How do sanctions affect trade?

Russia’s invasion of Ukraine has brought worldwide condemnation, with many considering the Eurasian country a pariah state. The response from the international community has been to impose cultural and economic sanctions on the country, isolating them from social and sporting events as well as impacting international trade.

But as more members of the international community inflict sanctions on Russia, the question we are being asked is “How do sanctions affect trade?”.

What is a sanction in international trade?


Trade sanctions are laws passed which prevent, or severely restrict, trading with a particular country. These are put in place as responses or punishment of a country when their practices are not ethical, or when they are breaking international law Common trade sanctions consist of quotas, higher tariffs, non-tariff barriers (such as licenses), and embargoes on certain commodities or the country as a whole.

Sanctions on trade can be leveraged by individual countries or by multiple allies at once, as is happening with Russia right now.

What other types of sanctions are there? 


Trade sanctions are a sub-type of economic sanction, but there are other economic blocks that can be enforced on a country:

– Individuals of a certain profile or status can have their assets in a country frozen or seized.

– Businesses of a certain profile can have their assets in a country frozen or seized.

– Transfer of funds from/to a certain country can be blocked, either wholly or for individuals and businesses of a certain profile.

In addition to economic restrictions, there are other blockages that can be levied against a country:

– Social and cultural sanctions, such as preventing visas or banning attendance at international gathering and events. EG The Olympics.

– Military sanctions, where military are deployed to intervene in a county’s affairs.

What sanctions are being imposed on Russia, and how is this affecting trade?

The United Kingdom, the European Union, and many other countries have imposed trade sanctions on Russia that cover some of the following commodities:
– The sale, transport, supply, or export of oil and refinery goods. 
– Dual use goods that could lead to the technological advancement of defense and security in Russia, including semi-conductors and other advanced technology.
– Aerospace technology.
Other restraints that have been imposed on Russia are:
– The restriction of movement for funds, with several countries blocking tranfers to/from Russian accounts.
– The seizure of property ad other assets in the U.K. and other EU countries, including the seizure of a Russian vessel by the French navy.

The effects on logistics and customs:

The borders between Russia, Ukraine, and their neighbouring EU countries have been impacted by the crisis. Waiting times have increased on those borders that are open, with the following borders closed to all non-military traffic:
– The road between Ukraine and Belarus.
– The road between Ukraine and Russia.
– All seaports in Ukraine.
– All airports in Ukraine.
– Some airports in Russia.
– Railways into Russia from Ukraine and the EU. 
Customs brokers are unable to process import declarations on banned goods, and no export documents can be raised for banned products until sanctions are lifted. This also applies to any goods that are moving through another country to Russia, or that are moving through Russia to another country. 

Do you need advice on sanctions?

We are here to help you. If you need help with sanctions that are affecting your supply chain, contact one of our team for assistance. 
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