Sanctions and Third-party Compliance with US Foreign Policy Preferences: An Analysis of Dual-use Trade

Abstract

Ostensibly bilateral US foreign policy actions, such as sanctions, can influence third-party compliance with US policy preferences. US sanctions simultaneously signal US preferences and demonstrate leverage, which can motivate third parties to avoid or change proscribed behavior proactively. Empirical testing of this strategic behavior typically is difficult given that it predicts non-events in a noisy signaling environment. However, I argue that the global trade of dual-use commodities—those with both civilian and military purposes—is a phenomenon where we can observe this process systematically. I isolate US sanctions that provide relevant context both by stigmatizing the target and signaling that third-party dual-use exports to the target would directly undermine US policy goals. Using newly-coded bilateral data spanning the post-Cold War period, I find evidence that relevant US sanctions are associated with lower third-party dual-use exports to US-sanctioned states. My findings have implications for scholars and policy-makers, suggesting a broad yet shrouded ability of sanctions to advance US foreign policy goals.