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Congress Approves Permanent Normal Trade Relations With Russia

by Mike Godfrey,, Washington

10 December 2012

On December 6, the United States Senate followed the example set by the House of Representatives last month, and passed legislation to restore Permanent Normal Trade Relations (PNTR) with Russia, and introduce new penalties on those who perpetrate human rights offenses in Russia.

The legislation, which passed the Senate by a bipartisan vote of 92-4, is expected to double American exports to Russia within five years and support thousands of jobs across every sector of the US economy, including manufacturing, agriculture and services. The bill also has provisions to help fight human rights abuses in Russia and extends PNTR to Moldova.

The approved bill removes Russia from the Jackson-Vanik amendment, which was introduced in 1974 to prohibit most favored nation status for non-market economies originally on the basis of human rights concerns. The United States has retained the law, but has each year since 1992 granted a waiver to Russia.

The US had to revoke the amendment by the end of this month in order to benefit from the preferential commitments Russia made in return for membership of the World Trade Organization (WTO). Under its WTO package, Russia has agreed to liberalize market access, and lower its final legally-binding tariff ceiling to 7.8% from a 2011 average of 10%, for all products. The average tariff ceiling will be 10.8% for agriculture products (13.2% currently) and 7.3% for manufactured goods (9.5% currently).

Additional provisions included in the bill have been included following the death of Sergei Magnitsky, a lawyer appointed by the Hermitage Capital Investment Fund, who was due to face charges of tax fraud but died, officially due to "negligence," in a pre-hearing detention centre. The new law will introduce penalties on those who have perpetrated human rights offenses in Russia, including visa denials and asset freezes.

Senate Finance Committee Chairman Max Baucus (D - Montana) confirmed that "the economic benefits from passing this bill are one-sided for the US. We give up nothing in return, and it puts US businesses and workers on a level playing field with our foreign competitors already reaping the benefits of Russia joining the WTO."

On behalf of the business sector, the US Chamber of Commerce’s President and CEO Thomas J. Donohue issued a statement praising the Senate’s vote which would, he said, "help American companies sell their products in the world’s ninth largest market. This is a rare bill that will create American jobs without costing the taxpayer a dime."

"More and more Americans see trade as an engine of growth and jobs, and our elected officials increasingly recognize the need to tear down the barriers that shut US products out of foreign markets," he added. "We need to build on this progress. In the new year, the Chamber will work to support conclusion of a high-standard Trans-Pacific Partnership agreement, the early launch of negotiations for a trade pact with the European Union and an International Services Agreement."

The legislation will now need to be signed by President Barack Obama, before it becomes effective. His reaction to the Senate approval was to commend both the House and the Senate for working on a bipartisan basis to pass the legislation, and to look forward to receiving and signing it.

TAGS: Russia | Finance | tax | business | law | tariffs | legislation | Moldova | United States | import duty | penalties | legislation amendments | trade

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