. Read from left to right, the measures move from friendly to hostile. For example, measures designed to signal disapproval and exert pressure on Country X would be selected from the "hostile/coercive" columns in the categories labeled "diplomatic," "political," "executive," "economic," and "military." Some 84 measures are listed in the two right-hand columns. The appropriate mix would depend on the situation at hand, including the specific vulnerabilities of the target.

U.S. Foreign Policy Tools
An Illustrative Matrix of Selected Options

TAB 2

Executive Branch Sanctions Procedures

I. Background

There are currently few procedural prerequisites for the imposition of economic sanctions by the President for national security and foreign policy reasons. The foremost source of such executive branch sanctions authority, the International Emergency Economic Powers Act (IEEPA), authorizes the President to establish sanctions after simply declaring a national emergency and, in general, consulting with Congress.1 Other sanctions authorities are similarly non-restrictive. In practice, formal, deliberative proceedings leading up to executive branch sanctions have reportedly been minimal.

On the one hand, the President should not be strictly limited as to when sanctions can and cannot be used. Rather, sanctions policy must be guided by the particular circumstances that are presented. Thus, the President should have the ability to impose sanctions quickly when necessary, in response, for example, to threatening developments with respect to state-sponsored terrorism or weapons of mass destruction.

At the same time, executive branch sanctions policies have, in some instances, suffered from reflexive decision-making in which important U.S. interests are not considered fully. Thus, for example, Carter Administration officials failed to consult with the U.S. Trade Representative prior to their imposition of the ill-fated 1980 grain embargo against the Soviet Union. Imprudent, reflexive resort to sanctions has stemmed largely from an incorrect perception that sanctions are always the "low cost" response to issues of concern.

Procedural reforms are needed to promote reliance on informed, analytical, deliberative reasoning in the executive branch's decision-making process regarding economic sanctions. Existing sanctions-related administrative structures should be retained to the extent that sanctions decision-making would benefit from experience and institutional knowledge about sanctions and their limitations as policy tools.

I. Proposed Reforms

It is proposed that the President establish, by directive, procedures on executive branch sanctions for national security and foreign policy reasons that have the following components:

1. Sanctions Review Committee.

A "Sanctions Review Committee" within the National Economic Council (NEC) and National Security Council (NSC) should be created to provide guidance on the advisability of proposed sanctions and to monitor world events that could lead to sanctions. Inter-agency disagreements would be elevated, as required, through the NEC/NSC structures and to the President if necessary.

The committee should contain senior officials from agencies with substantial roles in the formulation of U.S. national security, economic and international trade policy. Committee members would include, at minimum, representatives from the State Department, Commerce Department, Defense Department, Treasury Department, Justice Department, Labor Department, Office of the U.S. Trade Representative, Central Intelligence Agency and the Council of Economic Advisors, along with senior NEC and NSC staff.

Agencies that would not typically have officials on the Sanctions Review Committee could be represented as circumstances warrant. For example, an Agriculture Department official should participate if sanctions would entail a limitation on agricultural exports.

2. Consultations with Other Countries.

Experience demonstrates that U.S. sanctions are far more likely to have a beneficial impact if they are part of multilateral sanctions programs. Accordingly, the extent of multilateral support for sanctions and the prospects for parallel sanctions by other countries should weigh heavily in determining U.S. strategy for dealing with the target. To assess the likelihood of, and enhance the prospects for, multilateral support, the United States should ordinarily consult with its allies, and sometimes other countries (e.g., Mexico), before imposing sanctions.

3. Sanctions Review Committee Reports and Elements for Review.

  1. Overview Report

    The Sanctions Review Committee, led by the NEC and NSC co-chairs, should prepare an overview report to the President on whether proposed sanctions should be imposed.

    The overview report should be informed by reports on specific elements for review as described below. It should present findings on whether proposed sanctions are proportionate to the concerns to which they are responding and whether the probable benefits from sanctions (e.g., pressure on a rogue regime) warrant their imposition given the likely harm to other U.S. interests (e.g., economic, commercial, diplomatic). The overview report should also address issues of policy and implementation coordination. It should advise as to whether proposed sanctions would conflict with or duplicate existing measures. It should also cover other practical issues such as contract sanctity and the treatment of items in overseas warehouses.

