Part of the agreement that comes with being ethically sound is doing business with people that are the same. If we are trading with human rights abusers, we are providing them the ability to continue doing the same thing they have been doing. We should have zero tolerance when it comes to those committing crimes against people.
No, trading with human rights abusers does not encourage human rights abuses, because isolationist policies do not work. The United States has tried isolationism in Cuba, and it has not made Cuba better. The United States has traded with China, and China is slowly becoming more free and economically productive. Trading is better so these countries can learn about freedom and the West.