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ECONOMIC SANCTIONS EXEMPT HUMANITARIAN TRADE

humanitarian

ECONOMIC SANCTIONS EXEMPT HUMANITARIAN TRADE

Ailing Relations

Iran has been among the worst affected countries from COVID-19, having emerged as an early hotspot outside China. As of April 7, there were an estimated 62,589 confirmed cases with over 3,800 deaths. Iran’s cases appear to have peaked in late March, but exact numbers are unknown due to the secretive nature of its totalitarian regime. Other countries throughout the Middle East began reporting cases in late February and continue to battle spread of COVID-19 due to travel linked to Iran.

U.S. offers of assistance were rejected by Iran’s Supreme Leader Ayatollah Ali Khamenei, who said publicly on March 22, “You might give us a medicine that would spread the disease even more or make it last longer.”

According to the U.S. State Department, the United States has offered more than $100 million in medical assistance to foreign countries, including to the Iranian people, and reports that Iranian health companies have been able to import testing kits without obstacle from U.S. sanctions since January. The U.S. government has urged Iranian leaders to be more truthful about its efforts to contain the virus.

Iran assistance

Humanitarian Trade Exemptions

U.S. economic sanctions against Iran include a general exemption for U.S. exports of agricultural commodities, food, medicines and medical devices to Iran and an authorization process to obtain licenses for a specific list of medical supplies and equipment not covered under the general exemption. Such licenses are usually given for one year.

The U.S. government recently reinforced its messaging that sanctions are directed at the Iranian regime, stating: “[Sanctions] are not directed at the people of Iran, who themselves are victims of the regime’s oppression, corruption, and economic mismanagement.”

A 2019 Congressional Research Service report suggests U.S. sanctions have limited access by the Iranian population to “expensive Western-made medicines such as chemotherapy drugs,” due to a lack of bank financing for such transactions and that the limited supplies that exist have gone to elites.

Role of Financing

Between 2018 and 2019, overall U.S. trade with Iran went from small to very small under tightened sanctions. In 2018, U.S. exports to Iran were valued at $425.7 million. In 2019, U.S. exports had decreased 82 percent to $73.1 million.

Underlying that decrease in trade, even of humanitarian-related goods and services, reflects a tendency toward over-compliance by banks and multinational firms that avoid transactions with Iran to minimize possible violations of U.S. sanctions. Doing so, even inadvertently, could cut off their access to vital U.S. financial markets. The U.S. government has also explicitly cited concerns about the Iranian regime’s abuse of humanitarian trade to evade sanctions and launder money.

To close these loopholes, in October 2019 the Treasury Department announced a new payment mechanism “to facilitate legitimate humanitarian exports to Iran.” The measure restricts the role of the Central Bank of Iran in facilitating humanitarian trade, which the U.S. government views as financing terrorism. It also imposes rigorous reporting requirements to thwart diversion of funds intended for humanitarian use.

By late February 2020, as the COVID-19 medical crisis unfolded in Iran, the U.S. Treasury Department issued a general license authorizing certain humanitarian trade transactions involving the Central Bank of Iran while also approving the use of a Swiss financial channel to finance such transactions.

The Swiss Humanitarian Trade Arrangement (SHTA) enables Swiss-based exporters and trading companies in the food, pharmaceutical and medical sectors to access a secure payment channel with a Swiss bank to guarantee payments for their exports to Iran. Novartis was the first Swiss company to send medicine for use in cancer treatments. Germany, France and Britain have also used this new channel to offer a $5.5 million package to Iran to help fight the coronavirus.

exemptions in sanctions

Trade in Food and Medicine

Much has been written recently about governments restricting exports and otherwise increasing the cost of traded medical supplies during the pandemic.

For two decades now, the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) has ensured that each U.S. country-based sanctions program provides for trade of agriculture, medicine and medical devices under a broad humanitarian exemption. This is intended to limit potential adverse effects on civilian populations who are not the target of sanctions.

The United Nations Security Council maintains 14 active sanctions programs that also include humanitarian exemptions driven by the belief that a supportive and healthy citizen population is necessary to achieve improvements in a sanctioned regime.

Recently, the United Nations Security Council approved a humanitarian exemption to sanctions against North Korea (DPRK) requested by the World Health Organization for diagnostic and medical equipment to address COVID-19. The United States supported this decision.

