The economic impact of the Russian import ban: a CGE analysis

Abstract

The aim of this paper is to assess the economic impact of the Russian embargo from 7 August 2014 on certain agricultural food products from the EU, the USA, Norway, Canada and Australia. The effects of this economic sanction are analysed in the framework of a computable general equilibrium (CGE) model with a particular focus on bilateral and total exports, production and welfare. The detailed, based on real trade data, calibration of the model allows for an exact identification of the sectoral shares and prohibitive tariffs aggregated to match the CGE model's sectoral level of aggregation. In addition, the paper carries on a validation exercise to compare the model's predictions with real trade data developments. The modelling simulation results show that the impact of the ban on total exports of the EU, the USA, Norway, Canada and Australia is limited. Total extra-EU exports decline by merely 0.12%. Nevertheless at a disaggregate level there are sectors-'vegetables and fruits', 'other meat' and 'dairy products' which experience two digit percentage change declines.

Price and Volatility Transmission and Market Power in the German Fresh Pork Supply Chain

“…Due to the integration of the EU market with global agricultural markets as a result of successive reforms of the Common Agricultural Policy, the EU market is likely to be more exposed to global market shocks (Tangermann, ). A recent example of a market shock is the Russian embargo on fresh produce imports from the EU which was followed by a drop in fresh produce prices within the EU (Kutlina‐Dimitrova, ).…”

Dispute Settlement on Pig Products: Case study of European and Russian trade

“…What justifies Russia from calling the implementation of import ban policy is a right move is only Advances in Social Science, Education and Humanities Research, volume 307 based on the potential harm that the disease can bring as well as other health concerns. However, there is still a flaw in this understanding, since there is no sufficient scientific base to justify restricting imports from non-affected areas in EU or all the products related [13].…”

“…An example is that Lithuanian pork producing industry was forecasted to lose approximately €4 million each month, and Latvian meat industry would eventually experience the same outcome. As stated previously, Russia used to be a significant export market for meat producing sector; in 2013 the EU supplied Russia with pork worth € 1.4 billion, accounting for 25 % of its total exports of pigs, fresh pork and certain pig product [13].…”

“…The Russia president, Vladimir Putin said that Russia has the potential to be the world-leader in food as well as become self-sufficient in agriculture by 2020. Other global-wide effect includes decline in global prices of pork and pig products due to oversupply and decreasing demand [13].…”

“…However, no one has expected that this case would grow into a major bilateral issue having the possibility to jeopardize the trade relation between EU and Russia. This issue is believed to have significant adverse impact on both countries in terms of their international trade agreements, since EU is Russia's largest trading partner, and on the other side, Russia is EU's third largest partner [13].…”