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Letters to the 107th Congress

June 29, 2001

The Honorable Paul S. Sarbanes
Committee on Banking, Housing and Urban Affairs
United States Senate
Washington, D.C. 20510

Dear Mr. Chairman:

As you know, the Iran and Libya Sanctions Act of 1996 ("ILSA," Pub. L. 104-172) is scheduled to sunset on August 5, 2001 and legislation has been introduced to extend ILSA for an additional five-year period.

I am writing on behalf of the American Bar Association to express the ABA's concern with the scope of the retaliatory sanctions the President may be required under ILSA to impose against foreign parties that make significant investments in the petroleum sectors of Iran or Libya. Specifically, the ABA is concerned about three of those sanctions that would curtail the international trading privileges of foreign companies that have invested lawfully in these two countries. These sanctions are denial of U.S. export licenses, restrictions on imports into the United States, and denial of access to U.S. private sector funding. We believe that such punitive retaliatory foreign trade control measures conflict with established principles of international law.

These particular retaliatory features of ILSA, along with other extraterritorial U.S. foreign trade control measures inconsistent with international law norms, were the subject of a resolution adopted by the House of Delegates of the American Bar Association in 1998, in which the Association urged the United States to refrain from the adoption of such measures. I am enclosing a copy of this resolution and the accompanying report of the Section of International Law and Practice on which the resolution was premised. I urge you and your colleagues to give these materials careful consideration in deciding what action to take on legislation to extend ILSA.

As I am sure you are aware, the retaliatory features of ILSA have proved to be highly objectionable to some of our closest allies, especially in Europe, and, if enforced, would precipitate a serious confrontation in the World Trade Organization. The reauthorization or extension of ILSA in its current form certainly would have negative diplomatic and economic consequences for the United States, including greater difficulty in security cooperation in our efforts to isolate or change regimes that are hostile to U.S. foreign policy. The presence of these retaliatory sanctions also places the President of the United States in an awkward position, quite evident from the conduct of the last administration over the past five years since ILSA was enacted. In order to prevent serious damage to relations with friendly foreign countries and to avert an embarrassing defeat in the World Trade Organization, the last administration was strongly motivated to prolong investigations of alleged investments, especially in Iran, and waived the sanctions in the only case to reach a conclusion. The reauthorization of ILSA in its present form will leave President Bush in a similar no-win situation.

The Association has not taken any position with respect to features of ILSA other than the retaliatory punitive measures relating to international trade with third countries that are inconsistent with international law. There are other provisions in ILSA such as ineligibility for Export-Import Bank financing and for federal government contracts that do not conflict with international law norms because they simply deny U.S. government largess rather than deprive foreign parties of the right to engage in international commerce with the United States. Foreign nations, regardless of how they may view ILSA as a totality, can have no legitimate international law objection to such non-punitive measures, except to the extent they may conflict with specific obligations under international treaties or agreements.

The position the ABA has taken in opposition to punitive retaliatory foreign trade control sanctions does not reflect any concern with or endorsement of United States foreign policy toward Iran, Libya or any other country. But where the conduct of a foreign country is such as to warrant the imposition of foreign trade sanctions, the ABA urges the United States, as our 1998 resolution states, to seek the support and cooperation of foreign governments that share our concerns in developing appropriate multilateral foreign trade and investment limitations, rather than adopt unilateral measures that penalize parties in third countries. This cooperative sanctions approach is the one we understand the Bush administration currently is following to refocus the international sanctions against Iraq.

The concerns expressed in the ABA's 1998 resolution are grounded strictly in our Association's longstanding respect for international law. We strongly urge the Congress not to reauthorize and extend ILSA in its present form.

Thank you for your consideration.


Martha W. Barnett
President, American Bar Association


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