Brussels clears way to impose tariffs on Russia – POLITICO

EU countries began a process on Friday that could impose higher tariffs on Russian goods, increasing economic pressure on Moscow after its invasion of Ukraine.

Three EU diplomats said representatives of member countries had given the green light to lifting Russia’s privileges at the World Trade Organization.

Ukraine had asked WTO members on Thursday to scrap Russia’s trade benefits and even consider excluding the country from the WTO.

The WTO is based on the General Agreement on Tariffs and Trade (GATT), under which member countries impose basic duties that are the same for all. This concept of equality is called “most favored nation” treatment. Countries can suspend the most-favoured-nation clause without being sued in the WTO’s international trade tribunal if they appeal to the “essential security interests” exemption in the GATT.

Europe’s decision to do so paves the way for Brussels to hit Russia’s goods exports to the bloc, worth 79 billion euros in 2020, with either an import ban or high tariffs, adding to Russia’s financial pain after several sanctions already imposed by the EU and other major economies.

The EU is Russia’s largest trading partner, accounting for 37% of the country’s total merchandise trade in 2020.

A spokesman for the European Commission confirmed that broad support in the Council’s trade policy committee “would justify the non-application of most-favoured-nation vis-à-vis Russia”.

“There was strong support for working with like-minded countries on a joint statement and a willingness to take appropriate trade action as an action,” the spokesperson added.

Brussels is set to make a political statement, likely later on Friday, and is also coordinating with Washington. The United States is still considering the move internally, according to a spokesperson for the U.S. Trade Representative.

This does not mean, however, that Russia will be faced with the new obligations overnight. The EU announcement follows a similar move by Canada, which was the first country to unilaterally ban Russia and Belarus from most-favoured-nation treatment on Thursday. Canada now imposes a general duty of 35% on all Russian and Belarusian imports.

Unlike Canada however, Brussels does not have an alternative fare system to fall back on. Therefore, if the EU were to withdraw Russia from its preferential treatment at the WTO, it would not immediately trigger higher tariffs.

The EU is currently considering options such as import bans or alternative tariffs on certain Russian products. These would be part of an upcoming sanctions package rather than a new trade law. Now that EU countries have given the political green light, the Commission will start drafting the legal texts.

Two of the diplomats warned that Friday’s meeting was not an official green light, as final approval by EU countries still depends on specific steps to be taken. “Politically there is more or less a green light, but there are still a lot of technical and practical questions,” said one.

Leonie Kijewski and Doug Palmer contributed reporting.


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