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World: Manufacturers Decry Rising U.S. Trade Sanctions

Washington, 5 March 1997 (RFE/RL) - A major American business group says the increasing use by the United States of unilateral economic sanctions to try to force other countries to act in certain ways is having "little or no impact on the targeted governments" but is imposing "a steep price tag" on U.S. commercial interests.

The National Association of Manufacturers Tuesday released a report which says that from 1993 to 1996, the United States targeted 35 countries for sanctions. Included were Afghanistan, Bosnia, Croatia, Russia and Yugoslavia.

The economic sanctions range from the well-publicized, such as the U.S. act aimed against countries trading with Cuba and anti-terrorism sanctions on Iran, Iraq and Libya, to less well known restraints on African countries which allow female circumcision and on Afghanistan for inadequate anti-narcotics efforts.

The current sanction against Russia and other former Soviet states requires the cut-off of U.S. aid if any of these countries violate the territorial integrity or national sovereignty of another ex-USSR country.

The report says this growing resort to unilateral sanctions departs from the period in the late 1980s when there was "relative restraint" on imposing sanctions, due in part, it says, "to the lessons learned during the abortive oil pipeline sanctions against the Soviet Union in 1982 and the grain embargo of 1980.

The report says the controls on petroleum equipment exports, which lasted for nearly five years, cost U.S. companies $2 billion in direct export sales. The indirect impact was "probably even more serious," it says, because before the 1980s, U.S. companies dominated the market in Arctic drilling due to expertise gained in developing the Alaskan North Slope oil fields.

The report says the controls allowed companies in other countries to show that their products worked just as well. By the time the sanctions were lifted, American firms were far behind while the Soviet Union got the equipment it needed from Western Europe and Japan.

A study of the impact of sanctions conducted in 1995 by the Council on Competitiveness, a private U.S. policy organization, found that in just eight cases, sanctions jeopardized $6 billion in U.S. export sales and 120,000 American jobs.

"Economic sanctions rarely work -- even less so when they are targeted against friends and allies," says the report. "They have yet to topple a targeted government," but provide an "external scapegoat for well-entrenched regimes to compensate for domestic failings."

The report quotes former U.S. Secretary of State George Shultz as calling sanctions "light-switch diplomacy." Shultz, who was an international businessman before and after his service in Washington, says it takes a company a long time and considerable investment to do business in other countries. But a government can wipe out that value with sanctions, marking the U.S. firm an unreliable supplier.

The report says examples abound of the bad effect sanctions or even proposed sanctions have had on American firms. It noted a U.S.firm which lost $1.5 million a year on the lease of an airplane because the Canadian airline had to agree, under U.S. sanctions laws, not to fly the plane to Cuba.

The sale of $10 billion worth of goods to China by more than a dozen U.S. companies was recently jeopardized because of what the report said was a minor Chinese sale to a Pakistan nuclear facility.

The manufacturers say they understand the frustration of the government and public over unfulfilled major foreign policy objectives such as protecting human rights and preventing terrorism.

But the broad sanctions have little or no impact, it says. The manufacturers association recommends that economic sanctions only be used as a last resort and then only by meeting specific criteria that directly relate to effectiveness, availability of foreign suppliers and enforceability.