US EXTRATERRITORIAL LEGISLATION
The European Union - while fully committed, like the United States, to
promoting peace, democracy and respect for human rights, and to combating
terrorism and the proliferation of weapons of mass destruction - is opposed
to the use of extraterritorial legislation, both on legal and policy grounds.
In the last few years there has been a surge of US extraterritorial sanctions
legislation both at federal and sub-federal level. A recent study has
recorded that in just a four-year period (from 1993-96), 61 US laws
and executive actions were enacted authorising unilateral economic sanctions
for foreign policy purposes. Thirty-five countries were targeted.
The EU has expressed its concern about this development on numerous occasions.
Such laws represent an unwarranted interference by the US with the sovereign
right of the EU to legislate over its own citizens and companies, and
are, in the opinion of the EU, contrary to international law. In October
1996, the EU asked the WTO to set up a dispute settlement panel in respect
of the LIBERTAD (‘Helms-Burton’) Act.
April 1997 Understanding (see attachment)
An Understanding was reached in April 1997 covering both the LIBERTAD
and the Iran Libya Sanctions Act (‘ILSA’ or ‘D’Amato’).
Under this, the Community agreed to suspend its WTO case regarding the
former in exchange for a US commitment to work towards neutralising
the effects of these two pieces of legislation on EU firms and citizens,
thus avoiding a serious and potentially damaging confrontation. The early
implementation of the various elements of this Understanding of 11 April
1997 remains a high priority for both the EU and US sides.
The LIBERTAD Act (‘Helms-Burton’)
As regards the LIBERTAD Act, in the absence of its repeal - which remains
the EU’s ultimate objective - the EU is seeking two specific interim
objectives:
- the continued renewal by the US President of the suspension of the
right to file private lawsuits under Title III of the Act
- an amendment by Congress of Title IV of the Act, leading to a Presidential
waiver of the provisions of this Title.
This would relieve EU citizens and firms from most of the more damaging
provisions of the Act.
In this regard, bilateral consultations have been underway for some months
on disciplines and principles for enhanced investment protection. Although
these talks have shown some progress, no agreement was reached by the
15 October target date set forth by the Understanding of 11 April 1997.
However, informal contacts continue. The EU’s objective is to achieve
a politically balanced deal with regard to disciplines on investments
in illegally expropriated property on the one hand and principles on extraterritorial
US legislation on the other which would be accompanied by the necessary
steps on the US side to amend Title IV of the Act.
The Iran Libya Sanctions Act (ILSA)
On ILSA, the EU hopes that the continued work between the US Government
and the EU, especially in the framework of the Trilateral Working Group
on Iran, will pave the way for the early granting of a multilateral regime
waiver under ‘D’Amato’ to the EU.
The EU considers that the steps it and its Member States have already
taken on their own merits, in the field of anti-terrorism and non-proliferation,
fully justify the granting of such a waiver.
In this respect, the EU has stressed that the various elements of the
April Understanding have to be considered as a whole. The EU has reserved
all rights to resume the WTO Panel procedure against the LIBERTAD Act,
or begin new procedures, if measures are taken against EU companies under
the LIBERTAD or ILSA Acts.
US sub-federal sanction legislation
With regard to the multiplication of sub-federal sanction legislation
the EU hopes that a firmer position from the US Federal Government can
put a lid on this trend. The Massachusetts Selective Purchasing Law is
a prime example of sub-federal sanction legislation and we have already
started WTO consultations on this issue. We trust that an amendment to
the Massachusetts law can soon be introduced and enacted to render it
compatible with the US’s international obligations in this field.
Attachment: 11 April 1997 Understanding between the European Union and
the United States on US extraterritorial legislation
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