Brussels could revoke Russia’s most favored nation status, the one that all WTO member countries must recognize each other and which requires each partner to apply the same tariff regime, without being able to benefit anyone with lower tariffs. By suspending this clause, the EU would be in a position to raise its tariffs on imports from Russia at will. Canada has already done so and has announced tariffs of 35%, not only against Russia, but also against Belarus, for its involvement in the aggression against Ukraine. The US Parliament is preparing to discuss a bill to do the same and even call for the expulsion of Moscow from the WTO.
Brussels and the safety clause
The Commission is looking for solutions to raise the bar on the Russian economy even more and push Moscow to desist from the invasion of Ukraine, which is becoming increasingly bloody. If applied, the duties would obviously not be paid by Russian exporting companies, but by European importers and consumers, who would thus be forced to cut back on purchases and turn to suppliers from other countries. It is the mechanism of tariffs, a tax charged to those who import.
Russian companies, on the other hand, should look for other outlet markets: a much more difficult task, the more nations join the initiative. They would probably be pushed to turn more and more to the East, towards China. But it’s not quick or easy to replace your customers. After the heavy sanctions already adopted, the revocation of the status of most favored nation (Mfn, in the English acronym) would make Russia even more of a pariah, isolated from the rest of the world.
European Commission spokesperson Miriam Garcia Ferrer said: “We are discussing the options available to us in the context of the WTO. This includes the possibility of suspending the most favored nation clause vis-à-vis Russia on the basis of the national security exception ”.
The national security exception, however, is a delicate instrument: it would allow WTO states to suspend their rules for the protection of essential national security interests. Invoking it (Donald Trump did it to justify the duties imposed and threatened also against Europe, but in a completely different context) risks creating dangerous precedents. The Commission is discussing the hypothesis with Member States and allies. In short, a mechanism to be defined. Even in the application: it is difficult to think of indiscriminate duties on all Russian exports, including gas and oil, with prices already skyrocketing. More realistic, possibly, the application to targeted product lists.