Revocation of Russia’s MFN status | BakerHotelier
As reported in BakerHosteler’s Alert on March 14, 2022, last month, President Biden announced that the United States intends to revoke Russia’s Most Favored Nation (MFN) trade status (also known as normal trade relations permanent or “PNTR” treatment). Withdrawing or suspending MFN treatment requires congressional approval under US trade law. The U.S. House of Representatives and Senate voted overwhelmingly on April 7 to pass HR 7108, “Suspension of Normal Business Relations with Russia and Belarus Act.” (The House had approved similar legislation in March.) President Biden signed the bill April 8.
A country with MFN status receives the same trade benefits as all other U.S. trading partners with this status, including lower tariff rates and non-discriminatory treatment. This principle is fundamental to the international trading system and the functioning of the World Trade Organization (WTO), of which the United States and Russia are members. The action to suspend Russia’s MFN status represents a serious deterioration in that country’s trade relationship with the United States.
The new law:
- Imposes non-MFN tariffs on Russia and Belarus under the United States’ Harmonized Tariff Schedule (HTS). Revoking MFN treatment for Russia will increase unweighted average, according to Congressional Research Service ad valorem tariff on Russian imports from about 4% to about 30%.
- Gives the president time-limited power to raise tariffs on Russian and Belarusian goods above non-MFN rates. This authorization expires on January 1, 2024.
- Grants the President the power to reinstate the PNTR with Russia and Belarus on a temporary basis for up to one year, or permanently if those countries have ceased their acts of aggression against Ukraine and certain other conditions are met. Congress has the power to reverse such a decision by passing a resolution of disapproval within 90 days of the President’s notification to Congress of the intention to reinstate the PNTR.
- Demands that the United States Trade Representative (USTR) request the suspension of Russia’s participation in the WTO and halt Belarus’ WTO membership and membership-related work.
At this time, the Authority has not announced any related measures beyond rate increases.