TRADE AND SANCTIONS

Trade and sanctions

Multinationals corporate face more challenges than those that choose to operate in one country. One of the unique challenges that the multinational companies face is the different legal environment in different countries. Thus, a multinational company must develop a unique legal policy for every country. But there is even a more difficult challenge facing multinational companies- trade sanctions.

Trade sanctions are common problems in international relations. Trade sanction is simply a limit or a complete ban that one or more countries put on the exports and imports from a particular country. It is used as a punishment against rogue nations. The United States has often used trade sanctions to force rogue nations to agree to its terms and conditions. Because of its nuclear development, Iran was in the United States’ sanction list until President Obama made an agreement with them and lifted it. However, President Trump has reinstated the sanctions. Under the current administration, the US has major trade sanctions against Russia, North Korea, Iran, and Venezuela.

Although countries, such as the United States, use trade sanctions to achieve political ends, it creates a new challenge for the multinational companies. Indeed, once trade sanctions are implemented, the multinational companies which were trading in the country affected are forced to stop their operations in the said country. But there are certain cases where the sanctions are partial and a company can still operate in a limited scope. Trade sanctions are can deal a huge economic blow to a company that depended on its operations in the affected country. Borads should understand how sanction rules affect their companies. Therefore, companies should seek legal advice before expanding their operations in other countries. With an advice from an expert on international trade, a company would even be able to foretell an impending trade sanction and avoid he affected country.