Red tape could curb firms' reconstruction work in Iraq

While some U.S. companies may be poised to help with reconstruction and humanitarian aid in Iraq, they will not be able to conduct business there until Congress repeals a 1990 law that bars American firms from doing any work in the country.

Hence, the National Foreign Trade Council (NFTC) will push lawmakers next week to adopt the Senate-passed version of the emergency spending bill for fiscal 2003 because it would repeal the act once a new regime is installed in Iraq. The House-passed version of the bill would merely allow the president to waive the act until September 2004.

"As it turns out, there are significant obstacles to companies doing anything in Iraq ... even with regard to humanitarian efforts," said NFTC President William Reinsch, who has been working with White House staff to identify export barriers to U.S. business operations in Iraq.

At a lunch for reporters, Reinsch identified telecommunications equipment and computer-powered medical supplies as two types of humanitarian aid that could be stymied if Congress does not lift the sanctions. Without that action, he said, companies from other countries could have an immediate advantage over the United States when the war ends.

Reinsch cited history as precedent. After the war in Kosovo, the industrial equipment manufacturer Caterpillar could not sell bulldozers to U.S. military forces in Kosovo because the United States was slow in lifting sanctions on work there.

"Companies can get screwed by inadvertence rather than anything else," Reinsch said.

He noted that some telecom companies in Kuwait have said they are ready to provide cellular phones and other services to Iraq and that if U.S. companies have to clear significant red tape, the Kuwaiti companies could win the business contracts instead of U.S. firms.

When sanctions on Iraq are lifted, Reinsch noted that Commerce and Treasury department officials will have to reconsider the process for providing export licenses, and he hopes the government will provide "general" licenses to companies that have received a contract in Iraq so the firms do not have to get licenses for every single shipment they make to the country.

Another potential hurdle for U.S. companies is U.N. sanctions against foreign companies working in Iraq. Those also likely will need to be lifted, Reinsch said, unless the United States decides to ignore U.N. sanctions.