  2. Reports on Particular Review Elements

    Key review elements and committee members with lead responsibility for each are as follows:

    • Sanctions' Goals, Consistency with International Requirements and Foreign Policy Considerations -- State Department

      First, the goals of proposed sanctions should be identified with clarity.

      Second, the committee should evaluate the conformity of proposed sanctions with international law and U.S. international obligations, such as U.S. commitments under trade agreements. Sanctions' extraterritorial scope gives rise to particularly serious questions. The State Department committee member should be assisted on this element by the General Counsel of the Office of the U.S. Trade Representative and a representative from the Justice Department.

      Third, the committee should appraise foreign policy considerations such as: 1) proposed sanctions' impact on U.S. diplomatic relationships, 2) the likelihood that other countries will support the U.S. measures and establish parallel sanctions and 3) the probable extent of unintended, undesirable effects in other countries (e.g., economic harm to innocent citizens of the target country).

    • Likelihood of Success -- Central Intelligence Agency

      An assessment should be conducted in each case of the probability that the sanctions will achieve identified goals. Findings that proposed sanctions have a likelihood of success should be supported by references to successful past sanctions.

    • Economic and Competitiveness Impact -- Commerce Department

      The committee should assess the likely impact of proposed sanctions on the U.S. economy (including job losses) and the competitiveness of U.S. firms in the United States and abroad. In addition to direct limitations on economic activity attributable to the sanctions themselves, economic and competitiveness impact evaluations should cover the consequences of possible policy responses by other countries, such as sanctions blocking measures.

    • Need for Compensation of Injured Private Parties -- Commerce and Labor Departments. (Note: See Proposed Procedure No. 6, Tab 3.)

    4. Dissemination of Committee Conclusions and Reports.

    Certain conclusions of the Sanctions Review Committee, as appropriate, -- such as those from the economic/competitiveness and legal-consistency reviews -- should be made public. The overview report should be submitted to key congressional committees (see below), in classified form if necessary, and be released to the public within five years of its issuance.

    5. Sanctions "Watch-List".

    The Sanctions Review Committee should compile and continuously update and review a non-public "watch-list" of international issues that could lead to developments likely to be viewed by some as warranting U.S. sanctions. Through this exercise, the committee could assess in advance the most appropriate U.S. responses to such developments.

    6. Consideration and Recommendations by Key Congressional Committees.

    The Sanctions Review Committee must consult with and seek recommendations from congressional committees with jurisdiction over national security, economic and international trade issues. While IEEPA contains a limited requirement that Congress generally be consulted before IEEPA sanctions are issued, a stronger, generally applicable consultations protocol is needed. This should provide for a regular and sustained program of consultations between the Executive Branch and the Congress as international events warrant, rather than a pro forma notification immediately prior to imposition of sanctions. The committees to be consulted should include the Banking, Finance and Foreign Relations Committees of the Senate and the Ways and Means and International Relations Committees of the House of Representatives. Except in extraordinary cases, sanctions should not be issued before these consultations conclude.

    7. Consultations with Business Community, Organized Labor and State and Local Governments.

    The Sanctions Review Committee should be required to consult with leaders from the U.S. business community, labor unions and state and local governments to assist in the assessment of sanctions' likely impact on U.S. commercial interests and other relevant issues.

    8. Requirement that Executive Branch Seek to Make Any Sanctions Multilateral.

    If a decision is made to impose sanctions, the United States should seek to secure multilateral measures generally under the auspices of the U.N. U.S. sanctions should be amended to conform to multilateral measures once those measures are established.

    9. Require Progress Review and Reauthorization Based on Pre-Set Objectives and Milestones.

    To make sure that economic sanctions are not continued when the stated objectives are not being achieved after a reasonable period of time, any action taken to initiate sanctions should include

    • Specification of milestones toward achievement of the stated objective;
    • Date for review and re-authorization requirement (usually not more than 1-2 years);
    • Criteria for success/failure measurement; and
    • Possible exit strategies if extension is not warranted.

    10. State and Local Sanctions

    The Sanctions Review Committee should:

    • Advise state and local governments as to the consistency with U.S. international obligations and U.S. foreign and trade policies of potential state and local sanctions.
    • Take such other action as appropriate to counteract such sub-federal sanctions that are determined by the President to be inconsistent with international obligations and in conflict with achievement of U.S. foreign and trade policy objectives and constitutional responsibilities.

      Note:
      The Advisory Committee intends to give further consideration to recommending that the International Trade Commission be directed to undertake a study of existing and former U.S. sanctions. Such a study would cover, among other things, the cost of sanctions to U.S. economic and commercial interests, the effectiveness of sanctions and the consistency of sanctions with international requirements.

    Tab 3

    Legislative Branch Sanctions Procedures

    I. Background

    As the Helms-Burton and Iran-Libya sanctions legislation enacted last year demonstrate, the Congress often mandates through legislative measures the imposition of unilateral economic sanctions for national security and foreign policy reasons. Through the passage of such legislation, the Congress is able to mandate a U.S. response to foreign acts or policies determined by the Congress to be inconsistent with American values or foreign policy interests. However, the potential costs of such sanctions to other U.S. interests are not always fully considered in the legislative process, especially when political pressures demand quick action by the Congress. It would therefore serve the national interest to establish procedures to ensure that sanctions legislation has been subject to sufficient deliberation to address:

    1. whether the sanctions are likely to have the desired effect;
    2. the impact of the proposed sanctions on U.S. diplomatic initiatives and on our relations with U.S. allies; and
    3. the impact on other U.S. interests, including, in particular, commercial interests.

      With respect to establishing such procedural guidelines for Congressional actions to impose unilateral economic sanctions for national security and foreign policy reasons, it is important to recognize that no legislation can bind a future Congress seeking to respond to objectionable foreign acts or policies. However, it may be possible to adopt changes to the rules of the House of Representatives and the Senate which encourage future sanctions legislation to follow a more deliberative course than it might otherwise take, while recognizing that there may be situations (i.e., true national emergencies) that require an immediate Congressional grant of authority to permit prompt Presidential action. Such special rules would not prevent sanctions legislation from being enacted, but they would provide the tools needed to allow for more sober and objective treatment of economic sanctions and the potential economic, political and diplomatic costs associated with such sanctions.

      One model for such a rules-based approach is the legislative procedure for approving and implementing international trade agreements. The trade agreements implementation mechanism was adopted by the Congress by statute, but with a specific proviso that the procedural requirements were rules of the House and Senate. Because the two bodies do not modify or waive their own rules as a normal course of business, establishing these procedures as House and Senate rules has given them greater effectiveness For example, the trade agreements implementation process has its own constituencies in the House and the Senate -- the Ways and Means and Finance Committees -- which for institutional reasons are willing to argue for maintenance of the process even at the expense of denying immediate votes on popular issues.

      II. Proposed Procedures

      In the case of unilateral economic sanctions for national security and foreign policy reasons, the Congress might consider the following rules changes to ensure that sanctions legislation receives careful and deliberative consideration:

      1. Provide for a More Deliberate Process

      Ensure that, except in emergencies, legislation in the form of amendments or separate bills requiring sanctions will be addressed by committees with expertise in weighing the potential costs of unilateral economic sanctions on U.S. economic and diplomatic interests. A general prohibition on the use of such mechanisms as riders on appropriate bills for imposing sanctions decisions, enforced through the use of points of order as discussed below, may therefore be in order.

      A critical factor in making any such rule effective would be the definition of what constituted a sanctions measure subject to the prohibition. For example, sanctions measures may be drafted as provisions denying the use of appropriated funds for certain purposes, which may appear on their face to be legitimate appropriations actions. However, if a sanctions provision fell outside the rule simply because it was drafted as a restriction on appropriated funds, the general rule would be of limited value.

      As with the existing trade agreements implementation procedures, the rule should be enacted as a rule of the House and Senate, although perhaps as part of broader legislation.

