... or I'll Take My Toys and Go Home: The Iran and Libya Sanctions Act of 1996

Article excerpt

I. BACKGROUND

A. The History of the ILSA

B. The GAYT

1. History and Structure

2. The WTO

C. Economic Coercion & International Law

D. Secondary Boycott

II. U.S. OBLIGATIONS UNDER THE WTO AND THE GATT

III. ECONOMIC COERCION AND INTERNATIONAL LAw

A. Economic Coercion Under the Charter of the United

Nations

B. Economic Coercion under the U.N. Resolutions

IV. SECONDARY BOYCOTTS.

V. CONCLUSION & RECOMMENDATIONS

"Congress has the authority to enforce its laws beyond the territorial boundaries of the United States."(1) Extraterritorial legislation by its very nature applies to the territory or citizenry of another nation.(2) Thus, the recent increase in legislation aimed at foreign entities has given rise to an international outcry.(3) The United States has been accused by a number of nations of violating international law, national sovereignty, and self-imposed conventional-law obligations.(4)

The most recent conflict arising out of this type of legislation surrounds the Iran and Libya Sanctions Act of 1996 (ILSA).(5) This Act, signed by President Clinton on August 5, 1996,(6) provides for sanctions against foreign companies investing in Iran or Libya.(7) The international response to the ILSA has been profoundly negative.(8) Not only are the cries of foul much louder than usual, but they are coming primarily from U.S. allies in the European Community and beyond.(9)

In Part 1, this Article introduces the ILSA and the different legal principles and provisions under which it may be scrutinized. Part 11 analyzes the ILSA in light of the provisions of the World Trade Organization and the General Agreement on Tariffs and Trade. Part III examines economic coercion and its acceptance under international law. Part IV examines the incongruity between the ILSA and traditional U.S. policy towards secondary boycotts. Finally, this Article concludes that the ILSA is a violation of international law and a violation of U.S. international obligations as well as a departure from traditional U.S. policy.

I. BACKGROUND

A. The History of the ILSA

House Bill 3107 was introduced on March 19, 1996, as the Iran Oil Sanctions Act of 1996.(10) As the scope of the bill grew, so did its title.(11) Five days before the House of Representatives passed the bill, H.R. 3107 was renamed the Iran and Libya Sanctions Act of 1996.(12)

The goal of the ILSA was twofold: to deter Iran and Libya from aiding international terrorism or obtaining weapons of mass destruction and to influence the President to pursue negotiations to form a multilateral sanctions regime concerning Iran.(13) To achieve these goals, the ILSA requires the President to impose two or more specified sanctions(14) on persons who engage in conduct prohibited by the bill.(15)

The ILSA prohibits two types of conduct.(16) Foremost, it imposes sanctions on persons investing in or contributing to the ability of Iran or Libya to develop their petroleum resources.(17) Additionally, the ILSA imposes mandatory sanctions on persons exporting certain items that enhance Libya's weapons or aviation capabilities.(18) The requirement that all sanctions with respect to Libya be mandatory was a late addition to the bill.(19) In its original form, the bill gave the President discretion on whether to impose sanctions on parties contributing to the development of Libya's petroleum resources.(20)

The President is responsible for determining whether a party has violated the ILSA's prohibitions.(21) Once that determination has been made, the President must either impose sanctions(22) or exercise a waiver.(23) The President's power of waiver may be used to exempt any offending party from sanctions.(24) The President may also waive sanctions with respect to all nationals of any country that has agreed to undertake substantial measures to inhibit Iran's efforts to support international terrorism or acquire weapons of mass destruction. …