The Impact Of Economic Sanctions On International Trade

Economic sanctions are a common instrument in an international political strategy.The main goal of economic sanctions is to pursue a target country to change political behavior through economic damage.However,in some cases sanctions do not achieve the main political goal and instead they affect economy and trade.If the sender and the target are involved in trade relations,than collateral damages for both sides will be unavoidable.In some cases,economic sanctions affect not only the target country,but also the sender.This research estimates these damages in terms of Russian and Ukrainian conflict and further sanctions' implication by the European Union and United States of America in 2014.We find that though Russian Federation was significantly affected by these sanctions,the European Union,the sender of economic sanctions,suffered from huge losses in terms of export.As the Russian Federation was one of the major importer of the EU products,after sanctions' imposition the EU economy was damaged.To cover import needs,the Russian Federation found other trade partners and started the policy of import substitution,which means that even if the EU cancel all sanctions,it will be difficult to return on Russian market.The aim of this paper is to study the impact of economic sanctions on both the sender and the target's trade relations.We use DID method to analyze the impact on European and Russian trade relations before sanctions and after.We analyze the difference for export from the EU to the RF before sanctions and after,time period from 2014 to 2016.Analysis showed that the volume and value of export form the EU to Russia dropped by 1.32% and1.20% respectively.Than we investigate the factors,affecting the success of economic sanctions in case of sanctions against Russian Federation.To estimate the effectiveness of economic sanctions we use a quantitative SWOT model,which shows strength,weaknesses,opportunities and threats of economic sanctions.A SWOT matrix shows how successful is the sanction policy,whether the EU and the US achieved their original goal,using this policy.The sanctions imposed on Russia in the past few years have definitely affected the country's economy in a negative way and caused a significant economic decline,but it hasn't been quite enough to change its policy towards Ukraine and resume trading relationships between the two countries that once used to be major economic partners.As for the future of RF and the EU trade relations,we believe that the longer sanctions will last,the more difficult it will be for the EU to return on Russian market.