In 2003, Libya suspended its weapons of mass destruction program after years of American and international sanctions. The literature concerning this issue has focused on the debate about which type of American policy tool has had the biggest role in Libya's surrender, whether it was economic sanctions, military coercion, or diplomacy. However, the literature ignores explaining the American-Libyan relations policy in terms of International Political Economy (IPE) theory. Focusing on the IPE theory of neomercantilism, this paper argues that the definition of neomercantilism allows a variation between a minimalist definition and a maximalist definition for meomercantilism, as well aS a variation between what could be called domestic neomercantilism and external neomercantilism. Furthermore, the paper argues that this variation allows neomercantilism to offer a sound explanation of American policy towards Libya during the sanctions period. The assumptions of neomercantilism are tested against the events of the Washington- Tripoli relations during this period.