Washington: President Joe Biden announced Friday that the US will dramatically downgrade its trade status with Russia as punishment for its invasion of Ukraine. The US also banned imports of Russian seafood, alcohol and diamonds to the country.
The broad trade shift, which revokes the ‘most favoured nation’ status for Russia, is being taken in coordination with the European Union and Group of Seven countries. “The free world is coming together to confront Putin,” Biden said from the Roosevelt Room of the White House.
Stripping most favoured nation status from Russia would allow the US and allies to impose higher tariffs on some Russian imports. This move will increase the isolation of the Russian economy.
Biden’s changes on Russia’s trade status come as bipartisan pressure has been building in Washington to revoke what is formally known as ‘permanent normal trade relations’ with Russia. Ukrainian President Volodymyr Zelenskyy pressed the US and allies to take the action against Russia in remarks to Congress over the weekend. It follows days after the Biden moved to ban imports of Russian oil and gas products.
This week’s moves are the latest for the sanctions that have crippled the Russian economy and a sign that the US and its allies will continue to use their financial heft to retaliate against Russian President Vladimir Putin. The other measures include the freezing of central bank assets, limits on exports and sanctions against Russian oligarchs and their families.
These financial tools have led to the Russian ruble losing 76% of its value against the US dollar over the past month. The sanctions have caused destructive inflation that could erode Putin’s ability to wage a prolonged war in Ukraine.
Biden, after initially slow-walking congressional attempts to take the trade action against Russia, was embracing lawmakers’ efforts to do just that Friday.
The earlier sanctions on imports of Russian oil, gas and coal cut off about 60 per cent of the US Imports from the country.
Most favoured nation status has been a baseline for global trade, ensuring that countries within the World Trade Organization (WTO) are treated similarly. Some countries in the WTO have special privileges due to their status as developing economies. Russia would join the ranks of Cuba and North Korea by not having MFN status from the US.