Trade Sanctions (General Legislation)
- Trading with the Enemy Act
- International Emergency Economic Powers Act
Weyinmi Uranje
Mike Wasilewski
ITRN 603
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Trading with the Enemy Act:
Overview
 12 U.S.C. § 95a, enacted in 1917 to
restrict trade with countries hostile to the
United States.
 Woodrow Wilson: WWI
 Traditional deference given to the Executive in
the realm of foreign affairs (Article II of the
Constitution)
 As of 2008, Cuba is the only country
restricted under the act.
 North Korea is the most recent country to have
the restrictions lifted.
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Legislation
 October 6, 1917: Passage of the Trading
With the Enemy Act. This act gave the
President the power to regulate, during
time of war, all financial transactions
involving any "individual, partnership, or
body of individuals residing within any
nation with which the U.S. is at war."
 On March 9, 1933, five days after
Roosevelt's inauguration and four days
after he had declared a national
emergency, Congress passed the
Emergency Banking Act, which amended
the Trading With the Enemy Act to
include regulation of transactions not only
with the enemy but also between
Americans during time of war or national
emergency.
 Executive Order 6102: Gold Confiscation
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Legislation
Amended in 1977
 Only to be used in a time of war
 Concern about “National Emergency” powers
invoked too easily by President
 Existing uses could be extended for successive one
year periods
 As of today, only Cuba’s “National Emergency”
sanction programs continue
 Treasury Department's Cuban Assets Control Regulations,
originally established in July 1963, which continues to impose full
economic sanctions on Cuba and its nationals.
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Timeline
Event
Justification
Notes
1917 WWI
Time of War
Foreign Policy
1933 Banking
“Emergency”
“National Emergency”
• Not a matter of Foreign Policy.
• A domestic economic trade issue
• Did not apply to only enemies… applied to
US citizens
WWII
Time of War
Foreign Policy
Korean “Conflict”
“National Emergency”
No declared war
Cuban “Emergency”
“National Emergency”
No declared war
1977 Amendment
•
•
•
•
Remove National Emergency Language
Reigned in unchecked Presidential Authority
Grandfather in existing embargoes.
Renewed on a yearly basis.
Major Problems
 Presidential Authority
 Defined too broadly
 War vs National Emergency
 Enemies vs US Citizens (Foreign vs Domestic)
 Embargo as a foreign policy tool
 US in continuous state of some National
Emergency since 1933
 Extraterritoriality
 Ex: Canada and EU objections to Cuba sanctions (not a
time of war)
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One Issue: Cuba
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One Issue: Cuba
 Background
 Following the Cuban Missile Crisis, Kennedy imposed travel restrictions
on February 8, 1963, and the Cuban Assets Control Regulations were
issued on July 8, 1963, under the Trading with the Enemy Act in
response to Cubans hosting Soviet nuclear weapons. Under these
restrictions, Cuban assets in the U.S. were frozen and all other existing
restrictions were consolidated.
 Cuba is the only country against which sanctions derived from the
1917 Trading with the Enemy Act are still in place
 Competing Interests




EU and Canada
Farmers and other business
Amnesty International
Right to travel
 Critiques
 Makes Castro stronger while hurting the ordinary citizens
 US is the villain/scapegoat
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Continuation of The Trading
with the Enemy Act
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One Issue: Cuba
 Amnesty International: Report: U.S. sanctions put
Cubans' health at risk
 Obama announced that he is rolling back a ban
on Cuban-Americans visiting their families or
sending money to relatives still on the island—
and that's a good start
 US poll on Cuban embargo: opinion split fairly
evenly
 29% have no opinion
 US treatment of Cuba disproportionate?
 What about trade with China? A double
standard?
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Policy Proposal
 Do not renew the Cuban Embargo at
the next yearly deadline for extension
 This will remove the last of the grandfathered
embargoes under the Trading with the Enemy
Act
 Obama follow through on previous statements
to lift the embargo
 UN heavily condemns
 All other sanctions enacted by the
President have had more restrictions and
greater Congressional oversight since
the act was amended in 1977
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International Emergency
Economic Power Act (IEEPA)
 (P.L. 95-223, 91 Stat.1626) was enacted in 1977 as a
refinement of the Trading with the Enemy Act
(TWEA).
