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
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.