      2. Requirement of a Lay-Over Period for Submission and Consideration of Reports on Costs of Proposed Sanctions.

      To ensure that the potential costs of proposed economic sanctions legislation are fully considered by the Congress, Members of Congress should have ready access to analyses by government agencies of these potential costs. Therefore, it would be appropriate to enact a requirement that before consideration of any such sanctions legislation by the full House or Senate, there must be a 30-day lay-over period for the submission of reports by various governmental agencies on the potential effectiveness of the proposed sanctions and the likely costs to U.S. commercial and foreign policy interests associated with imposition of the sanctions. A lay-over period would also provide additional time for business, labor, and state and local government representatives to express to the Congress any concerns they might have regarding proposed economic sanctions legislation.

      The legislation establishing the procedures by which the Congress would consider future sanctions proposals should also specifically mandate that certain government agencies provide reports to the Congress within the time frame established. For example, the Central Intelligence Agency should prepare a report on the likelihood of the proposed sanctions having the desired effect. The Department of State should prepare a report on the likely impact of the proposed sanctions on our allies and on other U.S. diplomatic initiatives. Moreover, the Department of Commerce should submit a report on the impact of the proposed sanctions on U.S. commercial interests. Any other reports on sanctions prepared by Executive Branch agencies should also be made available to the Congress for review.

      3. Full Consideration by all Congressional Committees of Appropriate Jurisdiction.

      Legislation imposing unilateral economic sanctions for national security and foreign policy reasons is often drafted to fit within the jurisdiction of particular committee, where that committee's leadership may already be disposed towards such sanctions. In such circumstances, the committee leadership may move the legislation quickly to the full House and/or Senate for consideration without engaging in extensive hearings or other deliberations at the committee level. This denies the Congress as a whole the benefits of the committee system, which is designed to weigh carefully the benefits and costs of proposed legislation before it is considered by the full bodies.

      In addition, the committees producing such sanctions legislation may be less concerned about protecting other U.S. interests, such as U.S. commercial interests abroad. Other committees with more expertise on issues relating to these other interests are more likely to give significant consideration to the potential consequences of proposed sanctions on these other interests. For example, the committees with primary jurisdiction over U.S. trade policy are likely to give greater weight to the potential impact of economic sanctions on U.S. export interests. However, these other committees often do not have the opportunity to review the proposed legislation before it is reported to the full House or Senate.

      In order to remedy this situation, the rules of the House and Senate should provide that economic sanctions legislation must be referred to several different committees in each body with some jurisdiction over the subject matter in question. As a general matter, this would suggest that several of the following committees in each body should have an opportunity to consider sanctions legislation before it reaches the full House or Senate:

      • The House Committees on Commerce, International Relations, Ways & Means, and, where appropriate, Agriculture, Small Business and Banking.
      • The Senate Committees on Banking, Commerce, Finance, Foreign Relations, and, where appropriate, Agriculture, Small Business and Banking.

      Every committee need not be involved in every case, and other key committees might be engaged where they have a particular interest. For example, any sanctions legislation that may have an impact on U.S. agricultural interests should be considered by the agriculture committees. However, given the frequency with which U.S. commercial interests are adversely affected by the imposition of unilateral economic sanctions, all sanctions legislation should be reviewed by the Ways and Means and Finance Committees, as they have primary jurisdiction over U.S. trade policy and thus are the committees most attuned to U.S. commercial interests.

      To ensure that the committees of jurisdiction have sufficient expertise to judge the likely effectiveness of any proposed sanctions, Members of these committees should develop a regular and sustained program of fact-finding missions to countries against which sanctions have been or potentially may be imposed, as well as neighboring states. Such Congressional travel should be intensified as potential issues arise to ensure that Members of Congress are in a position to judge for themselves the particular circumstances surrounding any proposed sanctions. Every effort also should be made to ensure that these committees provide an opportunity for business, labor, and state and local government representatives to present their views to the Congress on the advisability and potential impact of any proposed unilateral economic sanctions legislation.

