Ukraine invasion—what Russia and Belarus face in the WTO system: so far

The feasible actions are unilateral. Anything requiring formal decisions in the WTO such as suspending membership is likely to fail

Sunflowers, the symbol of Ukraine, blue sky and red sunset

This blog post contains a list of actions that countries have taken against Russia and Belarus. It will now only be updated occasionally. The point was to examine how they work, where WTO decisions might be needed and the implications, and how they relate to WTO provisions such as non-discrimination (MFN) or the security exceptions. That should be clearer now.

See these sources for closer monitoring:

Global Trade Alert

A considerably longer list of sanctions announced against Russia is available at Global Trade Alert. Many are outside the WTO system. Some may be within the system, such as export restrictions on dual-use products and restrictions on shipping services (but not air traffic rights). Russia’s retaliation is here.

Global Trade Alert was originally set up by Simon Evenett and his team at St Gallen University, Switzerland. It is now run by an independent foundation.

PIIE

Chad Bown of the Peterson Institute for International Economics (PIIE) has created a timeline that tracks all the actions taken by various countries on all sides: Russia’s war on Ukraine: A sanctions timeline.

A number of other sources are available. This one (details paywalled) is Europe-centred.


By Peter Ungphakorn
POSTED MARCH 4, 2022 | UPDATED MAY 10, 2022 (SEE ALSO ENTRY DATES)

This is a summary of actions taken or proposed so far against Russia within the WTO system. Some are also against Belarus, which is not a WTO member.

They are deliberately described as “within the WTO system” and not “in the WTO” — or worse “by the WTO” — to avoid confusion.

This is because most of them are unilateral, meaning they do not need approval in the WTO or any joint decisions by the WTO membership. All of the actions that involve withdrawing non-discrimination or other rights fall into this category.

Non-discrimination (“MFN”), is explained below, including why a declaration that MFN is being suspended is more political than legal.


WTO SECURITY EXCEPTIONS

In the WTO agreements they are:
goodsArticle 21 of the General Agreement on Tariffs and Trade (GATT)
servicesArticle 14bis of the General Agreement on Trade in Services (GATS)
intellectual property rightsArticle 73 of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement

The word “national” is not used. The phrase is “its [the country’s] essential security interests”. The legal difference is nuanced. The exceptions also include “international peace and security” under the UN Charter.

Russia can challenge legally action that discriminates against it. In most, if not all cases the defence would be security (discussed here).

Suspending Russia’s WTO membership, expelling it, or blocking its activities in the WTO is entirely different, and would probably not work. There are no real legal provisions in the WTO to do this. A decision by the Ministerial Conference or General Council is possible. But politically it is out of the question because of the consensus rule in decision-making. Russia can block consensus or block any attempt to vote (discussed here).

Some countries have announced sanctions against Belarus as well. This is not within the WTO system, and therefore not subject to WTO rules, because Belarus is not a WTO member — it is negotiating membership. But they may already apply non-discrimination under their own laws, possibly through bilateral agreements.

This is a summary of the latest actions announced or proposed and what they cover. Most involve removing Russia from non-discrimination (“MFN”) principles. Below it is an explanation of how the unilateral actions work (jump down to the explanation).

Announced so farBack to top
United Kingdom

May 9, 2022 — a third round of additional tariffs of 35% on top of existing tariffs on products from Russia and Belarus (Not WTO) and export restrictions (goods)
Unilateral — “… The new import tariffs will cover £1.4 billion worth of goods — including platinum and palladium …. The planned export bans intend to hit more than £250 million worth of goods in sectors of the Russian economy most dependent on UK goods, targeting key materials such as chemicals, plastics, rubber, and machinery” — Press release, details (see April 21 and March 28, 2022)

April 21, 2022 — import bans, 35% duty added to existing tariffs on more products from Russia and Belarus (Not WTO) (goods)
Unilateral — “… the UK will now be imposing import tariffs and bans on over £1bn of Russian goods … import bans on silver, wood products and high-end products from Russia including caviar … increase tariffs by 35 percentage points on around £130m worth of products from Russia and Belarus, including diamonds and rubber …” — Press release, details (see March 28, 2022)

[April 9, 2022 — (not against Russia or Belarus, but for Ukraine) — all imports from Ukraine to be duty-free, with eased customs processing (goods)
Unilateral — “The UK has responded to the request of the Ukrainian government by liberalising all tariffs on imports from Ukraine and providing customs easements, as part of our commitment to the country’s economic stability.” — Press release.]

