Thu. Jul 7th, 2022

Canada has imposed tariffs on almost all Russian imports by withdrawing its “most favored nation” trade status in response to Moscow’s invasion of Ukraine.

It is the first country apart from Ukraine to make the move but the EU is considering following suit.

Under World Trade Organization rules, countries cannot discriminate between members and must trade with them on the same terms offered to others, known as “most favored nation” treatment.

Chrystia FreelandCanada’s deputy prime minister, and Mary Ng, Canada’s trade minister, made the announcement on Thursday night, using an exemption in WTO legislation that allows members to take action to “protect their security interests” during a war.

The move affects Russia and Belarus, which has applied to join the WTO. The two countries and North Korea will be the only nations subject to Ottawa’s general tariff – 35 per cent for most imports.

“We are working closely with our partners and allies to encourage them to take the same step,” said Freeland.

“Simply put, this means that Russia and Belarus will no longer receive the benefits – particularly low tariffs – that Canada offers to other countries. . . The economic costs of the Kremlin’s barbaric war are already high and they will continue to rise. ”

Canada, which imported C $ 1.2bn ($ 942mn) of goods from Russia in 2020, has already banned crude oil imports from the country.

An EU trade department spokesperson said the bloc had adopted “sweeping sanctions” but would consider increasing tariffs in consultation with member states.

“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, ”she said.

Bernd Lange, chair of the European parliament’s international trade committee, tweeted: “We can not continue with business as usual in WTO when it comes to trade with Russia. One step could be to remove MFN status. ”

The EU is Russia’s biggest trade partner and imported € 95.3bn of its goods in 2020, although more than two-thirds was oil and gas.

Geraldo Vidigal, assistant professor of international trade law at the University of Amsterdam, wrote on Twitter: “There is little doubt that we are in a ‘war or other emergency in international relations’,” referring to the wording of the WTO exemption. “So, in the abstract, the exception applies in the sense that [WTO] members can do some things that they otherwise would not be allowed to do. ”

They can “protect their essential security interests” under the exemption, which could include the preservation of international borders, he said.

Countries could impose any tariff level they wished but were wary of setting a precedent for future conflicts, he added.

Two US congressmen have proposed legislation calling for Russia to be expelled from the Geneva-based body but experts have said this would not be possible.

“Suspending Russia from WTO activities or membership is a completely different set of issues and probably impossible under WTO rules and procedures, unless Russia itself wants to leave,” said Peter Ungphakorn, a former WTO official.

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