What we are reading
Shifts in Russia sanctions, globalization, and supply chains
Published 05 April 2022
Our reading list this week asks key questions: Are sanctions against Russia in a new phase? What lies ahead for globalization – and the US’ China policy? How will supply chains shift - and get unstuck? Check out What we are reading, our list of articles and analysis on the drivers of global trade.
A new phase for Russian sanctions? | A shift away from globalization? | Supply chains shift - and sometimes get stuck | Reading the tea leaves on China policy | New Tools for Trade Research | More related research from Hinrich Foundation
As Russian atrocities emerge in newly liberated areas of Ukraine, the scope and limits of sanctions are under scrutiny. Nicholas Mulder considers the toll of economic war in Foreign Affairs, while Jean Pisani-Ferry, writing in Project Syndicate and Le Monde, argues that current steps have not gone far enough. Subtle and well-constructed sanctions can endure against Russia, explains Richard Nephew, noting that the sanctions war is just beginning.
How is effectiveness determined? Four criteria can analyze the effectiveness of sanctions, advise Gary Clyde Hufbauer and Megan Hogan. However, aspects of Russia’s economy may limit the impact of sanctions there, Roza Nurgozhayeva explains. Previous sanctions regimes instruct us about the ways Russia can sell its unwanted oil, according to the Economist.
WTO Members are also taking action against Russia and Belarus within the context of WTO rules and commitments. Peter Ungphakorn provides a helpful list of steps taken to date.
- The Toll of Economic War - Foreign Affairs
What will be the long-term impact of the toughest sanctions ever imposed on an economy as large as Russia’s? Will the sanctions fail because of their strength?
- Sanctions: Tightening the noose on Russia - Op-ed: Le Monde
- Crunch Time for Europe's Economic Sanctions - Project Syndicate
Are current measures impacting Russia or does the specter of tougher measures relay more pressure? Are the measures meaningless with an EU embargo of Russian gas and oil?
- How effective are sanctions against Russia? - Peterson Institute for International Economics
PIIE looks at the effectiveness of sanctions against Russia in terms of deterrence, enforcement, punishment, and rehabilitation.
- The Sanctions War Is Just Beginning - Foreign Affairs
For sanctions to be effective and sustained over time, they must be subtle and well-constructed.
- Economic Sanctions against Russia could put the World’s Future at Stake - AsiaGlobal Online
Are sanctions as efficient or effective as many suppose?
- What can Russia do to sell its unwanted oil? -The Economist
Iran’s experience demonstrates that Russia will have avenues to sell its oil.
- Ukraine invasion—what Russia and Belarus face in the WTO system: so far - Trade Beta Blog
A helpful list of actions taken by WTO Members within the context of the WTO to date.
Does Russia’s war in Ukraine mark the end of globalization? Adam Posen explores this question in Foreign Affairs. Brexit represented a shocking populist push back against British integration with the EU. The Financial Times explains how, as a consequence, Britain missed out on a global trade rebound.
- The End of Globalization?: What Russia’s War in Ukraine Means for the World Economy - Foreign Affairs
Have Russia’s war, populist movements, and the push for de-coupling from China led us past the point of no return for globalization?
- Brexit blamed as UK misses out on global trade rebound - Financial Times
Recent data shows that the UK has missed out on a rebound in global trade due to Brexit.
For all the talk of de-coupling, are supply chains really diversifying out of China? Macro Polo explains why quitting China is hard to do. How will supply chains evolve in light of the clean energy revolution, and what are the key commodities of the future? The Economist estimates the new commodity superpowers.
The Biden Administration is preparing for the transition with the tools it has, by invoking the Defense Production Act to develop domestic sources for key minerals, per the New York Times. Another large cargo ship has gotten stuck. What does this say about the state of shipping, American infrastructure, and supply chains? The Odd Lots podcast explains.
In Africa, the African Continental Free Trade Agreement is meant to streamline trade, but inter-continental trade still remains a massive challenge. The Economist explains why.
- Supply Chain Diversification in Asia: Quitting China Is Hard - Macro Polo
Using electronics manufacturing to analyze supply chain diversification, Macro Polo finds that supply chains have shifted very little in recent years.
- The transition to clean energy will mint new commodity superpowers - The Economist
The clean energy transition will help countries rich in high-demand commodities, while the current superpowers may lose out.
- Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended -The White House
- Biden Invokes Cold War Statute to Boost Critical Mineral Supply - The New York Times
The Defense Production gives the US Government more tools to support mining of critical materials like lithium, nickel, cobalt, graphite, and manganese, and reduce reliance on other countries.
- Why it costs so much to move goods around Africa - The Economist
Trade within Africa remains hindered by formal and informal trade barriers, leading to more exports outside of Africa than trade within the continent.
- Why All of Tracy's Furniture Is Stuck on a Grounded Ship - Podcast: Odd Lots by Bloomberg
Another massive cargo ship has run aground, this time outside of the Port of Baltimore, raising questions about ship size, port infrastructure, and dependent global supply chains.
The revealing of US trade policy towards China continues. A new agreement with the UK to ease steel tariffs includes audit provisions targeting Chinese-owned UK steel mills, according to the Financial Times. Upon reviewing over 500 categories of Chinese imports subject to Trump era tariffs, the Biden Administration has restored waivers on only 352 categories, Bloomberg reports. In her testimony last week, US Trade Representative Katherine Tai said that it’s time to forget about changing China’s behavior and instead focus on American capabilities.
Meanwhile, USTR details its concerns with Chinese practices and those of other trading partners in its annual National Trade Estimate report on Foreign Trade Barriers. These debates are set against the context of massive outflows of foreign investment from China, per The Economist, and ongoing efforts by China to set global technology standards, as discussed by experts in ChinaFile.
- US agrees to ease tariffs on UK steel and aluminium imports - Financial Times
- US-UK Joint Statement on Steel and Aluminum
- Announcement of Actions on UK Imports Under Section 232
A new steel agreement between the US and the UK lifts tariffs but includes a provision. Any UK steel company owned by a Chinese entity must undertake an audit of its financial records to ensure no “market-distorting” practices.
- U.S. Restores Waivers for Some Chinese Goods Hit by Tariffs - Bloomberg News
With granted exemptions expiring, the US will renew exemptions from tariffs for 352 of 549 categories of goods reviewed from China.
- U.S. Trade Chief Says New Focus Needed as China Hasn’t Changed - Bloomberg
- 2022 National Trade Estimate Report on Foreign Trade Barriers - United States Trade Representative
As USTR publishes its annual report on foreign trade barriers, Ambassador Tai presented to Congress a new message for US trade policy: shift away from trying to change China’s behavior through negotiations.
- Why foreign investors are feeling jittery about China - The Economist
Concerns about state interference with private companies, the property market, and China’s zero-Covid policy are prompting investment outflows.
- Will China Set Global Tech Standards? - ChinaFile
A group of experts explains the context of China’s efforts to be involved with and shape global technology standards.
The WTO Stats Dashboard has all you need to know about trade and tariff statistics by country.
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