March 24, 2022
Russia’s Trade and Investment Role in the Global Economy
The invasion of Ukraine by the Russian Federation (Russia)
and mechanical appliances was the top import category,
in February 2022—and the expansion of U.S. and
accounting for almost a third of Russia’s goods imports.
international sanctions that followed—has heightened
congressional interest in understanding Russia’s economy,
Recipients of goods exports were highly concentrated
including the composition and resilience of its trade and
geographically. In 2021, top export destinations were the
investment ties globally. Members of Congress may have
EU (mainly the Netherlands and Germany), followed by
an interest in scrutinizing these ties to better understand any
China and Turkey. The U.S. share of Russia’s exports stood
potential leverage that the United States and allies may
at 4%. In recent years, China and other Asian economies
have over Russia’s international trade flows, and to help
have accounted for a growing share of Russia’s oil and gas
inform potential additional U.S. policy responses.
exports. Sanctions, combined with the halting of the Nord
Stream 2 pipeline project and uncertainties surrounding the
Russia’s Economy
status of Ukraine’s transmission systems, could accelerate
Russia’s significance in the global economy is tied to its
this trend. The EU was the largest source of Russia’s goods
role as a major energy and grain producer and exporter.
imports in 2021, followed by China and the United States.
Outside commodity markets, Russia has long been a
relatively minor economic actor, despite its large land mass
In services trade, Russia ranked 27th among world exporters
and population. Its economy, the 11th largest in the world,
and 16th among importers in 2019, the most recent year for
accounted for 1.7% of the world’s total output in 2021 and
which there is data. It was a net services importer, exporting
remains weakly integrated into global value chains (GVCs)
$63 billion worth of services and importing $99 billion.
(Figure 1). Despite a stated desire to diversify its economy
Participation in Trade Agreements. Russia joined the
for decades, oil and gas dominate Russia’s goods
World Trade Organization (WTO) in 2012, after nearly two
(merchandise) exports and account for a large share of the
government’s budget revenue.
decades of negotiations on the terms of its accession, and it
For more detail, see CRS
is a founding member of the Russia-led Eurasian Economic
Report R46518, Russia: Domestic Politics and Economy.
Union (EAEU). The U.S. Trade Representative (USTR) has
Figure 1. Russia’s Role in the Global Economy
consistently raised concerns about Russia’s compliance
with its WTO commitments. In its most recent statutory
review on Russia, the USTR noted that the country
continues to move away from the WTO’s guiding principles
and maintains restrictive trade measures that distort trade.
Russia is party to EAEU trade agreements with Vietnam,
Iran, Singapore, and Serbia. The EAEU signed an
agreement with China, which remains non-preferential, and
is in trade agreement negotiations with India, Israel, and
Egypt. Russia is also a party to several agreements that pre-
date the EAEU. Because there is no trade agreement
granting more preferential terms, U.S.-Russia trade is
conducted on WTO most-favored-nation (MFN) terms.
(Several Members have proposed legislation that would
suspend MFN treatment for U.S. imports from Russia and
seek to expel Russia from the WTO.)
Source: CRS analysis using IMF, UNCTADstat, Russia’s Federal
Customs Service, Bank of Russia, and EIA data.
Supply Chains. Russia is relatively poorly integrated into
Russia’s Trade with the World
GVCs, partly due to its economic structure and business
environment. Nevertheless, some industries around the
Trade is important to the Russian economy: the ratio of
Russia’s
world are dependent on Russian inputs for which there are
goods trade (exports plus imports) to GDP has
limited alternative sources of supply. Russia is one of the
averaged about 40% in recent years, compared to 20% for
largest producers and exporters of certain grains and critical
the United States. In 2020, Russia ranked 16th among world
minerals. For example, the country is a leading exporter of
goods exporters and 21st among importers. Its goods
neon (for semiconductors), palladium (catalytic converters),
exports totaled $492 billion in 2021, up 46% from 2020
and titanium (aircraft). Shortages and plant stoppages,
(not adjusting for inflation). Minerals, including oil and gas,
combined with port closures and restricted Europe-Asia
accounted for almost 45% these exports (Figure 2). Goods
transit routes due to sanctions, have begun to affect
imports increased 27% to $294 billion in 2021. Machinery
production, cause market volatility and higher prices, and
exacerbate existing issues in already stressed supply chains.
