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Sanctions Have Little Impact On India, Pak: Report

Trade sanctions by the US against India and Pakistan have had a minimal impact on the two developing economies, since Japanese, European and Asian suppliers stepped in to fill the void, a US government report stated.

The US International Trade Commission said the economic sanctions, imposed by Washington in May 1998 after the countries conducted nuclear tests, have cost India's economy as little as $ 320 million and Pakistan only $ 57 million.

The US economy has lost $ 161 million, with American producers of wheat and other farm products suffering the most, the report said. The report was prepared for the US House of Representatives Ways and Means Committee.

Lawmakers and aides said the independent commission's findings could add fuel to a congressional debate over US sanctions policy. The commission and the Ways and Means Committee released summaries of the report.

A growing number of policymakers argue that unilateral sanctions hurt US companies and have little impact if other trading powers refuse to go along. Legislation gaining momentum in Congress would make it harder for Washington to impose sanctions, and would exempt food and medicine from future controls.

''This is more proof that unilateral sanctions aimed at other countries often have a boomerang effect on US workers and our economy,'' said representative Phil Crane, chairman of the Ways and Means Subcommittee on Trade. "At the same time, these sanctions have a minuscule impact on the countries we are trying to punish."

"That is why we must fix our counterproductive sanction system," the Republican from Illinois added.

The nuclear tests in 1998 automatically triggered the US sanctions, and meant American banks could not lend money to the two governments.

The sanctions suspended foreign aid, export credits and trade finance, and required Washington to oppose loans from the World Bank and the international monetary fund. Arms sales also were cut off.

The US agricultural sector was probably the hardest-hit, according to the commission. US sales of wheat to Pakistan plummeted. US exporters of industrial machinery, electronics as well as transportation, construction and mining equipment were also affected.

To ease tensions and help US producers, the congress gave President Bill Clinton the authority to temporarily waive most of the sanctions, including those on farm credits and export guarantees in October 1998.

That waiver is to expire at the end of this month, prompting calls for Congress to approve a 12-month extension. Crane and 100 other lawmakers in the US House have sponsored legislation that would let Clinton permanently waive the sanctions.

Without an extension, the International Trade Commission warned that US wheat producers could suffer further losses since Pakistan is a major consumer of white wheat grown in the US Pacific northwest.

But overall, the commission played down the impact of the sanctions, saying, "The ...sanctions appear to have had a relatively minimal overall impact on India, and a minimal but somewhat more pronounced adverse impact on Pakistan."

That is because India and Pakistan have found alternative suppliers. The commission said the US sanctions have particularly benefited suppliers in Japan, Europe, Asia, Australia and New Zealand.

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