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International Trade – Sanctions

International Trade – Sanctions

What are sanctions?In the context of international law, sanctions are measures that countries take in order to influence another country into behaving a certain way. Sanctions may be imposed for a variety of reasons, such as violations of human rights, nuclear arms testing, or breaches of other international law principles.Economic sanctions are one type of measure that may be applied to encourage the desired result. For example, the United States has had a trade embargo (prohibition on trade) with Cuba for several decades in protest to Fidel Castro’s communist rule over the country. During the last years of Saddam Hussein’s rule in Iraq, Iraq was subject to economic sanctions to protest its refusal to allow United Nations inspectors to investigate suspected arms factories and storage facilities.

In addition to using economic sanctions as a measure to coerce specific action, whether it be social, political or economic, economic sanctions are also used in retaliation for trade restrictions placed on a country. The country facing restrictions will then in turn place trade restrictions on the first country. Trade restrictions are also sometimes used to protect domestic goods from foreign competition.

Types of Economic Sanctions

Economic sanctions come in a variety of forms. These include tariffs, duties, quotas, other barriers, and complete embargos. Tariffs are taxes placed on imported goods, with the intent of raising the price of imported goods in comparison to domestic goods. Thus, a consumer in the marketplace will pay an inflated price for imported goods. Customs duties are the taxes paid by a person at the point of entry into a country with foreign goods. Many people associate the term “duty” with the “duty free” shops at some airports. Countries may also set quotas on the amount of goods they will export to a foreign country or that they will import from that foreign country. Economic sanctions may also include any other trade barriers put in place, including administrative and paperwork hurdles. The most extreme economic sanction is a trade embargo, which is a complete prohibition of trade with a particular country. When used, embargos have mostly been put into place as a sanction for political issues.

Past Sanctions – Resolving Trade Disputes

When countries are unable to resolve their trade differences through negotiations or through coercive economic sanctions, the World Trade Organization (WTO) handles the dispute. In addition, the WTO handles complaints about the legality of various economic sanctions.

Copyright 2015 LexisNexis, a division of Reed Elsevier Inc.

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