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Do economic sanctions go against WTO rules?

Economic sanctions are international measures that are usually used as punitive or corrective procedures. When one hears of economic sanctions countries like Russia, Sudan and Iraq come to mind, with the US being the chief instigator of such sanctions. Economic sanctions are penalties applied by a country or countries on another country or countries. Economic sanctions may include various forms of trade barriers and restrictions on financial transactions. The questions then become:

• Should such sanctions have the blessing of the UN?
• Should countries unilaterally decide to impose such sanctions?
• Do such measures go against the World Trade Organisation’s (WTO) goals?

Sanctions for violating human rights or international humanitarian law can be imposed by the UN Security Council if such violations pose a threat to regional or international security. The effectiveness of such sanctions remains a debateable point. Such sanctions were imposed on Iraq during the Saddam Hussein regime, Angola during the civil war and Sudan for its policy on Darfur. The power of the Security Council emanates from Chapter VII of the UN Charter, which permits it to take legally binding decisions to impose economic sanctions or to use force to maintain international peace.

Due to the serious consequences of such action, it has been noted that “the permanent members of the Security Council have not hesitated to use their veto power to obstruct action of this kind where their interests have been involved”. In addition to this we have seen individual countries, without the blessing of the UN, impose economic sanctions on other countries. The popular view in that respect over the years has been that the UN General Assembly should be the one given the platform to debate and vote on whether economic sanctions should be imposed on countries on a case by case basis. As much as countries like Cuba have remained unfazed by such measures, it has been interesting to note that Russia has decided to fight the EU and US through the WTO platform on the basis that the sanctions go against WTO rules (ironic that Russia just recently became a member of the WTO). Furthermore Russia has also put in place sanctions against EU and American products, to which another vice-versa complaint will be laid with the WTO.

When comparing UN obligations to WTO obligations it is important to read Article 103 of the UN Charter. It states that “in the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail”. This then means that the WTO obligations are subordinate to UN obligations. The UN seeks to protect global peace and security and therefore WTO obligations can be suspended in light of that. It is however important to note that economic sanctions can in some instances support WTO goals in the same way that they can be detrimental.

WTO goals seek to:

• Improve lives.
• Promote sustainable development, production, trade and utilisation of resources.
• Protect the environment.
• Promote developing countries’ share in international trade.

The impact of sanctions on the most vulnerable segments of the populations of targeted countries has been debated for years. This has led to the introduction of smart sanctions that target specific individuals and companies like the case of Russia. The impact of sanctions also sees the decline in economic growth and international trade activity of targeted countries. This has devastated many economies. On the other side of the coin such sanctions can be seen as a short to medium term measure to pressure governments to improve the lives of the targeted countries’ citizens. Such a plan was used for Sudan, whether this has worked still remains a mystery. Sanctions can also be used to pressure economies into promoting sustainable development, production, trade and utilisation of resources. This is evident in how the trade of conflict diamonds in central Africa is being dealt with.

It is clear that economic sanctions have a good and bad side. It is important to emphasise that such measures should not be abused and should be justifiable. In that respect due process needs to be followed taking into consideration the supremacy of the UN obligations but also the subordinate obligations of the WTO. The UN needs to give the power to make such a decision to the General Assembly. Political will remains the stumbling block!