What is important to know about the new G7 sanctions against Russia

The G7 countries (G7: USA, CANADA, Japan, UK, Germany, France, Italy) have announced a new round of economic sanctions against Russia. The new restrictions mean that Russia will lose its most favored nation status when trading with all these countries. In addition, the United States will stop the supply of DOLLAR bills to Russia and the EXPORT of luxury goods. They also ban imports of Russian seafood, liquor and diamonds. This is a continuation of the started trend towards sanctions against Russian exports after Washington banned the import of Russian oil and oil products a few days ago.

RBC figured out what the new sanctions against Russia mean.

Downgrading of Russia's trade status

The administration of US President Joe Biden plans to sign a law to end "permanent normal trade relations" (PNTR) with Russia. Such a decision must be passed through Congress, but a cross-party consensus on this issue has already been reached. Biden said that other G7 countries, through their national legal procedures, will make a similar decision. “Such action, in unison with other countries that account for half of the world economy, will deal a new devastating blow to the Russian economy, which is already suffering heavily from our sanctions,” the American president said.

PNTR is the same as MFN in bilateral trade. This is a fundamental principle of the World Trade Organization (WTO): it means that all countries should enjoy the same benefits and privileges in trade with a particular state. For the United States, only two countries are currently deprived of this status - Cuba and North Korea. Russia will join them after the adoption of the corresponding American law. Russia received PNTR status only in 2012 under US President Barack Obama.