FACT SHEET:U.S.SANCTIONS LAWS RELAT

[moe@xxxxxxxxxxxxx]

FILE ID:97091706.ECO

DATE:09/17/97

TITLE:17-09-97  FACT SHEET: U.S. SANCTIONS LAWS RELATED TO FOREIGN POLICY


TEXT:

(Number increased sharply in 1990s)  (3680)


Washington -- Following is a list of some of the laws in effect today

that were passed by Congress authorizing U.S. economic sanctions for

foreign policy reasons.


They are presented in reverse chronological order; the number in

parentheses is the date on which the law went into effect. The list

excludes laws authorizing sanctions for retaliating against unfair

trade barriers and for punishing violations of conservation measures.


(This article appears also in USIA's September 17 electronic journal

Economic Perspectives. The complete journal can be found on the USIA

web site at http://www.usia.gov/journals/journals.htm):



FOREIGN OPERATIONS, EXPORT FINANCING AND RELATED PROGRAMS

APPROPRIATIONS ACT, FISCAL YEAR 1997 (September 30, 1996)


Section 570 of this act prohibits new investment in Burma, pending

progress on human rights, and requires U.S. representatives to

international financial institutions to vote against spending for

Burma.


Section 533 prohibits U.S. foreign aid to any country not complying

with UN sanctions against Iraq and Serbia-Montenegro. It also

authorizes the president to ban U.S. imports of goods from countries

that have not enacted trade restrictions against Iraq and

Serbia-Montenegro.


Section 553 puts conditions on release of foreign aid to the Palestine

Liberation Organization.


Section 507 prohibits direct foreign aid to the seven countries on the

State Department's list of countries that support terrorism: Cuba,

Iran, Iraq, Libya, North Korea, Sudan, and Syria.


Section 523 prohibits, with specific exceptions, indirect foreign aid

to Cuba, Iran, Iraq, Libya, North Korea, Syria, and China.


Section 567 restricts, with specific exceptions, military aid to

Guatemala.


Section 569 restricts, with specific exceptions, foreign aid to Haiti.


Section 579 requires U.S. representatives to international financial

institutions to oppose spending for any country where the people

practice female genital mutilation and where the government has made

no effort to educate the people against performing this practice.


IRAN AND LIBYA SANCTIONS ACT OF 1996 (August 5, 1996)


This law requires the president to impose sanctions against foreign

companies that invest $40 million in any one-year period for

development of Iran or Libya's petroleum resources (in August 1997,

the threshold dropped to $20 million for Iran). Sanctions are mandated

also for any foreign company exporting to Libya goods such as aircraft

and oil-refining equipment that are prohibited by UN resolutions. The

sanctions include denial of Export-Import Bank credits, denial of

licenses for controlled U.S. exports, prohibition of loans from U.S.

financial institutions, and prohibition on bids for U.S. government

procurement.


Senator Alfonse D'Amato, sponsor of the law, and other members of

Congress criticized a Clinton administration decision in August not to

oppose construction of a gas pipeline across Iran linking supplies in

Turkmenistan with market demands in Turkey.


Also in August, the Canadian company Bow Valley Energy Limited signed

a deal to develop Iran's Balal oil field. D'Amato urged the State

Department to impose sanctions against Bow Valley and its partners.

The State Department has issued no statement yet.


ANTITERRORISM AND EFFECTIVE DEATH PENALTY ACT OF 1996 (April 24, 1996)


This law prohibits U.S. nationals from supporting terrorist

organizations and from engaging in financial transactions with

governments named on the State Department's terrorism list: Cuba,

Iran, Iraq, Libya, North Korea, Sudan, and Syria.


As five of those countries were already subject to comprehensive U.S.

embargoes, the 1996 law has affected only Syria and Sudan, and only

Syria has had significant trade with the United States. The Treasury

Department's August 1996 regulations implementing the law prohibit

only those financial transactions with Syria and Sudan that would

promote terrorist activities in the United States. Viewing the Clinton

administration's actions as too limited and contrary to the 1996 law's

congressional intent, members of the House of Representatives passed a

bill in July 1997 by 377-33 that would essentially eliminate the

administration's discretion in prohibiting transactions with the two

countries. A provision in a Senate-passed foreign affairs spending

bill would allow the president to waive sanctions under the law for

national security reasons. Resolution of the different approaches

could emerge from a House-Senate conference on the spending bill.


