Should Governments Forego Trade Sanctions?

Should Governments Forego Trade Sanctions?

I feel that trade sanctions in our current global world have no place.  For one, there is a domestic cost to be paidwhen cutting off a foreign market for export. This cost is borne by the industry and ultimately the citizens in theform of higher prices or less robust growth (Daniels, et al, 2009). 

Iam not convinced trade sanctions are that effective in accomplishing theirgoals.  For example, many nationspresently or recently under sanctions like Iraq, Cuba, Viet Nam, Libya canstill get many America made goods through grey market supply channels. Not allnations will comply with a sanction and others will use the decreasedcompetition to their advantage and deploy merchandise to fill the need (Danielset al, 2009).  Short of building a wallaround a nation, there are too many other ways for trade to take place thatsanctions are just not effective in the modern world. 

InIran a number of nations have halted the purchase and refining of Iraniancrude.  While this has some impact, thereare other nations, like China, willing to step up and partner with Iran andcontinue trade. In fact, this can lead to a competitive advantage for China asthey can demand more favorable terms for their continued trade with Iran(Chazan and Swartz, 2010).

Oftenthese sanctions are politically motivated for issues like regime or humansrights.  In many cases it is not toe foreigngovernment who suffers, it is the people. For half a century the US has not traded with Cuba, and it has failed tobring down the Castro government, and resulted in harsher conditions andpoverty for many Cubans (Daniels, et al, 2009). In Iraq trade sanctions did not seem to prevent cash from flowing in andout of the nation in either Gulf Conflict. In colonial times when trade was more challenging, an embargo orsanction could have an impact on the other nations.  In the modern world, the Internet,satellites, fast ships, airplanes, wire transfers, etc. all provide ways forthe sanctions to crumble.

Recentlythe President o the United States was outspoken on a trade bill that imposedenergy sanctions on fossil fuel use. Strategically it was decided this was not optimal for supporting thedomestic economy and in the long run would not result any much net savings ofCO2 emissions (Broder, 2009).

Theembargo in Cuba has not destabilized the government as predicted, but perhapsthe accumulated wealth that could result from more open trade would inspire thecitizens to change regimes.

Politicalmotivations drive many sanctions and these are often done for the wrongreason.  PACs and lobbyists all have theear of lawmakers and help influence their decisions.  If a trade sanction is to be effective insending a message it has to the proper message (Daniels, et al, 2009). 

Thereare related alternatives like tariffs that may be more focused andeffective.  I think that sanctions dosend a message to the world, but they are largely symbolic in the global modernworld.

REFERENCES

Broder, J.S. (2009, June 29). Obama opposes trade sanctions in climatebill. New York Times, A1.

Chazan, G., & Swartz, S. . (2010, March 11). Corporate news: shellhalts gasoline sales to iran. Wall Street Journal, B2.

Daniels, J. D.,Radebaugh, L. H., & Sullivan, D. P. (2009). International Business (12ed.). (S. Yagan, Ed.) Upper Saddle River, NJ: Pearson Education, Inc.