TAEM - Geopolitics and its impact in trade

Global supply chains, especially maritime chokepoints, are critical for global trade while constituting a significant risk for highly dependent countries. These risks exist due to the persistent nature of threats like piracy, natural disasters, and geopolitical risks. Japan is particularly dependent on the Strait of Malacca as most of its energy imports pass through the strait. This paper uses a two-step approach to estimate the effects of a possible disruption in the Strait of Malacca on the Japanese economy. In the first step, the change in maritime transport costs due to a possible disruption is estimated, and in the second step, this estimated cost change is modelled as an exogenous change in a GTAP CGE model. We find that it is essential to understand the potential vulnerabilities of maritime chokepoints to asses economic stability and risks. Significant disruptions in the Strait of Malacca decrease the overall trade volume and shift maritime traffic to alternative routes. If alternative routes cannot fully compensate for the decrease in imports, a disruption might even lead to an overall welfare decrease in the country.

During the last years the liner shipping sector has been interested by significant disruptions. The pandemic, geopolitical clashes and changes in regulation are determining a new organization of the services offered by liner companies. Since November 2023 the attacks on commercial ship transiting the Red Sea, in consequence of the dramatic conflict in Gaza Strip, led many companies to interrupt passages through the Suez Canal. This situation is affecting the cost of transport and the reliability of shipments, particularly for Mediterranean countries whose import and export flows to Middle East and Asia mainly relied on the Canal. The paper aims to evaluate the resilience of the Italian ports for container trade comparing the traffic between the second and the fourth quarter of 2023 and 2024. The analysis is based on changes occurred in the liner services considering the geography of the routes, the total cargo capacity (TEU) and the number of port calls. The results highlight a global reduction of Med - Far East direct services and a reduction at national level of approximatively the 6% of the global capacity that impact in different way the Italian ports.

This study builds on a protectionism index assessing the impact of non-tariff measures (NTMs) on trade flows through the Port Authority of Valencia (Valenciaport). It identifies motor cars and other vehicles (HS 8703), wine and fresh grapes (HS 2204), and glazed ceramic tiles (HS 6908) as the most affected sectors over the past decade.
Building on this framework, this study will examine whether exporters in these identified sectors using Valenciaport preemptively modify trade flows in response to NTM announcements or adjust only after enforcement. Using data from the Global Trade Alert (GTA) and Valenciaport's trade records, the research will evaluate the timing of trade flow adjustments and sectoral responses. Anticipatory behavior is expected to depend on factors such as supply chain integration, market rigidity, and firms' adaptability to policy changes.
As an ongoing study, this research seeks to enhance understanding of the dynamic effects of NTMs on trade-dependent economies. While tariffs have regained attention in recent years, most protectionist policies since the Great Recession have been non-tariff based, making their analysis particularly relevant. By refining the index to capture sector-specific responses, the study aims to offer valuable insights into exporter behavior, supply chain resilience, and trade policy.

The main research topic relies on the significance of geopolitical tensions in the legal provision in charterparties. The liability and responsibility of the parties in the ship's charter is allocated through the relevant clauses, which have been negotiated and agreed upon concerning the current geopolitical environment. In turn, the negotiation process before formulating the conditions in the charterparty is based on distinct grounds reflecting the current geopolitical tensions and are translated into increased or decreased hire/freight rates. Given the intricate nature of both geopolitics and shipping, the issues arising from their interplay trigger additional claims that are not sufficiently addressed through solely reliance on charterparty provisions, rather resolved through court decisions which in turn, reinforce the already existing uncertainty of contract formulation since the application of a principle differs from its theory.

Petroleum remains a dominant global energy source, with maritime transportation playing a dispensable role in sustaining and expanding the international petroleum trade network. While the Russia-Ukraine war represents one of the most significant geopolitical disruptions of the past two decades and has broadly impacted global trade, however, its specific effects on maritime petroleum trade patterns are not fully examined. This study analyzes the global maritime petroleum trade flows, derived from the Automatic Identification System (AIS), by utilizing the network graph theory to assess the conflict's impact on international petroleum trade networks. The findings reveal shifts in several countries' network positions, as measured by export-import ratios. Additionally, Russian petroleum trade patterns show notable changes, showing fewer but strengthened connections with trading partners.