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Trading sanctions: Are they the only way?Should you do business with countries accused of misconduct? Many of these nations are simply not democracies, such as Cuba. Others are accused of extreme acts, such as violent repression of dissent, torture, perpetuating slavery and trafficking in drugs, to name a few. What should be done? Refusing to do business with these nations may offer psychological rewards, but also isolates them so that they will likely remain unchanged. Engage them in trade and you may have a chance at influencing their future behavior. Its an old dilemma without a perfect solution. From the USA Engage website. In recent years, the U.S. government has increased its use of unilateral trade sanctions, which now extend to 56 countries, with sanctions pending in another 21 countries, plus sanctions from 22 state and local governments. A recent federal court ruling found state- and local-government sanctions unconstitutional, and the case seems headed for the Supreme Court. The Massachusetts Burma Law, which punishes companies that trade with Myanmar and want to do business with the state, infringes on the federal governments power to regulate foreign affairs. "State interests, no matter how noble, do not trump the federal governments exclusive foreign affairs power," Chief Judge Tauro wrote. The National Foreign Trade Council (NFTC) filed the Massachusetts case on behalf of its 580 members. Unilateral federal sanctions cost the U.S. tens of billions of dollars in lost exports. The U.S. Department of Agriculture analyzed six selected countries and reported that sanctions cost $500 million in lost agricultural trade in 1996 alone. At a recent NFTC forum, Chevron chairman Ken Derr, quoting the Institute for International Economics, said that federal sanctions cost the U.S. $15 to $20 billion in 1995, and urged that the Hamilton-Crane-Lugar Sanctions Reform Act be passed in 1999. NFTC President Frank Kittredge said that the business community does not disagree with the objectives of federal sanctions, the concern is that "Unilateral sanctions have a dramatically unsuccessful record of achieving their own objectives." Cuban investment. Canada-based Sherritt International, the largest foreign investor in Cubas fledgling oil and gas sector, has increased its oil production in Cuba to more than 15,000 bpd, an increase of 9,000 bpd from early 1997 levels. In addition to oil and gas, Sherritts operations include nickel plus cobalt mining, power generation, communications, tourism, food processing and agriculture. Sherritts President, Ian Delaney, has apparently chosen to ignore U.S. sanctions, most notably the Helms-Burton Act, and invest in the communist Caribbean island. His acts have made the Canadian company solid profits and powerful enemies. PESA view. The following is a column from Petroleum Equipment Suppliers Association Chairman Doug Rock, reprinted from the PESA News with permission:
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