The law also prohibits certain U.S. foreign aid to any country that

provides assistance or lethal military equipment to a terrorism-list

country, requires U.S. representatives to international financial

institutions to oppose spending for those countries, and prohibits

exports of munitions to any country certified by the president as not

cooperating on fighting terrorism.


CUBAN LIBERTY AND DEMOCRATIC SOLIDARITY ACT OF 1996 (HELMS-BURTON ACT)

(March 12, 1996)


Title I codifies the comprehensive U.S. trade embargo against Cuba

maintained since 1960 through regulations under the Foreign Assistance

Act, the Trading With the Enemy Act, and other laws. It also requires

U.S. representatives to international financial institutions to oppose

Cuban membership in those institutions, and restricts U.S. payments to

any such institution that approves assistance to Cuba over U.S.

objections. It denies assistance to any former Soviet republic that

assists or engages in non-market-based trade with the Cuban

government. It subtracts from U.S. aid to Russia an amount of money

equal to Russia's support for its intelligence facility at Lourdes,

Cuba; it subtracts foreign aid to any country by the amount the

country provides for Cuba's Juragua nuclear facility.


Title III gives U.S. nationals the right to bring suit in U.S. federal

courts against foreign companies investing in or profiting from

property confiscated from them by the Cuban government; it allows

award of damages up to three times the value of the confiscated

property. President Clinton has waived this provision for six-month

periods three times: in July 1996, January 1997, and July 1997. Newly

introduced legislation repealing the president's waiver authority is

expected to draw wide support in the House of Representatives.


The European Union (EU) has challenged Title III in the World Trade

Organization. In April the EU suspended its challenge as it attempts

to negotiate with the United States by October 15 a binding

international agreement on disciplines for expropriation of property.

The Clinton administration pledged to seek from Congress changes in

the law sought by the EU if the expropriation agreement is reached.

Those negotiations continue.


Title IV requires the State Department to deny visas to any foreigner,

as well as his or her spouse and children, who traffics in confiscated

property in Cuba subject to a claim by a U.S. national. The department

has so far barred from the United States executives of the Canadian

mining company Sherritt International and of the Mexican

telecommunications company Grupos Domos.


In July, the Italian telecommunications group Stet reached a

settlement with the State Department for compensating the U.S.

conglomerate ITT for work on Cuba's telephone system, which ITT

controlled before Castro's expropriation. Stet thus achieved effective

immunity from Title III and Title IV.


NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1996 (February 10,

1996)


This law prohibits the Defense Department from giving aid to countries

on the State Department's terrorism list.


FOREIGN RELATIONS AUTHORIZATION ACT FOR 1994 AND 1995, AS AMENDED

(April 30, 1994)


This law prohibits the federal government from selling defense goods

or services to any country that is "known" to request compliance with

the Arab League secondary boycott of Israel. The president has applied

this sanction to Iran, Iraq, Libya, Sudan, Syria, and Yemen. He has

waived application of it to Algeria, Bahrain, Bangladesh, Kuwait,

Lebanon, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.


HICKENLOOPER AMENDMENT EXPANSION (April 30, 1994)


This provision prohibits U.S. foreign aid to countries that have

expropriated property of a U.S. citizen without compensation, and

requires U.S. representatives to international financial institutions

to oppose spending for those countries.


NUCLEAR PROLIFERATION PREVENTION ACT OF 1994 (April 30, 1994)


Sections 821 and 824 mandate sanctions against any person determined

to have helped a non-nuclear-weapon state acquire nuclear material or

devices. The sanctions prohibit any such person from bidding on U.S.

federal government procurement or from dealing in federal bonds.


Section 825 prohibits the Export-Import Bank of the United States

(Ex-Im Bank) from providing credits to any country that helps a

non-nuclear-weapon state acquire nuclear devices or materials.


Section 530 prohibits U.S. foreign aid to non-nuclear-weapon states

that violate International Atomic Energy Agency agreements or

bilateral nuclear cooperation agreements.


The law also amends the Arms Export Control Act in a number of ways.

