An annual report states that with U.S. trade with Russia continuing to decline and bilateral relations at a low point, it is currently difficult for the U.S. to combat Russia’s ongoing movement away from World Trade Organization principles of national treatment, freer trade, predictability, transparency, and fair competition.
The report from the Office of the U.S. Trade Representative states that bilateral trade over the past ten years has seen significant fluctuations in both imports and exports but has declined overall, with total U.S. goods and services imports from Russia falling 50.6 percent and total U.S. exports to Russia down 57.9 percent. Part of the reason for this decrease is the “extensive U.S. export controls, sanctions, and import bans” imposed in response to Russia’s war against Ukraine. Hundreds of U.S. companies have withdrawn from, or significantly reduced their presence in, Russia, the report states, and Washington has ceased virtually all bilateral engagement on trade and investment issues with Moscow.
However, the report also places blame on Russia’s “increasingly inward-looking industrial and trade policies.” For example, Russia still restricts bilateral trade through import bans on a wide variety of agricultural products as well as high tariffs (above their WTO bound rates) on certain industrial products. It limits exports of certain industrial products and a wide variety of agricultural products and agricultural inputs. It also maintains an import 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 domestic technology companies.
In addition, the report states, import substitution remains a core tenet of Russia’s industrial policy. Alongside non-tariff measures imposed on imports, Russia has enacted explicit import substitution policies that applied initially to government procurement but have been extended to purchases by state-owned enterprises and even to private enterprises. To support its import substitution regime Russia has adopted, among other measures, bans on purchasing imported equipment.
The report concludes that 2023 saw a continuation of Russia’s disregard for its WTO commitments, with Moscow continuing to erect tariffs and non-tariff measures to isolate itself from the benefits of liberal trade. While USTR indicates that it has little current ability to encourage Russia to reverse this trend, given the ongoing decline in two-way trade and the near-total lack of bilateral engagement on trade and investment issues, it pledged to consult with domestic stakeholders and monitor Russia’s actions as it “looks forward to the day that we can again work with Russia.”
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