Invasion of Ukraine: Russia’s Trade Status, Tariffs, and WTO Issues

Invasion of Ukraine: Russia’s Trade Status, Tariffs, and WTO Issues

INSIGHTi

Invasion of Ukraine: Russia’s Trade Status,
Tariffs, and WTO Issues
March 10, 2022
Following Russia’s invasion of Ukraine, the United States and its allies imposed financial sanctions and
taken trade actions. Some Members of Congress have introduced legislation (e.g., H.R. 6835, H.R. 6905,
H.R. 7014, S. 3725, S. 3717, S. 3786) to revoke Russia’s permanent normal trade relations (PNTR) status,
which provides unconditional nondiscriminatory, most-favored nation (MFN) treatment to goods and
services traded with Russia. The proposals would suspend PNTR with Russia (and Belarus); seek to
suspend Russia’s membership in the World Trade Organization (WTO); and provide authority to restore
PNTR under certain conditions. Removing Russia’s PNTR status would increase applicable import duties
on U.S. imports from Russia, potentially impacting certain sectors reliant on Russian inputs and raising
issues under U.S. WTO obligations.
Background
During 1992-2012, Russia’s normal trade relations (NTR) status was annually renewed under Title IV of
the Trade Act of 1974. The Act requires the President to deny NTR status to any country that did not have
it at the time of the law’s enactment on January 3, 1975, essentially covering “nonmarket economy”
countries (the Soviet Union and other Communist countries). It further denies NTR status as long as the
country denies its citizens the right to freedom of emigration under Section 402 of the Act (the so-called
Jackson-Vanik amendment). Congress enacted the amendment in response to restrictive emigration
policies the Soviet Union implemented in 1972.
Amending Russia’s trade status was tied to its accession to the WTO in August 2012. WTO rules
generally require each member to provide unconditional MFN treatment (i.e., a member’s lowest tariff or
best trade concession) to all WTO members. To comply with WTO rules and ensure the United States
benefited from the terms of Russia’s WTO membership (e.g., market access commitments), Congress
passed legislation in December 2012 that removed the applicability of the Jackson-Vanik amendment and
provided the President authority to extend PNTR to Russia.
Proposed legislation to remove Russia’s PNTR status would re-apply Title IV restrictions and procedures
to Russia for purposes of reinstating NTR. Other bills would add new conditions that Russia would be
required to meet before regaining such status.
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Impact on Imports from Removing PNTR
If PNTR were revoked, applicable duty rates on U.S. imports from Russia would be rates set under
column 2 of the U.S. Harmonized Tariff Schedule (HTS), unless otherwise specified by law. The
President may adjust tariff rates under other authorities. Column 2 duty rates are generally higher than
column 1 rates, which apply to countries with NTR.
Although U.S. imports from Russia account for a relatively small share of U.S. imports (around 1% in
2021 based on U.S. trade data), some commodities are important to specific U.S. industries. For example,
in 2021, certain titanium products (used by the aerospace industry) accounted for roughly 53% of total
U.S. imports of similar products. Without PNTR, the duty rate for these products would increase from
15% to 45%. Based on the 2021 dutiable value of those products, U.S. importers would pay an additional
$32.4 million in duties. Duty rates for most petroleum oil, a major Russian export (over 50% of U.S.
imports from Russia), would double (Table 1Error! Reference source not found.). On March 8, 2022,
the Biden Administration announced a ban on imports of Russian crude oil and certain petroleum
products, liquefied natural gas, and coal to the United States. Additionally, Russia announced an export
ban of certain commodities and raw materials; covered commodities are yet to be announced.
Table 1. Top 10 U.S. Imports from Russia, 2021
Import
Customs
CRS Estimated
Value
Calculated
Column 2
(in $
Import
Duties (in $
Column 1
Column 2
Duties (in $
Product (HTS 8-digit) billions)
Quantity
millions)
Duty Rates Duty Rates
millions)
Petroleum-derived
$9.0
134.6 mil ion
$7.1
$0.0525/bbla
$0.21/bbl
$28.3
distil ate and residual fuel
barrels
oil, <25 degrees A.P.I.
(2710.19.06)
Crude oil, >25 degrees
$3.4
48.7 mil ion
$5.1
$0.105/bbl
$0.21/bbl
$10.2
A.P.I. (2709.00.20)
barrels
Petroleum-derived
$1.7
21.9 mil ion
$2.3
$0.105/bbl
$0.21/bbl
$4.6
distil ate and residual fuel
barrels
oil, >25 degrees A.P.I.
(2710.19.11)
Unwrought or
$1.6
20.7 mil ion
$0
Free
Free
$0
powdered palladium
component
(7110.21.00)
grams
Light oil motor fuel
$1.3
16.6 mil ion
$8.7
$0.525/bbl
$1.05/bbl
$17.5
(2710.12.15)
barrels
Nonalloy pig iron
$1.2
2.1 mil ion
$0
Free
$1.11/ton
$2.3
containing <0.5% of
metric tons
phosphorus (7201.10.00)
Crabs (0306.14.40)
$1.1
31.7 mil ion
$0
Free
Free
$0
kg
Semifinished products of
$0.9
1.2 bil ion kg
$206.1b
Free
20%
$383.4
iron or nonalloy steel
(7207.12.00)
Unwrought or
$0.7
1.2 mil ion
$0
Free
Free
$0
powdered Rhodium
component
(7110.31.00)
grams

