Effects of Trade Wars on Belarus
The trade wars that followed 2014 events in Ukraine affected not only its direct participants but the other countries like Belarus through the international trade linkages. According to the estimation of the model outlined in Ossa (2014), the trade wars cause the increase in the trade flow through Belarus, leading to the increase in its tariff revenue. At the same time, because of the ban on imports in Meat Products and Dairy Products Sectors, the tariff revenue of Russian Federation declined. As a member of Customs Union, Belarus needs to participate in the tariff revenue redistribution. The need to participate in the tariff revenue redistribution and the decline in the tariff revenue collected by Russian Federation lead to the decrease in after-redistribution tariff revenue of Belarus and to the decrease in its welfare. To avoid the decline in its welfare, Belarus should argue for the modification of the redistribution schedule. Also, Belarus could increase its welfare during trade wars by shifting from being a part of Customs Union back to being only a part of CIS Free Trade Area. While being the part of CIS FTA, the optimal tariffs for Belarus during trade wars should be higher than its optimal tariffs without trade wars to further benefit from the increased trade flow.