International sanctions: how it works

Are there sanctions in place against your export or import destination? If so, you may no longer be permitted to export or import certain products. Or doing business with certain individuals or businesses in that country may be forbidden. In addition to sanctions, there may also be trade barriers. These rules or restrictions make importing or exporting more difficult. Examples include additional checks, permits, or higher costs.

Imposing sanctions

Among others, the United Nations (UN) and the European Union (EU) are able to impose sanctions. They take these measures to punish undesirable behaviour by countries, organisations, or persons. The aim is to prevent further harm.

There are sanctions in place for dozens of countries. For example, China, Iran, Russia, North Korea, and Libya. The reasons vary from country to country. Often, they relate to war, human rights, or the threat of chemical weapons.

Overview of sanctions

Governments set out sanctions in regulations or decrees. They usually announce new sanctions through official channels and news sources, such as radio and television.

An overview of UN and EU sanctions can be found on these websites: 

• United Nations
• European External Action Service (EEAS)
• Customs Administration of the Netherlands

The Dutch government provides more background information on international sanctions.

Checking for sanctions

Do you have an ongoing contract with a customer? And has a sanction suddenly been imposed? In that case, you may no longer be able to fulfil the agreements made. That is unfortunate, but it is the reality.

In such cases, check your business partners. Find out who they are and what they do. Also investigate what they use your products for, and to which customers they sell them. You are responsible for carrying out this check yourself.

The Netherlands Enterprise Agency (RVO) explains how to check for sanctions for products, services, companies, and indicviduals (in Dutch). 

The most common sanctions

Imposing sanctions on countries usually involves these 4 common measures:

1. Financial sanctions

Financial sanctions restrict the flow of money into and between countries. Examples include freezing bank accounts, directly or indirectly providing funds to specific individuals, or banning organisations. In some cases, it is completely forbidden to receive money from or make payments to a specific country.

2. Trade restrictions

An example of a trade restriction is an embargo. This is a ban on trade in certain goods. These are usually products from which the authorities in that country derive income, such as oil or timber. Sometimes, a product can only be sold with a special licence. These are often sensitive goods, such as software and technology that a country might use in weapons programmes. Sensitive goods include, for example, weapons, tanks, and military vehicles.

Diamonds

Separate rules apply to the import and sale of rough diamonds. These are known as conflict diamonds or blood diamonds. Rebels trade these precious stones to finance an armed conflict with their country's government.

The Kimberley Process is an international alliance dedicated to eliminating conflict diamonds from the trade. The Antwerp World Diamond Centre offers more information about importing or exporting rough diamonds.

3. Travel and visa restrictions

Sanctions are sometimes imposed on individuals. They are then subject to a travel or visa ban and are no longer permitted to enter a country.

4. Arms embargoes

Arms embargoes forbid the import or export of items such as weapons, protective clothing, and military vehicles. So-called dual-use goods are also covered by these embargoes. Examples include certain flame retardants, which are used in construction but can also serve as raw materials for poisonous gases.

You apply for a licence to the Central Import and Export Office (CDIU). You need the product’s CN code. This is the commodity code for your product when exporting.

Exceptions to sanctions

Sanctions must target the right individuals and organisations, not the entire population. That is why there are always exceptions. For example, for diplomatic travel, or for providing assistance during a crisis. Such as supplying and funding food or medicines.

Violating sanctions

Sanctions set out in an EU regulation are binding on all EU Member States. The Dutch government does not amend these rules. However, it does make breaches of the rules a criminal offence under national law. To this end, the government transposes EU sanctions into Dutch law.

If you breach a sanction, you are in breach of the Sanctions Act 1977. This constitutes an economic offence and a criminal offence. As a result, you risk a fine or a prison sentence. The penalty depends on your role and degree of culpability in the violation.

Violating a sanction usually also causes reputational damage. Your good name is then at risk. This often happens more quickly than a fine. And repairing the damage usually takes more time and money than you would like.

Evading sanctions

Deliberately circumventing sanctions is a criminal offence. This applies even if you do not carry out the act yourself, but are complicit in it. Are you unsure about your customer? For example, whether they are reselling your goods to a country subject to sanctions? If so, ask for an end-user declaration. This is also known as an End-user statement (EUS).

Such a statement specifies what your customer does with the product and who the end customer is. This provides greater clarity. However, determining the final destination of your product remains difficult. Your product may still end up elsewhere via a second or third buyer.

Read more about Dutch government policy on international sanctions. 

Difference between sanctions and trade barriers

Sanctions are international measures imposed on a country, organisation, or individual. They are set out in regulations or decisions issued by governments. Trade barriers are obstacles to international trade. The country with which you are doing business determines these rules. Examples include additional administrative requirements or sudden import duties. These barriers are not set out in an EU regulation or decision.

Report them to the Trade Barriers Disclosure Office of the Ministry of Foreign Affairs (in Dutch). They will help you find a solution. 

Within the EU

Trade barriers also exist within the EU. For example, if a Member State fails to apply European rules correctly. Or if an EU country does not recognise your degree or professional qualification.

You can report these issues to SOLVIT. This EU network mediates between you and the relevant national organisations free of charge to find a solution.