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USA*Engage and NFTC Caution Against Bills Which Would Hinder Multilateral Effort with Iran
Date: 5/9/2007

U.S. Business Community Letter Says New Legislation Will Create Divide with U.S. Allies

 

Washington, DC – USA*Engage and the National Foreign Trade Council (NFTC) today joined eight other prominent trade associations in urging Senators to reconsider S. 970 and S. 1234 – two bills which would impose broad, unilateral U.S. sanctions resulting from foreign entities doing business with Iran, including many companies organized under the jurisdiction of key U.S. allies.

 

In a letter to Senators, the associations argued that preventing Iran from developing a nuclear weapons capability is a “critical objective,” but signaled that both bills would detract from that objective by “targeting our allies for penalties,” thereby “draw[ing] attention away from the core problem.”

 

As drafted, both bills contain extraterritorial provisions that would make U.S. parent companies liable for the actions of their foreign subsidiaries.

 

According to the letter, whose signatories also include Business Roundtable, the National Association of Manufacturers, the U.S. Chamber of Commerce and the U.S. Council for International Business, “The United States and its allies are making progress in assembling broad, multinational economic and diplomatic action against Iran. Enacting either S. 970 or S. 1234 and thereby imposing mandatory U.S. penalties on entities in the same countries that are assisting us would only undercut the progress that our diplomats are making.”

 

Citing the Reagan Administration’s response to the Soviet invasion of Afghanistan in the early 1980s when the U.S. sought to ban participation of foreign subsidiaries in the Siberian oil pipeline, the associations highlighted the diplomatic difficulties associated with imposing U.S. unilateral sanctions with extraterritorial extensions. In the case cited, foreign governments where subsidiaries of U.S. companies were located, including the U.K., France and the Netherlands, instituted blocking statutes to disregard U.S. sanctions.

 

“History should serve as a guide and policymakers should recognize that these kinds of unilateral sanctions with extraterritorial reach have been unsuccessful in changing the behavior of governments,” said NFTC President Bill Reinsch. “What we’ve learned instead is that these types of measures exacerbate tensions with our allies and distract from the real issue at hand.”

 

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USA*Engage (www.usaengage.org) is a coalition of 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. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.

 

The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.