Foreign trade embargo and its types. What is an embargo: economics and politics
Recently, in the news stories you can often hear the word "embargo". But what is an embargo? This is such an economic or political trick, as a result of which some states can put pressure on other countries economically or politically.
In the scientific literature, this term is given the following definition: a state ban on the export or import (or maybe both) of capital, technology and certain goods to specific countries. The word itself, translated from Latin, means "interfere" or "obstruct", and from Spanish means "prohibition".
It should be noted that the main purpose of the embargo is by no means to obtain economic benefits, but to put pressure on a certain country or countries. Success from this can only be guaranteed if three principles are observed:
- High elasticity of the economy of the country - the initiator of the embargo. This means that the economy of this state can safely do without exports.
- Low elasticity of the country targeted by the embargo. That is, this state depends on imported goods, since its own production cannot satisfy the needs of the population.
- The economic restrictions being imposed are large-scale and unexpected.
A prime example of such pressure is the oil embargo during the 1973 oil crisis, when OPEC countries imposed a ban on oil supplies to the United States and also raised oil prices by 70% for US allies in Western Europe.
Kinds
Embargo can be divided into three types:
- Temporary sanctions. They are introduced to solve problematic situations regarding climate, ecology or health.
- Sanctions of an economic nature aimed at solving problems in the economy.
- Political sanctions. They are imposed either by a UN decision or by the governments of some states in relation to others.
Embargoed goods may be of different origin and destination. It can be vegetables and fruits, dairy products, oil, weapons or something else. A complete “blockade” is also possible, when the import or export of absolutely any goods is prohibited.
Embargo in peacetime
Bans are mainly imposed with the aim of putting pressure on certain states with economic tricks. Such methods of influence can also be collective if a country threatens security in the world. The consequences are ambiguous. If the country against which sanctions are imposed has a low elasticity of the economy, i.e. it is highly dependent on imported goods, then they will be successful and this country will incur losses.
But what is an embargo for a state with a highly elastic economy? An example is the economic sanctions of the EU against the Russian Federation. European farmers long time focused on the Russian consumer, having a large sales market. After the introduction of sanctions, they were forced to stop deliveries to the Russian Federation and change their focus on the European consumer. As a result, in the markets of Europe, due to a sharp influx of goods, demand has decreased, therefore, farmers are forced to reduce prices, incurring huge losses. And what about the outcast country? Domestic producers have noticed an increase in demand, this provides an opportunity to raise the price and profitability of domestic production. Local farmers are actively involved in the market, receiving material benefits.
Embargo in wartime
The main goal during the war is violations in economic activity countries, deprivation of markets and raw materials. Such bans look like the termination of credit, trade and financial ties with the “blocked” country.
The “who is the boss” effect, or what is an embargo in demonstrative terms? The bans that are not always imposed are of a strict economic nature. Most often, these sanctions are aimed at showing the leading country, with which it is better not to quarrel. However, in certain cases of world politics and economics, such prohibitions have serious consequences. And if the country leading fighting, is highly dependent on the import of weapons or raw materials (for example, iron or oil), as a result of the imposition of sanctions, it may reduce its activity on the fronts; there will also be an increase in the cost of acquiring the same products, but from other channels and at higher prices.
As a result, it must be said that economic and political bans or restrictions are very ambiguous. They can lead to both a positive effect and a negative one - it all depends on the specific states involved in economic or political "blockades". Most often, such a ban on goods (embargo) or services has a boomerang effect, when the consequences of the imposition of sanctions return to their initiators.
a procedure that prohibits the import into one's country or the export to another country of goods. In practice international relations is established, as a rule, with the sanction of the UN Security Council and is considered as a measure of non-tariff regulation, established by virtue of international obligations.
Great Definition
EMBARGO
Spanish embargo - arrest, prohibition) -1) blocking trade with certain countries by decision of the United Nations as a repressive measure against this country for violating the UN Charter or other unseemly actions. By virtue of Art. Art. 39 and 41 of the UN Charter, in the event of any threat to the peace, any violation of the peace or an act of aggression, the UN Security Council may apply measures not related to the use of armed forces, which include E. (complete or partial interruption of economic relations). Such measures may also apply to States that have committed other international crimes. The General Assembly of the OOYA has repeatedly recommended the application of sanctions (in particular, E.) for such crimes in South Africa. In accordance with this, the Security Council adopted a number of decisions about E. in relation to South Africa; 2) prohibition by the state of import or export from the country of a certain type of goods, valuables, gold, securities, currency. In international practice, cases of embargo on the supply of weapons to any country are known. In the Russian Federation, the legal regime of embargo is established by the Decree of the President of the Russian Federation "On the procedure for imposing an embargo on the supply of weapons and military equipment, the provision of services of a military-technical nature, and so on. for the supply of raw materials, materials, equipment and the transfer of military and dual-use technologies to foreign states, including CIS members" dated February 18, 1993 235; 3) a ban established by the state regarding the exit of foreign ships from ports and territorial waters of this state. It is used with a declaration of war, and so on. as reprisals and in some other cases; 4) a preventive measure in the form of the arrest of merchant ships of the future enemy, which was used until the middle of the 19th century. E. superimposed in order to facilitate the capture of such ships after the start of the war.
