Economic Sanctions. The New International Economic Order

We have already seen that countries occasionally erect trade barriers. At times, trade barriers are enacted for overtly political reasons. Economic sanctions have often been used in order to pursue grievances between states.

The most comprehensive economic sanctions include the embargo and the boycott. An embargo is a policy prohibiting exports from one country to another. In recent years, trade embargoes have been applied by the United States to several adversaries. Prior to the Persian Gulf War of early 1991, the United States and its allies imposed an economic embargo on Iraq in response to the Iraqi invasion and takeover of Kuwait. The intent of this embargo was to place pressure on Iraq to withdraw from Kuwait prior to the military invasion of January 1991.

A boycottis a refusal to purchase goods from another country. Boycotts, like embargoes, have frequently been imposed for political reasons. The Boston Tea Party is a famous historical example of a boycott. The boycott was imposed because American colonists refused to pay the taxes on tea that had been imposed by the British. Boycotts and embargoes can include not only refusals to buy or sell goods, but also restrictions on inter- national travel, technical assistance, and other relations between countries.

The New International Economic Order.We have already discussed some of the potentially criticalissues that must be addressed to ensure the continued success of GATT. Perhaps the most important problem is the continuing imbalance of trade between the developed and less developed countries. Trade imbalances have thrown less developed countries deeply into debt.

During the 1950s and 1960s, European colonies in Africa, Asia, and elsewhere gained political independence. At that time, their leaders began to complain that the GATT agreements had the effect of promoting trade imbalances by protecting the interests of the wealthy countries. In response, Third World countries convened an international United Nations Conference on Trade and Development (UNCTAD) in 1964. UNCTAD was subsequently made a permanent organ of the U.N. General Assembly.

Because the original conveners of UNCTAD numbered 77, the active member countries of UNCTAD are known as the Group of 77. The Group of 77 has focused on terms of trade to promote the economic development of the Third World countries. General goals of UNCTAD include increasing the value of exports from developing countries, regulating trade policy to promote their economic development, and providing them with the necessary technical assistance to expand their production.

These policies are part of a more general goal of the Group of 77—that of establishing a New International Economic Order (NIEO). The less developed countries argue that more equitable distribution of wealth and income ought to be a fundamental priority of international economic policy.