Influence of Russian Sanctions on Agricultural Trade between Russia and the European Union

Abstract

The European Union is Russia’s largest agricultural trading partner, and this cooperation has a long history. The imposition of sanctions on certain product groups in 2014 significantly affected trading relations. A gravity model helps us to understand and evaluate the characteristics of agricultural trade between countries. The aim of the research is to compare the agricultural trade flow between Russia and the European Union for the period 2000-2017, find some regularity, and estimate the influence of Russian sanctions using regression models for each European country and for particular types of agricultural products. The dataset sample consists of 12,096 observations and 29 countries. The gravity model of the dependence on Russia of imports and exports from each European country takes into account such variables as GDP (US dollar), distance (km) and dummies (a common border, common language, common history and seaport availability). The findings of the research are as follows: the classical gravity model is feasible for imports from Russia to EU countries. Thus, the smaller the distance between countries, the greater the trade flow between them, and the larger the GDP of both countries, the greater the trade flow between them. In addition, the gravity model is feasible not only for countries, but also for the particular group of products. The results of the cluster analysis show the impact of sanctions on each of 24 groups of products imported into Russia (not just those products that have been under Russian sanctions). It is possible to say that the impact of sanctions is deeper than previously thought.

The impact of the Russian import ban on EU agrarian exports

“…Negative effects on trade between the European Union and Russia are also re-ported in other studies (Dreger et al 2016;Golikova and Kuznetsov 2016;Tyll et al 2018). Kontsevaya and Smutka (2020) identified two factors influencing the trade flow between Russia and the European Union. With a smaller geographical distance and a more significant economic scale, the impacts on EU countries were greater.…”

“…The cluster analysis revealed the impact of sanctions on absolutely all groups of agricultural products imported into Russia. Products that are not sanctioned were also affected (Kontsevaya and Smutka 2020). To evaluate the short-term impact of restrictions on imports of agri-food products into Russia, Boulanger et al (2016) used the CGE model (the specific factor computable general equilibrium model).…”

International Trade in the Post-Soviet Space: Trends, Threats, and Prospects for the Internal Trade within the Eurasian Economic Union

“…From the standpoint of the historical analysis and the current sanctions regime between Russia and the West, the prospects for the development of economic associations are unlikely (Kontsevaya and Smutka 2020;Krivko et al 2021). Closer cooperation between the EU, the EAEU, Russia, and even more so between Asia and the European Union, seems to be realistic only in the long run (Uporov 2021).…”

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“…From the results shown in Table 1, we can see that the Russian counter-sanctions imposed on the Western food imports lead to the decline in trade flows that were much stronger and more efficient than the decline caused by the sanctions imposed by the Western countries on Russia. All in all, even though economic sanctions are sometimes necessary, they do not affect trade security of neither of conflicting parties (Kontsevaya, Smutka, 2020;Krivko et al, 2021). Therefore, it appears that the West should re-think the usefulness of economic sanctions against Russia which might be especially relevant in the post-coronavirus recovery of the world economy (Dreger et al, 2016;Krivko, Smutka, 2020).…”