      4. Findings by Congressional Committees of Jurisdiction.

      In order to permit the House and Senate to properly evaluate the recommendations of any committees favorably reporting sanctions legislation, those committees should be required to include in their reports on the proposed legislation the following determinations:

      • The specific goals of the proposed sanctions and an assessment of the likelihood of success in meeting those goals.
      • The expected impact of the sanctions on the U.S. economy generally, on U.S. trade and financial interests, and on U.S. competitiveness.
      • The consistency of the proposed sanctions with U.S. international obligations and an assessment of the impact of the sanctions on other U.S. foreign policy goals.
      • The effect of the sanctions on U.S. allies and trading partners.
      • A description of what actions short of imposition of sanctions were considered by each committee, and why those actions were deemed inadequate.
      • If the sanctions are to be imposed extra-territorially, the expected impact and estimated costs of such extraterritorial application of the sanctions.
      • The unavailability of multilateral sanctions to achieve the goals cited.
      • The estimated cost of compensation for affected workers and small businesses.

      5. Require Progress Review and Reauthorization Based on Pre-Set Objectives and Milestones

      To make sure that economic sanctions are not continued when the stated objectives are not being achieved after a reasonable period of time, any action taken to initiate sanctions should include:

      • Specification of milestones toward achievement of the stated objective;
      • Date for review and re-authorization requirement (usually not more than 1-2 years);
      • Criteria for success/failure measurement; and
      • Possible exit strategies if extension is not warranted.

      6. Measures to Avoid Inequitable Impact on Workers and Economic Sectors

      We believe it is possible and appropriate to mitigate inequitable impacts on U.S. citizens and unintended consequences for U.S. competitiveness without undercutting the foreign policy effectiveness of the sanctions. We recommend that any new legislation authorizing or requiring economic sanctions include the following provisions:

      • To reduce uncertainty and unreliability of using U.S. goods and services, permit a limited form of contract sanctity by allowing performance of pre-existing contracts that are legally enforceable and which would be abrogated by compliance with the sanction --

        • until completion of the contract obligation if the date for construction or delivery and specification of quantity and price were agreed upon under the pre-existing contract, or
        • for open-ended contracts, only to the extent such performance does not extend beyond the date of the sanction by more than one year --

          unless the President determines that such permission would cause a significant threat to the national security of the United States. (Note: New or similar future business would not be permitted by such contract sanctity.)

      • To reduce unintended consequences and inequitable impacts for U.S. persons:

        • If the permission of contract sanctity (as provided above) is determined by the President in any specific circumstance to cause a significant threat to the national security of the United States,

          • permit a grace period for completion only of contractual obligations necessary to recover committed costs,
          • or reimburse, from general funds of the United States, the committed costs of the contracting parties; and
        • Allow adjustment assistance for displaced workers; and

        • Issue compensation plan at the time of sanction implementation, or, in emergency, within 30 days of sanction implementation.

      7. Provision for a Point of Order Against Sanctions Legislation That Has Not Met All Procedural Requirements for Sanctions Legislation Set Forth Above.

      A point of order mechanism provides the final means of enforcing the procedural requirements set forth above against any bill or conference report which has not met these procedural requirements. This would allow any Member of Congress to enforce the general deliberative requirements of the rules. Only in those relatively rare circumstances where a substantial majority of the House or Senate determined that the normal deliberative procedures should be waived could legislative action take place without full consideration of the potential costs of the proposed sanctions.

      In the House of Representatives, two types of points of order are generally used:

      1. a point of order that would automatically strike the offending language from the text of a bill under consideration, and
      2. a point of order that would return the bill containing the offending language back to its committee of primary jurisdiction for further consideration. Both these procedures would have benefits in ensuring full deliberation of the costs and benefits of the proposed sanctions, although the first type of point of order would enforce the procedural requirements with greater force.

      In the Senate, similar types of points of order could be made available. Given the ability of Senators to attach sanctions legislation as an amendment to an unrelated bill on the Senate floor, the most important function of a point of order in the Senate would be to allow another Senator to ensure that the deliberative procedures were invoked prior to the adoption of such an amendment imposing the proposed sanctions.

