As reported in BakerHosteler’s Alert of March 14, 2022, last month President Biden announced that the United States intended to revoke Russia’s most-favored nation (MFN) trade status (also known as Permanent Normal Trade Relations or “PNTR” treatment). The withdrawal or suspension of MFN treatment requires congressional approval under U.S. trade law. The U.S. House of Representatives and Senate voted overwhelmingly on April 7 to adopt H.R. 7108, “The Suspending Normal Trade Relations with Russia and Belarus Act.” (The House had cleared similar legislation back in March.) President Biden signed the bill into law on April 8.

A country with MFN status receives the same trade benefits as all other U.S. trading partners who have that status, including lower tariff rates and non-discriminatory treatment. This principle is fundamental to the international trading system and the operation of the World Trade Organization (WTO), of which the United States and Russia are members. The action to suspend Russia’s MFN status represents a serious downgrading of that country’s trading relationship with the United States.

The new law:

• Imposes non-MFN tariffs on Russia and Belarus under the U.S. Harmonized Tariff Schedule (HTS). According to the Congressional Research Service, revoking MFN for Russia will increase the average unweighted ad valorem tariff on Russian imports from approximately 4% to approximately 30%.
• Provides the President with time-limited authority to increase tariffs on Russian and Belarusian products above non-MFN rates. This authority expires on January 1, 2024.
• Grants the President authority to restore PNTR with Russia and Belarus on a temporary basis for up to one year, or on a permanent basis if these countries have ceased their acts of aggression against Ukraine and certain other conditions are met. Congress has the authority to overrule such a decision through passage of a resolution of disapproval within 90 days of the President’s notification to Congress of the intention to restore PNTR.
• Requires the U.S. Trade Representative (USTR) to seek suspension of Russia’s participation in the WTO and to halt the accession of Belarus to the WTO and accession-related work.

At this time the Administration has not announced any related actions beyond the tariff increases.

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This Alert is a tool to help businesses, both U.S. and foreign, consider impacts on their business with Russia, Belarus, or Ukraine. The Alert cannot be relied upon as legal advice. U.S. and foreign trade laws and regulations are complex, detailed, and continuing to develop, and legal counsel should be sought for guidance on specific transactions.

Please do not hesitate to reach out to any member of our International Trade and National Security team or your BakerHostetler relationship partner with questions. BakerHostetler continues to closely monitor the situation.