Bridges Weekly Trade News DigestVolume 16Number 25 • 27th June 2012

Russia Trade Debate Ramps Up in Washington as Human Rights Legislation Moves Forward


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Legislation that would sanction Russian officials for alleged human rights violations is moving swiftly through the US Congress, with a Senate panel unanimously approving its version of the bill on Tuesday. The potential linkage of the human rights bill with legislation that would remove Cold War-era trade restrictions on Moscow has sparked major debate among US lawmakers, particularly amid the backdrop of Russia’s impending WTO accession and warnings of retaliation from Moscow should the human rights measure become law.

Magnitsky momentum builds as trade hearings continue

The US trade restrictions at issue, known as the Jackson-Vanik amendment, deny most-favoured nation (MFN) status to countries with limited freedom of emigration. While Russia has been granted waivers from the amendment since the early 1990s for being in compliance with the law, some fear that leaving the original restrictions in place could put US exporters at a serious disadvantage to their foreign counterparts, who unlike the US would immediately enjoy the benefits of Moscow’s membership in the global trade body.

However, the process of granting Moscow permanent normal trade relations (PNTR) has been complicated by growing concerns over human rights protections in Russia.

Some lawmakers have argued against removing Jackson-Vanik entirely, on the grounds that this would take away Washington’s leverage in responding to concerns over human rights in Russia.

Others have suggested that the repeal of Jackson-Vanik be linked with a bill that would target Russian officials who commit human rights violations, including those suspected of involvement in death of anti-corruption lawyer Sergei Magnitsky in a Russian jail in 2009.

The human rights legislation - known as the Sergei Magnitsky Rule of Law Accountability Act - has quickly drawn support in both chambers of Congress, having now successfully passed both the House Foreign Affairs and Senate Foreign Relations committees. However, the legislation still needs formal approval from both the full House and Senate, as well as the US President, before it can become law.

“We do not pretend that terminating Jackson-Vanik and having Russia as a WTO member will resolve all of our differences with Russia,” US Trade Representative Ron Kirk told the House Ways and Means Committee during a hearing last Wednesday. “But maintaining the application of Jackson-Vanik to Russia offers no leverage with Russia over areas of disagreement.”

The US trade chief has openly argued against linking the trade and human rights bills, which acknowledging that the latter issue will need to be addressed in Congress in some form.

Senator Max Baucus, a Democrat who has championed the repeal of the Cold War-era legislation in his chamber, took a different tone regarding the relationship between the trade and human rights legislation during a hearing in the Senate Finance Committee the following day.

“By keeping the focus on US jobs, I am by no means suggesting we ignore the host of difficult issues we face with Russia,” Baucus said. “We must address the human rights, democracy, and foreign policy concerns,” he continued, reiterating his promise to support the Magnitsky legislation and add it to the PNTR bill when the trade legislation is marked up in the committee.

Even those that are not in favour of linking the human rights and trade bills, such as Kevin Brady - a Republican who chairs the House Ways and Means Subcommittee on Trade - have lately acknowledged that such a move might be inevitable. “I would prefer them not to be linked myself, but clearly at the end of the day if the will of the House and the Senate is to pass the Magnitsky bill, then it will be necessary,” Brady told Congressional newspaper The Hill earlier this week.

For its part, the Russian Foreign Ministry has warned of retaliation should the Magnitsky bill become law, a response that US officials have cautioned against.

“I’ve heard from several Russian counterparts their concern about the Magnitsky legislation,” Miriam Sapiro, Deputy USTR, said on Friday. “I certainly hope that if Magnitksy were to pass, that there would not be such measures.”

US lawmakers raise questions on Syria, WTO rules compliance

Concerns over Russia’s relationship with the embattled regime of Syrian President Bashar al-Assad have also been raised repeatedly by US lawmakers during the last several weeks, particularly following the news that Russian-made attack helicopters were being sold to the Syrian government.

Ileana Ros-Lehtinen, a Republican from the US state of Florida who chairs the House Foreign Affairs Committee, has advocated strongly against granting PNTR to Moscow given Russia’s foreign policy. “In light of Russia’s policy in Syria, the Obama Administration’s string of concessions to Moscow must stop, including the latest effort to repeal the Jackson-Vanik amendment to give Russia preferential trade benefits,” she said earlier this month.

However, several high-profile administration officials and lawmakers - including Secretary of State Clinton, Republican Senator John McCain, and Senator Baucus - have said that the Syria question should be dealt with separately from PNTR.

Meanwhile, various lawmakers have also raised questions over whether Russia will indeed comply with its WTO obligations once its membership in the global trade body is formalised. To that end, four Democratic senators have introduced legislation that would, if passed require the USTR to conduct annual reporting of whether Russia is upholding its WTO accession commitments, with the House Ways and Means and Senate Finance Committees having the option to request enforcement action should the Obama Administration not do so on its own.

“This bill is a common-sense measure to help ensure accountability,” said Sherrod Brown, one of the senators who introduced the bill. “We must make sure that Russia - and any country that makes commitments to earn greater trade facilitation - does not renege at the detriment to American workers, ranchers, and producers.”

Russian Constitutional Court asked to review accession package

Back in Moscow, Russia’s WTO accession protocol was forwarded to the State Duma earlier this month, in what is set to be one of the final steps in a process that was launched in 1993. The accord must be ratified by 23 July in order to avoid restarting the accession negotiations at the global trade body.

Though expected to pass, the ratification process in Moscow did hit a roadblock last week, after 131 Duma deputies sent a request on Wednesday to the Constitutional Court asking that it examine the accession protocol’s compatibility with the country’s constitution. The letter cited irregularities in the approval process and concerns that the procedures for ratifying treaties were not followed appropriately, according to Russian media.

Among the signatories of the request was Russian Communist Party leader Gennady Zyuganov, who has argued strongly against his country joining the global trade body. “Our country is totally unprepared for WTO entry and is doing so on unfavourable terms,” he said in a letter earlier this month.

“The main sectors of the economy are in no shape to compete on foreign markets and other industries do not make products that are in demand,” Zyuganov continued.

According to Russian media, the Constitutional Court is not yet sure whether it will consider the deputies’ request.

ICTSD reporting; “U.S. Warns Russia Not to Retaliate Over Human-Rights Sanctions,” BLOOMBERG BUSINESSWEEK, 22 June 2012; “Business groups see progress in moving Russia trade bill,” THE HILL, 24 June 2012; “Duma Deputies Appeal to Constitutional Court Over WTO Accession,” MOSCOW TIMES, 20 June 2012; “Russia’s WTO Entry ‘Threatens National Security’- Zyuganov,” RIA NOVOSTI, 15 June 2012; “Senate panel backs “Magnitsky” sanctions on Russia,” REUTERS, 26 June 2012.

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