On January 9, 2007, the U.S. House of Representatives approved H.R. 1, a bill that would implement the recommendations of the 9/11 Commission and would include extensive new sanctions provisions. These provisions would: 1) impose broad trade sanctions on foreign entities that wittingly or unwittingly participate in nuclear proliferation activities; 2) limit presidential authority to waive trade sanctions; and 3) impose new conditions on U.S. aid and arms transfers. The bill passed by a vote of 299-128 over the objections of the Bush administration. In the Senate, the House-passed bill has been referred to the Homeland Security and Government Affairs Committee, where no action has yet been taken.
The Nuclear Black Market Counter-Terrorism Act Of 2007
Title XIII of the House bill, known as “The Nuclear Black Market Counter-Terrorism Act of 2007,” would impose a new layer of U.S. sanctions on any entity, including extraterritorially, that “assists” rogue nuclear weapons programs. As a practical matter, the Iranian and North Korean nuclear weapons programs are the immediate targets. However, the language of the House bill is broad and could result in sanctions on any “foreign person,” which is defined to include any natural person, corporation, partnership, trust, international organization, government or successor of any such entity.
Under the House bill, sanctions would mandatorily be imposed on any foreign person that participates in the export, transfer or trade of nuclear equipment, materials, technology, design information or components to rogue nuclear weapons programs. There is no intent requirement in the bill, and merely providing indirect assistance could result in sanctions. The technologies, items and services covered are extensive, and thus the scope of the bill could be far-reaching. In addition, the bill also broadly defines “participate” to include selling, transferring, brokering, financing, assisting, delivering or otherwise providing or receiving, and also includes “any conspiracy or attempt to engage in any of such activities, as well as facilitating such activities by any other person.” Therefore, not only could foreign persons and associated entities with direct involvement be subject to sanctions, but those foreign persons and associated entities with indirect involvement could also be subject to sanctions under the bill.
Broad Sanctions Would Be Imposed
Except for a narrow waiver authority, the president would be required to impose a series of sanctions for at least two years on any violating foreign person. Underlying the expansive scope of these sanctions is the finding that the U.S. government must do everything possible to prevent nuclear proliferation. The sanctions are specifically designed to impose maximum commercial loss and to make worldwide commercial activity difficult for violating foreign parties and their associated entities. The sanctions contained in the House bill are extensive and include:
• Ban on U.S. Llicenses for Eexport of Ggoods or Technology Subject to EeARr. Licenses would not be issued for the export of any goods or technology subject to the Export Administration Regulations (“EAR”). Current licenses or approvals would be terminated as of the date sanctions are imposed. Because all goods and services are subject to the EAR regardless of specific licensing requirements, the broad language of this export license denial could trigger a complete embargo on U.S. exports to a targeted entity.
• Prohibition on Imports. The bill includes an almost complete prohibition of imports into the United States of goods, technology or services produced or provided by the foreign entity.
• Complete Ban on Uu.S. Llicenses for Eexport of Ddefense Articles and Services. Licenses would not be issued for the export of defense articles and services. Current contracts, licenses or approvals to export or import defense articles or services would be terminated as of the date sanctions are imposed.
• Prohibition of Foreign Assistance. All current U.S. foreign assistance would be terminated and all future assistance prohibited.
Narrow Waiver Authority
The president could waive sanctions only upon a determination of importance to U.S. national security interests and a finding that the waiver would help deter nuclear assistance. Traditionally, a “national security interest” waiver is a high standard to meet under U.S. law.
New Conditions On Uu.S. Aid And Arms Transfers
The House bill also would impose new conditions on U.S. foreign aid, requiring determinations that foreign governments are not cooperating with nuclear-related smuggling and are also taking measures to prevent entities within their jurisdiction from cooperating and that foreign governments are “fully cooperating” with the U.S. in stopping nuclear weapons technology transfers. In addition to cancellation of all U.S. assistance, upon submission of the president’s report to Congress the president must suspend all U.S. export licenses, both for dual-use and munitions items, to governments violating these standards.
Administration Opposes Provisions, Citing Harmful Impact
The Bush administration stated its opposition to Title XIII in a Statement of Administration Policy (SAP) issued after the House vote. In particular, it characterizes the provisions as unnecessary, duplicative and unduly restrictive on the president’s authority. The SAP specifically identifies Pakistan as one country that would be sanctioned. Based on other U.S. government proliferation reports, entities in several other countries likely would be sanctioned, including entities in Russia, China, the Gulf States and possibly several western European countries.
The new sanctions would be imposed “notwithstanding any other provision of law,” i.e., overriding all other counter-proliferation statutes. To illustrate the potential reach of the House bill, we note a recent Japanese case in which the Mitutoyo Corporation, along with four of its former executives, pleaded guilty to charges of illegally exporting five computer-controlled, three-dimensional measuring devices that can be used to make centrifuges to produce weapons-grade uranium. Several of these machines were later shipped to Pakistan, Libya and possibly Iran and North Korea. By way of example, the House bill could well cause export and import sanctions to be applied to the Mitutoyo Corporation, its bank and any entity that “participated” by assisting, transferring, delivering and/or receiving the machines at any point in the export process.
It is expected that industries concerned about the breadth and potential impact of the bill will oppose it in the Senate.