https://crsreports.congress.gov
Russia’s Trade and Investment Role in the Global Economy
annexation of Crimea in 2014 and its support for Donbas
separatists, neither side had traditionally engaged in
Figure 2. Russia’s Trade with the World in 2021
significant levels of bilateral trade and investment. This
lack of engagement is pronounced when compared to
Russia’s ties with other economic partners, such as the EU
and China. Despite overall lack of engagement, several
large U.S. companies are involved in projects with Russia,
and trade ties at the product or firm level can be significant.
Figure 3. U.S.-Russia Goods Trade in 2021
Source: CRS analysis with USITC data.
Russia was the United States’ 23rd-largest goods trading
partner by country in 2021. It comprised 0.8% of U.S.
goods trade, while the United States accounted for 4.4% of
Russia’s goods trade. The EU, as a bloc, was Russia’s and
the United States’ largest trading partner. In 2021, top U.S.
exports to Russia included civilian aircraft and engines, and
Source: CRS analysis with Russia’s Federal Customs Service data.
communication satellites, while the top U.S. imports from
International Investment
Russia were heavy fuel and petroleum oils and palladium
(Figure 3). Russia supplied about 8% (or 245 million
In recent years, Russia has experienced reduced foreign
barrels) of U.S. imports of crude oil and related products. In
direct investment (FDI) inflows, mainly due to increased
services, Russia was the 34th-largest U.S. trading partner in
uncertainties derived from U.S. and EU sanctions and
Russia’s countermeasures.
2020, accounting for 0.5% of U.S. services trade.
While Russia has bilateral
investment treaties (BITs) in force with about 60
U.S. FDI stock in Russia was $12.5 billion (0.2% of total
economies, including the UK and many EU members, FDI
U.S. outward FDI stock) in 2020, while Russia’s FDI stock
has not been a particularly strong element of the Russian
in the United States was $4.3 billion (0.1% of total U.S.
economy. Despite abundant natural resources, an educated
inward FDI stock). Top sectors for U.S. FDI in Russia are
labor force, and large consumer base, a number of factors
manufacturing and wholesale trade, and U.S. affiliate
have contributed to a less-than-favorable business
activity there supported over 210,000 workers in 2019.
environment, including the role of the state in the economy,
corruption, lack of regulatory transparency and property
Issues for Congress
rights protection, and regional instability.
As Congress oversees and contemplates additional
In line with the strong decline in global FDI flows due to
legislative responses to Russia’s actions, key issues that
the Coronavirus Disease 2019 (COVID-19) pandemic, FDI
Members may consider include the following:
into Russia plummeted in 2020. Russia’s inward FDI stock
Given Russia’s relatively small economic footprint
stood at $447 billion in 2020, which represented about 1%
outside commodity markets, what are points of U.S.
of the world’s total. Its outward FDI stock amounted to
leverage in bilateral trade ties or multilaterally?
$380 billion, equivalent to less than 1% of the global total.
To what extent can the first and second-order impacts on
In recent years, FDI into Russia has flowed mainly into
the global trading system be contained and a global
mining and quarrying of fuel and energy materials. Notably,
economic crisis averted? What steps should
Cyprus is both the top destination and source of Russian
policymakers take to support the most-affected
investment, reportedly in part due to “round-tripping” (e.g.,
countries?
domestic investment disguised as foreign investment).
How will sanctions and countermeasures alter the
U.S.-Russia Trade and Investment Ties
economic trends discussed above? What will be the
impact of sanctions on regional and global trade flows?
Russia has historically not been a major overall economic
partner of the United States. Even before U.S.-Russia
economic ties were constrained in the aftermath of Russia’s
https://crsreports.congress.gov
Russia’s Trade and Investment Role in the Global Economy
IF12066
Andres B. Schwarzenberg, Analyst in International Trade
and Finance
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https://crsreports.congress.gov | IF12066 · VERSION 1 · NEW