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Following Russia's unprovoked and unjustified military invasion of Ukraine, the EU has imposed sanctions on Russia. Details can be found here:
EU restrictive measures in response to Russia’s military aggression in Ukraine
Until 24 February 2022, Russia was one of the main trade partners of the European Union.
Since 1997, the EU's political and economic relations with Russia have been based on a bilateral Partnership and Cooperation Agreement (PCA). The trade-relevant sections of the PCA aim to promote trade and investment, as well as to develop mutually beneficial economic relations.
Since 2012, when Russia joined the WTO, EU-Russia trade relations have also been framed by WTO multilateral rules.
Since 2014, the illegal annexation of Crimea by Russia and its destabilising role in eastern Ukraine have seriously affected EU-Russia relations. As a result, some of the policy dialogues and mechanisms of cooperation, including in the area of trade, have been suspended.
Following further Russian invasion of Ukraine on 24 February 2022, the European Union has adopted unprecedented measures that aim to significantly weaken Russia's economic base, depriving it of critical technologies and markets, and thereby significantly curtailing its ability to wage war.
Please note that the following figures reflect the situation in 2021, before recent trade-related sanctions began to have an effect.
- In 2021, Russia was the EU's fifth largest trade partner, representing 5.8% of the EU’s total trade in goods with the world.
- In 2020, the EU was Russia's first trade partner, accounting for 37.3% of the country’s total trade in goods with the world. 36.5% of Russia’s imports came from the EU and 37.9% of its exports went to the EU.
- In 2021, the total trade in goods between the EU and Russia amounted to €257.5 billion. The EU’s imports were worth €158.5 billion and were dominated by fuel and mining products – especially mineral fuels (€98.9 billion, 62%), wood (€3.16 billion, 2.0%), iron and steel (€7.4 billion, 4.7%), and fertilisers (1.78 bn, 1.1%). The EU’s exports in 2021 totalled €99.0 billion. They were led by machinery and equipment (€19.5 billion, 19.7%), motor vehicles (€8.95 billion, 9%), pharmaceuticals (€8.1 billion, 8.1%), electrical equipment and machinery (€7.57 billion, 7.6%), and plastics (€4.38 billion, 4.3%).
- Two-way trade in services between the EU and Russia in 2020 amounted to €29.4 billion, with EU imports of services from Russia representing €8.9 billion and exports of services to Russia accounting for €20.5 billion.
- In 2019, the EU was the largest investor in Russia. The EU foreign direct investment (FDI) outward stock in Russia amounted to €311.4 billion, while Russia’s FDI stock in the EU was estimated at €136 billion.
The EU and Russia
The 1997 PCA remains the general framework for EU-Russia trade relations. Negotiations for a New EU-Russia Agreement started in 2008, but were put on hold in 2010 owing to the lack of progress in the Trade and Investment Chapter. In March 2014, the European Council suspended the negotiations due to the Russian military intervention in Ukraine.
Russia’s accession to the WTO in 2012 raised the expectations that trade with Russia would benefit from sustained liberalisation. Instead, Russia has progressively put in place numerous measures favouring domestic products and services over foreign ones, and incentivising localisation of production in Russia by foreign companies.
This import substitution policy has been continually expanded. As a result, EU exporters have either been pushed out of the market or been obliged to relocate production to Russia. Related measures often contravene WTO rules and cause many trade irritants. Some of these have triggered WTO dispute settlement procedures:
- The EU has filed six disputes against Russia at the WTO: on wood export restrictions (DS608; 2022), on which consultations took place in January 2022; on restrictions to procurement by state-owned enterprises (DS604; 2021), where the panel's authority lapsed on 8 March 2023; on Russia's excessive import duties (DS485; 2014) and on Russia's anti-dumping duties on light commercial vehicles (DS479; 2014) – in cases DS479 and DS485, Russia implemented the Dispute Settlement Body’s recommendations, which were favourable to the EU; on Russia's embargo on EU pig meat on the basis of Sanitary and Phytosanitary (SPS) requirements (DS475; 2014) – the authority of the compliance panel lapsed in January 2021; and on Russia's recycling fee on imported motor vehicles (DS462; 2013) – the case is currently on hold.
- Russia has also filed four disputes at the WTO against the EU: on the EU's third energy package (DS476; 2014), on gas cost-adjustment in EU anti-dumping investigations (DS474; 2013, and DS 494; 2015), and on EU anti-dumping measures on imports of certain cold-rolled flat steel products from Russia (DS 521; 2017). All four disputes are ongoing.
In July 2014, in response to Russia’s military intervention in Ukraine, the EU adopted a set of restrictive measures against Russia targeting four economic sectors: access to finance, arms, dual-use goods and specific technologies for oil production and exploration.
In August 2014, Russia reacted by introducing a political ban on imports of a range of EU agricultural and food products. The product scope was further extended in October 2017. More information is available here.
In February 2022, following further military aggression in Ukraine by Russia, the EU adopted additional sanctions targeting the energy, transport, technology and financial sectors, as well as imposing restrictive measures on individuals.
In addition, as of 15 March, the EU, in collaboration with the G7 countries and other like-minded partners, stopped treating Russia as a Most-Favoured-Nation within the WTO framework. This deprives Russia of key trade advantages as a WTO member.
The Eurasian Economic Union (EAEU)
In 2010, Russia created a Customs Union with Kazakhstan and Belarus. This Customs Union became the Eurasian Economic Union (EAEU) in 2015. Armenia and Kyrgyzstan joined the EAEU the same year. Russia represents almost 90% of the EAEU’s GDP.
The EAEU has legal competence in policy areas such as customs, competition, trade defence, agricultural and industrial product regulation, intellectual property rights and foreign trade. At the same time, semi-uniform EAEU technical regulations lack enforcement mechanisms and create additional barriers for trade.
The Commission maintained a technical dialogue with the executive branch of the EAEU – Eurasian Economic Commission – until Russia’s invasion of Ukraine in February 2022.
Trading with Russia
Trade with Russia is heavily restricted by EU sanctions. Practical guidelines on the import and export restrictions in force can be found below.
- Importing into the EU from Russia
- EU trade defence measures on imports from Russia
- Exporting from the EU to Russia
- Trade relations are part of the EU's overall political and economic relations with Russia
- Russia is a member of the World Trade Organization
The purpose of the meeting was to find the most effective and impactful ways to disrupt Russia’s revenue stream from the diamond trade.
Today, the Commission published a set of Frequently Asked Questions (FAQ) on export-related restrictions concerning dual-use goods and advance technology items.