Sanctions

From wartime laws to modern financial controls, US sanctions have reshaped global trade, testing sovereignty, alliances and the credibility of multilateral institutions

- DIPANKAR DEY

The United States has been undermining the global trading system since 1917, when the United States entered the First World War. That year, Congress passed the Trading with the Enemy Act (TWEA) to ‘define, regulate, and punish trading with the enemy’.

This statute conferred on the President wide-ranging powers to restrict trade between the United States and foreigners or countries considered enemies during wartime. Currently, TWEA remains the underlying legislation only for sanctions against Cuba. Even after the formation of the United Nations in 1945 and the World Trade Organisation (WTO) in 1995, the US could not be restrained.

Congress has, from time to time, issued a plethora of legislation with respect to sanctions and foreign policy that either authorises or mandates the US President, the US Department of the Treasury, or other federal departments to impose certain sanctions. The significant legislations are: Treasury's Office of Foreign Assets Control (OFAC), the International Emergency Economic Powers Act (IEEPA), and the United Nations Participation Act (UNPA), Section 301 of the US Trade Act of 1974 -usually referred to as Super 301. Pursuant to IEEPA, the President can declare a national emergency and issue executive orders to address that national emergency by, among other things, freezing the assets of and prohibiting financial transactions with any country, entity or person determined to be a threat to the United States.

A THREAT TO THE GLOBAL RULE-BASED ORDER

Repeated use of discriminatory policies, reciprocal tariffs, and unilateral sanctions used by the USA, that contravene WTO commitments, breaks the rule-based international order. Due to the prolonged noncooperation of the USA, the Dispute Settlement Mechanism (DSM) of the WTO has become almost defunct.