Senate Finance Chairman Max Baucus unveiled legislation today to strengthen U.S. sanctions on Iran due to its pursuit of a nuclear program, announcing he intends to mark up the bill Wednesday. The move comes as British Prime Minister Gordon Brown, in a news conference with President Bush, announced that his country and the European Union will impose tougher sanctions against Tehran. Baucus' measure is based on a bill from Sen. Gordon Smith, R-Ore., but he has softened some items to assuage industry opposition and broader concerns about the bill's impact on U.S. diplomacy. Baucus' bill would preserve the core of Smith's measure, which codifies executive orders banning direct or indirect trade of most products between the United States and Iran; prohibits the extension of trade preferences to Iran or that country's accession to the World Trade Organization; freezes assets of certain Iranian diplomats and representatives deemed to be involved in nuclear proliferation; and subjects U.S. parent companies to sanctions if they knowingly participate in violations of sanctions law by a foreign subsidiary.
One key change Baucus made was to remove a provision that would have eliminated tax incentives for oil companies that invest in Iran. That change is aimed at shoring up support on the Senate floor as well as sidestepping the constitutional requirement that measures affecting the tax code begin in the House. The bill would still require the president to report to Congress on any U.S.-based persons and companies that have invested in Iran's energy sector, and the amounts of those investments. Baucus made some changes to improve compliance with WTO rules, such as removing a provision that could penalize trade preferences or WTO accession for third countries determined to be aiding Iran's nuclear program. The bill would also allow a presidential waiver of most of the bill's provisions if the president determines it to be "in the national interest," which is a welcome change from Smith's bill, said National Foreign Trade Council President William Reinsch. He added his group still would rather see the sanctions matter handled diplomatically rather than legislatively. "These are all constructive changes [made by Baucus], but that doesn't mean the Senate couldn't have spent its time more constructively," Reinsch said.
The bill keeps in place a prohibition on the United States entering into a nuclear cooperation agreement with Russia until the president certifies to Congress that Moscow has suspended all nuclear assistance to Iran, which Reinsch argues could hurt the two countries' relationship. "We think that's more an issue that should be dealt with by the Foreign Relations Committee," he said. A spokeswoman for Foreign Relations Chairman Joseph Biden could not be reached for comment by presstime. The House has passed an Iran sanctions bill, which was referred to the Senate Banking Committee. That could pose an additional jurisdictional hurdle for the bill, as Banking Chairman Christopher Dodd has yet to announce his intentions. "Right now the committee's still weighing all of our options, including legislation," a committee aide said.
This article appears in the June 21, 2008 edition of National Journal Daily PM Update.