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Implications of an EU Import Stop on Food: A Dark Cloud with a Silver Lining?

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  • Thom, Ferike

Abstract

Disruptions of international trade chains are omnipresent: The COVID-19 pandemic, the recent US-Chinese “trade war” and the congestion of the Suez Canal. What are the effects and underlying mechanisms of a comprehensive trade stop? To answer these questions, I used the partial equilibrium model CAPRI and simulated an almost complete stop for all food imports into the EU. In the import stop scenario, EU prices increased for all products, but to different extent. This led to an increase in agricultural production, which caused an increase in GHG emissions. The EU’s trading partners experienced a decrease in income from exports. As also the EU’s exports decreased, the trading partners substituted these through an increase in domestic production. This increase was largest in animal production which is associated with a high value-added and thus income opportunities to the concerned regions. These results clearly show that an EU import stop in food has a substantial negative impact in monetary and environmental terms in- and outside of the EU. However, the results suggest that a reduction of EU exports can foster the economic development in other regions. I could show that the effects of a comprehensive, far-reaching import stop are higher than the sum of the effects of the single product import stops. This finding indicates that the implication of imposing or lifting a trade restriction for a specific product can differ depending on which trade restrictions are in place for other products.

Suggested Citation

  • Thom, Ferike, 2022. "Implications of an EU Import Stop on Food: A Dark Cloud with a Silver Lining?," Conference papers 333448, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333448
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