Embargo is an overseas word, for the Russian ear it sounds like the name of a ship. Indeed, this Spanish concept originally referred to navigation and meant "detention by the state of ships, weapons that belonged to a foreign state."
In modern economic relations the definition of "embargo" is interpreted more broadly.
Embargo- this is a complete or partial pause in the implementation of foreign economic operations between individual countries.
States that have fallen into economic disgrace receive restrictions on the import and export of goods or services in industrial, agricultural, commercial or other areas. For example, these countries may be subject to restrictions on business activities involving foreign businesses.
The embargo is often understood as a kind of sanctions that come into force against the backdrop of a threat to international security.
So, according to the Charter of the United Nations, an embargo is a punitive measure that provides for the possibility of partial or complete blocking of trade with a country that is the object of sanctions as a result of a violation of the world order, for example, if a state has applied an act of aggression against another country and its people.
Embargo - information from Wikipedia
Description of the embargo in simple words
For the layman - a person who is far from politics, the embargo or, more simply, the "ban" is not a global problem, but an everyday one. You don't need to look into an encyclopedic dictionary to understand what an embargo is. It is enough to go to the store and see that there are fewer products on the shelves in stores, and prices are higher - this is the “embargo” in the “popular” sense.
It is not necessary to be a gourmet, for whom life is not life without Mediterranean shrimp, in order to feel for yourself this very “embargo” - that is, the absence of crustaceans in retail chains. Ordinary people, accustomed to traditional Russian dishes such as cottage cheese or potatoes, felt the effect of the embargo no less - native potatoes from unscrupulous sellers can cost almost as much as broccoli.
This is a food embargo - that is, a state that imposes a veto prohibits local producers from supplying food to an embargoed country or vice versa - places restrictions on local importers to import goods from an embargoed country.
Embargo on the import of products into the Russian Federation (food embargo)
The food embargo as a special economic measure was introduced by the Government of Russia on August 6, 2014 for a period of 1 year in order to ensure security Russian Federation in response to the sanctions of Western countries against the Russian Federation in connection with the return of the Crimean peninsula to the Russian Federation and the current situation in the Donbass.
A food embargo means that it is forbidden to import certain types of goods from those countries that have decided to impose economic sanctions against Russia.
Thus, the United States, Australia, Norway, Canada and the EU countries fell under the embargo. Thus, the import of meat, fish and dairy products, as well as fruits, vegetables and nuts into the territory of the Russian Federation became impossible. The Russian government has made clarifications to the list of products prohibited for import into the Russian Federation and has decided to extend the food embargo until August 5, 2016 inclusive.
Analysts are trying to evaluate cost effectiveness as well as Negative consequences from the effect of the embargo after a year, both for Russia and for countries that supported anti-Russian sanctions.
On the one hand, the embargo leads to stagnation in the economy, loss of investment attractiveness; on the other hand, to import substitution, which means to support our own manufacturer, the emergence of original developments and technologies in science, economic growth in agriculture and other industries.
With such an arrangement of all the pros and cons, it turns out that the embargo on the import of products into the Russian Federation is just what the doctor ordered. It would seem that it is precisely these anti-sanctions that Russia lacks for an economic breakthrough and liberation from the import dependence of the food market. Everything is so, if not for the fall in oil prices and the cheap ruble, which have a huge impact on the processes in the economy.
While experts are arguing what are the true motives for introducing a food embargo regime - reorganizing their own market from foreign competitors or causing damage to a geopolitical rival, the average family does not care what affected its quality of life - sanctions, embargo or. The subtotal suggests that the Russian consumer will have to tighten their belt as prices are unstable and continue to rise, there is no more variety in the grocery basket, and the previous range is on the shelves.
The Russian embargo has affected the economies of the EU countries to varying degrees. The agricultural sector of Lithuania and Poland suffered the biggest costs. Established distribution channels were destroyed in an instant, farmers had to reorient themselves to new markets to export their perishable goods. The EU authorities did not stand aside and paid compensation to countries whose economies were undermined as a result of the Russian embargo.