Exemptions Thwarted by Totalitarian Regimes

The health impacts of embargoes are difficult to isolate and quantify. They may not become apparent until years after resource shortages occur. Domestic production challenges can also play a role. For example, Iran produces 97 percent of its medicines locally, but a third of these drugs rely on active ingredients that are imported, according to the head of Iran’s Food and Drug Organization.

Although humanitarian trade exemptions are intended to mitigate shortages of essential supplies, totalitarian regimes are known for putting their goals before the needs of their citizens. The negative impacts of sanctions are often compounded by inequitable distribution or outright theft of essential goods and ongoing civil conflicts.

In any case, it’s difficult to know the net effect of sanctions and humanitarian trade exemptions because data on key indicators of health effects are often missing or unavailable from embargoed regimes. However, it is clear that enabling trade in essential goods like food and medical supplies has served a role in health diplomacy for decades.

During her career in international trade and government affairs, the author worked with pharmaceutical and medical device manufacturers to navigate U.S. sanctions policies and requirements.

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Sarah Smiley is a strategic communications and policy expert with over 20 years in international trade and government affairs, working in the U.S. Government, private sector and international organizations.

This article originally appeared on TradeVistas.org. Republished with permission.

small business

Three Reasons You Should Support Small Business

Small Business Saturday takes place this Saturday, November 30

Every year, when Small Business Saturday rolls around, Americans are reminded to ‘support small businesses.’ But the need for your support extends far beyond the holiday season.

American small businesses are the backbone of the U.S. economy. In fact, they make up 99.9% of the economy and employ 47.5% of the workforce.

As a small business owner, I’ve built much of my career around serving the incredible community of entrepreneurs who drive innovation and economic progress, locally and nationwide. These men and women are the hidden heroes of our neighborhoods, often putting everything on the line to provide the services and staples that we rely on…not to mention, those which make our communities unique. It is they who pass the torch of the American dream to future generations — all of whom fight to defy conventional wisdom that only half will survive their first 5 years. Make no mistake about it: they depend on your support to hold onto that dream.

Here are three reasons you should support small business, and go out of your way to contribute to Small Business Saturday every day.

Small Business Owners Drive New Jobs

It’s no secret that small businesses create new jobs, fuel economic growth, and contribute to lowering unemployment rates. Even in today’s globalized world, America’s 30.2 million small businesses still make up 99.9% of all businesses in this country, and employ 58.9 million people.

Check out ‘The Best Small Places For Business And Careers’ in Forbes, to see where our city ranks. None of us should be surprised that we have an incredible workforce; we are well below the national unemployment rate; and that most of our 16+ population is in the civilian labor force. There’s no reason not to keep this momentum going and drive more business and more jobs to our area.

Small Businesses Strengthen Communities

It’s not the megastores that give our communities vibrancy; but rather, the mom-and-pop coffee shop that serves a great cup of morning joe, the family-owned pastry shop that’s been a local staple for decades, and the go-to-guy auto mechanic that give our communities personality, and a spot on the map.

Small Business Saturday is a community-centric day, where we have the opportunity to rally around our local small companies that make our lives a little bit better. So long as the community connection created by small businesses remains strong year-round, the benefits of strengthened communities will too.

Small Businesses Empower the Next Generation

Almost all of us got our start at a small business, whether it was helping out the family, as a cashier at the local movie theatre, waiting tables, working in the local bank, or even babysitting! We learned the basic skills and requirements of the workforce: showing up on time, working hard, being accountable, and leading others (and being led). It is still incumbent upon small businesses to perform the vital role of training the next generation and offering them mentorship opportunities and ways to learn professionalism.

 Things have changed a little since my first days as a neighborhood lawn mower in my hometown. Still, today, I scout for great small businesses everywhere I go, which was why I came here. I have found that small-business owners here understand best what it takes to make an area a real community. To me and many others, that’s an important public contribution and one I hope to never live without.

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Vincent Ney is the Founder and President of Expansion Capital Group, a business dedicated to serving American small businesses by providing access to capital and other resources, so they can grow and achieve their definition of success. Since its inception, ECG has connected over 12,000 small businesses nationwide to approximately $350 million in capital.