The 'don' of a New Era: Untangling the Sanctions Policy of the Trump Administration and Its Compliance Implications
| Publication year | 2017 |
| Author | By Saskia Rietbroek and Anna Sayre* |
By Saskia Rietbroek and Anna Sayre*
On November 8, 2016, the American voters chose to elect Donald J. Trump as the 45th President of the United States. No matter what your opinion about the outcome of the election, the billionaire and former reality TV star has changed the face of American political norms and signaled a possible departure from existing foreign policy and sanctions law.
Being properly prepared for such changes is essential to those in the sanctions and trade controls fields as it could have a broad impact on compliance duties and day-to-day responsibilities. Sanctions lawyers and compliance officers in the U.S. and abroad must keep one step ahead of any changes to economic sanctions policy that the Trump administration can be expected to establish and implement.
This article will endeavor to unravel the comments and assertions made by President Trump and his top assistants concerning economic sanctions and export controls so that legal and compliance professionals may make informed decisions as to the likely positions of the new administration during the next four years. Our analysis will focus on four countries on the forefront of current sanctions policy: Iran, China, Russia and Cuba.
Before discussing his statements, it is important to understand the scope of the President's power to invoke change.
In contrast to other democratic leaders around the world, the U.S. President has substantial power to enforce, strengthen, and waive sanctions with a stroke of a pen.1 Although sanctions may be issued by Congressional legislation, many sanctions imposed by the Treasury Department's Office of Foreign Assets Control (OFAC) come from the exercise of presidential national emergency powers. The International Emergency Economic Powers Act (IEEPA) grants the President broad authority to respond to "unusual or extraordinary threat[s]" to national security, foreign policy, or the economy of the U.S.2 The President exercises this authority issuing Executive Orders (EOs) on the basis of what he or she declares to be a "national emergency."3
Following the September 11th terrorist attacks, the President's IEEPA powers were expanded by the USA Patriot Act of October 2001,4 which strengthened security controls across the board in an omnibus fashion. Among other things, the Act allows the assets of a foreign national that supports or engages "hostilities or attacks against the United States" to be blocked without a prior hearing or clear evidence of wrongdoing pending the outcome of the investigation into the suspected conduct.5
A. The New "America First" AgendaDuring his campaign, one of Trump's biggest promises hinged on the pledge to put "America first," or in other words to prevent other nations from taking advantage of the U.S. by prioritizing American business and trade. According to the White House, it is fully "committed to a foreign policy focused on American interests and American national security."6 This is what it calls the "America First Foreign Policy."7
The idea of U.S. isolationism is by no way a new concept to the American people. Even George Washington in 1796 famously warned in his farewell address against being "engaged in frequent [European] controversies, the causes of which are essentially foreign to our concerns."8 These views continued through the First and Second World Wars, with Charles Lindbergh—the 1941 face of U.S isolationism and the America First Committee—explaining that: "[The America First policy] is based upon the belief that the security of a nation lies in the strength and character of its own people... It is a policy not of isolation, but of independence."9 Since that time, these ideas have mostly lost steam due to world globalization and numerous international treaties connecting the world.
Now, Trump's "America First" agenda seeks once again to isolate the U.S. from the world. However, in contrast to its historical counterparts, Trump's theory focuses more on economic isolation, which includes: "putting American workers and businesses first," "defeating ISIS," "rebuilding the American military," and potentially renegotiating a number of trade deals by "pursuing a foreign policy based on American interests."10
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In 2015, the Obama Administration set in motion negotiations that would ultimately lead to a global nuclear deal agreed to in Vienna on July 14, 2015 between Iran, the P5 + 1 (the five permanent members of the U.N. Security Council—China, France, Russia, U.K. and U.S.—plus Germany) and the European Union.11 This agreement, otherwise known as the Joint Comprehensive Plan of Action (JCPOA), was officially implemented on January 16, 2016 (Implementation Day) and partially suspends nuclear-related sanctions on Iran by the U.S., E.U. and U.N. in exchange for Iran agreeing to dismantle its nuclear infrastructure.12 In the U.S, the JCPOA was largely put into force through EOs and therefore does not need Congressional approval to be revoked.
