Content area
Full Text
The notion of trade sanctions is often directly associated with retaliatory action resulting from the conclusion of a World Trade Organisation dispute settlement process. One example is the withdrawal of trade concessions by the United States in retaliation against the European Union's banana regime, which was found to be inconsistent with WTO rules. Another is the retaliatory US action against the European Union's import restrictions on hormone treated beef from the United States. Washington acted after the WTO ruled that the safety concerns cited by Brussels lacked scientific justification.
However, economic sanctions cover boycotts and embargoes, which can be adopted by countries under WTO provisions but which are unrelated to the WTO dispute settlement process. They are part of the exceptional measures invoked by members of the WTO in specific circumstances. These measures mostly, if not exclusively, find their origin in political developments that lead one country to take action against another by severing trade links in whole or part. The (authorised) retaliatory action resulting from WTO trade disputes follows the logic of restoring a balance in rights and obligations between members when these are affected by a country's applying policies that violate WTO rules. But this same logic does not hold when economic sanctions are invoked: these are justified under the security exceptions of Article XXI of the General Agreement on Tariffs and Trade (1994).
The tension between sanctions and the WTO lies in the fact that the WTO was designed to liberalise trade, whereas the direct purpose of sanctions is to restrict trade for noneconomic, essentially political, reasons. This article will thus look at the relation between economic sanctions and WTO provisions. It will briefly discuss the main features of sanctions, how they work in theory and in practice and how they relate to the fundamental principles of the WTO multilateral trading system. Finally, some conclusions will be drawn.
Features of Sanctions
Economic sanctions, generally speaking, cover all direct trade-restricting policies between sovereign nations, and often include financial or investment restrictions. Sanctions can take the form of an embargo, in which case exports from one or more countries to the target country are prohibited, or a boycott, when imports from the target country are blocked, or both, in which case all trade...