Wednesday, August 7, 2019

Stop Regulating Commerce Between Foreign Nations

If Congress and the President had a basic understanding of what powers the constitution’s commerce clause does and does not give them, this whole Iran fiasco could have been avoided.
For several months now, the Americans and their allies have been trading threats with Iran. What began with attacks on oil tankers in the Straits of Hormuz – which the United States blamed on Iran – has escalated into the downing of drones by both sides, and then in July the Iranian Revolutionary Guard seized a British ship in the Straits, in retaliation for Britain’s seizure of an Iranian vessel near the Straits of Gibraltar earlier in the month.

News sites are blaring with headlines about ‘War Drums,’ though the public should view this through a lens of scepticism. Rumours of war have always kept newsmen in business, and so they tend to get deployed whether there’s actually going to be a war or not. Nevertheless, we shouldn’t dismiss the possibility of war out of hand.

All of this raises the question of how we got to the brink of war, and to answer that question, we need to go all the way back of the Constitution of 1787, in which Congress was given power ‘To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.’

Debate over the commerce clause usually centers on how broadly to read the phrase ‘among the several states.’ Occasionally, the political and legal debate will turn to the subject of regulating ‘commerce with foreign nations.’ Some people might naively think, as I once did, that imposing sanctions is an exercise of this power – and they would be right, if they were talking about the sorts of trade embargoes that were used in the early Republic, when, for instance, Jefferson signed the Embargo Acts to retaliate for Britain’s impressment of American sailors to fight in the Napoleonic War.

But that isn’t what modern sanctions – like the sanctions that lie at the heart of the Iran debacle – are doing. The Trump administration hasn’t simply decided that Americans must not trade with Iran; what it has done is imposed punishments on any firm, in any nation, which does business with Iran. What the government has now claimed is the power to regulate commerce between foreign nations.

Here is how this plays out in practice: Most countries still want to have normal trade relations with Iran, which, unlike the United States, did keep its end of the deal with respect to uranium enrichment. However, these countries’ merchant classes have generally refused to go along with the pro-Iranian policies of their governments, for fear of ending up like Meng Wanzhou.

Meng, you may recall, was the Chinese woman who was arrested in Canada last December, at the request of US authorities, on account of dealings she had carried on with Iran in her capacity as CFO of Huawei. She has been held in Canada ever since, as the authorities there dither about whether to extradite her to the United States to be tried for breaking American laws.

Keep in mind that Meng wasn’t actually in the United States when she committed any of her alleged crimes. She was just a Chinese businesswoman doing business with Iran. And one can only imagine how America would react if the roles were reversed – if, for example, an American travelling in Russia was arrested at the request of Chinese authorities for defying Chinese sanctions against Taiwan. Needless to say, the United States would not take well to such treatment.

And yet when the American authorities deal with China’s citizens this way, seemingly level-headed publications like The Federalist defend their modus operandi, with articles like this one accusing China of “bullying” Canada by making (unsuccessful) demands for Meng’s release, and defending Canada’s role with such hackneyed prose as the following:

“The Canadian government has tried very hard to explain to Beijing that Meng’s arrest was not politically driven.... The [U.S.] Justice Department launched a criminal probe into Huawei’s dealings in Iran in April 2017. The arrest warrant for Meng was issued in August by the U.S. District Court for the Eastern District of New York, and Meng was charged with “conspiracy to defraud multiple international institutions.” To U.S. authorities, arresting Meng in Canada was a natural choice, because Meng stopped traveling to the United States in 2017.”

This would all make a bit more sense if the U.S. District Court for the Eastern District of New York somehow had jurisdiction over alleged frauds committed in China and Iran. Under the Constitution of 1787, it doesn’t, but as that constitution wasn’t written with global imperialism in mind, the people who presently run this country have seen fit to abandon it.

China’s leaders, being as commercialist as they are, ultimately decided to let the matter slide rather than jeopardize Sino-American trade by responding in kind. Needless to say, it won’t always be this way; the Chinese know that, a few years hence, America won’t be the largest economy any more, and it will be their turn to make the demands.

In the meantime, the biggest losers are the Iranians. Although most countries do not share America’s antipathy toward Iran, few international corporations are willing to risk the wrath of the global hegemon. When a company must choose between severing ties with Iran, and ceasing to do business in the United States, raw economics determines that the ‘indispensable nation’ will come out on top.

This is why Ron Paul has been saying for so long that sanctions are ‘an act of war.’ For one country to be cut off from the rest of the world by the threat of violence against anybody of any nationality, anywhere on Earth, who dares to treat it like a normal country, is an attack on the sovereignty of not just one foreign nation, but all of them.

But America’s days of acting this way are numbered. The Americans have long depended on the rest of the world’s demand for paper dollars to keep them in the number one economic spot even though they manufacture few tangible goods. But with their liberal use of sanctions, the Americans are sawing through their own perch.

More and more countries are dedollarizing in order to make it harder for the United States to claim jurisdiction over their commerce – and this process will sooner or later result in a disastrous shock to the American economy, with severe inflation as dollars lose their appeal abroad and come flooding back home. And all of it, perhaps, would have been avoidable, if only America’s rulers had taken their constitutional limits more seriously, rather than trying to regulate commerce between foreign nations.

America’s founders fought the War of Independence in order to gain for their new country a “separate and equal status” with other nations. Hegemony was never part of the plan. A return to constitutional government requires that America recognize that it is a nation among nations, not an overlord among vassals, and act accordingly.