      8. Implementation of Procedural Rules.

      As discussed above, the preferred approach for enacting these procedural requirements would be as changes to the procedural rules of the House and Senate adopted as part of legislation relating to sanctions generally. By enacting the procedures as rules of the two bodies, the procedures could not be simply waived by a future Congress except where there was a broad consensus that the deliberative procedures were unnecessary. Further, by incorporating the rules changes in broader legislation, the two bodies can ensure that the House and Senate procedures are comparable and impose equivalent procedural requirements on each body. Because the broader legislation containing the rules changes would also be subject to presidential approval, the Executive Branch would also be guaranteed a role in the drafting of the legislative procedures to be adopted by the Congress.

      9. State and Local Sanctions.

      The Congress should also consider enacting legislation to discourage state and local governments from enacting their own unilateral sanctions measures for foreign policy purposes. Such legislation might include the following provisions:

      • A mandate that, where appropriate, the Secretaries of State and Commerce advise any state or local government considering the imposition of sanctions of the implications of such sanctions for U.S. international obligations, U.S. foreign and trade policies, and the impact of the sanctions on U.S. economic interests.
      • To the extent intended under the Constitution, authorization for federal action to prevent the imposition of sanctions by state and local governments, including possible federal preemption of state and local laws which impose economic sanctions for national security and foreign policy reasons when such sanctions are determined to impinge upon responsibilities of the federal government.

      TAB 4

      A G-7 Working Group on Sanctions

      We place particular emphasis on a multilateral approach in any pressure campaign designed to influence the behavior of the targeted country.

      An effective sanctions strategy requires a consensus on the part of countries that are important to the targeted country. Any one key country that chooses not to adopt sanctions can undercut a pressure campaign, shifting costs to other sanctioning countries and neutralizing the effect of the program.

      Only in the most unique circumstances is a target country sufficiently vulnerable to the United States that we can force a change by relying only on unilateral economic sanctions. Even Panama -- a dollar economy almost completely dependent on revenues from a U.S.-controlled canal -- was not sufficiently vulnerable to the United States, and military intervention was required.

      We therefore recommend a multilateral consultative process -- specifically, a new Sanctions Task Force within the G-7 -- that would be a part of the systematic process recommended by both the SWG and the President's Export Council.

      Such a task force would not diminish U.S. sovereignty because it would have no binding authority or decision-making powers. Instead, it would help U.S. policy-makers explore the likelihood and level of international consensus from the outset. Such information should be available to U.S. policy-makers (and those of other G-7 members) as they shape their initial proposals and begin to formulate a successful strategy.

      A G-7 forum would yield other kinds of information as well. Some members of the G-7 have a long history of involvement with targeted countries; their contacts and insights would be useful.

      Over time, the task force could help to narrow the wide gap on sanctions that now exists between the United States and its allies. In addition to genuine differences of policy, the whole area of sanctions is rife with mistrust and miscommunication. A task force could begin to develop norms, identify points of agreement, and slowly build a record.

      Such a long-run effect should not be underestimated. For example, discussions on bribery within the OECD have gradually built a consensus that has resulted in a modest but unprecedented set of anti-corruption initiatives within member countries. Ongoing dialogue is a form of the patient, unsung diplomacy that produces the most lasting results.

      There are precedents for a G-7 task force on sanctions. The G-7 has already established several country-specific working groups where sanctions are sometimes discussed (e.g., on Iran). The G-7 worked out the shared financing of U.S. operations in the Gulf War. A Financial Action Task Force on Money Laundering developed ideas for controlling money laundering in just six months and achieved implementation over five years in all of the major financial centers without drafting a formal treaty. A similar group has been formed on "electronic money."

      In addition to the G-7, a multilateral strategy must also reach out to key trading partners of the targeted countries that are not members of the G-7. Prior agreement in the G-7 is an important ingredient of a successful approach to these countries. Without G-7 participation, these governments would see little reason adopt sanctions. Moreover, in some cases other G-7 members have leverage with these governments. Again, reactions from all of these countries should be fed into the decision-making process at an early point -- before sanctions are drawn up, let alone announced or implemented.

