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|A series on Trade|
An embargo (from the Spanish embargo, literally Distraint) is the partial or complete prohibition of commerce and trade with a particular country. Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing country, to elicit a given national-interest result from the country on which it is imposed. Embargoes are similar to economic sanctions and are generally considered legal barriers to trade, not to be confused with blockades, which are often considered to be acts of war.
In response to embargoes, an independent economy or autarky often develops in an area subjected to heavy embargo. Effectiveness of embargoes is thus in proportion to the extent and degree of international participation.
Companies must be aware of embargoes that apply to the intended export destination. Embargo check is difficult for both importers and exporters to follow. Before exporting or importing to other countries, firstly, they must be aware of embargoes. Subsequently they need to make sure that they are not dealing with embargoed countries by checking those related regulations, and finally they probably need a license in order to ensure a smooth export or import business. Sometimes the situation becomes even more complicated with the changing of politics of a country. Embargoes keep changing. In the past, many companies relied on spreadsheets and manual process to keep track of compliance issues related to incoming and outgoing shipments, which takes risks of potential errors.
ERP software these days help companies to be fully compliant on such regulations even if they are changing on a regular basis. If an embargo situation exists, the software blocks the transaction for further processing.
The Embargo of 1807 was a series of laws passed by the U.S. Congress 1806–1808, during the second term of President Thomas Jefferson. Britain and France were engaged in a major war; the U.S. wanted to remain neutral and trade with both sides, but neither side wanted the other to have the American supplies. The American national-interest goal was to use the new laws to avoid war and force that country to respect American rights.
One of the most comprehensive attempts at an embargo happened during the Napoleonic Wars. In an attempt to cripple the United Kingdom economically, the Continental System – which forbade European nations from trading with the UK – was created. In practice it was not completely enforceable and was as harmful if not more so to the nations involved than to the British.
The United States imposed an embargo on Cuba on February 7, 1962. Referred to by Cuba as "el bloqueo" (the blockade), the US embargo on Cuba remains one of the longest-standing embargoes. The embargo was embraced by few of the United States' allies and apparently has done little to affect Cuban policies over the years. Nonetheless, while taking some steps to allow limited economic exchanges with Cuba, President Barack Obama reaffirmed the policy, stating that without improved human rights and freedoms by Cuba's current government, the embargo remains "in the national interest of the United States."
In effort to punish South Africa for its policies of apartheid, the United Nations General Assembly adopted a voluntary international oil embargo against South Africa on November 20, 1987; that embargo had the support of 130 countries.