It prohibits U.S. government sales of munitions and defense services

to countries violating nuclear non-proliferation agreements. It

prohibits foreign aid to any country that receives or delivers to

another country nuclear enrichment materials or technology without

proper safeguards or that attempts to export illegally from the United

States anything used to make nuclear weapons. It also requires a

number of sanctions against both sides in a transfer of nuclear

devices, components, or designs from any country to a

non-nuclear-weapon country.


IRAN-IRAQ ARMS NON-PROLIFERATION ACT OF 1992, AS AMENDED (October 23,

1992)


This law applies to Iran the same export license prohibitions applied

to Iraq in the Iraq Sanctions Act of 1990. It also mandates sanctions

against any foreign government that transfers technology or goods that

help Iran or Iraq acquire advanced conventional weapons, or chemical,

biological, or nuclear weapons. Those sanctions include suspension of

foreign aid, ban on access to U.S. government procurement contracts,

denial of export licenses, opposition to spending by international

financial institutions, and suspension of military transfers and

sales.


CUBAN DEMOCRACY ACT OF 1992 (October 23, 1992)


This law restates or modifies earlier legislation used in imposing a

total trade embargo on Cuba, including the Foreign Assistance Act of

1961, the Trading With the Enemy Act, the International Emergency

Economic Powers Act, and the Export Administration Act of 1979.


Section 1704(b) authorizes the president to apply sanctions against

foreign countries providing Cuba grants or concessional sales,

subsidizing exports to Cuba, or giving preferential treatment to

imports from Cuba. The sanctions include ineligibility for foreign

aid, for U.S. government sales of controlled munitions, and for debt

reduction from the U.S. government.


Section 1706 extends the U.S. embargo against trade with Cuba to

foreign subsidiaries of U.S. companies. It also restricts U.S. port

privileges for ships that carry Cuban goods or engage in trade at

Cuban ports.


Section 1705 allows, with some exceptions, donations of food to Cuban

non-government organizations; exports of medicines and medical

supplies and equipment; provision of telecommunications services and

appropriate facilities; direct mail service between the United States

and Cuba, and assistance for promoting non-violent democratic change

in Cuba.


CHEMICAL AND BIOLOGICAL WEAPONS CONTROL AND WARFARE ELIMINATION ACT OF

1991 (December 4, 1991)


Sections 306 and 307 mandate sanctions against a country determined to

have used chemical or biological weapons in violation of international

law or against its own nationals. The sanctions, which may be waived

by the president, are termination of foreign aid and foreign military

financing, prohibition of certain U.S. controlled exports, and denial

of Ex-Im Bank credit.


This law also amends the Arms Export Control Act and the Export

Administration Act. Those sections mandate sanctions against

foreigners who export technology or goods that help a terrorist

country acquire chemical or biological weapons. The sanctions prohibit

the foreigner from bidding on a U.S. government procurement contract

and from exporting goods to the United States.


IRAQ SANCTIONS ACT OF 1990 (November 5, 1990)


On top of the comprehensive U.S. trade embargo imposed on Iraq in

August 1990 after it invaded Kuwait, Congress passed this law denying

to Iraq U.S. foreign aid and Ex-Im Bank credit and requiring U.S.

opposition to spending for Iraq by international financial

institutions.


The law also restricts U.S. exports of supercomputers to countries

assisting Iraq's weapons capabilities.


The sanctions may be waived by the president if there is a change of

leadership in Iraq.


NATIONAL DEFENSE AUTHORIZATION ACT FOR 1990-1991, AS AMENDED (November

5, 1990)


This law mandates sanctions against foreigners who export goods or

technology controlled under the multilateral Missile Technology

Control Regime (MTCR) to a non-MTCR country if that sale helps the

country produce missiles. The sanction applies even if the export was

not of U.S. origin or made from U.S.-origin technology.


Under a provision called the Helms amendment aimed at China, any

sanction imposed on a foreigner in a non-market economy must also be

applied to the government there. The sanctions deny U.S. exports of

munitions and prohibit participation in U.S. government procurement

contracts. President Clinton imposed such sanctions against China and

Pakistan in August 1993; he waived the sanctions against China in

November 1994; the Pakistan sanctions expired after two years.


FOREIGN RELATIONS AUTHORIZATION ACT FOR 1990-91, AS AMENDED (February

16, 1990)


This law prohibits a number of U.S. benefits to China, including

credit from the Overseas Private Investment Corporation (OPIC);

foreign aid; exports of certain satellites; and licenses for export of

certain munitions, crime control equipment, and nuclear material,

technology, and equipment.


