The United States and its Western partners are imposing new sanctions on Russia in rapid succession. Now it is the turn of higher tariffs on Russian goods and import bans on caviar and vodka.
The US government, in coordination with Western partners, wants to initiate further punitive measures against Russia because of the Ukraine war.
US President Joe Biden announced in Washington on Friday that, among other things, he wanted to work with Congress to suspend normal trade relations with Russia. That would open the way for higher tariffs on Russian goods. A ban on the export of luxury goods to Russia and import bans on Russian goods such as vodka, seafood and diamonds are also planned. In addition, further sanctions are to be imposed on Russian oligarchs. Biden stressed that the US is taking these steps together with the G7 partners and the EU.
With regard to trade relations with Russia, trade policy concessions within the framework of the World Trade Organization (WTO) are to be abolished. Congress in the USA must take action for this. Specifically, Russia is to be deprived of the status of “most favored nation”. This principle stipulates that countries in the WTO should be treated equally when it comes to tariffs and other regulatory measures. From a US foreign trade perspective, suspending normal trade relations would put Russia in the same category as, say, Cuba or North Korea. Moscow can challenge this measure before the WTO Dispute Settlement Committee.
The most favored nation (MFN) principle means that members of the World Trade Organization must grant all other members the same access to their market – with a few exceptions. Tariffs can therefore generally not be set arbitrarily higher for a specific country. A the exception being national security, the regulations state that countries may take measures “as they deem necessary to protect their essential security interests (…) in time of war or other serious crises in international relations”.
Russia invoked this exact provision a few years ago after restricting the movement of Ukrainian goods through Russia. Ukraine appealed against it. The Dispute Settlement Committee concluded that it was Russia’s right to invoke this paragraph.
Trade relations in focus
Now the United States and its partners want to invoke it to suspend trade relations with Russia. Trade relations between the USA and Russia are limited: according to the US government, Russia was the 20th largest supplier of goods to the United States in 2019 and therefore mainly supplied oil and gas, metals and chemicals. However, the White House emphasized that combined with the measures taken by the other western partners, this would deal another serious blow to the Russian economy.
Since the start of the war in Ukraine, the US, in coordination with the EU and other allies, has already imposed very tough sanctions on Russia, including on the largest banks and the Russian central bank. These are already affecting the Russian economy. Just a few days ago, the US also issued an import ban on oil from Russia. In addition, many American companies are cutting their business with Russia of their own accord.
Biden once again pledged US support to Ukrainian President Volodymyr Zelensky in a phone call. Biden said in Washington on Friday that he had just spoken to Zelenskyy. “I told him, as I do every time we speak, that the United States stands with the Ukrainian people who are valiantly fighting to defend their country.”
Zelenskyj wrote on Twitter that he had informed Biden about the situation on the battlefield and about “Russia’s crimes against the civilian population”. Both had agreed on further steps “to support the defense of Ukraine and to tighten sanctions against Russia”.
Source: Stern
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