The European Union as a User of Economic Sanctions: Patterns and Effects on Trade

This study estimates the trade effects of economic sanctions used by the European Union 1990-2000. The EU has used economic sanctions frequently since the early nineties. These sanctions are compiled into a comprehensive list for the period 1990-2000, and classified as limited or extensive. Then, a gravity model is used to estimate how sanctions have affected trade between the EU and target countries. The regressions are run on both cross-sectional data and panel data, with a sample of 163 developing countries. The main result is that economic sanctions have had ambiguous effects on trade. The magnitude of the trade effect is greater on EU imports than on EU exports, which is consistent with theoretical predictions. Limited sanctions have become more trade-suppressing during the latter half of the nineties, while extensive sanctions have become less trade-suppressing