WASHINGTON – President Joe Biden on Friday said the U.S. would join the European Union and G7 allies to strip Russia of its preferential trade status and impose a series of new penalties in the latest effort to punish Moscow for its ongoing assault on Ukraine.
Revoking Moscow’s trade status “is going to make it harder for Russia to do business with the United States and doing it in unison with other nations that make up half of the global economy will be another crushing blow to the Russian economy,” Biden said.
The president, who spoke with Ukrainian President Volodymyr Zelenskyy just before his remarks, said the U.S. and European allies would ban imports from several signature sectors of Russia’s economy including seafood, vodka and diamonds as well as impose sanctions on additional oligarchs and their families. The president said the U.S. and allies are working to ban the export of certain luxury goods to Russia including watches, vehicles, alcohol, jewelry and other high-end products.
“They (Russian elites) support Putin. They steal from the Russian people and they seek to hide their money in our countries,” he said. “They must share in the pain of these sanctions.”
He said the G7 would also seek to deny Russia the ability to borrow from leading multinational institutions including the International Monetary Fund and the World Bank.
Biden said the new penalties are “the latest steps we’re taking but they’re not the last steps we’re going to take.”
The decision, which opens the door for new tariffs on Russian imports, will need approval from Congress for the U.S to make the change. The move would put Moscow’s trade relationship with the U.S. in the same category as North Korea and Cuba.
Larry Ward, a trade expert at the international law firm Dorsey & Whitney, said it’s striking that Russia will now join those ranks.
“It’s now in a very isolated group of countries,” he said.
The White House already has a groundswell of support in Congress, where a group of bipartisan lawmakers proposed legislation earlier this week that would have moved to suspend normal trade relations between the U.S. and Moscow.
But the provision was ultimately left out of a bill to ban Russian energy imports that passed in the House on Wednesday and instead called for a review of Moscow’s membership in the World Trade Organization.
Biden praised leaders from both parties in Congress for backing the move and thanked House Speaker Nancy Pelosi, D-Calif., for holding off on the provision to suspend Russia’s trade status until he could line up support from key allies for a unified response.
“The free world is coming together to confront Putin. Our two parties here at home are leading the way,” Biden said, adding that he looked forward to signing legislation to revoke Russia’s normal trade status.
The Biden administration has already announced a broad range of severe economic sanctions, including a ban on all Russian energy imports and cutting off Russia’s banks and oligarchs from the global financial system in response to Moscow’s invasion of Ukraine.
The World Trade Organization grants all its members “most favored nation” trading status, also known in the U.S. as “permanent normal trade relations.” The preferential treatment allows goods to flow between nations at lower tariff rates.
Russia was the 20th largest supplier of imports to the U.S. in 2019, amounting to $22 billion in goods, according to the U.S. Trade Representative’s office. The top imports were oil and gas, platinum, iron and steel, fertilizers and inorganic chemicals.
Ward said the most likely impact on American consumers will be on food prices because of the higher tariffs that could be imposed on imports of fertilizer components and Russian grain.
“There will either need to be replacement of those imports from elsewhere, which can lead to rising prices,” he said, “or we’ll have to continue to rely on those imports from Russia, and that obviously would have an impact because of the tariffs.”
Shortly before Biden spoke, Ukraine’s Zelenskyy tweeted that he and Biden had spoken and “agreed on further steps to support the defense of Ukraine and increase sanctions against Russia.”
Zelenskyy said he gave Biden an assessment of the battlefield situation and informed him “about the crimes of Russia against the civilian population.”
Pelosi said in a statement the House would take up legislation to formalize the trade penalties when it returns next week with the “hope that it will receive a strong, bipartisan vote.”
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