NFTC President Bill Reinsch and USA*Engage Director Richard Sawaya wrote the following:
 

“By proposing to penalize companies with no ties to Iran’s energy sector, export and job growth are at risk here at home,” said Sawaya. “The NFTC and USA*Engage are fundamentally opposed to unilateral sanctions because they are ineffective in achieving their stated purpose, and leave much collateral damage – in this case U.S. economic growth – in their wake.”
 

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.

About the NFTC

Advancing Global Commerce for Over 95 Years – 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.

“We are deeply disappointed that the House approved this flawed piece of legislation. In many ways, the House vote was predictable, as Congress consistently feels the need to ‘do something’ to show the Iranian regime it disapproves of its pursuit of nuclear weapons. While the intentions behind the bill are understandable, this is both the wrong time and the wrong policy tool to use to affect the behavior of Iran’s leaders,” said NFTC President Bill Reinsch. “The reality is three-fold. One, unilateral sanctions are ineffective because they do not include the buy-in and support of our allies in the international community. Two, the Administration is engaged in delicate multilateral negotiations aimed at applying pressure on Iran to change course. Three, this bill is far-reaching, and instead of imposing targeted sanctions, it will, if enacted, broaden the scope of actions and actors subject to sanctions in an unprecedented way.”

“The potential consequences of this bill to U.S. industry, exports and jobs have not been analyzed in great detail. We urge the Senate to reject S. 2799, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009, in its current form, and spend time reviewing its provisions to better determine the impact on the U.S. economy,” said USA*Engage Director Richard Sawaya. “Now is not the time to implement broad-brush sanctions that have little focus and will likely do more harm than good. We applaud several Senators who have expressed concerns and principled objection to the bill as drafted, including Senator Kerry.”

A NFTC/USA*Engage analysis of the House and Senate bills highlights the following key flaws:

* With respect to the extension of the Iran Sanctions Act to “entities” that trade refined petroleum products to Iran, both bills contain language that would subject any entity that trades refined petroleum products (as defined in the law) with Iran, over a fairly minimal dollar threshold, to mandatory sanctions enumerated in the bills. Assuming OFAC adopts the traditional approach to restricting U.S. persons from dealing in “property” or “interest in property” of the sanctioned person, U.S. companies could be precluded from any trade or business relationship with the sanctioned entity. The language in the additional mandatory sanctions section of each bill is quite sweeping, and would isolate any entity engaged in such trade from the U.S. economy.

* The bills also target foreign export credit agencies (ECAs) that finance any entities that have dealings with Iran’s energy sector. This measure would effectively preclude the Export-Import Bank from co-financing with such ECAs projects of U.S. exporters that have no relation to Iran’s or to its energy sector.

After making the case for reform, Reinsch outlined the business community’s key principles for reform, developed by the Coalition for Security and Competitiveness (CSC), a group of companies and associations representing aerospace and high tech companies, and the Export Control Working Group, composed of many of the same companies, practitioners and seasoned compliance experts. The principles recommend that any reform effort should draw clear lines of agency responsibility and ensure accountability; pursue controls and enforcement in partnership with the business community rather than as adversaries; keep pace with technology change and the development of global supply chains by revising and reducing control lists; enhance cooperation with our allies and rely on multilateral controls; and complete the transition to an end user based system by developing procedures for trusted end users and exporters.

In addition, Reinsch pointed out that the “higher fences around a smaller number of items” concept should play a key role in the development of the reforms, and that the reform “process needs to be based on a constantly updated understanding of technology changes here in the United States and overseas.” While not advocating radical reorganization of the interagency process, Reinsch stated that the “process for making commodity jurisdiction decisions must be regularized,” and that “in order to improve allied cooperation, we need to take the multilateral regimes seriously.” He also endorsed the prompt implementation of a number of thoughtful proposals made over the past year or two – the intracompany transfer, expansion of the Validated End User program, project licenses for munitions exports, Secretary Locke’s proposal to eliminate licensing requirements for NATO and other allies, and proposals for expedited treatment for trusted end users.

Reinsch concluded by stating that “taken together [the principles for reform] will realign the export control system with 21st century realities, better protect our security and at the same time enhance America’s ability to compete globally. We look forward to working with the Administration and the Congress to those ends.”
 

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.