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US House Tax Writers Back PNTR With Russia

by Mike Godfrey, Tax-News.com, Washington

31 July 2012


Following the bipartisan approval by the United States Senate Finance Committee on July 18 of the bill that would establish permanent normal trade relations (PNTR) with Russia by removing the nation from the Jackson-Vanik Amendment, the House of Representatives Ways and Means Committee followed suit on July 26, 2012.

The Jackson-Vanik amendment in the US was introduced to prohibit most favoured nation status for non-market economies originally on the basis of human rights concerns. The US has retained the law each year, but has, since 1992, granted a waiver to Russia.

It has been pointed out that Russia will, in any event, join the World Trade Organization (WTO) on August 22 this year, and that the removal of Russia from the Jackson-Vanik amendment would not provide Russia any market access benefits, lower any US tariffs, or make other changes to its trade laws.

On the other hand, PNTR would allow US businesses to take advantage of Russia’s concessions to join the WTO, including: additional market access for US service providers; improved intellectual property enforcement; higher quotas for US beef, poultry and pork producers; decreased domestic agriculture subsidies; consistent science-based sanitary and phytosanitary measures; and new dispute settlement tools to enforce WTO rules.

The versions of the bill, approved by both the Senate and House committees, also include additional provisions to ensure that the US Administration closely monitors and enforces Russian compliance with its WTO obligations.

As stated by Dave Camp (R – Michigan), Chairman of the Ways and Means Committee, in his opening comments: “The economic benefits of Russia’s new membership in the WTO are clear: greater opportunities for US employers, farmers and ranchers to sell American goods and services to Russia because Russia has to lower its barriers to join.”

“We give up nothing with this legislation – not a single US tariff,” he added, “but we would obtain a powerful new enforcement tool and important rights with respect to the sixth largest economy in the world.”

In addition, the legislation grants PNTR to Moldova, the only WTO member with whom the US does not currently grant that status. As Camp noted, “Moldova acceded to the WTO in 2001, so this step is long overdue”.

United States Trade Representative Ron Kirk welcomed the Ways and Means Committee’s action and noted that “extending PNTR to Russia will ensure that we have new tools to enforce US rights, including, if necessary, WTO dispute resolution, if Russia does not fully implement its commitments. We urge Congress to act as soon as possible to protect America’s interests and make sure that Russia plays by the rules of the global trading system."

Senate Finance Committee Chairman Max Baucus (D - Montana) also applauded the Ways and Means Committee’s bipartisan approval of the bill, confirming that, “plain and simple, Russia PNTR is a jobs bill. Now the House needs to pass the bill so we can get this done before the August holiday period.”

Camp himself confirmed that he would “continue to work with Democratic leadership to assure successful passage in the House,” and urged the Senate “to agree on a clear path forward. If Leader Reid is willing to make room on the Senate calendar, there is no reason we cannot act quickly.”

TAGS: Russia | compliance | tax | business | law | intellectual property | tariffs | enforcement | legislation | Moldova | United States | trade | services

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