Foreign company executives often worry about the reach of U.S. sanctions for selling nuclear, missile or chemical and biological products to the wrong buyer. But companies that screen their sales with U.S. controls in mind can minimize their risk.
The sanctions for knowingly aiding missile or chemical/biological weapon efforts grew out of the Gulf War, and after discoveries that U.S. and European goods helped Saddam Hussein build bomb factories. Since 1991, U.S. manufacturers have been required to pay close attention to their product’s final use, and non-U.S. firms are wise to adopt that stance, too.
U.S. sanctions law applies even if the seller, the product and the transaction were all foreign to the United States. If the U.S. determines, for example, that a Swiss manufacturer is shipping precursor chemicals to a plant in Iran that it knows is making chemical weapons, it could lose its U.S. government contracts and be barred from doing any business with the United States. The same sanctions apply for making direct contributions to missile development in countries that are not members of the Missile Technology Control Regime (MTCR).
Last year, the U.S. Congress added nuclear technology sales to unsafeguarded plants as an offense that could trigger sanctions even if the material wasn’t a U.S.-origin product or technology, but would have been controlled under U.S. law. Nuclear sanctions are modeled on the missile and chemical/biological sanctions, but lack an import ban.
The sanctions are an effort over the last five years to make companies more responsible for their sales. “We want to take the profits out of proliferation,” says a key Congressional aide. “We want individual and corporate responsibility for this.”
A ban on government contracts could be important to European companies working on large U.S. projects, like the space station. And though the reach of U.S. law is disconcerting to one European company executive, he sees it as part of business. We don’t expect to ever be affected by these sanctions,” he says, because his company now reviews sales with an eye on U.S. law.
Sanctions against foreign companies are triggered by a Presidential finding, after consultations and negotiations with foreign governments. The U.S. President must find that a company “knowingly” exported or “materially” or “directly” contributed to a weapon of mass destruction program. Sanctions are a last resort, says one top official. “If you are subject to sanctions, you have had opportunities to correct your behavior.”