A. Trump's Ambitions to Dismantle the JCPOAPresident Trump has expressed an extreme aversion to the JCPOA on a number of occasions. During his 2016 presidential campaign, Trump underscored his opposition to the JCPOA, frequently describing it as a "horrible deal"13 and vowing to "tear up"14 the landmark nuclear agreement in his first few days in office. He also called the agreement "one of the worst deals ever made by any country in history,"15 saying his "No. 1 priority [was] to dismantle the disastrous deal with Iran."16
During a radio interview in July 2015, Trump already expressed reservations regarding a potential nuclear deal with Iran:
Well, it's just insulting, it's such a bad deal.... That I can tell you. It's pathetic. It's disgraceful, it's incompetent. (...) They should have doubled up the sanctions. I mean double and triple up the sanctions, and had them come. They are dancing in the streets of Iran right now. It's... an absolute disgrace.17B. Secretary of State Rex Tillerson's Businesslike Foreign Policy
The position of U.S. Secretary of State is a lofty one, which is steeped in history. Under the U.S. Constitution, it is for the President to determine U.S. foreign policy, and the Secretary of State acts as his chief advisor in such matters.18 Since its inception in 1789, the Secretary of State's duties relating to foreign affairs have not changed significantly, but they have become more complex as international commitments multiply. One of these duties is to negotiate, interpret, and/or terminate trade agreements and treaties; another is to advise on foreign affairs, including sanctions policy.
Despite Trump and Former White House Strategist Steve Bannon's sharp criticisms, Tillerson has expressed openness to the possibility of U.S. companies doing business with Iran. As Secretary of State, the views of former ExxonMobil CEO, Rex Tillerson, on foreign affairs are particularly important due to the significant role the State Department plays in sanctions policy and implementation.
In fact, the U.S. State Department has, arguably, the greatest influence of any U.S. department over the implementation of U.S. sanctions policy. Among other things, it coordinates the creation, modification, and termination of sanctions regimes through the Counter Threat Finance and Sanctions Bureau (TFS), regulates U.S. exports, specifically exports of defense items, through the Directorate of Defense Trade Controls (DDTC) and it designates suspicious foreign individuals or entities as Foreign Terrorist Organizations (FTOs) or Specially Designated Global Terrorists (SDGTs) under the Immigration and Nationality Act as well as EO No. 13224.
During an interview with CNBC's Becky Quick on March 3, 2016, when asked about doing business outside the U.S., the then-CEO of ExxonMobil made it clear that the company would "certainly take a look" at investing in Iran "because it's a huge resource-owning country."19 Further, during his confirmation hearing, Tillerson said he would conduct a "full review" of the Iran deal as Secretary of State.20
On March 2, 2017, Tillerson held private talks with the Director General, Yukiya Amano, Head of the International Atomic Energy Agency (IAEA), the UN's atomic watchdog, regarding Iran. This was the first direct meeting between the agency monitoring the Iranian nuclear accord and a senior official from the Trump administration. As the meeting was a private one, the details and points discussed have been kept strictly confidential. For now, however, it is likely that the JCPOA was a top item on the agenda.
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In June 2017, Tillerson admitted that he and President Trump disagree over key issues regarding Iran, namely whether or not to scrap the nuclear deal altogether. "He and I have differences of views on things like JCPOA, and how we should use it," Tillerson said at a State Department briefing. Tillerson said that Washington could "tear it up and walk away" or stay in the deal and hold Iran accountable to its terms."21
On July 17, 2017, the Trump Administration reportedly certified, for the second time, and in accordance with the Iran Nuclear Agreement Review Act (INARA), that Iran was compliant with the JCPOA.22 According to INARA, the President is required to certify to Congress every 90 days that Iran is in compliance with its obligations under the JCPOA.23 If the President does not certify Iran's compliance or advises Congress that the country has materially breached its obligations, then the statute provides for expedited congressional consideration of legislation re-imposing sanctions.24
For the time being, it seems that President Trump intends to preserve the deal, however in light of his distaste for the JCPOA, it is still unclear whether or not he will keep doing so indefinitely.
C. Treasury...To continue reading
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