What are sanctions and their effect on the air cargo industry?

Compliance with international, country-specific, and regional rules and regulations is of utmost importance for air cargo carriers. Sanctions form a crucial part of the compliance equation for air cargo carriers. Trading with sanctioned countries and organizations can lead to hefty fines and serious reputational damage. But what are sanctions? How do they impact the air cargo industry and individual carriers? Read on for the answers to these pressing questions.

What are sanctions?

Sanctions are used by governments and governing bodies to punish individuals, organizations, and countries that fail to comply with specific and officially documented rules, laws, and regulations. Anyone involved in cross-border business needs to proactively assess the potential impact of sanctions on their trading.

Let’s take a look at some up-to-date examples of how governments are using sanctions.

  • There have been various sanctions against Russia since 2014. After Russia invaded Ukraine in late February 2022, the EU imposed additional economic and financial sanctions against the country. Measures include financial restrictions against state banks and state-owned companies, an export ban on various goods, and an import ban on weapons and related products.
  • The United States government currently imposes sanctions on companies that actively play or are suspected of playing a critical role in the production, sale, and shipment of Iranian petrochemicals and petroleum to buyers in Asia.
  • Several countries and regions have imposed sanctions on companies that produce and export unsustainable palm oil and related products.
  • The United States embargo against Cuba prevents US businesses, and businesses organized under US law or majority-owned by US citizens, from conducting trade with Cuban interests. It is the most enduring trade embargo in modern history.
sanctions for air cargo industry

What types of sanctions are there?

Sanctions can take many forms and may target specific economic, political, and social topics. They generally fall into one or more of six categories1:

  • Economic sanctions
  • Diplomatic sanctions
  • Military sanctions
  • Sports sanctions
  • Individual sanctions
  • Environmental sanctions

Economic sanctions are commercial and financial penalties that typically ban or restrict trade and financial relations with the sanctioned party. They can include the levying of import duties on goods, restricting the export of particular goods from a certain country, or blocking certain harbors or airports.

Diplomatic sanctions are political measures that express disapproval of the policies or actions of a particular country. They usually serve the purpose of reinforcing a commitment to a behavioral norm, such as respect for human rights or opposition to proliferation. Such sanctions generally involve measures to reduce or remove diplomatic ties, such as closing embassies, pulling back ambassadors, or canceling high-level government meetings. Diplomatic sanctions are usually taken before economic sanctions or military steps. Military sanctions involve the intervention and deployment of armed forces and are only used in extraordinary situations such as the invasion of an allied country or a direct assault on national security.

Sports sanctions prevent a country’s athletes from competing in international events. Sanctions on individuals, sometimes used by the UNSC, are usually targeted toward political leaders or leading economic figures, such as important political figures and oligarchs in present-day Russia. Freezing such an individual’s assets or imposing travel bans on that person are common examples of individual sanctions.

Sanctions on the environment are relatively new, but steadily gaining ground in several regions such as the EU and certain Latin American countries. Environmental sanctions are usually imposed on countries or companies that allow the trafficking of endangered species or fail to comply with environmental laws.

Understanding sanctions as an air cargo carrier

Sanctions, export controls, regulatory fines, and other crucial data are publicly available, but most of the time not in one place. They may also be spread across several languages and data architectures. But violating them can result in hefty fines, disruption, and even jail time, so it’s vital to understand the rules.

Airlines must manage a number of embargoes. These apply to country restrictions, customs restrictions, aircraft limitations, ground handling agent limitations, and more. Embargoes can be temporary or permanent, and restrictions may impact inbound, outbound, or transit movements. Of particular relevance for airlines are the related regulations imposed by the United Nations (UN), European Union (EU) and United States (US)2.

Finally, airlines must also be vigilant to identify dual-use items. These items include software and technology which can be used for both civil and military purposes such as goods that can be utilized for non-explosive uses and to assist in any way in the manufacture of nuclear weapons or other nuclear explosive devices.

How to keep up?

Be Informed’s International Trade & Transport Compliance Solution (ITTS) helps air cargo carriers achieve and demonstrate compliance with sanctions and international trade, transport, and financing regulations. ITTS enables organizations to automatically check trade and transport transactions for potential compliance issues such as sanctions against a specific country. The air cargo compliance solution also supports staff in resolving problematic transactions, while automatically building an audit trail that delivers the necessary evidence to regulators.

Would you like to know more about sanctions and the benefits of ITTS? Then feel free to contact us! We would be happy to make your acquaintance

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