Global Trade Alert
Global Trade Alert

Isolating the Russian Economy: The overlooked role of international shipping costs

Second CBRIEF WITH THE UNIVERSITY OF CALIFORNIA-SAN DIEGO

Just one-quarter of World Trade Organization (WTO) members, a total of 40 governments, have moved to impose additional tariffs on Russian exports following Moscow’s invasion of Ukraine—an outcome that limits the punishment metered out to the Russian economy. This cBrief draws upon the precedent of medium-term sanctions on the Apartheid regime in South Africa, where a combination of trade and investment sanctions as well as elevated international transport costs isolated that nation’s economy. We present evidence that sustained, modest increases in shipping costs reduce Russian GDP more over the medium-term than G7 and EU Member States imposing heavy tariffs on Russian exports. Strategies to isolate the Russian economy therefore need to keep the global shipping giants onside. 

Authors

Simon Evenett, Marc-Andreas Muendler

Date Published

26 Apr 2022

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