Russia can contest 'purely political' decision of U.S. to no longer treat Russia as market economy in WTO - Economic Development Ministry

MOSCOW. Nov 11 (Interfax) - The decision of the United States Department of Commerce to no longer treat Russia as a market economy, which is "purely political" and not particularly important from a practical point of view, might be contested in the World Trade Organization (WTO), the Russian Economic Development Ministry said in a statement.

"This is a prejudiced and purely political decision," a representative of the Economic Development Ministry said, adding that the review of Russia's status was begun only six months after the Department of Commerce confirmed that Russia remains a market economy.

"The circumstances that were deemed sufficient to review its own decision arose after the start of the special military operation in Ukraine and are a direct result of the actions of a number of countries, not least of all the U.S. itself," the representative said.

The representative did not rule out that dispute resolution procedures would be triggered in the WTO.

"This decision of the U.S. is illogical not only because our non-market status is being established on the basis of circumstances that were created by the U.S. itself. The practical application of this decision requires the supply of Russian goods to the U.S. market. Russian exports have already practically been fully halted by a whole set of sanctions measures, from full bans and additional duties to the practical inability of American individuals to pay for supplies and for carriers to deliver shipments. Market principles as the U.S. understands them are applied in essence not to guarantee unrestricted competition, but, quite the opposite, to suppress competition from non-American producers," the representative said.

Last Thursday the Commerce Department announced that, following an investigation, it decided that Russia can no longer be treated as a country with a market economy for the purposes of the law on antidumping duties and that the Russian economy will be reclassified as non-market.

The U.S. granted Russia market status in 2002. The Commerce Department did a review of this status last year and on October 29, 2021 released the decision that there were insufficient grounds to repeal Russia's market status. However, in May 2022 Commerce began a review of this decision, citing altered circumstances.

The Economic Development Ministry said that the circumstances cited by the Commerce Department included "measures to control the movement of capital and restrictions on currency conversion, the deterioration of the climate for foreign investment, the increase in the share of state ownership in the economy as a result of foreign firms leaving Russia, state intervention in pricing on the domestic market, including for metal products, as well as measures that the U.S. Commerce Department calls suppression of independent journalism."

The ministry said that it and interested Russian exporters took part in the review and "provided commentary on the fallacy of the arguments about the non-market nature of Russia's economy," including, "about the temporary targeted nature of currency regulation measures adopted in response to the sanctions pressure of the U.S. and other countries."

"Russia also did not worsen conditions for foreign investments, but on the contrary encouraged and supported them to ease the impact of the unfriendly actions of sanctioning countries. There were no significant changes on the Russian labor market, and directive price regulation on metal products and other goods was not introduced," the ministry said.

"For countries with what they deem a 'non-market' economy, the U.S. has a particular method for determining a reasonable price when calculating the dumping margin, where export prices are compared not with prices and costs in the country of the export (the standard methodology prescribed by World Trade Organization rules), but with the indicators of third countries with what the U.S. considers to be a market economy. The use of such a method worsens exporters' ability to defend their interests and often leads to inflated antidumping duties," the ministry said.