Russia Suspended From WTO Coordinating Group

The World Trade Organization headquarters (WTO) in Geneva, Switzerland, on March 4, 2021. Denis Balibouse/Reuters

The United States and the European Union have announced the suspension of Russia from the Developed Countries Coordination Group at the World Trade Organization (WTO) due to Moscow’s “unprovoked and unjustified” attack against Ukraine.

Both the United States and the EU believe that it is “no longer appropriate” to allow Russia to remain part of the group due to its actions in the invasion of Ukrainian, according to a March 4 joint letter submitted to the WTO’s Chairman of the General Council. As a result of the suspension, Russian nominees will no longer be taken into consideration when the group decides on appointments to chair WTO bodies.

“We condemn the Russian Federation’s reprehensible assault on Ukraine. We consider that the Russian Federation’s actions are an unprovoked, premeditated attack against a sovereign, democratic state, and an egregious violation of international law, the U.N. Charter, and fundamental principles of international peace and security.”

The EU is also planning to remove Russia’s Most Favored Nation (MFN) status from the WTO, an action, which if it comes to fruition, will disrupt Moscow’s $105 billion worth of annual exports with the bloc. An end to Russia’s MFN status will see the country’s exports to the EU become costlier, as any company in the bloc doing business with Moscow would need to pay additional tariffs.

Russia’s biggest trade partner is the EU, which accounted for around 37 percent of Moscow’s trade in goods in 2020. Total trade between the two was valued at 174.3 billion euros, with 67 billion euros accounted for by the EU’s imports of petroleum.

“We are discussing options available to us in the WTO context. This includes the possibility of removing MFN treatment to Russia on the basis of the WTO national security exception,” European Commission Spokeswoman, Miriam Garcia Ferrer, told Bloomberg.

Ukraine used the national security exception rule, that allows for a country to take “any action” deemed necessary to protect its essential security interests, to withdraw WTO benefits to Russia.

Canada recently revoked its MFN status for Russia and Belarus. In the United States, lawmakers have proposed legislation to permanently end Russia’s normal trade relation status. They have also asked President Joe Biden to work towards suspending Moscow’s membership in the WTO.

Russia is already under immense pressure due to numerous sanctions announced by the West. Washington cut off Russia’s biggest bank, Sberbank, and its 25 subsidiaries from making use of the U.S. financial system.

Russian banks Alfa-Bank and Bank Otkritie have been barred from issuing bonds, shares, or loans in the European Union countries. Multiple nations have frozen assets of Russian banks BTV, Promsvyazbank and Rossiya Bank, among others.

Russian companies like Gazprom, Russian Railways, and RusHydro, which are critical to the country’s economy, have been restricted from raising money in American markets. Gazprom is the largest natural gas company in the world, while RusHydro is a major power company.

The European Union has banned companies within the bloc from exporting technology to Russian weapons manufacturer, JSC Kalashnikov, as well as military communication units, pharma firms, etc.