Market Integration through Smuggling: China’s Sanction on Norwegian Salmon

Roberto J. Garcia () and Thi Ngan Giang Nguyen
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Roberto J. Garcia: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway
Thi Ngan Giang Nguyen: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway

No 6-2019, Working Paper Series from Norwegian University of Life Sciences, School of Economics and Business

Abstract: Much has been written in the popular press and studied in the political-economics literature about the link between the awarding of the 2010 Noble Peace Prize to a Chinese dissident and China’s trade sanction affecting Norway’s whole, fresh/chilled salmon exports. Trade patterns show a break in Norway’s salmon exports to China and a declining share of the Chinese market. However, since 2011 a curious trade pattern developed as Vietnam suddenly increased its import of Norwegian salmon. This paper establishes a relationship between the salmon markets of Vietnam and China since 2011, specifically addressing whether Vietnam’s increased import of salmon is related to China’s limiting of market access to Norwegian salmon. The sanction period acts as a structural break that divides trade flows into two sub-periods, July 1997 to February 2011 and March 2011 to December 2018. Vietnam’s current monthly imports are negatively affected by lags in China’s monthly imports with the sanction but had no effect before the sanction. An increase (decrease) in China’s salmon imports from Norway “Granger causes” a decrease (increase) in Vietnam’s imports from Norway. This provides statistical evidence of China’s sanction on Norwegian salmon, but that the sanction integrated China and Vietnam’s salmon markets through smuggling.

Keywords: Vietnam; China; Norway; salmon trade; sanction; Granger causality; smuggling (search for similar items in EconPapers)
JEL-codes: F13 F14 F51 P33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2020-01-17
New Economics Papers: this item is included in nep-cna and nep-sea
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