Sanctions and the Blurred Boundaries of International Economic Law.

• Author: Bechky, Perry S.
• Position: MISSOURI LAW REVIEW

1. INTRODUCTION

   Economic sanctions are often said to occupy a middle space between communiques and combat. (1) As this description makes clear, sanctions are a political tool--but a political tool that operates through economic regulation. They are simultaneously economic and political. (2)

   Their dual nature seems to place sanctions in a twilight zone, neither truly in nor out of the academic discipline of international economic law ("IEL"). Sanctions tend to be marginalized in IEL scholarship, generally taking little space in the IEL literature and at the podiums of IEL conferences and courses. While economic sanctions loom large today in headline news and the practice of international trade law, they are not proportionately represented in recent IEL literature. Rather, IEL scholarship seems content to leave sanctions to other disciplines like public international law, economics, and international relations. To be sure, sporadic controversies capture atten-tion--typically when they implicate other IEL concerns, as when the Helms-Burton brouhaha erupted at the then-fledgling World Trade Organization ("WTO"). (3)

   This Article contends that sanctions are part of IEL and they warrant more rigorous consideration in IEL scholarship. Sanctions may lie at the edges of the IEL field, and they surely also stand in other fields, but this is no reason for IEL to overlook them. As with "trade and labor" and the other cross-disciplinary "and" topics, exploring the edges is critical to understanding the field--its definition, nature, values, and priorities. Also, sanctions offer a rare example of economic regulation that cuts across many of the traditional subdivisions within IEL. Sanctions thus nicely illustrate Andreas Lowenfeld's observation in International Economic Law:

   [E]verything is related to everything else--trade to investment to monetary affairs, dispute settlement to sanctions and to unilateral versus collective action, economic law to 'public international law' and to 'private international law'.... [I]t is worth keeping in mind that international economic law influences, and is influenced by, both of these fields, and that the boundaries between them are inevitably blurred. (4) This Article proceeds in four parts. Part II defines key concepts and gives an overview of economic sanctions law in the United States, introducing the statutes and regulations that govern the most sweeping U.S. sanctions programs. Part III looks to the blurred external boundaries of IEL, drawing on the descriptions of the field offered by such foundational IEL scholars as John Jackson, Andreas Lowenfeld, and Georg Schwarzenberger to show that sanctions belong within IEL. Part IV turns to the blurred internal boundaries within IEL, arguing that economic sanctions warrant further attention by IEL scholars because of the rare way they cut across so many IEL subdivisions. Part IV takes a deep look at the fifty-year-old U.S. embargo of Cuba to demonstrate how it regulates together trade, investment, finance, securities, intellectual property, and more--all in a single, remarkable sentence. Finally, Part V highlights recent developments in sanctions law generating novel and timely questions for academic consideration. In keeping with the themes of this Article, the examples in Part V need cross-disciplinary cooperation between IEL and other disciplines.

   It should be noted that this Article draws mainly from U.S. examples to support its theses about the nature and significance of sanctions. These theses might also be illustrated with international and comparative examples. Similarly, the Article discusses many acts taken by the Obama administration. Again, however, while the Trump administration has started making important changes to sanctions policy, those developments continue to support the theses advanced here. After all, the nature of sanctions policy endures: it is a political tool that operates through economic regulation. Indeed, the recent trends in U.S. sanctions policy towards creative design and aggressive enforcement are both likely to continue--and may press forward (5)--making an even stronger case for scholarly attention.

2. A BRIEF INTRODUCTION TO ECONOMIC SANCTIONS

   Lowenfeld often describes economic sanctions as "economic [or trade] controls for political ends." (6) Accordingly, he defines "economic sanctions" as "measures of an economic--as contrasted with diplomatic or military--character taken by states to express disapproval of the acts of the target state or to induce that state to change some policy or practice or even its governmental structure." (7) It follows that sanctions "generally are measures taken not for economic gain, and often at commercial sacrifice" and that "the reason for [the] action... is important in making the judgment that [the] action is a sanction." (8)

   While generally aligned with Lowenfeld's understanding of sanctions as economic measures taken for political reasons, (9) this Article both enlarges his definition and focuses on a particular subset of sanctions. First, this Article eschews the state-centric limitation in Lowenfeld's definition, recognizing that recent sanctions frequently target non-state actors, including terrorist groups, transnational criminal organizations, and drug kingpins. (10) Second, this Article focuses on the broad sanctions programs administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, omitting narrower measures that also inhibit economic activity for various political reasons--such as export controls administered by the State and Commerce Departments, Lacey Act restrictions on wildlife trafficking, and denial of most-favored-nation tariff status to communist countries that restrict emigration (11)--even though similar arguments about such measures might also be made to support this Article's main theses.

   OFAC maintains numerous sanctions programs, including "country-based" programs that target governments and "list-based" programs that target specific persons. The country-based programs today target mainly Cuba, Iran, and Syria, as well as the "Crimea region of Ukraine" (12) and to some extent North Korea. (13) OFAC has over twenty list-based programs targeting a wide variety of sanctioned persons, who are named on OFAC's massive List of Specially Designated Nationals and Blocked Persons ("SDN List") or several other OFAC lists; (14) usually, the sanctions also apply to any entity that is fifty percent or more owned by listed persons. (15)

   OFAC operates mainly under the authority of the International Emergency Economic Powers Act ("IEEPA"). (16) IEEPA authorizes the President to impose economic sanctions to respond to a national emergency. In practice, this means that a President wishing to impose sanctions declares a national emergency in an executive order that simultaneously launches the sanctions program and delegates to the Treasury Department the authority to implement the program (in coordination with the State Department). (17) The President must confirm annually, for each IEEPA program, that the emergency continues.

   Congress enacted IEEPA in 1977 in a post-Watergate effort to constrain Presidential action under the Trading with the Enemy Act of 1917 ("TWEA"). (18) TWEA previously applied in times of "war or national emergency" but is now limited to wartime. (19) As Congress has not declared war since 1941, the President has not invoked TWEA even in times of armed conflict. (20) However, Congress grandfathered pre-existing TWEA sanctions--a list that has dwindled over time to the point where TWEA now governs only one program: Cuba.

   An OFAC program may impose a near-total embargo against dealings with a sanctions target or a range of lesser sanctions. For example, in response to Russia's occupation of Crimea, the United States restricted dealings with Crimea; imposed innovative "sectoral sanctions" restricting specified dealings with specified companies in Russia's defense, energy, and finance sectors; added a number of Russians to the SDN List; and tightened certain export controls. (21) The Russia program thus exemplifies several trends: it has both country-based and list-based aspects, part of the effort to make sanctions "smarter" and more targeted; it reveals the increasing variety and creativity of sanctions; and the Commerce Department's Bureau of Industry and Security ("BIS") plays an important role in administering it.

   Other statutes may expand or restrict presidential sanctions authority, either in general or focused on a particular target or class of targets. Important examples include:

   * The United Nations Participation Act ("UNPA"), which authorizes the president to act in compliance with sanctions ordered by the Security Council. (22)

   * The Helms-Burton Act and the Cuban Democracy Act, which require the president to maintain sanctions against Cuba until certain requirements are met. (23) A Congressional compromise in the Trade Sanctions Reform Act originally liberalized agricultural sales, but it imposed strict payment requirements with regard to Cuba only, which constrained the Obama administration from further liberalizing trade with Cuba in this sector. (24)

   * The Berman Amendment, which precludes OFAC from restricting trade with target countries of "information or informational materials," including art, books, and musical recordings. Congress also stopped OFAC from prohibiting travel by U.S. nationals, except travel to Cuba. (25)

   * The Iran Sanctions Act ("ISA," as amended), which requires the president to impose sanctions in certain circumstances on third-country companies that do business with Iran. (26) The ISA is a good example of a sanctions program administered mainly by the State Department rather than OFAC.

   * The Countering America's Adversaries Through Sanctions Act ("CAATSA"), which tightened sanctions against Iran, North Korea, and Russia. (27) Perhaps most...