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US Bill To Establish Normal Trade With Russia

by Mike Godfrey,, Washington

14 June 2012

In readiness for when it joins the World Trade Organization (WTO) later this summer, bipartisan legislation has been introduced into the United States Senate to establish permanent normal trade relations (PNTR) with Russia and repeal the 1974 Jackson-Vanik amendment.

Those steps, it was said, are required to gain market access in Russia, which is the largest economy currently outside the WTO and the sixth-largest economy in the world. It has been estimated that establishing PNTR would double American exports to Russia in just five years after it joins the WTO, and help create jobs across every economic sector – services, manufacturing and agriculture included.

As part of the accession process, Russia will lower tariffs and increase market access for foreign businesses from countries that have PNTR with it. Therefore, it follows that Congress must pass legislation establishing PNTR by the time Russia joins the WTO for the US to enjoy the full economic benefits.

It was explained that, unlike a free trade agreement, the US will not provide any market access benefits, lower any US tariffs, or make other changes to US trade laws as a result of Russia’s WTO accession. PNTR simply allows American businesses to take advantage of Russia’s concessions.

Those should include additional market access for US service providers, intellectual property enforcement, higher quotas for US beef, poultry and pork producers, decreased domestic agriculture subsidies, science-based sanitary and phytosanitary (SPS) measures, and dispute settlement to enforce WTO rules.

The Jackson-Vanik amendment was intended to affect US trade relations with countries (originally countries of the old Communist bloc) that restrict freedom of emigration and other human rights. It remains valid, although it has been regularly granted a waiver regarding Russia.

The legislation has been introduced by the Senate Finance Committee Chairman Max Baucus (D - Montana), International Trade Subcommittee Ranking Member John Thune (R – South Dakota), Foreign Relations Committee Chairman John Kerry (D - Massachusetts) and Armed Services Committee Ranking Member John McCain (R - Arizona).

“This is an opportunity to double our exports to Russia and create thousands of jobs across every sector of the US economy, all at no cost to the US whatsoever. We give up nothing as part of this process – not one single tariff reduction – so it’s truly a one-sided benefit for the US,” Baucus said. “Jackson-Vanik served its purpose during the Cold War, but it’s a relic of another era that now stands in the way of our farmers, ranchers and businesses pursuing opportunities to grow and create jobs."

Thune added that “Presidents of both parties have granted Russia normal trade relations status on a yearly basis since 1992 and it is time to establish this treatment on a permanent basis so that American farmers, manufacturers, investors, and service providers will have the ability to take full advantage of the new business opportunities resulting from Russia’s entry into the WTO. This legislation will ensure that Russia’s commitments upon entering the WTO are enforced and ensure that American businesses are on an equal playing field in the Russian market.”

TAGS: Russia | tax | business | law | tariffs | World Trade Organisation (WTO) | enforcement | manufacturing | legislation | United States | trade | services

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