White House pulls Russia from trade benefits program

President Obama announced Wednesday that he plans to remove Russia from a trade benefits program because it no longer qualifies for duty-free access to the U.S. market.

The White House notified Congress that Russia is now considered a high-income nation and isn't eligible for the Generalized System of Preferences (GSP) program designed to help less developed economies.

ADVERTISEMENT
"Russia's actions regarding Ukraine, while not directly related to the president's decision regarding Russia's eligibility for GSP benefits, make it particularly appropriate to take this step now," said Caitlin Hayden, spokeswoman for the White House National Security Council, in an email.

The change becomes effective Jan. 1, 2016.

"Russia has advanced beyond the level of economic development and competitiveness for GSP eligibility," said U.S. Trade Representative Michael Froman.

Last year, the World Bank classified Russia as a high-income country — based on a measure of per capita income — and was expected to lose the benefits of the program. 

"As such, Russia should no longer qualify to receive GSP benefits."

Canada and the the European Union have made similar moves.

The GSP program expired July 31 so no country has been getting the benefits since then, including Russia. 

There has been a push by the Obama administration and business groups for Congress to renew benefits and provide retroactive duty cuts for upward of 5,000 approved imports from any of the 123 approved countries.

During a House committee hearing last month, Froman said that renewal of the program “would benefit Ukraine immediately.”

Russia was the ninth largest beneficiary of the U.S. program in 2012 and would feel the effects in a broad range of sectors.

The GSP program led to $19.9 billion in imports in 2012. Through July of last year that figure stood at $11.1 billion. 

Products that are eligible for duty-free treatment includes chemicals, minerals and building stone.

Among the products that are not eligible are most textiles and apparel, watches and most footwear.

Justin Sink contributed. 

More in Finance

Democratic critics rebuff latest White House trade overture

Read more »