Russian Roulette at the Trade Table: A Specific Factors CGE Analysis of an Agri-food Import Ban

In the summer of 2014 Russia imposed a ban on most agri-food products from countries enforcing Ukraine-related sanctions against Russia. We use a specific factors computable general equilibrium (CGE) model to simulate the short-run impact of this retaliatory policy. The baseline is carefully designed to isolate the impacts of the ban on the European Union (EU), Russia itself and a selection of key trade partners. The modelling of the ban follows a novel approach, where it is treated as a loss of established trade preferences via reductions in consumer utility in the Armington import function. Not surprisingly, the results indicate that Russia bears the highest income loss (about €3.4 billion) while the EU recovers part of its lost trade through expansion of exports to other markets. An ex-post comparison between simulation results and observed trade data reveals the model predictions to be broadly accurate, thereby validating the robustness of the modelling approach.

BOULANGER Pierre;  DUDU Hasan;  FERRARI Emanuele;  PHILIPPIDIS George; 

2016-04-05

WILEY-BLACKWELL

JRC96903

0021-857X,   

http://onlinelibrary.wiley.com/doi/10.1111/1477-9552.12156/full,    https://publications.jrc.ec.europa.eu/repository/handle/JRC96903,   

10.1111/1477-9552.12156,