What will revoking Russia’s ‘most favoured nation’ status mean for trade

Move will affect what goods can be sold to and brought from Russia

President Joe Biden’s announcement of a decision by the United States and the rest of the Group of Seven to revoke Russia’s “Most Favoured Nation” trade status as punishment for what the G7 called an “unprovoked and unjustified attack” on Ukraine puts the Russian Federation in a very small category of nations that have been denied such a status by the US.

Only North Korea and Cuba — two former Soviet client states that have long had a rocky relationship, or in North Korea’s case, no relationship with the US — lack Normalised Trade Relations (NTR), the American legal term for “Most Favoured Nation” trade treatment.

It’s a benefit accorded to World Trade Organisation members, which is why Russia was given permanent NTR status under the terms of a 2012 law signed by then-president Barack Obama, 10 years after then-president Bill Clinton granted it by giving the newly-independent Russian Federation a waiver exempting it from restrictions imposed by a 1975 law which denied countries normalised trade relations to any country that denied its’ citizens the freedom to emigrate.

But Mr Biden’s announcement and the impending Congressional action revoking Russia’s NTR privileges will mean the US can now charge far higher tariffs on Russian imports than currently allowed.

What will the loss of NTR status mean for Russia?

Losing NTR status means Russian businesses that want to sell goods to American consumers may have to do so under far higher import tariffs than are currently imposed, which means Americans will pay more than they would for the same goods from other countries, if those goods are even allowed to be imported.

What Russian goods are now banned from the US?

An executive order signed by Mr Biden and released by the White House on Friday prohibits importation of “fish, seafood, and preparations thereof,” as well as “alcoholic beverages” and “non-industrial diamonds”.

Moreover, the Secretary of the Treasury can add to that list if needed.

Mr Biden has also prohibited the sale of “luxury goods” — a broad category that can include electronics, clothes, food, and other kinds of products — to Russian markets.

What else is not allowed under the new Russia trade rules?

According to Mr Biden’s new order, any “new investment” in “any sector” of the Russian economy by any US Person — a citizen, permanent resident, or American company — is now prohibited.

What’s more, it’s now illegal for any US person to sell or supply American currency to anyone in Russia.