Contends Bills Undermine U.S. Foreign Policy, Will Harm Businesses and Pensioners

Washington, DC – The National Foreign Trade Council (NFTC), a Washington, DC-based association of some 300 companies engaged in international trade and investment, today urged Members of the Pennsylvania General Assembly to reconsider bills – HB 1085, 1086 and 1087 – which could require divestment from a broad array of companies with international operations. In opposition to the proposed legislation, the NFTC sent letters to state lawmakers asking them to consider the bills’ potentially negative consequences, including that the measures undermine the federal government’s ability to conduct foreign policy, and put state pensioners and U.S. companies at undue financial risk, while having no effect on the behavior of targeted governments.”

“We’re seeing a proliferation of these measures at the State level, many of which have no regard for the level or type of business surrounding these countries of concern,” said NFTC President Bill Reinsch.”This should be alarming for any businesses engaged in international commerce and for pensioners whose retirement funds could be affected.”

“Statutes aimed at affecting foreign policy at the state and local levels – as divestment seeks to do – threaten to create a complex web of restrictions and regulations that interfere with the Constitutional rights given to the President to largely conduct foreign policy,” wrote Reinsch in a letter to Pennsylvania legislators. “Foreign policy sanctions by states not only undermine the ability of the U.S. to speak with one voice, but also frustrate cooperation with U.S. trading partners who often see them as a violation of U.S. international commitments.”

The NFTC pressed Pennsylvania lawmakers to take a closer look at ambiguous language included in the legislation, specifically the lack of well-defined criteria that would be used to identify companies targeted for divestment. “While this legislation purports to address business ties between companies and countries on the U.S. list of state sponsors of terrorism, the provisions are so broad and the legislation is so complicated as to affect hundreds of U.S. and foreign companies, including many whose supposed ties to these countries are variously tenuous, mischaracterized or legitimate under U.S. law,” Reinsch wrote.

“Most troubling, the bills appear to require divestment of investments in any company that does any amount of indirect business with targeted countries, including in instances where companies have no direct ties or contact with the offending countries. The United States will no doubt face vigorous complaints from our trading partners if it were to come into effect,” the letter reads.

The letter also argues that not only are there no clear indications for how pension fund trustees are supposed to divest, “there appears to be no transparent process for trustees to decide which companies to divest from.” The letter contends that the bills’ broad divestment provisions could cost pensioners millions of dollars in transaction costs and threaten to “eliminate entire stock classes from the pool of potential investments, narrowing State pension fund managers’ choices and increasing the overall risk to the portfolio.”

The NFTC also questioned how the state will target companies when no federal list exists, noting that even the U.S. Securities and Exchange Commission was forced to take down its own flawed list of companies.

For a full copy of the letter, please click here.

Advancing Global Commerce for Over 90 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.

Washington DC – USA*Engage Co-Chair and National Foreign Trade Council (NFTC) President William Reinsch today released the following statement in response to the announcement of sanctions on Iran’s Revolutionary Guard Corps:

“There is no question that Iran’s effort to develop a nuclear capability poses a threat to peace and stability, but the approach announced today by the administration may move us farther away from our goal of getting Iran to actually change its behavior.

“These sanctions are extraterritorial, and as such are likely to worsen relations with our allies. Given their sweeping nature, they may ultimately end up targeting hundreds of foreign companies that are doing business legally under their national laws. Their reach is so broad that they pose real challenges when it comes to connecting the dots with other companies and entities both inside and outside Iran.

“The most unfortunate element is that the Bush administration is framing this as a diplomatic initiative. In fact, they are sanctions intended to punish Iran, though their primary effect may well be on companies in third countries. As a result they are unlikely to lead to a positive diplomatic outcome. Real diplomacy means utilizing direct diplomatic channels to the government in Iran, and it means working with our allies on concerted multilateral efforts.”
 

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.

Calls “Feel Good” Sanctions Ineffective and Distracting

Washington, DC – USA*Engage and the National Foreign Trade Council (NFTC) today released a statement expressing concern over the House Foreign Affairs Committee’s approval of H.R. 3890, the Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2007, which would impose new unilateral U.S. sanctions against Burma.

“The need to utilize sanctions to influence the behavior of rogue governments and bad actors is a necessary tool of diplomacy, but imposing unilateral U.S. sanctions is ineffectual at best and often counterproductive. While it is clear that the United States must take a strong stand, one country alone cannot effectively limit the economic activity.  This is particularly true in Burma, where we have little leverage to begin with. Engaging other nations in efforts to pressure the regime there is by far the best diplomatic strategy to effect change,” said Bill Reinsch, NFTC President and Co-Chair of USA*Engage.

“The sanctions under consideration will do nothing more than make us feel good about taking a stand, while distracting efforts for real and long lasting change. It is important for Congress and the Administration to work in coordination with allied nations to combat repressive regimes if we are to achieve success in any sanctions effort,” Reinsch continued.

“Institutionalizing sanctions and removing the periodic approval process by Congress will make it virtually impossible for the President to adapt sanctions to changing circumstances or reward good behavior. Extending sanctions indefinitely is simply bad public policy,” said Reinsch. “We hope that in the coming weeks, Members of Congress will thoroughly review this provision and identify ways to engage our allies to effect real change for the people of Burma.”

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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.