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Economic sanctions are domestic penalties applied by one country (or group of countries) on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas.
Economic sanctions are frequently retaliatory in nature. For example, in 2002 the United States placed import tariffs on steel in an effort to protect its industry from less expensive foreign producers, such as China and Russia. The World Trade Organization (WTO) ruled that these tariffs were illegal. The European Union threatened retaliatory tariffs on a range of US goods, forcing the US government to remove the steel tariffs in early 2004. Economic sanctions frequently result in trade wars. The World Trade Organization is the world governing body for trade disputes.
Economic sanctions are not always imposed because of economic circumstances. For example, on May 13 1998, the United States and Japan imposed economic sanctions on India, following its second round of nuclear tests. The United States has imposed economic sanctions on Iran for years, stating Iran's "state sponsor of terrorism" as its main reason.
The United Nations imposed stringent economic sanctions upon Iraq after the first Gulf War, and these were maintained partly as an attempt to make the Iraqi government co-operate with the UN weapons inspectors' monitoring of Iraq's weapons and weapons programs. These sanctions were unusually stringent in that very little in the way of trade goods were allowed into or out of Iraq during the sanction period (further information about these sanctions and their effects can be found at www.casi.org.uk and at ). The sanctions were not lifted until May 2003, after the Iraqi president, Saddam Hussein, was overthrown.
There is a United Nations sanctions regime imposed by UN Security Council Resolution 1267 in 1999 against all Al-Qaida and Taliban associated individuals which has undergone years of modification by a dozen UN Security Council Resolutions. The cornerstone of the regime is a consolidated list of persons maintained by the Security Council. All nations are obliged to freeze bank accounts and other financial instruments controlled by, or used for the benefit of, anyone on the list.
Trade sanctions
Trade sanctions are trade penalties imposed by one or more countries on one or more other countries. Typically the sanctions take the form of import tariffs (duties), licensing schemes or other administrative hurdles. They tend to arise in the context of an unresolved trade or policy dispute, such as a disagreement about the fairness of some policy affecting international trade (imports or exports).
For example, one country may conclude that another is unfairly subsidising exports of one or more products, or unfairly protecting some sector from competition (from imported goods or services). The first country may retaliate by imposing import duties, or some other sanction, on goods or services from the second.
Politics of trade sanctions
Trade sanctions are frequently retaliatory in nature. For example, in 2002 the United States placed import tariffs on steel in an effort to protect its industry from more efficient foreign producers, such as China and Russia. The WTO ruled that these tariffs were illegal. The European Union threatened retaliatory tariffs on a range of US goods, forcing the US government to remove the steel tariffs in early 2004. Economic sanctions frequently result in trade wars. The World Trade Organization is the world governing body for trade disputes.
Sanctions can be a coercive measure for achieving particular policy goals (such as United States sanctions against Brazil over patent law in the late 1980s).
Sanctions can be include a software that may not be downloaded or otherwise exported or re-exported to any country subject to U.S. trade sanctions governing the software: countries including Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria.
Recent historical examples of trade sanctions
Worldwide there have been many examples of such disputes and associated sanctions. For example, American steel companies requested, and were at times granted, protection from steel imports that they claimed enjoyed an unfair advantage due to the economic policy of the steel exporting country. At times it was asserted that the exporting company was dumping steel overseas (in the USA) at below cost. See United States steel tariff 2002
Again, as the Asian economies became more and more effective competitors on the international stage, achieved largely via export-led growth, many countries imposed import tariffs and other measures aimed at protecting domestic industries. The intention was not always permanent protection (of the threatened industry) but sometimes an attempt to give the domestic firms time to adjust to a changed competitive context.
The disagreements that occur are not only bi-lateral and can be fundamental to the working of the global economy and e.g. to the alleviation of global poverty. As of September, 2003, World Trade Organisation talks in Cancún broke down between the advanced nations and the developing world. Unresolved issues include that of whether the advanced nations are unfairly subsidising their agricultural sectors to the detriment of the developing world (that might otherwise sell more agricultural produce into e.g. the USA and Europe).
See also
- International sanctions
- Protectionism
- Sanctions against Iran
- United States embargoes
- Countervailing duties
- Trade war
- International sanctions
External links
- Four Decades of Failure: The U.S. Embargo against Cuba
- Steel Trap: How Subsidies and Protectionism Weaken the U.S. Steel Industry
- The European Union’s sanctions related to Human rights: the case of Burma/Myanmar.
- U.S. Sanctions Against Burma: A Failure on All Fronts
- Article by Steve Charnovitz on WTO trade sanctions