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What is a Trade Embargo?

Trade embargos can be violated, such as when countries offer aid through the Red Cross for a natural disaster.
In most democracies, a trade embargo must be approved by the legislature.
The United States currently holds a trade embargo against Cuba.
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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 01 August 2014
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A trade embargo is a political move by one country against another. Generally speaking, the country imposing the embargo will prohibit most or all people in their country from doing business with the country against which it is imposed. It may even mean that citizens from the imposing country are banned from visiting the prohibited country. Essentially, a trade embargo is a strategy to make another country either do something or refrain from doing something.

Some trade embargoes may be meant to sanction a government that is not abiding by laws, treaties, or agreements. They are sometimes called “economic sanctions.” It is one means by which one country may compel others to cooperate with international laws.

Perhaps, one of the most famous trade embargoes in recent times is that the United States holds with Cuba. The embargo was established in the hope that prohibiting trade with Cuba would weaken the country’s economy to the point where Cuba would overthrow Fidel Castro and implement a democratic government. In fact, the law prohibiting trade with Cuba was renamed the Cuban Democracy Act in 1992, though the initial embargo began in 1962.

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Under the terms of the Cuban Democracy Act, the United States does not transact business with Cuba, and does not allow Cuban investors to spend money in the US. Visiting Cuba means either traveling illegally, or obtaining a special license for a visit. Political visitors from the US must account for the money they spend in Cuba, and may also be restricted to a certain amount of spending per day. Purchasing items from Cuba or sending money to Cuban family and friends is not permitted. Though the Cuban economy has been weakened by the decades old US trade embargo, it shows no signs of implementing a democratic government.

In the US, participating in a secondary trade embargo is outlawed. This occurs when a country attempts to coerce a business's dealings with a third party country. An example of this would be a decision made by the US to pressure businesses not to trade with Israel, because Israel established economic sanctions with any Arabic country, or alternately, for the US to compel businesses not to trade to the country to which Israel has halted trade. Pressuring businesses to form secondary trade embargoes is not only illegal, but must be reported.

This does not mean that a trade embargo can’t be established by more than one country. In fact a country in violation of international laws may have several countries impose economic sanctions against it. A trade embargo is more likely to achieve its ends if multiple countries end financial relationships with the country.

Under most laws in most countries, there are special times when a trade embargo can be violated. A country can still offer help or aid if a natural disaster occurs, or they may sponsor the efforts of organizations like the Red Cross to help get assistance to the extremely poor or those in need of medical attention. Yet, when a trade embargo exists, one country will never hand money to another country’s government. Instead, they will fund humanitarian efforts that reach the people directly, as often doubt exists that giving money to a government would ever reach or benefit its citizens.

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Discuss this Article

icecream17
Post 3

@Subway11 -I had a professor that did research on Cuba and he was allowed to travel to the island. As a matter of fact he was given U.S. educational grants in order to do his research.

Some people think that the Cuban embargo has not made a difference and others think that we need to continue to put the economic pressure on the government. I don’t know which method is best but I do know that a lot of American companies are looking forward to a trade investment with Cuba someday.

Of course this is hypothetical, but a lot of companies are starting to think that a trade investment might be possible in the future especially if there is a significant regime change. I think that only time will tell if they are right.

subway11
Post 2

@Hydrax53 -I agree with you. I know that the Cuban embargo has been going on for over fifty years but many Cuban exiles living in Miami look forward to the day when Cuba becomes a free democracy.

While the trade embargo on Cuba has not changed its communist government over the years many hope that eventually with Raul Castro in power things might change because Cuba is suffering economically and in fact for the first time in fifty years they had to lay off government workers. A lot of people reminisce about the Pre-Castro days and hope that one day they will be able to go back to the Cuba that once knew.

hyrax53
Post 1

Trade embargos have had a lot of influence on history over the years. They're a convenient way for a country like the United States to show its true feelings for another nation's actions without actually taking a stand or beginning military action. While they're sort of sneaky that way, they can be a nice, nonviolent way to make an international political statement.

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