Category Archives: EU trade policy

26/6/20: Trade Restrictions: European Companies

BOFIT newsletter out today highlights the scale of restrictive trade measures applicable to the EU exporters across a number of significant markets:

Of eleven countries included, three managed to lower trade and investment barriers applying to the EU companies over 2017-2019 period, two countries had unchanged barriers, and six showed increasing barriers to trade and investment. In a way, this reflects a shift away from trade and investment globalization focus on the last three decades toward more regionalized and even protectionist policies.

COVID19 pandemic is likely to accelerate this trend.

9/2/15: Sanctions: "poisoning the public water supply in the hope of killing some enemies"

An excellent article on the effectiveness of economic sanctions as a tool in geopolitical conflicts:

Quick quotes:

"Research by the Peterson Institute for International Economics in 1997 showed that, in instances where the United States imposed economic sanctions in partnership with other nations, between 1945 and 1970 they were successful in 16 cases and failed in 14 – a success rate of 53 per cent. Between 1970 and 1990, when sanctions were applied more prolifically, they succeeded in 10 instances and failed in 38, reducing the success rate to 21 per cent. ...Unilateral US sanctions had a high success rate of 69 per cent between 1945 and 1970, tumbling to 13 per cent in the period 1970-90."

Meanwhile, "in economic terms they carry a cost. …the reality is that Russia is the European Union’s third largest commercial partner and the EU, reciprocally, is Russia’s chief trade partner. Who thought it was a good idea to subvert this arrangement?"

"Economic sanctions have the same credibility as poisoning the public water supply in the hope of killing some enemies. Sanctions are not a weapon that can responsibly be used in a globalised economy."

Yep. On the money. Though I am not so sure that "killing some enemies" is even an attainable goal here: so far, sanctions have been hitting predominantly smaller enterprises (via cut off of credit supply) and ordinary people (via supporting currency devaluations). As per oligarchs and Government-connected elites, for every instance where their property abroad has suffered, there are tens of thousands of instances where devalued ruble has made their forex holdings and forex-denominated portfolios of investments increase in purchasing power. So be prepared to see more concentration of economic power in Russia in their hands over the next 12 months.