US downgrades Russia to non-market economy in bid to further isolate Moscow

The US Commerce Department announced on Thursday that it had removed Russia from its market economy category in a bid to pressure Moscow in the context of bilateral trade and further isolate the country’s economy.

The Commerce Department’s decision cited increased interference by the Russian government in its own economy, leading to price distortions, which are disadvantageous to American companies. The resolution – a retaliatory action by the US government for Russia’s continued aggression in Ukraine – opens up the possibility of applying the full force of US anti-dumping law against imports from Russia.

“Based on a balanced assessment of the facts and consistent with U.S. law, this decision will ensure that the Department’s dumping calculations reflect the economic realities on the ground and that U.S. industries obtain the unfair import relief to which they are entitled. under the law,” the department said.

Russia was on a list of countries the United States considers non-market economies, but was dropped from the rankings in 2002 following Moscow’s pursuit of moves to liberalize its economy.

The list includes countries such as Russia’s allies, Belarus, China, Vietnam, Armenia, Azerbaijan, Moldova, Uzbekistan and other nations that were part of the former Union Soviet.

The Commerce Department’s determination was based on a number of criteria, including the foreign investment climate, currency convertibility, and government control of the means of production. “In its decision, the Commerce Department found significant backsliding in these areas, particularly since the invasion of Ukraine,” the department’s press release said.

Dumping refers to foreign manufacturers selling goods at prices below the producer’s selling price in the domestic market or at a rate below the cost of production. This happens when the governments of these countries subsidize production and provide financial assistance, such as loans on terms that do not reflect market conditions.

American trade with Russia

The new classification will lead to higher import duties for products of Russian origin. However, the impact would only have a moderate effect as Russian imports have already been curbed since the Ukrainian invasion.

In 2022, the United States imported $12.5 billion worth of Russian goods from the start of the year to September. US imports from Russia totaled $29.7 billion in 2021, more than double this year’s level, while US exports to Russia totaled $6.4 billion.

Oils and minerals, lime and cement were the main commodities from Russia, accounting for more than 59% of all imports in 2021. Base metals, iron, steel and tools followed with 13, 4%, followed by stone, glass, metals and pearls. made up of 10 percent. Last year, 7.9% of total US imports of oils and minerals, lime and cement came from Russia, according to Commerce Department data (pdf).

“Putin’s regime should not enjoy the privileges of a market economy designation. I am pleased that the Commerce Department has implemented this important measure which will put additional pressure on this illegitimate regime,” said Sen. Sherrod Brown (D-Ohio).

“The Russian government owns up to 70% of its economy – it’s not a market economy – and by removing Russia’s market economy status, the United States will prevent Russia from engaging in unfair trade practices with our allies.”

At Friday’s climate summit in Egypt, President Joe Biden called on Russia to stop using “energy as a weapon and holding the global economy hostage.”


Naveen Athrappully is a reporter and covers world affairs and events at The Epoch Times.

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