 Before this act, the TWEA provided a source of
presidential emergency authority as well as war
time authority.
 The IEEPA falls under the National Emergence Act ,
therefore an emergency declared under the act
must be renewed annually to remain in effect, and it
can be terminated by congressional resolution.
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Historical Background
 The IEEPA was enacted by congress in 1977 as a
way of clarifying the presidents power with regards
to declaration of national emergences.
 This started with President Franklin D. Roosevelt in
1933; whereby presidents claimed the power to
declare emergence without limiting their scope or
duration, without citing the relevant statues, and
without reporting to congress.
 In cases like “ Youngstown Sheet and Tube Co. v.
Sawyer”, the supreme court limited the president’s
response to such emergencies, but did not limit the
emergency declaration power itself.
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Provisions
 The IEEPA authorizes the president “to deal with any unusual
and extraordinary threats to the national security, foreign
policy or economic of the United States. The source of this
threat has to be whole or substantially outside of the United
State
 If ever the president declares a national security in regards
to this threat, “ Under this authority the president may “
investigate, regulate, or prohibit any transaction in foreign
exchange” and also “ investigate, regulate, direct, comply,
nullify, void prevent or prohibit the exportation of any
property in which any foreign country or foreign national has
an interest in.
 The IEEPA also gives the president the broad authority over
financial transactions, and property in which any foreign
country, foreign citizen or people aiding this foreign country
is interested in. This can only be done when the president
declares a national emergency under this act.
 Before any of this provisions can be enacted, the president is
subject by requirement / the United States Federal Law to
consult and report to congress periodically.
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Differences between the TWEA
and the IEEPA
There are specific statutory authorities that existed in
TWEA, but no longer in IEEPA.
 The power to “vest” (i.e expropriate) property in
which foreign states or their nationals have an
interest
 The power to regulate purely domestic transactions
 The power to regulate purely gold or silver coins or
bullions (Roosevelt)
 The power to seize records.
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IEEPA Restrictions
Under the new regulations,
 The president does not have the power to :
regulate or prohibit personal communication that
does not involve the transfer of anything of value.
 The president does not have the power to regulate
uncompensated transfer of articles for
humanitarian aid unless he determines that the
transfer of this type would either seriously impair his
ability to deal with the emergency situation, or
endanger U.S armed forces.
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IEEPA Restrictions
Cont’d
Under the new regulations,
 The president does not have the power to : regulate
or prohibit personal communication that does not
involve the transfer of anything of value.
 The president does not have the power to regulate
uncompensated transfer of articles for humanitarian
aid unless he determines that transfer of this type
would either seriously impair his ability to deal with
the emergency situation, or endangers U.S. armed
forces.
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Challenges on IEEPA
 U.S citizens have challenged the use of IEEPA
designation on them, because it deprives them of
their right of speech and their right of association.
 Its been challenged for imposing criminal punishments
on U.S citizens without showcasing procedural
protections required by the bill of rights.
 Also due to the assumption that it affects the fifth and
sixth amendment of the bill of right.
 The IEEPA designation on foreign entities have a
detrimental effect on Americans who do business or
bank or travel to these states.
 U.S citizen claim that IEEPA designation also takes
private property for public use without just
compensation.
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Use of IEEPA IN CASES
There are some major cases whereby the president
has used the power given to him by the IEEPA.
 1979-1981 was the first time the president used the
IEEPA, and it was based on the crisis involving Iran
holding U.S diplomatic and consular personnel
stationed in Teheran as hostages.
 Supreme Courts decision on Dames and Moore v.
Reagan (1981)
 The First Circuit Decision in Chas. T. Main Int’l v.
Khuzestan Water and Power Auth, (1981).
 The D.C Circuit decision in American Int’l group v.
Islamic Republic of IRAN (1981).
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IEEPA Emergencies
As of 2011, different states and people have been
sanction under the IEEPA for different reasons.