Oil embargo: springboard for rise or fall
Another type of economic sanctions is the oil embargo, which limits the supply of petroleum products to individual countries.
A bit of history: USA, 1973
For the first time, the oil embargo was used by the oil exporting countries of the OPEC (Organization of the Petroleum Exporting Countries) against the United States, Israel and other countries of the Western world. The reason for the introduction of the energy embargo was the US support provided to Israel during the 1973 Yom Kippur War against Syria and Egypt.
As a result of the restriction imposed on oil supplies to Western countries that supported Israel, the price of oil rose from 3 to 12 US dollars per barrel. As a result, the cost of gasoline at gas stations in the United States increased by 4 times. Car owners were forced to give up frequent trips, as in the conditions of fuel shortages, sales were carried out according to a special schedule. For example, cars whose numbers ended in an even number could only refuel on even days, the rest on odd days.
The Americans were able to draw the right conclusions. In the short term, they took into account the crisis experience, noting that economical Japanese cars were serious competition to powerful American cars. Auto giants decided to reorient production, and began to produce cars with lower gas mileage.
Europeans had to put up with the hardships of the oil embargo, freezing from the cold in their own homes; opening hours of schools, government offices and shops have been reduced. The oil crisis exposed the dependence of Western countries on energy supplies and served as an impetus for the development of energy-efficient technologies and alternative energy sources; The Western world began to take steps towards solving environmental problems and preserving the environment.
While the energy crisis stimulated the development of the US and European economies, large-scale development of new large oil fields in Western Siberia began in the Soviet Union. In a short time, it became possible to increase the volume of imported raw materials to Western countries, as a result, new pipelines began to be laid to Europe.
The world energy crisis, alas, was the beginning of the degradation of the country's production potential, since oil became a priority item for Soviet exports. The economy of the USSR, and then Russia, atrophied, being completely dependent on the "oil pipe" and petrodollars.
Our days
In modern Russia, the export oil and gas sector is still a key sector of the Russian economy. Therefore, the country is periodically in a fever from the rise of the dollar and the euro and the fall of the ruble.
The oil and gas sector is a target, and cheap oil is a trophy for the Western world. The plan to rock the Russian oil and gas economy can have two possible development scenarios. The first leads to a reduction in profits from the export of raw materials by lowering the price of oil and gas. The second - theoretically possible so far - is the imposition of an embargo on the purchase of Russian oil and gas.
The first scenario is already a reality that we have been dealing with since the 2nd half of 2014, when the price of oil fell from $114 to $48 per barrel. The second scenario is just speculation and talk so far, but the possibility of an oil embargo is not ruled out.
- Embargo (from Spanish embargo) - arrest, prohibition, from embargar - to seize, embargo; hinder, hinder, derived from lat. imbarricare - to hinder, hinder.
the imposition by a state of a ban on the import by other countries or the export from the country of gold or foreign exchange, certain types of goods - weapons, modern technologies and others;
prohibition by the state authorities of the entry into the ports of their country of ships belonging to other countries, or the exit from their ports of ships of other countries;
partial or complete cessation of trade with certain countries by decision of the UN or other interstate association as a repressive measure against this country for violating the UN Charter, other unseemly actions.
The purpose of the embargo may be reprisals against another state, the desire to inflict material damage on it and force it to act on the instructions of those who introduced it.
The practice of international relations between states, which has a thousand-year history, has many examples of the introduction of trade bans. The variety of historical and modern cases of embargoing makes it possible to classify the use of this instrument in foreign trade activities on various grounds.
According to the subject of sanctions influence, embargoes are most often directed at a state (or a group of countries), but less often they can have a personalized nature that does not depend on the country of location or residence (for example, an embargo against terrorist organizations).
According to the degree of formality, trade embargoes can be both official and unofficial.
According to the volume of bans imposed, one can distinguish between full and partial embargoes. A complete embargo can be understood as comprehensive prohibitive measures in foreign trade between countries, some exceptions are possible for the implementation of humanitarian programs. A partial embargo applies to certain areas or objects of foreign trade activity. A partial embargo can be implemented for both export and import transactions, with various combinations of sanctions possible.
Types of trade embargoes on exports and imports of products
Classification of the embargo according to the type of declared motivations for the imposed bans.
Political embargo.
An economic embargo.
Embargo in order to ensure the national security of the state.
Embargo in order to prevent and respond to controversial issues about the territorial borders of states.
An embargo imposed to protect the health of citizens of a state.
Embargoes of an environmental nature, introduced with the aim of expressing the state's disagreement with the environmental policy of another country or the attitude towards animals.