Assessing the Seafood Trade Diversion Arising from Economic Sanctions: Evidence from Russia and Western Countries

Abstract

Since 2014, economic sanctions between Russia and Western nations have significantly altered the global seafood trade. The consequent decline in bilateral trade also had spillover effects on the rest of the world (ROW). According to earlier studies, economic sanctions appear to negatively impact bilateral trade and income. However, few studies examine how Russian sanctions affect the world as a whole and estimate their effects on the fisheries industry. This study seeks to close this gap by quantifying the extent to which Russian sanctions have impacted trade in terms of trade deflection, trade destruction, trade depression, and trade creation. To this end, panel data from 185 countries were created for the years from 2005 to 2020. With trade policy variables that account for changes in trade channels, a structural gravity trade model was specified. Based on calculations using the Poisson pseudo-maximum likelihood (PPML) fixed effect model, economic sanctions led to a 119.28% surge in Russia’s seafood imports from the rest of the world (ROW), alongside a 39% decline in imports from Western countries. The extent of trade deflection, which includes the exports of Western nations diverted from Russia to the ROW markets, increased by 5.49%. The results demonstrate that trade between sanctioned states, as well as global trade, is significantly impacted by economic sanctions.