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Letters to the 107th Congress

September 5, 2001

The Honorable Joseph R. Biden, Jr.
Chairman
Committee on Foreign Relations
United States Senate
Washington, D.C. 20510

Dear Mr. Chairman:

I am writing to express the opposition of the American Bar Association to Section 9 of H.R. 2052, the Sudan Peace Act, as passed by the House of Representatives on June 13, 2001. This provision was added on the floor of the House and is not found in the comparable bill, S. 180, passed by the Senate on July 19, 2001.

Section 9 of H.R. 2052 would oblige the President to use his emergency authority under the International Emergency Economic Powers Act to prohibit any entity engaged in the development of oil or gas in Sudan from raising capital in the United States or from trading its securities or depositary receipts in any capital market in the United States.

The American Bar Association shares the deep concerns of the Congress about the terrible toll of life and deprivation of human liberties that has been brought about by the civil strife and government suppression in southern Sudan. These actions are contrary to long-standing positions of the Association, including respect for law and human rights. It is entirely appropriate for the United States government to take firm and reasonable measures to end these abuses. In fact, since 1997, the U.S. has maintained a broad-based embargo against Sudan.

Unfortunately, Section 9 of H.R. 2052 seeks to address these concerns in an ill-advised manner -- an approach that would be tantamount to the imposition of a secondary boycott and contrary to generally accepted norms of international law. Specifically, parties in foreign countries that are beyond the reach of U.S. jurisdiction would be sanctioned for trade and investment activities unconnected with the United States by being shut out of U.S. capital and securities markets.

In 1998 the House of Delegates of the American Bar Association adopted a resolution urging the United States to refrain from adopting extraterritorial foreign trade control measures - including retaliatory sanctions - that are inconsistent with international law norms. The position of the Association in opposition to extraterritorial retaliatory trade sanctions is consistent with long-established United States foreign policy opposing secondary trade boycotts, notably the Arab boycott of Israel which, like Section 9 of H.R. 2052, blacklists foreign companies that invest in a targeted foreign country (Israel) by denying them the right to do business in the countries imposing this secondary boycott (certain members of the League of Arab States).

Secondary boycotts not only depart from international law but invariably lead to foreign retaliatory measures, as exemplified by U.S. antiboycott laws, as well as by foreign blocking measures that have been adopted by Canada, Mexico and the European Union to negate other U.S. extraterritorial measures. In addition, secondary boycotts are seldom effective in accomplishing stated foreign policy objectives and in the longer run are harmful to U.S. economic interests by causing foreign parties to avoid dealings in the United States.

There is already speculation in the press that Section 9 of the Sudan Peace Act, if enacted, will become the precedent for similar future measures to close U.S. exchanges and capital markets to foreign companies that do not conduct business in accordance with whatever views may prevail in the United States at a particular time. Such legislation, or the belief that such legislation may be enacted, could seriously damage the competitive position of U.S. financial institutions.

We urge you and your colleagues not to include Section 9 of H.R. 2052 in the final version of the Sudan Peace Act.

Thank you for your consideration.

Sincerely,

Robert E. Lutz
Chair
ABA Section of International Law and Practice

107th Congress Letters Home

AMERICAN BAR ASSOCIATION
Governmental Affairs Office
740 Fifteenth Street, NW
Washington, DC 20005
ph: 202-662-1760
fx: 202-662-1762

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