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New York Times: House Democrats introduce a bill to revoke favored trading relations with Russia.

February 25, 2022

Congressional Democrats on Friday said they were proposing legislation to end permanent normal trade relations with Russia, a change that would result in Russian goods facing higher tariffs and could limit trade with the United States.

Lloyd Doggett of Texas and Earl Blumenauer of Oregon said they would introduce a bill to penalize Russia for its unjustified invasion of Ukraine and ensure that President Vladimir V. Putin of Russia and other Russian elites could not benefit from the international trading system.

Under the rules of the World Trade Organization, all members grant each other “most favored nation” trading status, in which goods are allowed to flow between countries at lower tariff rates.

Eswar Prasad, a professor of trade policy at Cornell University and the former head of the International Monetary Fund’s China division, said the change would limit Russian exporters’ access to U.S. markets and expose them to higher tariffs and other trade barriers compared to exporters from other countries.

“This will put Russian exporters at a significant competitive disadvantage relative to exporters from other W.T.O. member countries,” he said.

It is unclear whether the legislation will advance, but the measure may face limited pushback, given Russia’s actions and relatively low trade between Russia and the United States.

The United States has suspended the trading status for some countries in the past through legislation, though in principle the action could run afoul of trading rules and bring challenges at the W.T.O., Mr. Prasad said.

Members of Congress have been drafting various legislative approaches to respond to the invasion, including sanctions for Russia and humanitarian aid for Ukraine, but lawmakers have splintered along ideological lines over how to best punish Moscow. The Biden administration has announced an array of financial sanctions and export controls aimed at cutting off Russian elites, the military and strategic industries from financing and foreign technology.

“In seeking multiple ways to respond to Russia’s unprovoked invasion of Ukraine, we should close every possible avenue for Russian participation in the world economy,” Mr. Doggett said. “Our legislation takes one such step.”

“The United States must use every tool at our disposal, short of armed conflict, to protect Ukraine’s independence,” Mr. Blumenauer said. “Putin’s unprovoked and unprecedented actions warrant a proportional response that includes terminating Permanent Normal Trading Relations.”

Chad Bown, a senior fellow at the Peterson Institute for International Economics, said the measure would result in the average U.S. tariff on imports from Russia increasing from around 3 percent to 33 percent.

“However, the trade impact on Russia of such a tariff hike would be small, as the United States is not a particularly sizable export destination for Russian products,” Mr. Bown said. The United States imported only $16.9 billion of goods in 2020, including oil, aluminum, steel, fish and fertilizers.