After lots of fits and starts, it looks like the U.S. (and others) will join Canada and withdraw MFN treatment for Russian and Belarusian imports. President Biden discussed this at a press conference today. Here are some of the key points he made:
As Putin continues his merciless assault, the United States and our allies and partners continue to work in lockstep to ramp up the economic pressures on Putin and to further isolate Russia on a global stage. Later today, together with other NATO allies and the G7, Canada, France, Germany, Italy, Japan, United Kingdom as well as the European Union, we're going to jointly announce several new steps to squeeze Putin and hold him even more accountable for his aggression against Ukraine. I want to speak to a few of those points today.
First, each of our nations is going to take steps to deny most favored nation status to Russia. A most favored nation status designation means two countries have agreed to trade with each other under the best possible terms, low tariffs, few barriers to trade, and the highest possible imports allowed. In the United States, we call this permanent normal trade relations, PNTR, but it's the same thing. Revoking PNTR for Russia is going to make it harder for Russia to do business with the United States, and doing it in unison with other nations that make up half of the global economy will be another crushing blow to the Russian economy. It's already suffering very badly from our sanctions.
I want to thank Speaker Pelosi, Leader McCarthy, Leaders Schumer and McConnell, and Senators Wyden and Crapo, Representatives Neal and Brady, for their bipartisan leadership on this in the Congress. I would like to offer a special thanks to Speaker Pelosi who's been a strong advocate for revoking PNTR and who agreed to hold off on that in the House until I could line up all of our key allies to keep us in complete unison. Unity among our allies is critically important as you all know, from my perspective at least.
... The free world is coming together to confront Putin. Our two parties here at home are leading the way. With that bipartisan cooperation, I'm looking forward to signing into law the bill revoking PNTR, which is again, most people think of it as most favored nation status.
We're also taking the further step of banning imports of goods from several signature sectors of the Russian economy, including seafood, vodka and diamonds.
A White House fact sheet on this issue is here. On MFN withdrawal and the import ban, it says:
Revoking Russia’s Most-Favored Nation Status. President Biden will work closely with Congress to deny Russia the benefits of its WTO membership and ensure that Russian imports do not receive most favored nation treatment in our economy. The United States Congress has demonstrated bipartisan leadership to revoke Permanent Normal Trade Relations for Russia, and President Biden looks forward to signing a bill into law. Together with similar actions by the G7, following our respective national processes, this collective action by more than half of the global economy will deliver another serious economic blow to Russia.
...
Ban U.S. Import of Goods from Several Signature Sectors of Russia’s Economy. President Biden’s E.O. will also prohibit the import of goods from several signature sectors of Russia’s economy – including seafood, spirits/vodka, and non-industrial diamonds. This will deny Russia more than $1 billion in export revenues and ensure U.S. citizens are not underwriting Putin’s war. The United States retains the authority to impose additional import bans as appropriate.
The basis for the U.S. legislation going forward could be the Wyden/Crapo bill described here. The full text is here (and eventually will be posted here). I'm going to go through some of the key provisions.
Let's start with the provision on the suspension of normal trade relations:
SEC. 3. SUSPENSION OF NORMAL TRADE RELATIONS WITH THE RUSSIAN FEDERATION AND THE REPUBLIC OF BELARUS.
(a) NONDISCRIMINATORY TARIFF TREATMENT.—
Notwithstanding any other provision of law, beginning on the day after the date of the enactment of this Act, the rates of duty set forth in column 2 of the Harmonized Tariff Schedule of the United States shall apply to all products of the Russian Federation and of the Republic of Belarus.
(b) AUTHORITY TO PROCLAIM INCREASED COLUMN 2 RATES.—(1) IN GENERAL.—The President may proclaim increases in the rates of duty applicable to products of the Russian Federation or the Republic of Belarus, above the rates set forth in column 2 of the Harmonized Tariff Schedule of the United States.
(2) PRIOR CONSULTATION.—The President shall, not later than 5 calendar days before issuing any proclamation under paragraph (1), consult with the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate regarding the basis for and anticipated impact of the proposed increases to rates of duty described in paragraph (1).
(3) TERMINATION.—The authority to issue proclamations under this subsection shall terminate on January 1, 2024.
I think it's useful that instead of just saying normal trade relations are withdrawn, as some previous versions of this legislation did, they spell out that Column 2 rates apply. That offers some added clarity as to what the impact of the legislation is.
At the same time, as explained here, based on the actual mix of products we import from Russia, it's not clear how much impact applying Column 2 rates would have on U.S. tariff levels for Russian imports. As a result, there might need to be additional measures taken to raise those tariffs, and Section 3(b) of this legislation provides for that.
Also, as a general matter, I've been concerned with Congress delegating power to the president over the years to raise tariffs. The delegation here has a termination provision, though, which seems like a good approach.
Section 4 then deals with a prohibition on Russian energy imports.
And Section 5 has a long and detailed set of provisions on resuming application of Column 1 rates and normal trade relations if Russia/Belarus withdraws forces/ceases aggression, poses no immediate threat to NATO allies/partners, and "recognizes a free and independent Ukraine." A lot of the power is with the president, but the legislation gives Congress a say in the process as well.
Finally, as with previous versions of this legislation, there is something on actions at the WTO itself:
SEC. 6. COOPERATION AND ACCOUNTABILITY AT THE WORLD TRADE ORGANIZATION.
The United States Trade Representative shall use the voice and influence of the United States at the WTO to—
(1) condemn the recent aggression in Ukraine;
(2) encourage other WTO members to suspend trade concessions to the Russian Federation and the Republic of Belarus;
(3) consider further steps with the view to suspend the Russian Federation’s participation in the WTO; and
(4) seek to halt the accession process of the Republic of Belarus at the WTO and cease accession related work.
The "consider further steps" part of (3) seems weaker than previous legislation on this point, but regardless, I'm not sure they will get very far with suspending Russia from the WTO because of the heaving political lifting required. But maybe they will give it a shot and we'll see how it goes.
