Note: Remarks as prepared for delivery
I. From the Napoleonic wars through World War I, economic sanctions were almost entirely an auxiliary feature of war, loosely governed by customary international law and some conventions on blockades, contraband, and rights of neutral states. In the Napoleonic wars and the War of 1812, and the first years of World War I, the United States advocated respect for international law principles that narrowed the scope of blockades and definitions of contraband, and enlarged the rights of neutrals. In the Civil War, the United States took an aggressive stance in its blockade of the South, and defined virtually all shipments as contraband. II. With the Trading with the Enemy Act (TWEA) of 1917, the Congress gave the president exceptionally broad powers to regulate international trade and finance, and to freeze and unfreeze seize foreign-owned assets of all kinds. Excepted were commerce and assets wholly within the United States. Presidential power under TWEA knew few limits: it was invoked by Franklin Roosevelt to declare a bank holiday in 1933, by Lyndon Johnson to control the export of capital in 1968, and Richard Nixon to impose a brief 10 percent surcharge on imports in 1971. After World War II, multiple national emergencies were declared under the TWEA, and it was used to impose economic sanctions against a range of Cold War adversaries. Except for the Korean War, the hostilities and accompanying sanctions did not have the blessing of the U.N. Security Council, and presidential invocation of the TWEA was unblemished by the guidance of customary international law. In some cases, this provoked an adverse reaction from U.S. allies, notably France and Canada. The issue typically was TWEA directives to controlled foreign subsidiaries of U.S. corporations not to trade with countries like Cuba and China. In a few noteworthy cases, allied governments obtained blocking court orders from their national courts; and in subsequent TWEA regulations, the U.S. Treasury generally sought to avoid giving offense to the allies. This set a pattern that endures right down to the Clinton administration’s handling of the Helms-Burton Act and the Iran-Libya Sanctions Act (ILSA).
III. The League of Nations, inspired by Woodrow Wilson and rejected by the U.S. Senate, ushered in the concept of internationally authorized sanctions. League sanctions succeeded in a few cases involving minor powers (Greece, Paraguay, Bolivia). However, the League was effectively discredited when sanctions against Italy did not induce a withdrawal of troops from Abyssinia (1935-36). It is noteworthy that the United States did not observe the Italian sanctions.
IV. The United Nations authorized sanctions against South Africa and Rhodesia in the 1960s. The Kennedy administration opposed far-reaching sanctions voted by the General Assembly against South Africa in 1962; later, successive presidents supported sanctions narrowly targeted against arms sales, as designed by the Security Council. In 1963, the Security Council called on member countries to sanction Rhodesia; in 1966 and 1968, it voted mandatory sanctions. The Byrd Amendment, enacted in 1971, and not repealed until 1977, flouted the U.N. sanctions on ferrochrome imports from Rhodesia.
V. The TWEA era ended with the passage of the International Emergency Economic Powers Act in 1977. Outstanding TWEA cases (e.g., North Korea, Vietnam) were grandfathered, but IEEPA became the all-purpose statute for new U.S. sanctions. Congressional passage of IEEPA was inspired more by concern over the autocratic domestic implications of TWEA rather than its imperial international dimensions. Possible limitations of international law do not circumscribe presidential powers under IEEPA. In fact, Barry Carter’s comment, published in 1988, broadly describes Congressional opinion when IEEPA was enacted: “The frequent use of these sanctions by the United States and many other countries constitutes persuasive evidence that no clear norm exists against them in customary international law.” Nevertheless, many of the sanctions cases initiated by the President Carter, in pursuit of nuclear safeguards and human rights, can be characterized as furthering treaty regimes and customary international law. U.S. sanctions against Iran, in the wake of the hostage episode, were explicitly consistent with a ruling from the World Court.
U.S. grain sanctions against the U.S.S.R. in the wake of the Afghanistan invasion (1980-81) were verbally supported by Australia, Canada, and the European Commission, but not Argentina. However, U.S. pipeline sanctions against the U.S.S.R.(1980-81), initiated by President Reagan in the wake of Polish martial law, badly inflamed European opinion and inspired various European court tests that were running against IEEPA controls when they were lifted in late 1981. Likewise, U.S. sanctions against Nicaragua (1981-90), intended to dislodge the Sandinastas, were found to violate the GATT, but the United States rejected the report. The sanctions stayed in place; but note that the objecting party, Nicaragua, was an adversary, not a friend.