States like
 Iran (since 1979 for the Iran hostage crisis and
subsequent sponsor ship of terrorism)
 Sudan (1997 for human rights violation and
sponsoring terrorism)
 Russia (since 2000 to prevent the export of
weapons-grad uranium)
 Zimbabwe( Since 2003 for undermining
democratic institutions)
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IEEPA Emergencies (Cont’d)
 North Korea (Since 2008 for risk of the proliferation of weapon
– usable fissile material)
 Libya (2011 for attacks on unarmed civilians)
Under the IEEPA, people are sanctioned for multiple reasons.
Some of these reasons are
 Former officials of Ba’ath government of Iraq (since 2003).
 Persons generally that support or threaten to commit
terrorism, including affiliates of al –Qeada (since 2001).
 Persons contributing to the conflict in Cote d’ ivoire and
Democratic Republic of Congo (Since 2006)
 Persons who threaten the stabilization efforts in Iraq with
violence ( since 2007)
 Persons that engage in or support proliferation of weapon of
mass destruction(since 1994).
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Amendment on the IEEPA law
A bill to amend the IEEPA was introduced into the 110 congress on June 17 2007, it was
passed on June 26, 2007 and signed into law by President bush on October 16 2007.
Congress amended the IEEPA bill by adding tougher regulations. Senator Christopher
Dodd sponsored this bill.
SEC. 2. INCREASED PENALTIES FOR VIOLATIONS OF IEEPA.
 (a) In General- Section 206 of the International Emergency Economic Powers Act (50
U.S.C. 1705) is amended to read as follows:
SEC. 206. PENALTIES.
 (a) Unlawful Acts- It shall be unlawful for a person to violate, attempt to violate,
conspire to violate, or cause a violation of any license, order, regulation, or prohibition
issued under this title.
 (b) Civil Penalty- A civil penalty may be imposed on any person who commits an
unlawful act described in subsection (a) in an amount not to exceed the greater of--
 (1) $250,000; or
 (2) an amount that is twice the amount of the transaction that is the basis of the
violation with respect to which the penalty is imposed.
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Amendment on the IEEPA LAW
 (c) Criminal Penalty- A person who willfully commits, willfully attempts to
commit, or willfully conspires to commit, or aids or abets in the
commission of, an unlawful act described in subsection (a) shall, upon
conviction, be fined not more than $1,000,000, or if a natural person,
may be imprisoned for not more than 20 years, or both.'.
(b) Effective Date (1) CIVIL PENALTIES- Section 206(b) of the International Emergency
Economic Powers Act, as amended by subsection (a), shall apply to
violations described in section 206(a) of such Act with respect to which
enforcement action is pending or commenced on or after the date of
the enactment of this Act.
 (2) CRIMINAL PENALTIES- Section 206(c) of the International Emergency
Economic Powers Act, as amended by subsection (a), shall apply to
violations described in section 206(a) of such Act with respect to which
enforcement action is commenced on or after the date of the
enactment of this Act.
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Recommendation on IEEPA
 Sanctions should be placed on states and people based on the
actual definition of the IEEPA , which is a national emergency can be
called for only when a foreign nation or citizen is a direct threat to
the United states.
 When sanctions are placed on states the U.S has to take into
consideration the humanitarian impact of this sanction. A good
example is Cuba and the detrimental effect the IEEPA has had on
the country.
 The U.S should take into consideration the rulings of the UN, and its
allies especially on sanctions that can directly affect trade relations
between two countries. For example, since the U.S has placed a
sanction on Cuba, it is harder for countries like Canada and the EU to
trade with Cuba.
 It is important that sanctions on states should only affect persons that
threaten the stability of the state; like the ruling party or political
party. It should never affect the country as a whole.
 The IEEPA sanctions or embargos should never prohibit the supply of
food or medicine to the state. Because the sanction automatically
become a direct threat to stability of that particular state.
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Sources
 http://www.encyclopedia.com/topic/Trading_wi
th_the_Enemy_Act.aspx
 http://en.wikipedia.org/wiki/International_Emerg
ency_Economic_Powers_Act
 http://www.harvardjol.com/wpcontent/uploads/2011/02/95-136.pdf
 http://www.answers.com/topic/internationalemergency-economic-powers-act
 http://www.govtrack.us/congress/bill.xpd?bill=s1
10-1612
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