April 6, 2022 — end coal and oil imports within 2022, gas imports “as soon as possible”; banning eg, iron and steel imports, and exports of oil refinery equipment (goods)
Unilateral — “Action against key Russian strategic industries and state owned enterprises. This includes a ban on imports of iron and steel products, … new restrictions on [Russia’s] ability to acquire the UK’s world-renowned quantum and advanced material technologies” — Press release.

March 28, 2022 — 35% duty added to existing tariffs on selected imports from Russia and Belarus (Not WTO) (goods)
UnilateralPress release, details, analysis on Lexology: “includes works of art, antiques, ships and floating structures, silver, iron and steel, fur skins, beverages, spirits (including vodka) and vinegar, fertilisers, glass and machinery … roughly 5% of recently imported goods”.

March 8, 2022 — phase out oil imports (goods)
Unilateral — “The UK will phase out imports of Russian oil … by the end of the year” — Press release.


Japan

(See also G7 and EU, below)

April 20, 2022 — withdrawing MFN (goods, unclear if services and intellectual property included)
Unilateral — law enacted suspending most-favoured-nation treatment (“MFN”), allowing discrimination against Russia. It’s unclear if this has automatic effect on tariffs under Japanese law (as in the US and Canada). It authorises the Cabinet to raise tariffs above Japan’s normal rates in the WTO. Japan had already blocked exports of dual-use technology products (March 18) and luxury and other goods (March 25), in practice violating MFNnews story (Associated Press via ABC), “there is no set outcome” (Finance Ministry official quoted by Japan Times), Japan’s House of Representatives on the law’s progress (in Japanese, or via Google translate)


United States

(See also G7 and EU, below)

April 8, 2022 — H.R. 7108 (Neal and Brady, House of Representatives) — signed into law by president after bill passes House, passes Senate (amended), passes House as amended
Unilateral — suspends most-favoured-nation treatment (“MFN”, normal trading relations, explained below) and allows president to raise tariffs above default “column 2” (goods) — also Belarus (Not WTO)
WTO decision needed — consider suspending Russia from WTO activities
WTO decision needed — halt Belarus’s WTO membership talks (although proceedings can be blocked)
— time limit January 1, 2024 — news, text and progress, press release, report and analysis (International Economic Law and Policy Blog), tariff analysis (Progressive Policy Institute)

April 8, 2022 — H.R. 6968 (Doggett, House of Representatives) — signed into law by president after bill passes House, and Senate (amended), passes House as amended
Unilateral — bans energy imports (goods)
WTO decision needed — consider suspending Russia from the WTO
Drops withdrawing most-favoured-nation treatment (normal trading relations) — text and progress, report and analysis (International Economic Law and Policy Blog)


European Union

(See also G7 and EU, below)

April 8, 2022Goods: import bans (coal and other solid fossil fuels from August 2022), export bans on technology goods — Services: restrictions on some bank transactions, ban on road transport operators (also Belarus Not WTO) and on ships’ access to ports (except essential goods) — Government procurement: restricted access (Russia not in the WTO agreement)
Unilateral — EU adopts fifth round of sanctions — Decision (part of a full package), press release, April 5 statement

March 15, 2022Goods: import ban on iron and steel, tighter restrictions on exporting dual-use goods, ban on exporting luxury goods, and ban on providing credit-rating services, no tariff increases
UnilateralCouncil regulation, Council decision, press release (decision), press release (Q&A)

February 27, 2022 — Belarus: import restrictions on goods
Not WTO — “This will stop their exports of products from mineral fuels to tobacco, wood and timber, cement, iron and steel.” — Statement, decision (March 2, 2022).


Australia

March 31, 2022 (effective April 25) — withdrawing MFN, affecting tariffs (goods)
Unilateral — Russia and Belarus (Not WTO so WTO MFN does not apply) — additional 35% tariff — “in addition to general duty rates that currently apply” — announcement

Note Australia has banned energy, oil and gas imports from Russia, and bans on exports of alumina and aluminium ores (including bauxite) to Russia, which in practice means MFN is already suspended.

