NEWS

WASHINGTON, April 16 (Summary of Reuters Article) - Dan O'Flaherty, vice president of the National Foreign Trade Council, whose board includes Halliburton and GE, complained about pending legislation in Congress that would extend anti-terror sanctions to foreign subsidiaries of U.S. companies. Mr. O'Flaherty predicted a strain in trade relations with the European Union if the legislation becomes law. The legislation, proposed by Sen. Frank Lautenberg, would make it illegal for U.S. companies like Halliburton, General Electric and Conoco-Phillips to do business through foreign subsidiaries in countries subject to U.S. sanctions such as Iran. "If we are serious about our sanctions laws, then we need to shut down this loophole," Sen. Lautenberg said in a statement quoted by Reuters. "When U.S. companies devise schemes to thwart sanctions laws and do business with terrorists, they are funding terrorist activities," he said.

"This is alarming to the business community for a variety of reasons. ... It will generate lawsuits, WTO (World Trade Organization) cases, as well as create frictions with our major trading partners at the political level," O'Flaherty told Reuters.

After U.S. sanctions against Libya were imposed in 1986, the United States had repeatedly limited investment and trade prohibitions to U.S.-based companies and not their foreign subsidiaries. Most of these subsidiaries are based in European countries, which do not ban trade with Iran and other countries the United States accuses of sponsoring terrorism, trade council officials told Reuters. Sen. Lautenberg will attach his legislation to a Senate bill aimed at resolving an existing trade dispute with the European Union by repealing a set of corporate tax breaks that the WTO says are illegal export subsidies.