FOCUS ON EUROPEAN ECONOMIC INTEGRATION Q3/14 31 Assessing the Full Extent of Trade Integration between the EU and Russia – A Global Value Chain Perspective

Recent geopolitical tensions and discussions of trade sanctions have sparked wide-spread interest in economic linkages between the EU-272 and Russia. In this article, we assess the status quo of trade integration between Russia and individual EU-27 Member States. While we realize that it may well be impossible to cover all aspects of interconnectedness, we have nevertheless aimed to gauge the degree of inter-dependence as comprehensively as possible. We focus on trade linkages, but above and beyond existing studies, we take into account global (i.e. direct and indirect trade) linkages to get a fuller picture. We would like to emphasize that our analysis is not an attempt to estimate the impact of current and possible further sanctions, but a broad investigation of the state of trade links prior to the current crisis. Several publications on global value chains (GVCs) have demonstrated that a narrow focus on direct trade flows that does not take into account global inter-dependencies gives an incomplete picture of mutual trade interdependencies. The international fragmentation of production is an important element of global economic activity today. Stehrer et al. (2012) find that international linkages hav