Trade sanctions are legal restrictions on trade with a country, functioning as a subcategory of economic sanctions. These sanctions serve as economic penalties imposed on a country to achieve certain policy goals beyond mere economic activity.
Key Takeaways
- Trade sanctions are enforced to address foreign policy concerns.
- They can alter or punish objectionable policies of the targeted country.
- Export and import restrictions are common forms of trade sanctions.
- Embargoes represent the most severe trade sanction, essentially prohibiting all trade activities.
- While tariffs and quotas can also be used as sanctions, they more often protect domestic producers from international competition.
Understanding Trade Sanctions
Trade sanctions aim either to punish a particular policy or to increase its costs, thereby encouraging a change. These sanctions may be imposed unilaterally by a single nation or multilaterally if multiple countries agree. Additionally, international organizations like the United Nations Security Council can also adopt sanctions.
Multilateral sanctions tend to be more effective compared to unilateral ones, but even the latter, when imposed by a major economic power like the United States, can effectively mobilize public support and offer a non-military alternative.
Though impactful, critics argue that sanctions often harm civilians who are not responsible for their government’s policies. Additionally, countries imposing sanctions also suffer trade-related drawbacks.
Trade Sanction Mechanisms
Embargoes
Embargoes represent the most severe form of trade sanctions, broadly prohibiting most forms of trade. For instance, the U.S. maintains embargoes against countries like Cuba, Iran, North Korea, Syria, and Russian-occupied Crimea in Ukraine, forbidding all trade activities unless authorized by U.S. licenses.
Export Restrictions
Export restrictions, often requiring licensing or imposing outright bans, typically focus on advanced technology transfers to the targeted country’s governments or private entities. The focus usually lies on industries involved in the sanctioned activities or sectors considered particularly valuable to the sanctioned nation.
For example, responding to Russia’s invasion of Ukraine, the U.S. government, as of February 2022, restricted its and third-party exports involving technologies like semiconductors, telecommunication, and navigation to Russia. Further actions in March 2022 included bans on exporting oil and gas refining technologies to Russia and imposing strict sanctions on Belarus for supporting the invasion.
Import Restrictions
Import restrictions and bans often target goods or services from the sanctioned country. Proposals like banning Russian crude oil imports in response to its Ukraine invasion in March 2022 significantly impacted global energy markets. Similarly, the European Union has ongoing bans on imports such as Syrian weapons and Somali charcoal.
Tariffs and Quotas
While tariffs and quotas do not entirely ban trade, they limit it and are usually employed to encourage domestic employment or address other economic motivations rather than foreign policy objectives. However, the U.S. expanded the use of such tariffs for foreign policy during the Trump administration.
Economic sanctions often include tariff and quota measures. For instance, the Jackson-Vanik amendment to the Trade Act of 1974 aimed to withhold non-discriminatory tariffs from non-market economies that restricted emigration. Initially targeting the Soviet Union and China, it was later replaced by the Magnitsky Act of 2012 for Russia and Moldova, though it remains in force for certain countries like Azerbaijan, Belarus, and Kazakhstan.
Trade quotas, though less common, have also been sanctions tools. An example includes the U.S. reducing Nicaragua’s sugar import quota by 90% in 1983 to oust its government, later restoring it in 1990.
The Bottom Line
The Western world’s leadership in trade and advanced technologies often makes economic sanctions a preferred alternative to force in international disputes. The success of trade sanctions hinges on their broad acceptance by the sanctioned country’s trading partners and their impact on the country’s crucial industries and leadership.
Trade sanctions have proven effective not just when a country reverses its policies, but also when they impose sufficient costs or showcase the sanctioning country’s disapproval. This point was notably demonstrated in apartheid-era South Africa.
Related Terms: economic sanctions, embargo, non-tariff barriers, quotas, tariffs.
References
- U.S. Department of the Treasury. “Sanctions Programs and Country Information”.
- The Britannica Dictionary. “Definition of ‘Sanction’”.
- United Nations Security Council. “Sanctions”.
- RAND Corp. “The Power to Coerce”, pp. 1-2.
- Human Rights Watch. “Iran: Sanctions Threatening Health”.
- CEPII. “Collateral Damage: The Impact of the Russia Sanctions on Sanctioning Countries’ Exports”.
- University of Pittsburgh, Office of Trade Compliance. “Embargoed and Sanctioned Countries”.
- The White House. “Fact Sheet: Joined by Allies and Partners, the United States Imposes Devastating Costs on Russia”.
- The White House “Fact Sheet: The United States Continues to Impose Costs on Russia and Belarus for Putin’s War of Choice”.
- European Commission. “Restrictive Measures (Sanctions) in Force”, pp. 55, 60.
- CESifo. “The Trump Administration’s Use of Trade Tariffs as Economic Sanctions”, pp. 1-5.
- Govinfo. “126 Stat. 1496 - Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012”.
- Kun.uz. “US Congressmen to Assist Uzbekistan in Repealing the Jackson-Vanik Amendment”.
- International Court of Justice. “Case Concerning Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. United States of America), Judgement of 27 June 1986”, page 70.
- UC Santa Barbara, The American Presidency Project. “Proclamation 6120 - Restoring the Country Allocation to Nicaragua for Quotas on Certain Sugars, Syrups and Molasses”.
- History. “Key Steps That Led to End of Apartheid”.