      TAB 5

      Advisory Committee on International Economic Policy

      Mark AndersonAFL-CIO
      Harvey Bale Pharmaceuticals Manufactures Assoc.
      Steven Beckman United Auto Workers
      Seddik Belyamani Boeing
      Fred Bergsten Institute for International Economics
      Thomas Block Chase Manhattan Bank
      Carol Brookins World Perspectives
      Anthony Corso Mobil
      Greg Farmer Northern Telecom
      Isaiah Frank Johns Hopkins (SAIS)
      Don Fuqua Aerospace Industries Association
      R. Michael Gadbaw General Electric
      R. Harkin United Technologies
      Robert Hormats Goldman, Sachs International
      Nancie Johnson DuPont
      Oackley Johnson AIG
      Robert Johnson Phelps Dodge & Morenci
      Dale Jones Halliburton
      Robert Kapp US-China Business Council
      Frank Kittredge National Foreign Trade Council
      Mary Lou Lackey Motorola
      T. Lee AFL-CIO
      Charles Levy Wilmer, Cutler and Pickering
      Clement Malin Texaco
      Rebecca Mark Enron Development
      Joel Messing Cigna
      Robert Niemeth Pfizer
      G. Staley Toys R Us
      Roger Swanson US-Japan Business Council
      Sandra Taylor Eastman Kodak
      Robert Vastine Coalition of Service Industries
      Alan Wolff Dewey Ballantine


      1 The President's Export Council, "Unilateral Economic Sanctions: A Review of Existing Sanctions and Their Impacts on U.S. Economic Interests with Recommendations for Policy and Process Improvements," June 1997.

      2 Gary Clyde Hufbauer, Kimberly Ann Elliott, Tess Cyrus, and Elizabeth Winston, "U.S. Economic Sanctions: Their Impact on Trade, Jobs, and Wages," Washington, DC: Institute for International Economics (April 16, 1997).

      3 National Association of Manufacturers, A Catalog of New U.S. Unilateral Economic Sanctions for Foreign Policy Purposes, Washington, DC: National Association of Manufacturers, 1997.

      4 This report addresses sanctions undertaken pursuant to laws or regulations that authorize or mandate unilateral economic sanctions in order to achieve a foreign policy objective.

      The foreign policy objectives may include the transition to democracy, opposing terrorism or support of terrorist activities, sanctioning drug production and transit or trafficking, supporting human and worker rights and religious freedom, opposing the proliferation of weapons of mass destruction, and protecting the environment.

      The type of sanctions imposed for these purposes have included blocking of assets and a prohibition on all dealings with a foreign country and its nationals, restrictions on exports to or imports from a particular country or foreign person, the withholding of financial assistance or trade benefits, a ban on participation in government procurement, and opposition by U.S. representatives in international financial institutions to loans or financial assistance.

      We do not include the following types of trade restrictions:

      • Standard export controls undertaken pursuant to multilateral agreements, such as the Nuclear Suppliers Group, the Australia Group, the Missile Technology Control Regime, or the Wassenaar Arrangement;
      • Unilateral export controls imposed on the sale of defense articles or specified dual-use items which facilitate the proliferation of conventional or non-conventional weapons, violations of human rights, and terrorism (such as those provided under the Export Administration Act and the Arms Export Control Act). While these controls are unilaterally imposed for foreign policy purposes, they are intended more to avoid diversion of these items to a targeted activity rather than to affect the policy or behavior of certain States; and
      • Sanctions that are imposed or threatened to be imposed to attain trade or commercial objectives. For example, the use or threatened use of trade sanctions under Section 301 of the Trade Act of 1974, as amended, to encourage foreign governments to provide market access for U.S. goods is not included.

      1 On its face, the statute limits the President's exercise of authority granted under IEEPA to dealing with an "unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States." 50 U.S.C. § 1701. In practice, executive branch officials have found this language to be sufficiently elastic to cover an extremely broad range of circumstances, including, for example, the activities of Colombian narcotics traffickers. Exec. Order 12,978, Oct. 21, 1995.

      Letter from Thea M. Lee, AFL-CIO 10/28/97
      AFL-CIO Dissenting Statement


      Return to Top  Return to Top

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