The effecitveness and appropriate use of economic sanctions

Excerpt from testimony by Thea Lee, Assistant Director for International Economics, Public Policy Department, AFL-CIO before the Senate Task Force on Economic Sanctions, September 8, 1998, Progressive Response, Vol. 2, no. 32, 15 October 1998

No one disputes that unilateral economic sanctions are an essential policy tool, that should be applied judiciously, consistently, and effectively. All would similarly agree that, given a choice, multilateral sanctions are preferable to unilateral sanctions.

It is worth noting that the line between multilateral and unilateral sanctions is not clear. Many multilateral sanctions, like those against the apartheid government of South Africa, began as sub-national and even private shareholder sanctions in response to grassroots activism and gradually garnered first national, then multilateral support.

Gaining multilateral support is crucial to the effective use of sanctions. We should use every means at our disposal and every forum, including the World Trade Organization as well as the United Nations, to convince other countries to support sanctions in the cases where we have determined that it is in the national interest to apply them.

There has been much discussion recently about the need to discipline economic sanctions because, it is argued, they have simultaneously proliferated and become less effective and more costly.

Before we take any steps to limit our ability to impose economic sanctions in a timely and effective way, we need to be much more precise in our definitions and clear about our goals.

Unilateral economic sanctions include trade measures (restrictions of exports or imports), financial measures (such as blocking assets or withholding loans or development aid); and government procurement restrictions. Lumping these disparate measures together confuses the discussion of economic sanctions, particularly with respect to their efficacy and their costs.

Certainly, the domestic economic impact of restraining exports and limiting imports will differ, particularly with respect to the impact on jobs, wages, and prices, yet recent studies such as the IIE [Institute for International Economics] report do not distinguish between these two forms of sanction. Similarly, withholding aid or opposing loans from the international financial institutions may reduce overall trade indirectly, but will have a much smaller and less focused impact on one country’s trade volume than other forms of sanctions.

It should also be pointed out that withholding foreign aid will have an offsetting impact at home, in the sense that those dollars will be freed up to be spent on aid to some other country or domestic programs or tax cuts.

Taking a careful look at the list of sanctions compiled by the National Association of Manufacturers (NAM) in 1997 and publicized by USA-Engage makes it clear that the perception that the government has gone sanctions-happy is overstated. Of the 61 sanctions catalogued by NAM (and in effect between 1993 and 1996), only eight involve comprehensive trade sanctions or embargoes. These include Iran, Iraq, Libya, Sudan, Syria, North Korea, and Cuba.

The debate that has arisen in the last year or so purports to be about the effectiveness of unilateral economic sanctions as a policy tool, not the justness of the causes to which they are applied. Yet the criticism of sanctions has focused exclusively on the problems involved with sanctions imposed for foreign policy reasons, while excluding sanctions imposed to attain trade or commercial objectives, such as remedying unfair trade practices. This distinction does not make sense.

Any criticism of unilateral economic sanctions as ineffective must apply equally to sanctions applied for trade objectives as to those applied for foreign policy objectives. Yet we seldom hear an outcry from the business community that the U.S. Trade Representative should refrain from imposing retaliatory tariffs or withdrawing trade preferences when one of our trading partners has engaged in illegal dumping or has violated intellectual property rights agreements.

In fact, unilateral economic sanctions are routinely threatened and occasionally imposed to achieve commercial objectives or to protest unfair trade practices. A few months ago, the United States withdrew generalized system of preferences (GSP) trade benefits from Honduras over egregious copyright violations.

The U.S. Congress has on numerous occasions recognized the importance of using the economic and political clout of the United States to stand for values other than short-term cash flow: to prevent the spread of weapons of mass destruction, to prevent the abrogation of democracy, to punish egregious abuse of human and worker rights, and to stop terrorist activities.

It is true that we do not use our available tools consistently or as effectively as we could, and the labor movement supports efforts to improve the implementation of sanctions. But we would caution against taking legislative steps to erect obstacles or delay the imposition of sanctions across the board.

Decisiveness is also important. While some flexibility is necessary, waivers applied indiscriminately signal that the sanctions policy need not be taken seriously. This undermines the credibility of future policy.

Let me conclude by saying that successful grassroots action on trade policy can be a valuable and empowering force, as well as a legitimate expression of citizen concern. Our task should be to make these initiatives more successful and effective, not to choke them.