Commodity trade in the Asia-Pacific: Assessing the short- and long-term impact of sanctions

Russia’s commodities-based export influences the development of its economy. The European sanctions stimulated the need to redirect Russia’s commodities to countries in other regions, including the Asia-Pacific. APAC accounted for half of the world trade in commodities, however while there was a general reduction in barriers, the region saw a fragmentation process due to the growth in sanctions imposed. The paper’s aim is to assess the sanctions’ impact on the trade in commodities between the countries of the Asia-Pacific in 1992–2023. Methodologically, the study relies on the theories of international trade, trade policy, industrial organisation and political markets. The research method is the evaluation of dependencies based on the structural gravity model. The data come from the UN, the World Bank, CEPII, CEIC, statistical agencies of the Asia-Pacific countries, and the Global Sanctions Database. The results demonstrate that any type of sanctions decreased the trade in commodities in the Asia-Pacific by 20.5 and 61.4 % on average in the short and long run, respectively. Economic sanctions affected the trade in commodities in APAC negatively: trade sanctions – by 16.5 and 64 %; financial sanctions – by 24.3 and 54.6 %; travel sanctions – by 23.5 and 77.3 % in the short and long term, respectively. Military assistance sanctions had a long-term negative impact of 43.3 % alone. The growth in global trade and integration processes offset the overall negative impact of sanctions on the trade in commodities in APAC, but mitigated the sanctions’ impact only in the long term. The findings allow understanding how the APAC commodities market reacts to various types of sanctions in the long-term, indicating the fragmentation of the market on the geopolitical basis, as well as the limited effect of the sanctions.