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Post at: Apr 26 2022

Permanent Normal Trade Relations (PNTR) Status

Recent Context

  • 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  • It means that revoking country does not consider the other country whose status has been revoked as a trading partner anymore.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.

Background

  • 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.

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