March 19, 2022 — ban on aluminium exports
Unilateral — Official news: Russia sanctions regime

March 11, 2022 — ban on oil energy imports
Unilateral — Official news: Russia – Extension of sanctions on Russia to prohibit the import into Australia of Russian oil and other energy products


41 WTO members*

March 24, 2022 — suspending Belarus’s WTO membership talks
In practice, a WTO decision — “… we have concluded that Belarus is unfit for WTO membership. We will not further consider its application for accession” — WTO documentRussia’s response… it means that: these Members are leaving the Working Party on the Accession of Belarus to the WTO, and this Working Party will continue to work …

* Albania, Australia, Canada, EU, Iceland, Japan, South Korea, Montenegro, New Zealand, North Macedonia, Norway, Ukraine, UK, US — these are 41 of the 78 members in the working party considering Belarus’s membership bid, a majority even though accessions working parties normally accept a new member by consensus. (A final decision on accepting a new member goes to the 164 WTO members in the General Council or Ministerial Conference, again normally by consensus although the rules allow a 67% majority vote. In this case, the decision would not be put to the full membership.)


Ukraine

March 5, 2022 (notified Mar 25) — Export restrictions (goods)
Unilateral — exports restricted citing GATT Art.11 (critical shortages, essential products) and Art.21 (security exceptions) — cattle, beef, poultry meat, some meat products, most cereals, eggs, sunflower oil: restricted outright or under non-automatic export licensing — WTO notification (Market Access Committee, March 25) citing Cabinet resolution on March 5

March 2, 2022All WTO agreements (goods, services, intellectual property and more)
Unilateral — “no longer apply the WTO Agreements in its relations with the Russian Federation”. Source here, and longer with Russian reply here.


Canada

March 3, 2022 — Tariffs (goods)
Unilateral — Russia and Belarus (Not WTO) — time limit 180 days — 35% tariff on most imports from Russia, as applied to North Korea — customs notice, press release with additional links.


Proposed so farBack to top
G7 and EU, plus others (but acting separately)*

March 11 and 15, 2022 — Revoke Russia’s most-favoured-nation status in the WTO
Unilateral — G7 and EU to implement under own national processes — US to work with Congress on this and other measures (including banning luxury goods exports) — France, Germany and Italy cannot revoke MFN alone, has to be the EU — press releases and statements: US fact sheet, G7 statement (also released by the EU Council); statement in the WTO; report and analysis (International Law and Policy Blog) — Has legal implications in US and Canada. Elsewhere: symbolic. EU: won’t raise tariffs. See political v. legal, below

* March 11 — G7 (Canada, France, Germany, Italy, Japan, UK, US) and EU (27 member states, 3 also in the G7, plus the EU itself).
March 15 — adds Albania, Australia, Iceland, South Korea, Moldova, Montenegro, New Zealand, North Macedonia, Norway


Ukraine

March 2, 2022 — Suspend Russia’s participation in the WTO
WTO decision needed — “We urge all WTO members to consider further steps with the view to suspending the Russian Federation’s participation in the WTO for its violation of the purpose and principles of this organisation”. Source here, and longer with Russian reply here.


United States

(See also G7 and EU, above)
Following Congress approval of 2 bills on April 7, presumably these are no longer needed

Other bills in the US Congress — on tariffs (goods)
Unilateral — removing permanent normal trading relations treatment (“MFN”), discussed heretariff analysis (Progressive Policy Institute)

  • March 10, 2022 — Media report Biden (with EU and G7) to suspend normal trading relations (“MFN”, explained below) — CNN, New York Times, Reuters
  • March 9, 2022 — Crapo and Wyden (Senate) — Ban energy imports, remove normal trading relations
    Also Belarus (Not WTO) including suspending WTO accession (WTO decision may be needed)
    text, press release
    (previously March 1, 2022 — Wyden —  text, press release, report and analysis on International Economic Law and Policy Blog)
  • March 1, 2022 — Brown and Cassidy (Senate) — similar to Doggett and Blumenauer — text, press release, report and analysis (International Economic Law and Policy Blog)
  • March 1, 2022 — Portman and Cardin (Senate) — text, press release, report and analysis (International Economic Law and Policy Blog)
  • February 25, 2022 — Doggett and Blumenauer (House of Representatives) — text, press release, report and analysis (International Economic Law and Policy Blog)

Other bills in the US Congress — seek suspending Russia’s WTO membership
WTO decision needed — US president to “direct the US Permanent Mission to the World Trade Organization to use the voice, vote, and influence of the United States at the WTO to seek the suspension of the Russian Federation’s membership in the WTO.”