NARCOTICS CONTROL TRADE ACT (October 27, 1986) AND FOREIGN ASSISTANCE

ACT, AS AMENDED (September 4, 1961)


Under Sections 481 and 490 of the amended Foreign Assistance Act, no

foreign aid or credit from Ex-Im Bank or OPIC can go to any

drug-producing or drug transit country not certified by the president

as cooperating with U.S. counter-narcotics efforts.


Section 802 of the Narcotics Control Trade Act requires the president

to apply other sanctions to those uncertified countries, including

denial of preferential tariffs under the Generalized System of

Preferences (GSP), and to restrict air transportation between the

United States and those countries.


Section 803 of the law prohibits the president from allocating any

U.S. sugar import quota to any country where the government engages in

illegal drug trade or fails to cooperate with U.S. counter-narcotics

efforts.


DEPARTMENT OF DEFENSE APPROPRIATIONS ACT OF 1987 (October 18, 1986)


This law prohibits the U.S. Department of Defense from entering into

contracts of $100,000 or more with companies owned or controlled by

the government of a State Department terrorism-list country.


INTERNATIONAL SECURITY AND DEVELOPMENT COOPERATION ACT OF 1985 (August

8, 1985)


Section 505 authorizes the president to restrict or ban imports of

goods and services from countries on the State Department terrorism

list, and to prohibit exports of goods and technology to Libya.


EXPORT ADMINISTRATION ACT (EAA) OF 1979, AS AMENDED (September 29,

1979)


Section 11A mandates sanctions against foreigners who violate certain

multilateral export controls. The sanctions ban imports and bids for

U.S. government procurement contracts. Such sanctions were applied in

1988 to Toshiba Machine Company of Japan and Kongsberg Trading Company

of Norway.


INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT (IEEPA) (October 28, 1977)


Under this law, the president has broad authority "to deal with an

unusual and extraordinary threat, which has its source in whole or in

part outside the United States, to the national security, foreign

policy, or economy of the United States."


After the president declares a national emergency, he can restrict or

prohibit virtually any foreign economic transaction: imports, exports,

and transfers of money or credit.


Under IEEPA, the Treasury Department's Office of Foreign Assets

Control (OFAC) administers sanctions against Iran, Libya, Iraq,

Serbia-Montenegro, and Angola.


Sanctions from 1979 and 1995 prohibit most U.S. transactions with

Iran, including any brokering and financing related to trade in

Iranian goods and services. They prohibit U.S. exports to Iran as well

as re-exports to Iran from other countries of certain U.S.-origin

goods and technology. They prohibit investments by U.S. persons in

Iran as well as those by a foreign subsidiary of a U.S. company.

Sanctions also block transactions of certain assets of the Iranian

government and central bank within U.S. jurisdiction.


For Libya, 1986 sanctions block the assets in the United States of the

Libyan government and of persons acting on its behalf. They prohibit

essentially all U.S. exports to Libya and U.S. imports from Libya;

they allow re-exports to Libya of U.S.-origin goods that are

substantially transformed in a third country, except those used in

Libya's petroleum sector.


For Iraq, the 1990 sanctions implementing a United Nations resolution

block financial assets in the United States of the Iraqi government.

They prohibit most U.S. exports and re-exports of U.S. goods and

technology to Iraq, U.S. imports of goods from Iraq, and financial

transactions with the Iraqi government. Unilateral U.S. sanctions also

prohibit exports of U.S. services to Iraq and block all property

assets in the United States of the Iraqi government.


OFAC regulations of December 1996, implementing a later UN resolution,

authorize U.S. companies to seek licenses to buy oil from Iraq; the

revenue is intended for the purchase of humanitarian supplies for

Iraqis.


Regulations of 1992 and 1994 block the assets of the governments of

Serbia-Montenegro in the United States, as well as those of the

Bosnian Serb-controlled areas of Bosnia and Herzegovina.


Regulations of September 1993 prohibit the sale or supply of arms and

related material or petroleum and petroleum products to Angola, except

through a few designated points of entry, and prohibit such sales to

the National Union for the Total Independence of Angola (UNITA).


Also under IEEPA, regulations of January 1995 prohibit all

transactions with persons listed by the State Department as having

committed or posing a significant risk of committing acts of violence

to disrupt the Middle East peace process.


