Here’s what the ‘most favored nation’ status means — and why Russia still has it

Trade is about to become a key element of the global response to Russia’s invasion of Ukraine following the array of sanctions that have already been imposed.

On Friday, President Joe Biden announced that the United States, along with the G7 nations and the European Union, aim to strip Russia of its “most favored nation” status. Biden can’t do this alone, he requires Congressional approval.

But what does it mean to be a “most favored nation” and why does Russia still have this status?

As a member of the World Trade Organization, Russia is treated as amost favored nation, which givesit equal access to all of the WTO members’ markets and guarantees equal tariffs.

US President Joe Biden speaks about trade and Russia in Washington, DC on March 11, 2022.

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In short, the label is like a rubber stamp for permanent normal trade relations. Should Congress vote to approve its removal, normal trade with Russia will effectively end, paving the way for higher tariffs.

It’s also about anti-discrimination, according to the World Trade Organization, and means countries can’t discriminateagainst theirtrade partners. The clause allows for some exceptions, including separate free trade agreements or special market access for developing counties.

This wouldn’t be the first time a country has lost itsmost favored nation status. India revoked Pakistan’s label following a 2019 bomb attack that killed 40 Indian paramilitary personnel.

Last week, Ukrainian President Volodymyr Zelensky urged US lawmakers to revoke the status for Russia. Zelensky also said halting purchases ofRussian oil and gas would be the most powerful sanction possible.

On Wednesday, the House of Representatives passed a watered-down bill to ban imports ofRussian oil, natural gas and coal into America. An earlier version of the legislation had included a provision that would suspend permanent normal trade relations for Russia and Belarus.

A driver returns a fuel nozzle to a gas pump at a Chevron gas station in San Francisco, California, U.S., on Monday, March 7, 2022. The average price of gasoline in the U.S. jumped above $4 a gallon for the first time since 2008 in a clear sign of the energy inflation that's hurt consumers since Russia invaded Ukraine. Photographer: David Paul Morris/Bloomberg via Getty Images

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CNN reported Thursday that bipartisan talks taking shape in the Senate would include more aggressive action on Russia’s trade status.

As of 2019, Russia was America’s 26th largest global trade partner, totaling $28 billion in goods tradeand $6.9 billion in services, exports and imports, according to the Office of the US Trade Representative.

In terms of exports, Russia ranks 40th on the list of US export markets, but it was the 20th largest supplier of goods imports in 2019, with fuel, precious metals, iron, steel and fertilizers at the top of the list.

CNN’s Kaitlan Collins and Manu Raju contributed to this report.