Bridges Weekly Trade News DigestVolume 16Number 11 • 21st March 2012

US Lawmakers Begin Debate on Russia Trade Restrictions

Discuss this articleShare your views with other visitors, and read what they have to say

The highly-anticipated debate over whether to lift a decades-old law restricting trade with Russia is in full swing in the US Congress, with a Senate committee holding an initial hearing on the subject on 15 March. Meanwhile, leaders of anti-government protests in Moscow are also pushing for the repeal of the trade restrictions, arguing that keeping them intact would only benefit President-elect Vladimir Putin.

The Obama administration has strongly backed the removal of the US’ trade restrictions on Russia, noting that keeping them would put US producers - particularly farmers and manufacturers - at a disadvantage against foreign competitors when Russia’s WTO membership becomes final this summer.

Establishing Russia as a full trade partner will require the US Congress to repeal the Jackson-Vanik amendment, a legislative provision left behind from the Cold War that allows Washington to deny most favoured nation (MFN) status to nations that restrict freedom of emigration.

The US has waived the application of Jackson-Vanik since 1994.

Senator Max Baucus of the US state of Montana, who chairs the Senate Finance Committee - which has jurisdiction over tax and trade policy - has said that the Senate could take up legislation to repeal the Jackson-Vanik amendment “within a couple of months.”

The legislation is unlikely to move through Congress until after Russia’s formal entry into the global trade body, he said.

Debate: trade versus human rights

The 15 March Senate Finance Committee hearing quickly set the tone of the debate, with lawmakers sparring on the Senate floor as to whether the benefits of removing the trade restrictions outweighed the concerns over Moscow’s human rights record and foreign policy.

“To allow American businesses, workers, farmers, and ranchers to seize the opportunity that Russia joining the WTO presents, Congress must act,” Baucus said at the hearing.

“Russia [Permanent Normal Trade Relations, or PNTR] is a one-sided agreement that benefits American workers and businesses and requires them to give up nothing in return,” he added.

With Russia’s expected WTO entry date in mind, a coalition of 173 US companies and business groups released a letter the day before the hearing also calling for lawmakers to repeal the trade restrictions. “Without PNTR, US companies and their employees will be left behind our competitors in this growing and profitable market,” they said.

In response to Baucus’ statement, Senator John Kyl, a Republican from the US state of Arizona, expressed scepticism over the benefits of granting Russia permanent normal trade relations.

“We still need to determine whether America is getting a good deal through Russia’s WTO accession, and whether more should be done to protect our interests,” he said on Thursday, referring specifically to a bilateral investment treaty that was ratified by the US Senate but not by Moscow.

He added that, while the emigration problem addressed by the Jackson-Vanik amendment might no longer exist, “Russia’s blatant disregard for human rights and the rule of law is every bit as relevant today as it was decades ago,” while also criticising Russia’s relationship with Syria.

Meanwhile, a group of four senators from both parties has said that they would be willing to support the repeal of the Jackson-Vanik amendment, but only if it is replaced by a law that would sanction Russian officials for human rights violations.

The sanctions bill, known as the Sergei Magnitsky Rule of Law Accountability Act, if passed would subject Russian officials connected to human rights abuses to travel bans and bar them from financial transactions in the US.

The House Foreign Affairs Committee was scheduled to explore Russia’s human rights record in a hearing today; however, the House - which would also need to pass legislation to repeal the Jackson-Vanik amendment - has yet to announce any hearings to specifically discuss the trade restrictions.

Russian opposition backs Jackson-Vanik repeal

A few days prior to the Senate hearing, a letter signed by opposition organisations in Russia also called for a repeal of the trade restrictions.

“Although there are obvious problems with democracy and human rights in modern Russia, the persistence on the books of the Jackson-Vanik amendment does not help to solve them,” the statement said, adding that the restrictions only help President-elect Putin by providing him the tools “to depict the United States as hostile to Russia.”

“[Jackson-Vanik] limits Russia’s competitiveness in international markets for higher value-added products, leaving Russia trapped in  its current petro-state model of development and preventing it from transforming into a modern, diversified and more hi-tech economy,” the letter added.

“Those who defend [Jackson-Vanik] in order to punish Putin’s anti-democratic regime only darken Russia’s political future, hamper its economic development, and frustrate its democratic aspirations,” they said, suggesting instead that Washington implement legislation along the lines of the proposed Magnitsky bill.

The statement was signed by anti-corruption activist Alexey Navalny; leaders of the People’s Freedom Party Boris Nemtsov, Vladimir Ryzhkov, and Sergey Aleksashenko; former deputy energy minister Vladimir Milov; and Ilya Ponomaryov, a member of Parliament from the Just Russia Party.

ICTSD reporting; “Senators push Russia trade restriction replacement,” ASSOCIATED PRESS, 17 March 2012; “GE Seeks Normal Trade With Russia to Open Market for U.S. Rivals,” BLOOMBERG BUSINESSWEEK, 15 March 2012; “Tensions over Syria could slow efforts to normalize Russia, U.S. trade relations,” THE HILL, 18 March 2012; “Russian Opposition Urges U.S. to End Cold War Trade Sanctions,” NEW YORK TIMES, 12 March 2012; “Putin critics say U.S. should open trade with Russia,” REUTERS, 12 March 2012; “Putin critics oppose Jackson-Vanik trade sanction law,” WASHINGTON POST, 13 March 2012.

Add a comment

Enter your details and a comment below, then click Submit Comment. We’ll review and publish the best comments.