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Import
Customs
CRS Estimated
Value
Calculated
Column 2
(in $
Import
Duties (in $
Column 1
Column 2
Duties (in $
Product (HTS 8-digit) billions)
Quantity
millions)
Duty Rates Duty Rates
millions)
Enriched uranium and
$0.6
550,388 kg
$0
Free
Free
$0
other radioactive
chemical elements
(2844.20.00)
Source: CRS analysis of import data from the U.S. International Trade Commission Dataweb and HTS.
Notes: Imports are imports for consumption
a. Bbl=barrel
b. Steel products are subject to an additional 25% tariff under Section 232 of the Trade Expansion Act of 1962.
It is difficult to estimate the direct impact on prices from tariff increases, partly because U.S. importers
may source from other countries to offset possible increased costs. Industries reliant on raw materials or
inputs from Russia would be impacted more and could face disruption to their supply chains if businesses
decide to stop sourcing from Russia altogether. Some countries, such as Ukraine and Canada, have
revoked and others, including the European Union (EU), are considering revoking Russia’s MFN
treatment, which may compound potential impacts.
WTO Issues
Collective action by the U.S. and allies would limit Russia benefiting from MFN treatment under its
WTO membership. There is limited precedent for rescinding PNTR for a major trading partner; however,
the United States has delayed (e.g., Moldova) or withheld NTR (e.g., Cuba) for some WTO members.
(North Korea, a non-WTO member, is the only other country without NTR.) Key policy issues include the
scope (e.g., possible tariffs caps, as in Canada), duration, and authorities for revocation.
In a notification to the WTO, Ukraine claimed that rescinding the application of WTO agreements in trade
relations with Russia was consistent with its “national security rights” under the agreements, and urged
WTO members to suspend Russia’s participation in the WTO. Canada revoked Russia’s MFN status on
the basis of GATT Article XXI, the so-called national security exception, and the EU indicated it is
considering similar justification. The exception permits a WTO member to impose WTO-inconsistent
measures it considers “necessary for the protection of its essential security interests,” including “in time
of war or other emergency in international relations.”
Russia could take similar action in retaliation should the United States revoke PNTR/MFN, and pursue
WTO dispute settlement, arguing that the United States and others have violated their WTO obligations.
U.S. trade officials would likely justify potential action using GATT Article XXI; panel decisions
involving the GATT exception (including a Russia-Ukraine dispute) offer some guidance but remain
contentious among members.
Some pending legislation and H.R. 6968, which the House passed on March 9, 2022, and experts
advocate expelling Russia from the WTO. No formal mechanism exists to expel members, but WTO
members could seek to amend the WTO Marrakesh Agreement to create one. This would likely face
procedural and other obstacles, as WTO decisions are generally made by consensus among 164 members.
Amending a WTO agreement requires the support of two-thirds of WTO members; if a member refuses to
comply, three-fourths of the membership could vote to apply the decision and the dissenting members
“shall be free to withdraw from the WTO or to remain...with the consent of the Ministerial Conference.”
Some experts view a coordinated suspension of trade benefits as achieving the same effect as expelling

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Russia, but through a “more practical” approach. Such actions could include a path for Russia to reenter
the WTO in the future.

Author Information

Cathleen D. Cimino-Isaacs
Liana Wong
Specialist in International Trade and Finance
Analyst in International Trade and Finance

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