Date: Monday, March 14, 2022
Source: Sourcing Journal
President Biden said Friday he will work closely with Congress to deny Russia the benefits of its World Trade Organization (WTO) membership and ensure that Russian imports do not receive most favored nation (MFN) treatment in the U.S. economy.
Biden also signed an executive order that will end the exportation of luxury items, such as high-end watches, luxury vehicles, high-end apparel, high-end alcohol and jewelry, to any person located in the Russian Federation. The U.S. export value of the products covered by Friday’s luxury goods restrictions is nearly $550 million per year.
“Before today, controls on luxury goods only applied to rogue state North Korea, a regime where its leaders and their political cronies live in opulence while their people struggle,” Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler said. “Today’s action should remind Putin and his Russian and Belarusian cronies that the world strongly condemns the horrors they have wrought. The U.S. and our allies and partners will continue to stand together in imposing severe consequences on Russia and Belarus for the continued invasion of Ukraine.”
Biden’s order will also prohibit goods imports from several signature sectors of Russia’s economy, including seafood, spirits/vodka and non-industrial diamonds. This will deny Russia more than $1 billion in export revenues and ensure U.S. citizens are not underwriting Putin’s war, the White House said, adding that the U.S. retains the authority to impose additional import bans as appropriate.
Biden announced the new economic actions in conjunction with G7 leaders from Canada, France, Germany, Italy, Japan, and the U.K., as well as the European Union. These measures are designed to hold Russian President Vladimir Putin accountable for his continued assault on Ukraine and further isolate Russia from the global financial system. Each partner will implement actions consistent with their national processes.
The White House said these actions will collectively ramp up pressure on Putin and build on the unprecedented package of economic sanctions and export controls the United States and over 30 countries have already imposed on Russia. Biden said Congress has demonstrated bipartisan leadership to revoke Permanent Normal Trade Relations (PNTR) for Russia, and he looks forward to signing a bill into law.
PNTR and MFN status, afforded to all WTO members, offer certain trade benefits such as lowering the cost of a country’s exports, easing customs requirements and greater market access.
The G7 leaders also agreed to ensure Russia cannot obtain financing from leading multilateral financial institutions, such as the International Monetary Fund and the World Bank.
In addition, the U.S. and its allies will invoke full blocking sanctions on additional Russian elites and their family members, and the members of Duma, Russia’s principal legislative assembly, who sponsored legislation to recognize the so-called “Donetsk People’s Republic” and “Luhansk People’s Republic,” Ukraine’s “breakaway” states.
The action follows up on multiple efforts to target Russian oligarchs and their family members who are profiting “from this war of choice,” Biden said, and cuts them off from the U.S. financial system, freezes any assets they hold in the U.S. and blocks their travel to the United States.
In addition, the Treasury Department, through new guidance, will continue to make clear that its expansive actions against Russia require all U.S. persons to comply with sanctions regulations regardless of whether a transaction is denominated in traditional fiat currency or virtual currency. Treasury is closely monitoring any efforts to circumvent or violate Russia-related sanctions, including through the use of virtual currency, and is committed to using its broad enforcement authorities to act against violations and to promote compliance, the White House noted.
Biden has already banned new U.S. investments in the Russian energy sector and the new executive order will establish the legal authority for future investment restrictions in any sector of the Russian economy, as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, by a United States citizen.