Imposing Trade Sanctions on Perceived Foreign Foes Only Punishes U.S. Exporters
As a nation of immigrants, it’s hard to explain how xenophobic this country can be. For whatever reason, if we believe that the U.S. is slighted in any way, our inclination is to lash out diplomatically, economically, or when all else fails, by force.
We are currently engaged in an economic battle with many nations who we perceive as having an adversarial relationship with America. In such cases, we punish them by imposing trade sanctions, which rarely have the anticipated effect. Instead, such sanctions usually only hurt American manufacturers and workers.
A recent article from Bryan R Early for The Christian Science Monitor bears this out. Early conducted a study spread over 50 years (from 1950-2000) of 100 cases where the U.S. imposed sanctions His conclusion was that “the United States’ allies have consistently exploited the commercial opportunities created by U.S. sanctions for their own benefit.”
There’s little doubt that during these past fifty years the United States has gone overboard on sanctions. We have sanctioned more than 80 countries over 175 times. If we include “soft” sanctions such as denying export financing through the EXIM Bank the number would be much higher. Our sanctions threaten two thirds of the world’s population. Over half of the sanctions established in our country’s 233 year history have occurred in the last ten years.
It’s no secret that when we impose sanctions, the first people in line to pick up the export dollars are our own allies — eager European and Asian competitors who trip over themselves to fill every purchase order and contract we walk away from. Early suggests that our allies “use their alliances with the U.S. as political cover to shield their companies from American retaliation. In effect, this means that the U.S. subsidizes the economies of its allies to the detriment of its own business.”
Although it is difficult to estimate, sanctions cost American exporters at least $70 billion annually in lost sales which translates into 600,000 jobs.
We are deemed by many to be unreliable suppliers beholden to an impulsive Congress. Trade sanctions have become foreign policy “on the cheap” as a way to show disdain without sending in the marines. At least we can all be reassured that Congress can not be blamed for being discriminatory. We literally sanction every country from A-to-Z: Angola to Zimbabwe.
We sanction to fight communism (ironically our trade policies now perpetuate communism in China). We sanction in the name of human rights, to protect the environment, to stop weapons and nuclear proliferation, to protest military action, to improve treatment of labor, to elevate environmental standards, for harboring terrorists, for dealing in expropriated U.S. property, for drug trafficking, for money laundering and my personal favorite, for having restrictive trade policies.
In fact, if we consistently applied our policies, only a handful of countries would be left to trade with.
Of course all good people support human rights and don’t want the “bad guys” to get dangerous weapons. However our sanctions are totally out of control. They have robbed the jobs (and lowered the wages) of hundreds of thousands of Americans without having any impact on the targeted countries. If they are to be used, sanctions should be weighed carefully, and be targeted primarily against rogue countries with out-of-control weapons programs. Unless sanctions are airtight and multilateral they have absolutely no chance to succeed.
Why do we continue down a road of such arrogance and assured failure? Too often we fail to realize that our power has some very real limitations. A better solution is to let Americans engage the citizens of foreign countries by traveling abroad, taking with them our values, culture and ideas. By allowing Americans to engage with the world, trade barriers would fall, and the only losers would be tyranny, poverty and ignorance.
If we truly want to jump start the economy, we have two immediate priorities: stop imposing sanctions against our foes and start passing free trade agreements with our friends.