The recent events in Ukraine have changed the landscape of the bilateral trade and investment relationship between the United States and Russia.
Russia’s provocative actions, including its purported annexation of Crimea and destabilizing activities in southeastern Ukraine, have forced the United States and others in the international community to impose sanctions on Russian individuals, companies, and financial institutions. For specific information related to these sanctions, please visit the U.S. Department Treasury’s Office of Foreign Assets Control (OFAC) website (http://www.treasury.gov/resource-center/sanctions/Programs/Pages/ukraine.aspx). For information on current export licensing restrictions, please visit the U.S. Department of Commerce’s Bureau of Industry and Security (http://www.bis.doc.gov/) and the U.S. Department of State’s Directorate of Defense Trade Control (http://www.pmddtc.state.gov/).
Current Political Situation
The United States has suspended government-to-government economic cooperation with Russia on many fronts, including our bilateral trade and investment working group that sought to expand economic and commercial ties.
Within these parameters, U.S. companies can still export their goods and services to Russia and continue working with their Russian partners to sustain their position in this market. However, companies should continuously monitor any developments concerning the United States’ political and economic relationship with Russia.
For more information on the political and economic relationship between the United States and Russia, please click on the links in Chapter Two to view the U.S. Department of State’s notes on these topics.
With a vast landmass, extensive natural resources, more than 142 million consumers, and acute infrastructure needs, Russia remains a promising market for U.S. exporters.
Russia is the world’s 8th largest economy by nominal gross domestic product (GDP) and the 6th largest by purchasing power parity (PPP), as cited by the International Monetary Fund. According to the World Bank, 2014 GPP per capita GDP was $13,210, the highest of the BRICS countries (Brazil, Russia, India, China, and South Africa). Russia is a high-income country, with a highly educated and trained workforce and sophisticated, discerning consumers.
Although Russia recovered quickly from the global financial crisis in 2009, economic growth slowed substantially subsequently, and GDP is expected to contract in 2015.
In terms of trade in goods, Russia was the United States’ 29th largest export market and the 20th largest exporter to the United States in 2014. Russia was the United States’ 25th largest trading-partner overall. U.S. exports to Russia in 2014 were $10.8 billion, a decrease of 3.3% from 2013. Russian exports to the United States in 2014 were $23.7 billion, a decrease of 12.5% from 2013. Russia’s leading individual trading partners are China, the Netherlands, Germany, Italy, Turkey, Japan, United States, Ukraine, South Korea, and Poland.
Stocks of U.S. investment in Russia through 2013 were approximately $18 billion. The United States is Russia’s 10th largest foreign investor.
Russia joined the World Trade Organization (WTO) in August 2012. Congress also enacted legislation to extend permanent normal trade relations to Russia in the same year.
Russia’s membership in the WTO has the potential to create opportunities for U.S. exports and investments.
U.S. manufacturers and exporters should have more certain and predictable access to the Russian market, because of Russia’s commitment not to raise tariffs on any products above the negotiated rates. For industrial and consumer goods, Russia’s average bound tariff rate declined from almost 10% to under 8%.
For American businesses, Russia’s accession to the WTO also provides the following benefits, although Russia has been slow to fulfill many of its WTO obligations:
In alphabetical order:
For a comprehensive overview of doing business in Russia, please review our Country Commercial Guide at this link: http://www.export.gov/ccg/russia.