On March 11, 2022, President Biden and the G7 (a group of countries that includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) jointly announced their intention to take steps to revoke most-favored-nation (MFN) status – otherwise known in the United States as permanent normal trade relations – from Russia. MFN status grants countries the best possible trade terms, including low tariffs, few barriers, and the highest quantity of imports allowed. The European Union also announced that it will take similar action. Earlier this week, Canada became the first nation to revoke Russia’s MFN status. Canada also revoked Belarus’s MFN status at the same time, making Russia and Belarus the only countries besides North Korea that do not enjoy MFN status with Canada.

While revoking Russia’s MFN status in the United States will require Congressional authorization, President Biden expressed optimism that Congress will pass bipartisan legislation to that effect as part of other bipartisan actions in response to Russia’s invasion of Ukraine. The US House of Representatives on March 8, 2022 passed a bill calling for the United States Trade Representative to “consider further steps with the view to suspend the Russian Federation’s participation in the WTO.” The US Senate is considering a bill with similar language that also calls for suspending MFN status for both Russia and Belarus. Should such legislation be passed and signed into law, all Russian imports likely will be subject to higher customs duties and import restrictions.

The European Union and other countries in the G7 will join the United States in calling for the revocation of MFN status for Russia. Taken together, these countries represent more than half of the global economy. Any company directly or indirectly doing business with Russia should prepare for potential changes in trade requirements, supply chain disruptions, and other issues.

The G7 announcement coincides with the imposition of additional US trade restrictions on Russia on March 11, including export controls, economic sanctions, and a ban on imports of Russian seafood, vodka, and diamonds. Other recent US trade actions have been covered by BakerHostetler here.

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This Alert is a tool to help businesses, both US and foreign, consider impacts on their business with Russia, Belarus, or Ukraine. The Alert cannot be relied upon as legal advice. US 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.