Embargo is a political decision taken by countries where government passes an order to restrict the free trade of goods & services between two nations for a specified period of time and the restriction in trade can include restricting all types of goods & services or trading of particular good like oil etc.
How Does Embargo Work?
- It is a tool used by a nation for restricting free trade with another nation that can be termed as a target country. They can be exercised by the country which could be a restriction for consumer goods (Trade) or military supplies (Strategic) etc.
- The decision regarding its enforcement is usually made with the approval of a group of countries that are gathered for making the trade easier as well as protecting the international peace within the nations.
- In case of perceiving any threats to world peace, the allied nations put embargo to a target country which is engaged in the activities threatening world peace. Through this procedure, the allied nations are focusing on the target company to put a halt into the activities that are deteriorating to world peace, etc.
Let’s say for example there is a country A who is in good relationship with country B and they are continuously engaging in Import and export of goods and series between the two nations and the trade involves the trading of military weapons for the security of the nation.
But lately, it has been found that county A is supporting & feeding a criminal and terrorist association. And seeing the growing impact and activities the allied group of countries which includes country B decide to impose a strategic embargo and which resulting in no trading of security and military weapons with the target country forcing it to take action against terrorism to protect the world peace.
Types of Embargo
There are different types that could be imposed on a country or state, some of them are as follows:
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- Trade, which restricts the import-export or trading of goods from the target nation or state for the time period. This type could also be termed as economic embargo as it includes restriction of all types of goods & services or it could only relate to some particular goods & services and could allow trading of some of the goods.
- Strategic, which restricts the trading of military weapons for the safety of world peace and the nation.
- There can be restrictions on the news of a nation and its borders for any disputed conversations.
- Embargoes on the environment for restricting the practice on the environment and animals of the target nation or state.
- Other types are like oil, sports, diplomatic restrictions, etc.
Imposing an Embargo
They are mostly imposed on a country/state or group of countries/states. Such a country is termed as the target company. The purpose of imposing embargo relates to stopping the activities in which the target country is actively involved and poses a threat to the security & peace of the world.
For example, if the country is related to the terrorist organizations and isn’t taking any proper steps to decimates the terrorist organization and instead of providing a favorable environment for the terrorist organizations to grow then in that case United Nation (UN) may impose an embargo on the target company to reduce such activity and make the country obey the rules and acts on it to preserve the world peace.
- The imposing of embargo and restriction over the import and export of goods & services affects the price of the same goods and services within the country. The result that is observed is that the prices of the goods multiply into doubles and triples and the burden of the same is ensured by the normal citizens instead of the government that may have been targeted through the embargo.
- They may relate to the restriction in import and export of goods which is a key element to the economy of one’s country. The restriction results in the severe decrease in the economy of the target company and the suffering of all the people residing in it.
- The imposing of an embargo by one country to another may be followed by that country but if the same goods or services could be imported and exported to some another country which does not follow it, then its effect is not effective and makes it meaningless.
Some of the importance are as follows:
- They help the allied nations to protect the world peace and security of the members of allied nations.
- Embargo helps to control the spread of terrorist activities from one nation to another.
- They release helps the companies or the entity to release the information or news publically at the same time in different media with more insight and details and reduce any leakage of the information.
Embargo is an imposed restriction on trading activities with the target country. In history, it has been seen that several times it has been imposed especially during wartime to restrict one country for helping another country for weapons and other accessories which prolong the war and casualties. It is implemented by taking the safety of the other countries in mind.
This has been a guide to Embargo and its meaning. Here we discuss an example and types of embargo with their criticism and importance. You can learn more about economics from the following articles –