- On March 11, 2022 President Biden announced that the United States—along with the G7, the European Union, and NATO—will revoke Russia’s Most Favored Nation (MFN) trade status.
- PNTR is United States’ specific legal designation of Russia’s MFN trade status.
Exceptions to MFN status
Preferential treatment is given in certain condition like:
- Developing countries,
- Regional Free Trade Areas
- Customs Unions
- Granting of permanent normal trade relations status/MFN status is automatic, except where specifically denied by law.
What does losing MFN status mean?
- It means that revoking country does not consider the other country whose status has been revoked as a trading partner anymore.
- Revocation in itself does change the conditions of trade between two countries.
- However it allows a country to increase import tariffs or impose quotas on other country’s goods, or even ban them, and to restrict services out of that country.
- Revoking Russia's MFN status sends a strong signal that the United States and its Western allies do not consider Russia an economic partner in any way.
- It does formally allow the Western allies to increase import tariffs or impose quotas on Russian goods, or even ban them, and to restrict services out of the country.
- They could also overlook Russian intellectual property rights.
- The Removal of Russia's MFN Trade status follows the established western response to the Ukrain invasion.
- Where as, prior sanctions and restrictions targeted specific sector of the Russian economy, the removal of Russia's MFN trade status allows the west to broadly target Russia's export - oriented economy as whole.