Portman, colleagues urge Trade Minister Raimondo to reconsider Russia’s status as a market economy

May 3, 2022

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WASHINGTON, DC – Today, US Senator Rob Portman (R-OH) led a bipartisan group of peers in a Letter Trade Secretary Gina Raimondo has been urged to reconsider Russia’s status as a market economy under the Anti-Dumping (AD) Act of the 1930 Customs Act. Although the Ministry of Commerce classified Russia as a market economy in 2002, Russia has slipped back towards less and less free market economy in recent years. Now, following its invasion of Ukraine, Moscow has taken further steps to centralize control of Russia’s economy. Declaring Russia as a non-market economy would likely increase anti-dumping duties on Russia in future AD cases.

“Russia imposes restrictions on eight of the 11 types of capital transactions tracked by the International Monetary Fund, and since Russia’s invasion, converting the ruble has only become more difficult. Recently, the Central Bank of Russia announced it would ban banks from selling foreign currency to Russians and limit how much foreign currency individuals can withdraw from their accounts. These edicts are specifically designed to restrict access to foreign currency.” said the senators.

The senators went on “Russia’s economy is also characterized by state ownership and control over production. According to Russian government sources, the state’s share of the Russian economy can be as high as 70 percent. This growth in economic intervention by the Russian government follows the rapid expansion of state-owned enterprises (SOEs) in Russia. According to the International Monetary Fund, Russia has the third highest level of SOEs per capita in the world.”

Along with Portman, Senators Sherrod Brown (D-OH), James Lankford (R-OK), Mike Brown (R-IN), Angus S. King Jr. (I-ME), Todd Young (R-IN), Chuck Grassley (R-IA), Richard Blumenthal (D-CT), Jack Reed (D-RI), Bill Cassidy (R-LA ), Susan Collins (R-ME), Bill Hagerty (R-TN), Cynthia M. Lummis (R-WY), Steve Daines (R-MT), Lisa Murkowski (R-AK) and Roger Wicker (R-MS ) also signed the letter.

You can read the whole letter here and under:

Dear Secretary Raimondo,

We are writing to urge you to reconsider Russia’s market economy status under the Anti-Dumping Act (AD) of the Customs Act of 1930. Given Russia’s unprovoked invasion of Ukraine, as well as the facts about the Russian economy, we urge you to reconsider this matter and note that Russia is a non-market economy country.

In the last two decades, Russia has reverted from a young market economy to one without a free market. In its 2002 decision to classify Russia as a market economy, the Ministry of Commerce stated that economic decentralization was the “hallmark of the market economy”. But under Vladimir Putin’s leadership, Russia is beset by corruption, a weak rule of law, worker exploitation and human rights abuses. If one applies the facts of this relapse to the relevant legal criteria, Russia can be classified without a doubt as a country without a market economy.

Of the six legal criteria for determining whether a country is a non-market economy country, we believe it is important and crucial to highlight two in particular: currency convertibility and government control of the economy. It is clear that the ruble is not freely convertible into the currency of other countries. Russia imposes restrictions on eight of the 11 types of capital transactions tracked by the International Monetary Fund, and since Russia’s invasion, converting the ruble has only gotten more difficult. Recently, the Central Bank of Russia announced it would ban banks from selling foreign currency to Russians and limit how much foreign currency individuals can withdraw from their accounts. These edicts are specifically aimed at restricting access to foreign currency.

Russia’s economy is also characterized by state ownership and control over production. According to Russian government sources, the state’s share of the Russian economy can be as high as 70 percent. This growth in economic intervention by the Russian government follows the rapid expansion of state-owned enterprises (SOEs) in Russia. According to the International Monetary Fund, Russia has the third most state-owned companies per capita in the world.

Russia’s invasion of Ukraine – a disgusting latest step in its year-long campaign to undermine order and democracy in Eastern Europe – has earned it unique status as an international mocker. Therefore, we would strongly encourage the government to seize this opportunity to hold the Russian Federation and Vladimir Putin accountable for their continued attempt to circumvent international norms, whether economic or otherwise, for their own benefit. In particular, we point out that according to the anti-dumping law, the Department of Commerce “can make a decision [of non-market economy status] at any time.”

We believe that now is the time and that the facts clearly support this reclassification. Thank you for considering our request and we appreciate your attention to this important matter.

sincerely,

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