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In my novel there's a diplomatic accident that will deteriorate relationships of two European countries: Germany and Spain. How would e-commerce be affected in case of an embargo between those 2 countries (I'm thinking of Amazon, but also other e-commerce sites)? Would it be possible for someone to sell an item in Germany and buy it in Spain, for example? Are there real examples of problems of this kind?

(There is no longer the EU "we know" in the novel; only 3 countries left after 20 years of Referendum for Countrexit)

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    $\begingroup$ As long as both are EU countries, there cannot be an embargo. You may want to clarify your question. $\endgroup$ – Burki Nov 4 '16 at 11:04
  • $\begingroup$ Countries that are currently inside EU, in my novel the only EU left is make by 3 countries $\endgroup$ – GameDeveloper Nov 4 '16 at 11:35
  • $\begingroup$ You may wish to clarify that only one, or none, of these countries are in the remains of the EU. At present, this is not clear, and your comment only confuses the issue. $\endgroup$ – John Dallman Nov 4 '16 at 11:40
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Look at real embargos

For a demonstration of an embargo, you might look at real trade sanctions, e.g. the current situation in Crimea; earlier examples of Iran, etc.

The effect on e-commerce in such places has included (at some point of time in last few years), and might do it in your story, the following items:

  • companies in the embargoing country/countries are not allowed to sell any goods to the area. This includes e-commerce. This includes purely virtual goods. The restriction works on two aspects - you're not allowed to accept any money from their residents; and even if someone else pays, you're not allowed to deliver any goods to them (or in case of virtual goods, to any user accounts located there).
  • payment systems may block all deals between these countries as such. As in, most schemes of international payments explicitly prohibit any anonymous deals (anti-money laundering / know your customer laws) and also indicate the residence of the payer. This means that bank transfers and credit card payments from the area are blocked, so in effect it's much harder to buy goods as you lose easy ways to pay for them. Any payment service companies (e.g. Paypal) would also be mandated to restrict such payments. Bitcoin and others might be an option, but with severely restricted liquidity - e.g., a government can easily require that all legal merchants cannot accept bitcoin unless they can somehow prove the identity of the payer and that they are not from the embargoed country.
  • customs may block all deliveries across a border (assuming neighbouring countries), including transit from other countries. While no countries are so isolated that a single closed border will stop all trade, it will make trade more expensive and reduce it.

Most real trade sanctions are limited to a few particular industries. However, large scale embargos covering all or most consumer deals are feasible in appropriate circumstances.

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One real example until recently is Iran.

Embargo affects e-commerce on two key services: banking and shipping.

Embargo can be tricked on various levels:

  • some people are german/spanish binationals or have family in both countries, and have some privileges for travelling, exchanging gifts or opening bank accounts.

  • some other countries may stay neutral with respect to that diplomatic accident, thus choose not to promote embargo.

  • smuggling may develop

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  • $\begingroup$ Ehy, how does Iran embargo is working on ecommerce? $\endgroup$ – GameDeveloper Nov 4 '16 at 13:02
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    $\begingroup$ First, you need to access Amazon web site. Second, you need a Visa card or Master Card. Third, you need that Amazon accepts to deliver to Tehran, Fourth, you need that UPS operates in Iran. What else? $\endgroup$ – mouviciel Nov 4 '16 at 13:06
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It depends on the terms of the embargo and how it is enforced. Also important in this much reduced EU is how borders are managed. If there is already a system of customs checks and tariffs for any goods leaving Germany then this makes it relatively easy to prevent any legal exports to a specific country.

Of course one problem is that Germany and Spain don't have a common border so this is potentially easy to get around by using another country such as France as an intermediary.

In the case of an international company like amazon it would be easy enough just to route goods from a warehouse in another European country, in fact I doubt that there is that much direct retail trade (in the sense of ordering a package in Spain and having it shipped from Germany) between Germany and Spain in any case. Obviously the details of this will depend on the exact legal framework of the embargo.

It might effect small independent retailer more, especially if they sell/manufacture a unique product themselves, say hand-made musical instruments for example. But again this sort of thing is a pretty niche market which may be not worth enforcing.

Looking in more detail at german exports we see that the vast majority of goods manufactured in Germany are vehicles and industrial parts and very few things which are likely to be ordered directly by a consumer. Even cars generally go through a long and complex retail chain of importers, agents and dealers.

With this in mind it is also quite likely that any embargo simply wouldn't bother to include retail transactions in its scope as restrictions on bulk exports and financial products are much more economically significant and easy to enforce.

There is also the consideration that an embargo usually requires a large block of countries acting together against a specific target. Trade is, by definition, a mutually beneficial arrangement so two individual countries refusing to trade with each other is not really much more than a gesture unless one controls a commodity that the other needs and can't easily obtain anywhere else.

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  • $\begingroup$ ok so my "Amazon" exampe is not good because it is so big that it can easily workaround any embargo. Thanks for the plentiful of information of your post. $\endgroup$ – GameDeveloper Nov 4 '16 at 13:02
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You are assuming a hypothetical scenario set 20 years in the future, where at least one of two countries that were formerly EU members has left.

Two questions need to be answered:

In 2036, is E-Commerce a special legal category?

Right now we have situations where companies like to pretend that ordinary laws don't apply in the web, and where they use jurisdiction shopping to avoid taxes and regulations.

  • Is Uber (a) an illegal cartel where independent cab drivers do price fixing, (b) a corporation which pretends that their employees are independent contractors to defraud the tax office and the workers, or (c) both at the same time?
  • If a popular messaging site rapidly censors a famous photo from the Vietnam war (because it shows a nude girl), yet allows users to threaten others with murder (because that is free speech), can the subpoena be served to their local advertising office or do the prosecutors have to nail down the cloud where their server works today?

I think we can presume that by 2036 the legal situations will be somewhat settled in that regard, and nobody pretends that the web is the wild west.

In 2036, are some companies big enough to risk the wrath of nations?

Once upon a time, United Fruit could topple governments in Central America. In a future where the EU disintegrates, Europe may be in such a bad shape that Amazon can ignore laws with impunity. Or it is in such a good shape that companies have to respect national laws.

The second question is really up to you as the writer. Do you want to paint the end of the EU as a bad thing?

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  • $\begingroup$ well, not really 20 years in the future, it is 60 years in future, 20 years is the time in which most states exit the EU. Very usefull insights, thanks $\endgroup$ – GameDeveloper Nov 4 '16 at 18:14

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