Explanation: unilateral discriminationBack to top

There are a range of possible unilateral actions against Russia. Most of those announced or proposed so far involve tariffs, and therefore goods imports from Russia.

In one case, Ukraine itself, the action is much broader. Ukraine is suspending the application of all WTO agreements in its relations with Russia. That includes goods (and more than tariffs), services, intellectual property and dispute settlement.



IS ‘SUSPENDING’ MFN POLITICAL OR LEGAL?

On March 11, 2022, the G7 and EU — 31 countries plus the EU itself — announced they were suspending MFN treatment from Russia.

For almost all of those countries, the announcement was a political declaration of intent and solidarity rather than action under WTO rules. The EU says it won’t raise tariffs.

What really counts is what they do in practice, and many had already suspended some MFN treatment by banning some imports from Russia.

Unlike in most of the G7 and EU, formally suspending MFN treatment matters legally in the US, for its own law, not because of WTO rules.

This is because Congress controls US tariffs legislatively. Formally suspending MFN treatment — called “normal trading relations” in the US — moves US tariffs on imports from Russia from one list to another with higher tariff rates on a large number of goods.

Technically they move to “column 2” rates created in the infamous 1930 “Smoot-Hawley” Tariff Act. (Details here.)

In the US, this can only be done by legislation.

Canada’s laws controlling tariffs are similar. Without MFN, the default is a flat rate of 35% on almost all products.

In many cases, the action involves suspending non-discrimination, called “most-favoured-nation treatment (MFN)” in the WTO or “normal trading relations” in the US.

This is about treating a country’s trading partners equally. Suspending it for Russia allows discrimination against Russia.

This can be done formally, or simply by announcing action that discriminates in practice, such as a higher-than-normal tariff (see box).

Most if not all of the MFN suspensions announced or proposed so far are on tariffs. But MFN suspension is also possible for other ways goods imports are handled, and in services and intellectual property rights.

A second type of non-discrimination has not been mentioned at all: “national treatment”.

This is where foreign goods, services, service providers and intellectual property are treated no worse than the country’s own — as if they are of the country’s own nationality.

Suspending national treatment would mean countries set tougher standards and regulations on Russian goods and services than their own, and weaker intellectual property protection than for their own inventors and creators. So far this has not been mentioned.

Non-discrimination is only part of the WTO agreements on goods, services and intellectual property, but suspending it is the most obvious route to restricting trade.

Finally, action can also be taken within the WTO system on exports. A number of countries are restricting exports of products involving dual-purpose technologies. Details on the Global Trade Alert website.


See also
● Some estimates of the impact on Russia and on the G7+EU27 economies — Making Moscow pay: how much extra bite will G7 & EU trade sanctions have? by Simon Evenett and Marc-Andreas Muendler, UC San Diego and St Gallen Endowment, March 11, 2022
● Background of Russia-Ukraine disputes in the WTO — The West Can Make Russia a Trade Pariah with a Page from Moscow’s Playbook by Susan Ariel Aaronson, Barron’s, Feb 28, 2022
● Discussion of “war” and security exceptions in the WTO — Characterizing War in a Trade Context by Mona Pinchis-Paulsen, Opinio Juris, Mar 10, 2022


Updates (See also entry dates):
May 10, 2022 — correcting the entry for Japan on whether removing MFN automatically leads to raised tariffs (unclear for now)
April 7–8, 2022 — correcting links to US bill withdrawing MFN/NTR, moving agreed US and EU sanctions to “announced”, adding UK tariffs March 28
April 6, 2022 — adding road transport to EU proposal April 5
March 13 and 25–26, 2022 — adding the sidebar box on the political nature of announcements on suspending MFN, and then adding to the box details on Canada and EU not raising tariffs
March 11, 2022 — corrects the description of the bill passed in the US House of Representatives to include considering suspending Russia from the WTO
March 6, 2022 — removing a reference to aviation because air traffic rights are excluded from the WTO agreement

Image credits:
Sunflowers | Jeb Buchman, Unsplash licence

Author: Peter Ungphakorn

I used to work at the WTO Secretariat (1996–2015), and am now an occasional freelance journalist, focusing mainly on international trade rules, agreements and institutions. (Previously, analysis for AgraEurope.) Trade β Blog is for trialling ideas on trade and any other subject, hence “β”. You can respond by using the contact form on the blog or tweeting @CoppetainPU

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