President Biden signed two bills on April 8, 2022, to further punish Russia for its invasion of Ukraine. The two bills, which passed in Congress with large bipartisan support, revoke Russia’s and Belarus’s MFN status (also referred to as Permanent Normal Trade Relations (PNTR) in the United States) and codify President Biden’s recent Executive Order (E.O.) banning Russian energy imports.
Suspension of Russia’s and Belarus’s MFN Status
President Biden signed H.R. 7108, the Suspending Normal Trade Relations with Russia and Belarus Act, after it passed the Senate by a vote of 100-0 and the House of Representatives by a vote of 420-3. By revoking Russia’s and Belarus’s MFN status, the bill denies Russia and Belarus the benefits of their World Trade Organization (WTO) membership in the United States. As such, imports from Russia and Belarus are no longer subject to the preferential duty rates granted to most other WTO-member countries, but instead are subject to higher tariff rates found in Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS). Russia and Belarus will be joining Cuba and North Korea as the only countries that do not have PNTR status with the United States. The bill also grants the President, in consultation with the House Ways and Means Committee and Senate Finance Committee, authority to unilaterally proclaim increases in the duty rates of Russian and Belarusian products above the Column 2 rates provided in the HTSUS until 2024.
In addition, the President is authorized to restore normal trade relations with Russia and Belarus, but only if the administration submits a certification to Congress. The certification requires a determination that Russia and/or Belarus: (1) have reached a deal to withdraw their forces from Ukraine and have agreed to a “cessation of military hostilities that is accepted by the free and independent government of Ukraine,” (2) “poses no immediate military threat of aggression to any North Atlantic Treaty Organization Member;” and (3) “recognizes the right of the people of Ukraine to independently and freely choose their own government.” The restoration of PNTR is subject to congressional disapproval.
H.R. 7108 also directs the United States Trade Representative (USTR) to “use the voice and influence of the United States at the WTO” to: (1) condemn the recent aggression in Ukraine; (2) encourage other WTO members to suspend trade concessions to Russia and Belarus; (3) consider further steps with the view to suspend Russia’s participation in the WTO; and (4) seek to halt the accession of Belarus to the WTO.
Finally, H.R. 7108 permanently reauthorizes the Global Magnitsky Human Rights and Accountability Act, which was set to expire in December 2022. The law authorizes sanctions on individuals responsible for human rights abuses and corruption.
Canada was the first country to revoke Russia’s and Belarus’s MFN status on March 3, 2022, subjecting goods of Russian and Belarusian origin to Canada’s “General Tariff.” The General Tariff is calculated as 35% of the declared value for duty of the product at the time of accounting after importation into Canada. More information about Canada’s actions can be found here. Similarly, the European Union and other G7 partner countries announced their intentions to revoke Russia’s and Belarus’s MFN status.
Statutory Ban on Russian Energy Imports
President Biden also signed H.R. 6968, the Ending Importation of Russian Oil Act, after passage in the Senate (100-0) and House of Representatives (413-9). The law prohibits imports of Russian energy products classified under Chapter 27 of the HTSUS in a manner consistent with any implementation actions issued under E.O. 14066. Subject to congressional disapproval, the President is authorized to resume imports of Russian energy products upon submitting a certification to Congress. The certification requires the same determinations provided for in H.R. 7108, as detailed above. Please find further information related to the ban on Russian energy imports here.
The developments described above supplement sanctions announced in recent weeks by the U.S. government. Companies should carefully review any current or future dealings in Russia and Belarus to determine if they are engaged in or plan to be engaged in any transactions involving the import of Russian or Belarusian goods. If so, companies should review their activities to ensure compliance with these recent import regulations.
U.S. sanctions with respect to Russia, Ukraine, and Belarus are expected to continue changing in the coming days and weeks. Contact us if you have questions about these developments or their potential impact on your business.