NFTC and USA*Engage Express Disappointment Over House Approval of Iran Divestment Bill

Friday, 29 January 2010


Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today expressed disappointment over the U.S. House of Representatives’ approval of H.R.1327, the Iran Sanctions Enabling Act.

“At a time when the United States and our key allies are engaged in multilateral diplomatic efforts to encourage the Iranian regime to be forthcoming about its nuclear ambitions, the passage of this bill is problematic,” said USA*Engage Director Richard Sawaya. “While we understand that the legislation is a reflection of policymakers’ desire to ‘do something’ with respect to Iran, it undermines the federal government’s ability to conduct foreign policy by granting all 50 states and countless municipalities the right to levy what amount to economic sanctions against Iran.”

NFTC President and USA*Engage Co-Chair Bill Reinsch said, “From a macro perspective, this bill complicates U.S. policy toward Iran, as it calls into question our commitment to the ongoing diplomatic talks. As tempting as it may be for Congress to approve bills aimed at crippling Iran’s energy sector, the reality is two-fold: one, unilateral sanctions are by definition ineffective, and two, this kind of legislation sets a bad precedent. Today the legislation is aimed at Iran, but what happens when a given state decides it should no longer have business ties with another country? It’s a slippery slope.”

In August 2006, the NFTC and eight boards of Illinois public employee pension funds brought suit (NFTC v. Giannoulias) against Illinois over the state’s Act to End Atrocities and Terrorism in Sudan, challenging the constitutionality of the Illinois Act. In February 2007, Judge Matthew Kennelly of the Federal District Court for the Northern District of Illinois ruled that the state’s law was “unconstitutional because the Act [violated] federal constitutional provisions that preclude the states from taking actions that interfere with the federal government’s authority over foreign affairs and commerce with foreign countries.”

The NFTC lawsuit followed the precedent set in the U.S. Supreme Court’s 2000 decision in Crosby v. NFTC, in which the Court struck down sanctions enacted by Massachusetts on Burma.  In that decision the Court ruled that if the federal government has enacted sanctions on a country, state and local governments are preempted from imposing sanctions of their own.