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Washington Prepares To Normalize Trade Relations With Russia

by Mike Godfrey, Tax-News.com, Washington

25 July 2012


The United States Senate Finance Committee has approved a bill that would establish permanent normal trade relations (PNTR) with Russia by removing the nation from the Jackson-Vanik Amendment.

The Jackson-Vanik amendment in the United States was introduced to prohibit most favoured nation status for non-market economies originally on the basis of human right concerns. The United States has retained the law but has each year since 1992 granted a waiver to Russia. The removal of Russia from the Jackson-Vanik Amendment will be tied to approval of the Magnitsky Bill, which introduces sanctions, such as visa denials and asset freezes on those believed to have perpetrated human rights offences in Russia. An updated version of the Bill, approved by the Senate Finance Committee last month, includes additional provisions to address corruption issues in Russia, and to ensure that the US Administration closely monitors and enforces Russian compliance with its World Trade Organization (WTO) obligations.

"By enacting PNTR together with the Magnitsky bill, we are replacing Jackson-Vanik with legislation that addresses the corruption and accountability issues that Russia confronts today," Max Baucus (D - Montana), the Chairman of the Senate Finance Committee, said.

Welcoming the Committee's adoption of the Bill, Baucus said the removal of Russia from the Jackson-Vanik amendment, "will enable US businesses to create jobs here at home by capitalizing on Russia's growing market. The legislation supports and creates thousands of US jobs across every sector of the American economy, including manufacturing, agriculture and services, by helping double US exports to Russia within five years."

In approving the bill, Baucus said a major step had been made "All this boils down to one thing: jobs. Russia will formally be a member of the WTO next month, so that is Congress’s deadline for passing PNTR. There is no time to waste - America risks being left behind. If Congress misses that deadline, American farmers, ranchers, workers and businesses will lose out to the other 154 members of the WTO that already have PNTR with Russia. American workers will lose the jobs created to China, Canada and Europe when Russia, the world’s seventh largest economy, joins the WTO and opens its market to the world. This is an opportunity to create jobs we can’t pass up.”

He underscored that the removal of Russia from the Jackson-Vanik amendment will not provide Russia any market access benefits, lower any US tariffs, or make other changes to its trade laws as a result of Russia’s WTO accession. PNTR simply allows US businesses to take advantage of Russia’s concessions, he noted. These include: 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, Baucus explained.

The bill also extends PNTR to Moldova, the only WTO member with whom the United States does not have permanent normal trade relations. Like Russia, Moldova has allowed freedom of emigration for many years, Baucus acknowledged. "We are long overdue in providing that status," he said.

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

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