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1 1 (April 1, 2022)

handle is hein.crs/govefnf0001 and id is 1 raw text is: Congressional Research Service Intorm~ng the legislative debate since 1914 0 April 1, 2022 Russia's Trade Status, Tariffs, and WTO Issues Following Russia's 2022 invasion of Ukraine, Congress is considering legislation 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. On March 11, 2022, President Joe Biden announced his support for such legislation, in coordination with the G-7 countries. On March 17, the House passed H.R. 7108, which would suspend PNTR with Russia and Belarus; provide the President authority to further increase non- MFN tariffs; and provide authority to restore normal trade relations (NTR) under certain conditions. It also directs the U.S. Trade Representative (USTR) to use its voice and influence at the World Trade Organization (WTO) to encourage other WTO members to suspend trade concessions; consider further steps toward suspending Russia from the WTO; and seek to halt Belarus's accession process. Removing Russia's PNTR status would increase applicable duties on U.S. imports from Russia, potentially impacting certain sectors reliant on Russian inputs, and raise issues under U.S. WTO obligations. History of Russia's Trading Status During 1992 to 2012, Russia's NTR status was renewed by the President annually under Title IV of the Trade Act of 1974 (19 U.S.C. § 2431). 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 (i.e., 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), which Congress enacted in response to restrictive emigration policies the Soviet Union implemented in 1972. Amending Russia's trade status was tied to its WTO accession in August 2012. MFN treatment is a cornerstone of the WTO and its predecessor-the 1947 General Agreement on Tariffs and Trade (GATT). 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, and recourse to dispute settlement procedures), Congress passed legislation in 2012 that removed Title IV restrictions and provided the President authority to extend PNTR to Russia. Some proposed legislation to remove Russia's PNTR status would reapply Title IV restrictions and procedures to Russia for purposes of reinstating NTR. Other bills would add new conditions that Russia would have to meet before regaining such status. Delegated Presidential Tariff Authorities Although congressional revocation of Russia's PNTR status would subject Russian imports to non-MFN tariffs, the President already possesses broad authority to restrict trade. In the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. § 1601 et seq.), Congress authorized the President to regulate a variety of economic transactions after declaring a national emergency. No president has relied upon IEEPA to impose tariffs, but presidents have used the Act to impose other trade measures. For example, on March 11, 2022, President Biden cited IEEPA when banning the import of certain products of Russian origin, imposing export controls, restricting investment in Russia, and taking other measures. Thus, even if Congress does not impose a blanket revocation of Russia's MFN treatment, the President could rely upon IEEPA or other provisions of federal law (e.g., Section 232 of the Trade Expansion Act of 1962) to impose tariffs on Russian imports. Trade Impact from Removing PNTR If Russia's PNTR were revoked, applicable duty rates on U.S. imports from Russia would be the rates listed in column 2 of the U.S. Harmonized Tariff Schedule (HTS), unless otherwise specified by law or via other presidential authorities. Column 2 duty rates are generally higher than column 1 rates, which apply to countries with NTR. Pertinent for Russian trade, non-MFN rates for raw materials are relatively low. 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 (see Table 1). 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. Subsequently, the Administration announced import bans on other key goods, including seafood, spirits/vodka, and non-industrial diamonds. In response, Russia announced an export ban on over 200 products, including medical equipment, agricultural machinery, and grain. 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 Russian inputs would be impacted ittps://trsreports.congress.gt

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