A US business group on Friday predicted a legal nightmare and a new strain in trade relations with the European Union if Congress extends anti-terror sanctions to foreign subsidiaries of US companies.
Senator Frank Lautenberg wants to change a law that allows US companies such Halliburton, General Electric and Conoco-Phillips to do business through foreign subsidiaries in countries subject to US sanctions such as Iran.
"If we are serious about our sanctions laws, then we need to shut down this loophole," the New Jersey Democrat said in a statement. "When US companies devise schemes to thwart sanctions laws and do business with terrorists, they are funding terrorist activities."
But Dan O'Flaherty, vice president of the National Foreign Trade Council, whose board includes Halliburton and GE, said the amendment would create legal problems similar to those that followed former President Ronald Reagan's June 1982 decision to ban US companies and their European subsidiaries from participating in a Siberian pipeline project.
"This is alarming to the business community for a variety of reasons. It will generate lawsuits, WTO (World Trade Organisation) cases, as well as create frictions with our major trading partners at the political level," he said.
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