USA*Engage urges opposition to certain sanctions provisions in H.R. 282, the Iran Support Act

Wednesday, 30 March 2005

March 30, 2005
Representative Ileana Ros-Lehtinen
2160 Rayburn House Office Bldg.
Washington, DC 20515-0918

Dear Representative Ros-Lehtinen,

I am writing on behalf of USA*Engage, a coalition sponsored by the National Foreign Trade Council representing over 670 small and large businesses, agricultural exporters, and trade associations, to urge you to oppose H.R. 282, the Iran Support Act. Since 1997, USA*Engage has opposed the adoption of new unilateral sanctions and urged that existing sanctions be reviewed regularly to determine their success in achieving foreign policy goals relative to their costs to the American economy. Ultimately, we believe engagement, both cultural and economic, would be more likely to bring about the regime and societal reform that is at the heart of U.S. foreign policy toward Iran, including democratic reform, respect for civil liberties and human rights, and cessation of weapons development and support for terrorism.

On Thursday, April 7th, the Subcommittee on the Middle East and Central Asia is scheduled to markup H.R. 282, the Iran Support Act. Prior to that meeting, we urge you to take a moment to review the track record of unilateral measures addressed in this bill. While it goes without saying that the business community finds the Iranian regime's behavior deplorable and supports U.S. and EU initiatives to halt weapons development in Iran, sections of this bill undermine relations with the very allies we need to present a multilateral front. Furthermore, aspects of the bill violate the tenets of Sanctions Reform Act legislation that our coalition has advocated in Congress to establish a more consistent and pragmatic framework for evaluating unilateral sanctions.

The Iran-Libya Sanctions Act, which H.R. 282 seeks to amend, contains extraterritorial, counterproductive and unenforceable sanctions that have had no quantifiable impact on foreign investment in the Iranian energy sector. While it may have dissuaded some deals from going forward, there have been roughly 30 investments since its enactment that appear to exceed ILSA's $20 million threshold. Were the Administration to impose sanctions - the effect H.R. 282 intends - it would inevitably face a complaint at the WTO - which we would almost certainly lose -- and numerous lawsuits here and abroad.

In this context, Section 201 of the bill would extend ILSA's reach to insurers and creditors, greatly multiplying the potentially sanctionable entities under the Act, and thus the number of lawsuits that would follow, as well as the degree of diplomatic resistance we would encounter from our allies in Europe and Japan. This section would also require Executive determinations on outstanding investments within ninety days. If the President then chose to waive sanctions, he would be forced to renew that waiver every six months. This policy severely restricts the Administration's flexibility to conduct foreign policy in ways that can adapt to complex, changing circumstances. Since the United States has agreed to work with the EU to pursue negotiations with Iran, including some incentives for more responsible behavior, the timing of this legislation could not be worse. On one hand, we are committing to multilateral negotiations; on the other, we are threatening to sanction their businesses. We would hope that Congress would not want to require foreign policy actions that directly work against other initiatives already adopted by the Administration.

In addition, Section 204 would remove the sunset provision originally written into ILSA. Sunsets are critical to creating a well-reasoned sanctions regime by ensuring due diligence on Congress' part in reviewing existing programs. We believe this should be done on a regular basis, and that sunset provisions are the best mechanism to achieve this.

On a positive note, we commend the bill's removal of Libya from ILSA coverage and support its provisions dedicating resources to programs and people in Iran that are likely to promote reform. Nevertheless, the bill's actions attempting to enhance a sanctions program that does not work and cannot be realistically enforced, and thereby constraining the President's ability to conduct foreign policy, far outweighs these helpful provisions. For these reasons, we urge you to oppose the legislation.




William A. Reinsch
President, NFTC
Co-chairman, USA*Engage


USA*ENGAGE is a coalition of over 670 small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. For more information on USA*ENGAGE and the harmful effects of unilateral trade sanctions, visit the USA*ENGAGE web site at