VI. With the end of the Cold War, U.S. sanctions policy coincided with mandates of the U.N. security Council mandates in three major cases. The big case was Iraq; the second was Haiti; and the third was Bosnia. In all three cases, the United States worked hard to enact Security Council resolutions; and in Haiti, the United States imposed sanctions unilaterally well before the Security Council acted. Nevertheless, these cases represent a brief period of golden harmony between U.S. policy and international law.
VII. During the Clinton administration, Congressionally initiated sanctions disregarded the traditional U.S. concern for allied interests. Over a number of episodes, U.S. concern for allied interests became part of the fabric of TWEA and IEEPA regulations. By contrast, the Helms-Burton Act and the Iran and Libya Sanctions Act, both enacted in the wake of aircraft disasters (Brothers to the Rescue and TWA 800), seek to impose substantial penalties on companies based in friendly countries that do business with the adversary. Clinton signed these laws under political pressure, despite his own initial opposition and probably despite the continued contrary advice of the State Department. In administering the statutes, Clinton has sought to assuage the concerns of U.S. allies. However, the administration has done little to arrest the surge of state and local sanctions which arguably penalize economic rights of third countries under the World Trade Organization (WTO) and other trade and investment agreements. State and local sanctions against Burma are the leading irritation today.
“Extraterritoriality” is the wrong red herring. All states, including the European Union (EU), enact laws and regulations or issue judicial pronouncements with extraterritorial effect (e.g., the EU’s pronouncements over the Boeing-McDonnell Douglas merger, Germany’s judicial ruling that the Iranian government was behind the murder of three Kurdish dissidents in Berlin, or Canada’s erstwhile sanctions against India for the misuse of nuclear material).
The key novelty of Helms-Burton Act was legislative repeal, with respect to property expropriated by Cuba within Cuban territory, of the act of state doctrine, enunciated by the U.S. Supreme Court in the Sabbatino case. In the absence of a presidential waiver of Title III, plaintiffs may bring suit in U.S. federal courts against third country “traffikers” in such property.
The key novelty of the Iran-Libya Sanctions Act was the imposition of a menu of secondary sanctions against companies based outside Libya (e.g., Total of France) for new investment in the sanctioned countries, above a threshold level. Upon a finding of such investment, in the absence of a presidential national interest waiver, and the absence of “substantial measures,” including economic sanctions, imposed against Iran or Libya by the third country (e.g., France), the president must impose two or more sanctions against the offending third country firm. Generally speaking, the United States and other countries have objected to secondary sanctions (such as those applied by ILSA) unless authorized by the U.N. Security Council (as in sanctions against Iraq).
An irritating feature to third countries in the administration of both statutes is U.S. refusal to submit the international legal questions to the WTO or other international tribunals. This refusal to submit “political questions” to an international tribunal finds precedent in the ICJ case brought against the United States by Nicaragua during the Reagan administration.
In the instance of Massachusetts sanctions against procurement from companies doing business in Burma, the U.S. Trade Representative has chosen to defend Massachusetts law against a WTO complaint brought by the European Union under the Government Procurement Code. However, the United States has not argued that the WTO lacks jurisdiction.
A predictable consequence of these novelties and irritations is that other countries, notably the European Union, individual European countries, and Canada, have enacted various blocking and retorsion measures.
Conclusion: As a generalization, at the inception of each sanctions episode, U.S. policy has coincided with the norms of international law only when the underlying goals coincided. This is true whether the sanctions were launched (or not launched) by the president or Congress. However, the president has developed a practice of respecting the interests of allied and friendly countries in his administration of sanctions.
The American Law Institute,. Restatement of the Law Third: The Foreign Relations Law of the United States, American Law Institute Publishers, 1987.
Barry E. Carter, International Economic Sanctions, Cambridge University Press, 1988.
Margaret P. Doxey, International Sanctions in Contemporary Perspective, St. Martin’s Press, second edition, 1996.
Gary Clyde Hufbauer, Jeffrey J. Schott and Kimberly Ann Elliott, Economic Sanctions Reconsidered: History and Current Policy, second edition, 1990.
Michael P. Malloy, Economic Sanctions and U.S. Trade, Little Brown & Co., 1990, plus biennial supplements.