United States: Legal Bases For Iran Sanctions, Cuba Sanctions, And NAFTA

Last Updated: January 10 2017
Article by Louis Rothberg and Margaret M. Gatti

How easily can the Trump administration change the status quo?

The International Emergency Economic Powers Act (IEEPA), 50 U.S.C §§1701-1707 enacted October 28, 1977, authorizes the US president to broadly regulate international commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has a foreign source. IEEPA is the current legal basis for most US economic sanctions other than the Cuba sanctions for which the legal basis is the Trading with the Enemy Act of 1917, (TWEA) 50 U.S.C. App. §§ 1—44.

Using IEEPA, the president may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise, investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States, and may issue such regulations, including regulations prescribing definitions, as may be necessary.

Economic sanctions begin typically when the president declares a national emergency under IEEPA for a particular foreign situation via an executive order published in the Federal Register. Executive orders (EOs) are legally binding orders issued by the president, acting as the head of the executive branch, to federal administrative agencies. EOs are generally used to direct federal agencies and officials in their execution of congressionally established laws or policies. They do not require congressional approval to take effect but have the same legal weight as laws passed by Congress. The president's source of authority to issue EOs is Article II, Section 1 of the US Constitution, which grants to the president the "executive Power." Section 3 of Article II further directs the president to "take Care that the Laws be faithfully executed."

EOs can be challenged in court, usually on the grounds that the order deviates from "congressional intent" or exceeds the president's constitutional powers. Courts generally have been accepting of presidential EOs made pursuant to a specific grant of authority as stipulated in an act of Congress. No EO declaring an emergency under IEEPA to impose economic sanctions has been voided by the courts. Typically in an IEEPA EO, the president directs the US Treasury Department's Office of Foreign Assets Control  (OFAC)  to implement regulations in coordination with other departments to carry out the EO.

Iran

On January 16, 2016, President Obama issued EO 13716 which revoked or modified various other Iran-related EO's that he had previously issued to implement sanctions against Iran, as authorized under IEEPA. No congressional action was required for the issuance of the previous EO's and likewise none was required for the issuance of  EO 13716. To implement  EO 13716, OFAC revised its licensing policies toward Iran and relaxed many US sanctions that were in effect until January 15, 2016.

Given that President Obama used EO's to implement sanctions against Iran and then issued a separate EO to revoke or modify previously issued Iran-related EO's, it stands to reason that President-elect Donald Trump, upon taking office, can likewise unilaterally amend or revoke EO 13716, issue a new EO to reinstate the EO's that were revoked or modified by EO 13716, or  issue one or more additional EOs under IEEPA to impose new economic sanctions against Iran, both with respect to the activities of US and non-US persons involving Iran.

Cuba

As of 2017, Cuba is the only country restricted under the TWEA. The Cuba sanctions began before IEEPA was enacted in 1977, and thus TWEA was the main source of statutory authority for Cuban sanctions. TWEA restricts trade with countries hostile to the United States and authorizes the president to restrict trade between the US and its enemies in times of war. IEEPA grants somewhat broader powers to the president and is invoked during states of emergency when the country is not at war.

On October 14, 2016, President Obama issued a Presidential Policy Directive (not an EO) on Cuba which stated in part as follows:

"The United States Government will seek to expand opportunities for US companies to engage with Cuba. The embargo is outdated and should be lifted. My administration has repeatedly called upon the Congress to lift the embargo, and we will continue to work toward that goal. While the embargo remains in place, our role will be to pursue policies that enable authorized US private sector engagement with Cuba's emerging private sector and with state-owned enterprises that provide goods and services to the Cuban people. Law enforcement cooperation will ensure that authorized commerce and authorized travelers move rapidly between the United States and Cuba. Although we recognize the priority given to state-owned enterprises in the Cuban model, we seek to encourage reforms that align these entities with international norms, especially transparency.

"United States regulatory changes have created space for the Cuban government to introduce comparable changes. In tandem with the Department of the Treasury's regulatory change to expand Cuba's access to the US financial system and US dollar transit accounts, the Cuban government announced in early 2016 plans to eliminate the 10 percent penalty on US dollar conversion transactions, subject to improved access to the international banking system. We will sustain private and public efforts to explain our regulatory changes to US firms and banks, Cuban entrepreneurs, and the Cuban government."

In January 2015, the US government, through amendments to the US Commerce Department's Export Administration Regulations [EAR] and OFAC's Cuba regulations, began to liberalize US trade restrictions with Cuba to carry out President Obama's December 17, 2014, declaration of a new US-Cuba policy. The new rules, issued in separate waves in 2015 and 2016, nonetheless leave the comprehensive US embargo against Cuba largely in effect.

For its part, the Cuban government has reacted very leisurely in revising its own laws and regulations to fully accept and implement within Cuba the limited relaxation that the new US rules authorize.

President-elect Trump can unilaterally amend or revoke any or all of these relaxations in the Cuba sanctions and issue new directives under TWEA restoring the status quo as of December 17, 2014.

NAFTA

Article 2205 of the North America Free Trade Agreement [NAFTA] allows the US to withdraw with six months' written notice:

"A Party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties. If a Party withdraws, the Agreement shall remain in force for the remaining Parties."

To whom in the US government does the constitution grant the power to terminate or withdraw from treaties? Arguments may be made that the power belongs to the president alone, the president and Senate, or in Congress. Thus, President-elect Trump can assert that he alone has the authority to withdraw the United States from NAFTA.

Historical practice provides support for all these arguments, and there is no definitive clarity on the question of how a treaty, once ratified, must be terminated. See Goldwater v. Carter, 617 F.2d 697 (D.C. Cir.) (en banc), vacated and remanded, 100 S. Ct. 533, 444 U.S. 996 (1979).

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions