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handle is hein.crs/goveflu0001 and id is 1 raw text is: Congressional Research Service Infrm gT helgsltv11bt ine11 0 March 24, 2022 Russia's Trade and Investment Role in the Global Economy The invasion of Ukraine by the Russian Federation (Russia) in February 2022-and the expansion of U.S. and international sanctions that followed-has heightened congressional interest in understanding Russia's economy, including the composition and resilience of its trade and investment ties globally. Members of Congress may have an interest in scrutinizing these ties to better understand any potential leverage that the United States and allies may have over Russia's international trade flows, and to help inform potential additional U.S. policy responses. Russia's Economy Russia's significance in the global economy is tied to its role as a major energy and grain producer and exporter. Outside commodity markets, Russia has long been a relatively minor economic actor, despite its large land mass and population. Its economy, the 11th largest in the world, accounted for 1.7% of the world's total output in 2021 and remains weakly integrated into global value chains (GVCs) (Figure 1). Despite a stated desire to diversify its economy for decades, oil and gas dominate Russia's goods (merchandise) exports and account for a large share of the government's budget revenue. For more detail, see CRS Report R46518, Russia: Domestic Politics and Economy. Figure I. Russia's Role in the Global Economy GDP ($bn, current)' Trade Goods Exports ($bn)' Goods Imports ($bn)' Services Exports ($bn)2 Services Imports (Sbn)' FDI Outward [DI Stock ($bn) Inward FDI Stock ($bn) Forex Reserves Energy Production AMOUNT $1,478.6 $332.2 $240.4 $62.8 $99.0 $379.6 $446.7 $64 3.2 GLOBAL SHARE / RANK 17% 11th 1.90/ 16th 13% 21st 1.0% 27th 1.7% 16th * 1.0% 22nd S1.1% 22nd 4.8% ith Petroleum/Other Liq.(Mb/d) 10,496 21.2 Natural Gas (bcf)2 23,938 16, i°. 3rd .2nd Date of data: (1) 2020; (2) 2019; (a) 3/4/2022, Bank of Russia; (b) Q3:2021, IMF; (c) 1/31/2022, Financial Times, Source: CRS analysis using IMF, UNCTADstat, Russia's Federal Customs Service, Bank of Russia, and EIA data. Russia's Trade with the World Trade is important to the Russian economy: the ratio of Russia's goods trade (exports plus imports) to GDP has averaged about 40% in recent years, compared to 20% for the United States. In 2020, Russia ranked 16th among world goods exporters and 21 among importers. Its goods exports totaled $492 billion in 2021, up 46% from 2020 (not adjusting for inflation). Minerals, including oil and gas, accounted for almost 45% these exports (Figure 2). Goods imports increased 27% to $294 billion in 2021. Machinery and mechanical appliances was the top import category, accounting for almost a third of Russia's goods imports. Recipients of goods exports were highly concentrated geographically. In 2021, top export destinations were the EU (mainly the Netherlands and Germany), followed by China and Turkey. The U.S. share of Russia's exports stood at 4%. In recent years, China and other Asian economies have accounted for a growing share of Russia's oil and gas exports. Sanctions, combined with the halting of the Nord Stream 2 pipeline project and uncertainties surrounding the status of Ukraine's transmission systems, could accelerate this trend. The EU was the largest source of Russia's goods imports in 2021, followed by China and the United States. In services trade, Russia ranked 27th among world exporters and 16th among importers in 2019, the most recent year for which there is data. It was a net services importer, exporting $63 billion worth of services and importing $99 billion. Participation in Trade Agreements. Russia joined the World Trade Organization (WTO) in 2012, after nearly two decades of negotiations on the terms of its accession, and it is a founding member of the Russia-led Eurasian Economic Union (EAEU). The U.S. Trade Representative (USTR) has 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.) Supply Chains. Russia is relatively poorly integrated into GVCs, partly due to its economic structure and business environment. Nevertheless, some industries around the world are dependent on Russian inputs for which there are limited alternative sources of supply. Russia is one of the largest producers and exporters of certain grains and critical minerals. For example, the country is a leading exporter of neon (for semiconductors), palladium (catalytic converters), and titanium (aircraft). Shortages and plant stoppages, combined with port closures and restricted Europe-Asia transit routes due to sanctions, have begun to affect production, cause market volatility and higher prices, and exacerbate existing issues in already stressed supply chains. ittps://crsreports.congress.go

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