Russia is continuing to move away from World Trade Organization principles but the U.S. currently has little ability to press Moscow on this issue, according to the Office of the U.S. Trade Representative’s annual report on Russia’s compliance with its WTO accession commitments.
Russia joined the WTO in 2012 after making significant changes to its legal and regulatory regime covering trade and investment, USTR said, but Russia has reversed course since then and its “trajectory showed no change in 2022.” For example, Russia (1) imposes import bans on a wide variety of agricultural products and high tariffs on some industrial products, (2) limits exports of certain industrial products and restricts a wide variety of agricultural products and inputs, and (3) imposes behind-the-border trade restrictions such as a licensing regime that acts to restrict imports of consumer technology products, food safety measures not based on science, and a domestic tax regime that favors domestic software and technology companies. Russia has also enacted explicit import substitution policies across a wide range of products that are supported by local content requirements, domestic purchasing quotas, and bans on purchasing imported equipment.
As a result, U.S.-Russia trade over the past ten years has declined. Total U.S. imports from Russia in 2021 were $29.6 billion, only a slight rise from $29.4 billion in 2012, while total U.S. exports to Russia were $6.4 billion in 2021, compared to $10.7 billion in 2012. USTR noted that while some of this decline is likely attributable to the global decline in trade due to the COVID-19 pandemic, some is also likely due to Russia’s increasingly inward-looking industrial and trade policies.
Trade volumes declined further in 2022 after the U.S. imposed sanctions in response to Russia’s full-scale war against Ukraine. Those sanctions specifically exempted food and humanitarian goods, USTR said, but the extensive U.S. export controls and sanctions on financial and logistics services, as well as reputational risks of doing business in Russia, have resulted in a significant diminution of two-way trade. In addition, increased geopolitical tensions and reputational risks have led hundreds of U.S. companies to withdraw from, or significantly reduce their presence in, Russia.
Further, USTR said, this situation has lead the U.S. to cease bilateral engagement on trade and investment issues, meaning the U.S. has had virtually no opportunity to press Russia to comply with its WTO obligations.
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