Permanent Normal Trade Relations (PNTR) Status
On 11th March 2022, Joe Biden, U.S. President announced that the U.S. will revoke Russia’s “permanent normal trade relations (PNTR)” status. This is to punish Russia for its invasion of Ukraine.
About PNTR status
Permanent normal trade relations status is a legal designation in the U.S. for free trade with a foreign country. In 1998, the U.S. changed the name from the most favored nation (MFN) to PNTR.
About MFN Status
- MFN status is a designation given by one country to another country. The country that is awarded MFN status will be given all trade advantages, such as low tariffs, that any other country also receives. Thus, a country that is awarded MFN status will not be treated worse than any other country with MFN status.
- MFN status is one of the cornerstones of the World Trade Organization (WTO). The members of WTO agree to accord MFN status to each other. However, there are certain exceptions for preferential treatment of developing countries, regional free trade areas, and customs unions.
Revocation of MFN Status
- As per the rules of the World Trade Organization (WTO), any country can revoke the MFN status that it had previously awarded to another country. According to Article 21 (National Security) of WTO, MFN status can be revoked without giving any explanation.
- India revoked Pakistan’s MFN status in response to the Pulwama attack of 2019. In March 2022, G7 nations resolved jointly to revoke Russia’s MFN status in response to the 2022 Russian invasion of Ukraine.
Impact on Russia
Revoking “permanent normal trade relations (PNTR)” status or Most Favored Nation (MFN) status will enable U.S. and G7 nations to impose punitive tariffs on Russian goods. This will put pressure Russian economy, which is already on the brink of a deep recession.
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Month: Current Affairs - March, 2022
Category: International / World Current Affairs