Thank you, Mr. Chairman, and I commend you for holding a timely hearing on an important topic.

Evolution of U.S. Sanctions

The U.S. needs economic sanctions in its foreign policy toolkit. Sanctions can be a useful option between diplomacy and sending in the troops.

But I believe that unilateral sanctions are, on balance, damaging U.S. interests.

We are imposing sanctions much more frequently. The United States has imposed foreign policy sanctions 100 times since World War II, but more than 60 times just since 1993. Seventy-five countries are now subject to, or threatened by, U.S. sanctions. U.S. laws authorize 21 different sanctions targeting 27 different kinds of foreign conduct. The increasing frequency and scope of unilateral sanctions should concern us for three reasons.

Unilateral Sanctions Don't Work

First, unilateral sanctions don't work. They rarely achieve their objectives. They fail because the world economy has become too interdependent. When we act alone to deny another country access to our products or our markets, it usually has plenty of alternatives.

Unilateral Sanctions Hurt Our Economy

Second, unilateral sanctions harm our economy. They reduce U.S. exports - by $15 to $19 billion annually, according to a study conducted by one of our witnesses today, Jeffrey Schott, from the Institute for International Economics.

Now I recognize that $19 billion is not a lot of money in a $7 trillion economy, but it still means a loss of tens of thousands of good-paying export sector jobs. Calculations of the economic impact of sanctions understate their actual cost. As many U.S. executives have reported, America's reputation for sanctions is prompting foreign customers to steer clear of U.S. firms.

Unilateral Sanctions Harm our Foreign Policy

Third, unilateral sanctions harm American foreign policy.

- Unilateral sanctions - especially full trade embargoes - often victimize the innocent. Leaders of countries can insulate themselves from economic pain. Poor people cannot.

- Unilateral sanctions are often counterproductive. When we act alone to punish a bad government, we give it a scapegoat for problems of its own making.

- Unilateral sanctions laws, when they include automatic, unwaivable sanctions, deny the President the authority and flexibility he needs to promote U.S. foreign policy interests.

India & Pakistan

A powerful example of the damaging impact these automatic, unilateral sanctions can have on U.S. foreign policy are the sanctions the President must impose on India and Pakistan under the 1994 Nuclear Proliferation Prevention Act.

Because Pakistan's economy is in far worse shape than India's, U.S. sanctions - which the President may not adjust - will hit Pakistan much harder than they hit India. The U.S. will be perceived throughout South Asia as favoring India - certainly not what Congress intended. It also means Pakistan's economy will be in danger of defaulting. Nothing could be more threatening to this region's stability than a political and economic crisis in Pakistan.

Religious Persecution Act

Another bill that would require the President to impose a rigid list of sanctions in response to unknowable future circumstances is the House-passed Freedom from Religious Persecution Act.

If the Religious Persecution Act were to become law, a friendly country that engages in economic persecution of a religious community would be hit with the exact same sanctions as a hostile country that slaughtered a religious group. The Administration would have no discretion, and U.S. national interests would suffer.

Helms Burton & ILSA

Finally, two recent sanctions laws - the Helms-Burton and Iran-Libya Sanctions Acts have undermined U.S. foreign policy leadership.

There is no convincing evidence that either law has promoted change in the policies or regimes of targeted countries. Yet there is clear evidence that both laws have harmed U.S. foreign policy interests well beyond Cuba, Iran, and Libya. They have:

- Damaged relations with some of our very closest friends -- countries whose support we count on for many important foreign policy and trade initiatives; and

- Given comfort to the leaders of Iran, Libya, and Cuba. The state- controlled media in Iran and Cuba have paid a lot of attention to international condemnation of the United States.

A couple of weeks ago, thanks to the impressive work of today's first witness, Under Secretary Eizenstat, the United States was able at least temporarily to resolve the principal disputes caused by these laws. These diplomatic achievements deserve the support of Congress.

On ILSA, the Administration's decision to waive sanctions against three foreign firms was clearly in the U.S. national interest. Sanctioning this deal would have jeopardized the achievement of several extraordinarily important foreign policy objectives.

It would have:

- Undermined U.S. efforts to maintain a multilateral coalition to contain Iraq.

- Reduced multilateral cooperation on Iran.

- Extinguished any hope of drawing Iran's new, democratically-elected President into a constructive dialogue on issues of concern to us.

- Jeopardized our efforts to persuade Russia to stop missile cooperation with Iran.

- Sent our disputes on ILSA and Helms-Burton back to the World Trade Organization, threatening the integrity of that vital organization.

On Helms-Burton, the United States and the EU reached tentative agreement on measures that will restrict investment in illegally confiscated property world-wide. For this deal to be completed, Congress will need to approve a Presidential waiver for the immigration restrictions of Helms-Burton. We should do so, because this agreement is too valuable to pass up. It will:

- Increase protection for the property rights of Americans worldwide.

- Resolve a dispute with our most important allies and trading partners.

- Put the promotion of democratic change, rather than U.S. disputes with its allies, back at the center of multilateral discussions on Cuba, and

- Reduce investment in properties that were illegally confiscated in Cuba.

The U.S.-EU agreement on Helms-Burton deserves the support of Congress. It represents an unprecedented step forward for global property fights. It ends a major dispute with our allies. And it will make it easier for us to cooperate with them on steps to promote democracy in Cuba.

H.R. 2708 Mr. Chairman, I would like to close by making a brief statement in support of H.R. 2708, a bill I introduced late last year along with Congressmen Bereuter and Manzullo.

Remarkably, no U.S. law requires an assessment of the impact of foreign policy sanctions before or after they are imposed. H.R. 2708 would change that. It would require a committee reporting a unilateral sanctions bill to request an analysis by the President of the bill's likely impact on U.S. foreign policy, economic, and humanitarian interests, and an analysis by CBO of its impact on the private sector. The President would be required to prepare a similar analysis of sanctions he wanted to impose.

H.R. 2708 also establishes some guidelines for future sanctions. It would require that they expire after two years, unless reauthorized; protect existing contracts; be targeted narrowly on responsible actors; and minimize interference with the work of private humanitarian organizations.

H.R. 2708 would not impact any sanctions currently in effect or prohibit any future sanctions. It would not limit the President's ability to impose sanctions in emergencies. It would not affect any sanctions imposed under U.S. trade, arms export, health, or safety laws, or under multilateral agreements on proliferation, the environment, or other international issues.

I view H.R. 2708 as a "yellow light" for sanctions, not a "red light." It would ensure that, before we impose sanctions unilaterally, we have in hand better information on their potential costs and benefits. And if we chose to act unilaterally, H.R. 2708 would strengthen U.S. sanctions by reducing their domestic cost and minimizing their harm to innocent citizens.

I'd be glad to answer any questions about H.R. 2708, and I thank the Chairman for the opportunity to make some remarks. I look forward to the testimony.