ARMS EXPORT CONTROL ACT, AS AMENDED (October 22, 1968)


Section 40 prohibits exports of munitions to countries on the State

Department terrorism list.


Section 38 restricts munitions exports under certain foreign policy

objectives, including the possibility of escalating conflict and human

rights violations. At present the State Department denies licenses for

munitions exports to Afghanistan, Angola, Armenia, Azerbaijan,

Belarus, Burma, China, the Democratic Republic of Congo, Haiti,

Liberia, Rwanda, Serbia-Montenegro, Somalia, Tajikistan, and Vietnam.


UNITED NATIONS PARTICIPATION ACT OF 1945 (December 20, 1945)


Section 287(c) gives the president broad powers to impose economic

sanctions, but only those mandated by the UN Security Council.


EXPORT-IMPORT BANK ACT, AS AMENDED (July 31, 1945)


This law prohibits Ex-Im Bank credits to "Marxist-Leninist" countries

(China has received a "national interest" waiver from successive

presidents since 1980) and to countries that have violated

International Atomic Energy Agency safeguards or U.S. bilateral

agreements regarding nuclear energy.


SMOOT-HAWLEY TARIFF ACT OF 1930 (June 17, 1930)


This law prohibits U.S. imports of goods mined, produced, or

manufactured by convict labor, forced labor, or indentured labor,

except for goods otherwise unattainable to meet U.S. demand. At

present the Treasury Department applies this law to certain products

from China and Mexico.


TRADING WITH THE ENEMY ACT (TWEA) (October 16, 1917)


Section 5 prohibits trade with any enemy or ally of an enemy during a

war. From 1933 until 1977, the law was expanded to control both

domestic and international financial transactions during peacetime as

well as during war. When Congress passed IEEPA in 1977, it restricted

somewhat the president's authority to control economic transactions

during peacetime emergencies. At the same time, Congress revised the

Trading With the Enemy Act, retaining the president's broader

authority to control foreign transactions and property interests

during war; it also continued trade embargoes and foreign assets

controls then in effect, including one with North Korea.


Although the total embargo on transactions with North Korea from 1950

was modified after an October 1994 U.S.-North Korean agreement to

begin reducing barriers to trade and investment, bilateral trade

remains mostly restricted. Treasury's OFAC generally prohibits U.S.

imports from North Korea, but may issue specific licenses for imports

of North Korean-origin Magnesite or magnesia. Commerce Department

licenses are required for all U.S. exports to North Korea except for

items like books, magazines, films and compact disks. The regulations

prohibit buying and selling to North Korean nationals doing business

anywhere in the world.


CURRENT ISSUES


Religious Persecution: A bill has been introduced in Congress that

would impose unilateral U.S. economic sanctions against governments

determined to be engaged in religious persecution involving

imprisonment, forced resettlement and other forms of brutality.

Neither the House nor Senate has yet to act on the bill. Consideration

by the House International Relations Committee was scheduled September

11 but postponed with no new date scheduled.


State and Local Sanctions: In July the EU challenged in the WTO a

Massachusetts state law imposing sanctions against foreign companies

doing business with Burma. According to the EU, the law violates WTO

procurement rules. The Clinton administration is defending

Massachusetts during a 60-day consultation period. If still

dissatisfied after consultations, the EU can request a WTO panel to

settle the dispute, which could ultimately lead to retaliatory EU

trade sanctions. Such a case could set a precedent for handling of

state or provincial rights and sovereignty under multilateral trade

agreements.


Meanwhile, a Journal of Commerce report says the USA Engage coalition

of more than 600 U.S. big businesses is planning to challenge

sanctions imposed by state and municipal governments in federal court,

arguing that they infringe on the federal government's constitutional

powers for conducting foreign policy.


Sanctions Reform: Published reports say that Senator Richard Lugar and

Representative Lee Hamilton are circulating a legislative proposal

that would set conditions on Congress for passing additional

unilateral sanctions laws. They have made no official comment yet.

Hamilton has said publicly that sanctions should be subject to

cost-benefit analysis concerning the likelihood they will achieve

their objective and the costs they will impose on U.S. business and

employment.


SOURCES: President's Export Council; U.S. Treasury Department; U.S.

House of Representatives Ways and Means Committee; National

Association of Manufacturers