Free US Law Dictionary

Embargo

In international commerce and politics, an embargo is the prohibition of commerce (division of trade) and trade with a certain country, in order to isolate it and to put its government into a difficult internal situation, given that the effects of the embargo are often able to make its economy suffer from the initiative.

The embargo is usually used as a political punishment for some previous disagreed policies or acts, but its economic nature frequently raises doubts about the real interests that the prohibition serves.

One of the most comprehensive attempts at an embargo happened during the Napoleonic Wars. In an attempt to cripple the United Kingdom economically, the Continental System- which forbade European nations from trading with the UK- was created. In practice it was not completely enforceable and was as harmful if not more so to the nations involved than to the British.

Although the law of the United States does not prohibit participation in an embargo it does prohibit participation in a secondary embargo. This occurs when one country pressures a business to stop doing business with a third country over issues with which the business is not directly involved. Not only is an American business required not to participate in a secondary embargo, but is also required to report all attempts to get a business to participate in a secondary embargo. The situation which led to these laws are attempts by Arab countries to prevent American companies from doing business with Israel.

The typical reaction is the development of an autarky.