Trade sanctions are measures used by one country against another to achieve economic, political, or military objectives. They can take the form of import tariffs, quotas, or administrative barriers. The WTO has a dispute settlement procedure that allows member countries to apply sanctions against offending parties. However, trade sanctions are difficult to implement and rarely achieve their objectives. Multilateral sanctions are generally more effective than unilateral ones.
Trade sanctions are trade sanctions applied by one country against one or more other countries. These sanctions fall into the broader category of economic sanctions and could be used to achieve economic policy objectives, political objectives or military objectives. Trade sanctions usually come in the form of import tariffs, quotas limiting the volume of imports, licensing fees or other administrative barriers to trade.
A country that believes it has been treated unfairly by a trading partner will often implement trade sanctions that target economic goals. Actions that could be considered unfair include funding a domestic industry, dumping products below cost on the international market, or installing unclear tariffs or trade barriers. The United States often refers to these types of sanctions as “trade remedies” and has been known to use such sanctions to retaliate against unfair trade practices.
One example of the United States’ use of trade sanctions against unfair practices occurred in 2002 when President George W. Bush set tariffs on imported steel, claiming to protect the US steel industry from the illegal dumping of cheap steel from competitors in Europe and Asia. The World Trade Organization (WTO) has ruled the US tariffs illegal, prompting several European countries to threaten retaliatory tariffs. This eventually caused the US to roll back the steel tariffs.
Trade sanctions can also be a political or military tool. Sanctions have been used in an attempt to get countries to change their political behavior, focusing on issues such as the protection of civil liberties, human rights, threats of aggression and the development of weapons of mass destruction. In these cases, sanctions are usually part of a comprehensive diplomatic and military approach. In other cases, sanctions have been used to cut off funding to countries and organizations deemed a threat to peace and security or in violation of international law.
Trade sanctions are also an important policy tool for WTO member countries. This organization has a binding dispute settlement procedure enshrined in its statute that allows member countries to appear before the WTO as an impartial third party to resolve any trade disputes. When the WTO finds favor with a country, it often authorizes it to apply sanctions against the offending party.
Trade sanctions have been used with some regularity, but are notoriously difficult to implement and rarely achieve their objectives. This is largely because most goods and services trade on global markets. If a trading partner places tariffs on a certain import, the target country can simply export the product to other trading partners. As a result, multilateral trade sanctions, those imposed by a bloc of countries, are generally more effective than unilateral sanctions.
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