Oppose Unilateral Economic Sanctions

Thursday, September 15, 2016 - 10:30am

During the past few decades, Congress and the executive branch have repeatedly imposed unilateral economic sanctions on a variety of countries in the pursuit of foreign policy goals. With so few positive results—and so many unintended consequences—it’s time for a fresh look at U.S. sanctions policy.
 
Unilateral sanctions cover a range of policy tools from import bans and embargoes to restrictions on U.S. investment and expatriate activity overseas. All too often, unilateral sanctions have been imposed for ill-defined purposes or with little consideration of their real impact. Rather than altering the behavior of foreign governments, these sanctions have often damaged U.S. economic interests at home and overseas. Consistently, U.S. unilateral economic sanctions create a vacuum that is quickly filled by companies from other countries.
 
Over the past 30 years, some sanctions legislation has imposed restrictions on commercial activity in an extraterritorial fashion that incites economic, diplomatic, and legal conflicts with our allies. In the past, U.S. laws imposing restrictions on the activities of European subsidiaries of U.S. multinationals have met with intense resistance from European governments. While the United States eventually lifted the restrictions, the damage to its foreign policy goals had been done. 
 
Not only do such moves undermine efforts to build a consensus for multilateral action, they make the United States more vulnerable to international commercial complaints. They can also damage U.S. leadership by greatly expanding the universe of entities subject to countersanctions to include insurers, creditors, and foreign subsidiaries.
 
There is no better example of the ineffectiveness of U.S. unilateral sanctions than Washington’s policy toward Cuba. Implemented in October 1960 to pressure Fidel Castro to democratize, the Cuban embargo arguably has helped prop up the current regime. No one seriously argues that the Cuban dictatorship could have withstood five decades of free trade, free markets, and free enterprise, powered by its own entrepreneurial citizens.
 
While the current isolation of Cuba has far outlasted its original purpose, U.S. policies impose real costs. A March 2010 study by Texas A&M University indicates that easing restrictions on agricultural exports and lifting the travel ban could result in up to $365 million in additional sales of U.S. goods and create 6,000 new jobs in the United States. 
 
While the U.S. government has taken some welcome actions to ease some restrictions on trade and travel with Cuba, a comprehensive review of U.S. unilateral economic sanctions is overdue. From the five-decade old embargo on Cuba to proposals for extraterritorial sanctions on other countries, unilateral sanctions bring a host of unintended and unhelpful consequences. It’s time to put an end to these damaging policies.
 

Chamber Recommendations

  • The United States should eschew the use of unilateral economic sanctions, which have proven to be ineffective in advancing U.S. foreign policy goals.
  • A good place to begin would be to lift the embargo on Cuba, starting by easing restrictions on agricultural exports and lifting the travel ban.
  • Even more pernicious are sanctions with extraterritorial reach, which undermine multilateral approaches to global security challenges and open the United States to countersanctions.