US to cut off Russia’s trade concessions
2014-05-12 11:57:29
The United States has decided to cancel all trade benefits extended to Russia under its Generalized System of Preferences (GSP) scheme – that been designed to help developing countries grow their economies by lowering tariffs for exports to the U.S.
According to the Ria Novosti news agency, U.S. President Barack Obama informed Congress of his decision last week, saying that Russia is now “sufficiently advanced in economic development and improved in trade competitiveness that continued preferential treatment under the GSP is not warranted.”
Russia was officially deemed as a “high-income country” by the World Bank last year. This would disqualify them from receiving the benefits from the GSP program, but that status was only due to expire in 2016.
A spokesman for the Russian trade mission insisted that the decision “is not linked to sanctions in any way.”
“The decision just comes at a politically difficult moment. It has long been expected, voiced already last year,” he said, as cited by Ria Novosti.
“Russia has become a country with a high level of income according to the World Bank methodology, and the Generalized System of Preferences (GSP) applies only to developing countries with low and middle incomes. It is not that the US administration has taken some harsh decision, it’s just that the GSP expires automatically by law,” a spokesman for the Russian trade mission said.
U.S. National Security Council spokesperson Caitlin Hayden however did say that while Russia’s actions in Ukraine were “not directly related” to Obama’s decision on GSP benefits, they “make it particularly appropriate to take this step now.”
Russia was the ninth-largest beneficiary nation under the GSP program in 2013 according to a fact sheet on the U.S. Trade Representative’s web page. About $296 million in U.S. imports from Russia were eligible for the trade benefits through last July, it said.
GSP was instituted on January 1, 1976, by the Trade Act of 1974. It promotes economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from any of 123 designated beneficiary countries and territories.