19 March 1997
The Detroit News
Bruce Bartlett

Trade Sanctions Normally Don't Work

Although President Bill Clinton and the Republican Congress seldom agree on anything, they seem to see eye to eye on trade sanctions. Both Clinton and Congress believe trade sanctions are an effective way to implement foreign policy. As a result, the use of them in recent years has increased sharply. However, evidence of their effectiveness remains elusive.

The U.S. Department of Commerce administers foreign policy export controls, which fall into seven major categories: human rights, anti-terrorism, nuclear non-proliferation, anti-narcotics, political stability, worker rights and environmental protection. For companies producing products covered by the controls, licenses must first be obtained before they may be exported. Licenses are also required for all exports to countries covered by sanctions, except for comprehensive embargoes, in which no trade is permitted.

Countries covered by total embargoes include Cuba, Iran, Iraq, Libya and North Korea.

A thorough review of the history of U.S. trade sanctions by the Institute for International Economics a few years ago found that only about a third of them were effective. Effectiveness was measured by the degree to which the purpose of the sanctions was accomplished. Even this low percentage has been declining with the latest round of sanctions. The principal reason appears to be an increased willingness by the United States to impose unilateral sanctions without the support of our allies.

Common sense tells us that if the United States halts exports of some product that is easily available from other countries not participating in the sanctions, they are not likely to be effective. The classic example is Jimmy Carter's grain embargo against the Soviet Union in 1980 to protest the invasion of Afghanistan. The Soviets simply bought their grain from Canada and Argentina and suffered no ill effects.

Despite the failure of unilateral sanctions, the United States has increased their use. According to a new report from the National Association of Manufacturers, since 1993 this nation has initiated 61 new cases of unilateral sanctions covering 35 countries. Collectively, these countries have 42 percent of the world's people and represent 19 percent of the world export market. Thus U.S. exporters are increasingly being excluded from foreign markets not by foreign tariffs and trade barriers, but by our own.

It is difficult to quantify the impact of these trade sanctions on U.S. exports and jobs, but a presidential commission in 1985 estimated that the United States was losing $4.7 billion in exports annually because of such controls. A 1994 study by the Council on Competitiveness looked at eight cases of trade sanctions and found a loss of $6 billion in sales annually, costing as much as 125,000 export-related jobs.

The long-term impact is undoubtedly higher, because U.S. firms have gotten the reputation as being unreliable suppliers due to the overuse of trade sanctions. Countries entering into contracts with U.S. firms have to be concerned that they may become the target of some future sanction that will prevent them from taking delivery of their goods.

Better to pay a little more for lesser quality goods produced in a country without our tendency to impose sanctions at the drop of a hat. As former Secretary of State George Schultz put it, "Who wants to deal with an unreliable supplier, especially when the supplier is not the only game in town."

Sanctions in general don't work and unilateral sanctions almost never work. American businesses and workers only end up paying the price, while our competitors gain.

Bruce Bartlett is a senior fellow at the National Center for Policy Analysis, 727 15th St. NW, Fifth Floor, Washington, D.C., 20005.

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