13th June 2012

Bridges Weekly | Russian Accession to WTO Forces Rethink on US Human Rights Approach

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The road to formalising Russia’s WTO accession appears to be nearing an end, with the country’s Parliament set to examine the accession accord on 4 July. Meanwhile, the debate on whether to lift Cold War-era restrictions on US-Russia trade has ramped up in Washington, after bipartisan legislation geared at making Moscow a full trading partner was introduced in the US Senate on Tuesday amid burgeoning questions regarding Russia’s human rights record.

Moscow sends accession accord to Duma; vote expected within weeks

Russia’s entry into the global trade body was formally approved by WTO members last December at the global trade body’s ministerial conference, following an 18-year accession bid. (See Bridges Daily Update #3, 17 December 2011) However, the accord must be ratified domestically by the end of this summer in order for Russia to accede to the now-155 member trade club, which saw Samoa and Montenegro officially join its ranks earlier this year. (See Bridges Weekly, 2 May 2012)

In a key step in the process, last Thursday the Russian government approved the WTO accession package and passed it on to the State Duma - the lower chamber of the Russian Parliament - for ratification. Assuming the accord passes, Moscow will formally become a WTO member 30 days after ratification.

“I would like to congratulate everyone [who is in charge of the WTO accession] for the completion of such a deal,” Russian Prime Minister Dmitry Medvedev said after the Thursday announcement. “The decision is being made and we have sent the documents [to the Duma] for ratification.”

Medvedev has publicly urged that ratification not be delayed, lest Moscow miss the deadline for ratifying its accession deal and have to restart the process to negotiate WTO entry.

Bill repealing Jackson-Vanik amendment introduced in the Senate

With Russia’s WTO accession package largely expected to receive Parliament’s seal of approval in a matter of weeks, questions have been flying in Washington as to whether and when the US will repeal a decades-old law that denies most-favoured nation (MFN) status for those countries that restrict freedom of emigration.

Although the US has waived application of the legislation - known as the Jackson-Vanik amendment - on Russia since the early 1990s, some fear that leaving the original law in place could put US exporters at a serious disadvantage compared to their European and Asian counterparts, who unlike the US would immediately enjoy the benefits of Moscow’s WTO membership.

US-Russia trade is relatively small, with US government data placing Moscow as Washington’s twentieth largest trading partner in goods, with US$42.9 billion in total bilateral goods trade last year. The Washington-based Peterson Institute for International Economics has estimated that Russia’s WTO accession could cause US exports to double from US$9 billion to US$19 billion over the next five years, assuming that Washington removes its trade restrictions on Moscow.

To that end, Senate Finance Committee Chairman Max Baucus, a Democrat from the US state of Montana who has championed the repeal of the Russia-focused trade restrictions, introduced a bill in his chamber on Tuesday that would establish MFN status, or Permanent Normal Trade Relations (PNTR), with Moscow. The legislation was backed by three other senators, from both major political parties.

“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,” Baucus said in a statement on Tuesday. “The clock is ticking for us to move, so we need to act now.”

US President Barack Obama, for his part, has also been a vocal supporter of removing the trade restrictions. In Congress’ other chamber, the Ways and Means Committee - the House of Representatives’ counterpart to the Senate Finance Committee - is scheduled to hold its first hearing on repealing Jackson-Vanik on 20 June.

Linkage of human rights and trade bills?

Some US lawmakers have said they would only be in favour of repealing the Jackson-Vanik amendment in exchange for a Moscow-focused human rights bill, raising questions about the future and composition of the trade legislation in Congress.

The human rights bill, known as the Sergei Magnitsky Rule of Law Accountability Act, would subject Russian officials connected to human rights abuses to travel bans and bar them from financial transactions in the US. A version of the legislation has already successfully made its way out of the House Foreign Affairs committee, though the bill must still be passed by the entire House of Representatives, as well as receiving US Senate and presidential approval, to become law.

In a letter dated 12 June to Senators Joseph Lieberman, Benjamin Cardin, John McCain, and Roger Wicker, Baucus indicated that he is ready to support the linking of the human rights and trade bills in the Senate, despite his earlier reservations.

“I share your concerns about human rights issues in Russia,” Baucus said. “It is equally clear that many of our colleagues are rallying around the position you have advanced - that the repeal of Jackson-Vanik for Russia must be accompanied by passage of the Magnitsky Act.”

“I am fully committed to ensuring that the Senate can act on both items this year,” he continued, adding that he planned to include the full text of the Magnitsky legislation in the mark-up for the Russia PNTR bill.

Even with Baucus’ assurances, however, several Senate Republicans, led by Finance Committee Ranking Member Orrin Hatch - a Republican - have already written to the committee chairman to voice their concerns about a series of issues, human rights and otherwise, related to the Jackson-Vanik repeal.

“Several members of our caucus are deeply concerned by continuing attempts to weaken the Senate version of the [Magnitsky] legislation,” the letter said. “In addition, while it is important to address the Magnitsky legislation in the context of graduating Russia from other human rights provisions, we believe a number of other issues should be addressed as the legislative process continues.”

Among these subjects, the senators raised questions about alleged Russian barriers to US exports, Moscow’s relationship with the embattled regime of Syrian President Bashar al-Assad, and whether the country would indeed comply with adverse rulings by the WTO’s Dispute Settlement Body once it becomes a WTO member.

“We believe it will be necessary to satisfactorily address these and other issues if Congress is to successfully navigate a path toward granting PNTR to Russia,” the senators concluded. “We hope you will work with us as we consider legislative options to address remaining concerns.”

For its part, the Obama administration will not stand in the way of legislation addressing Moscow’s human rights record, though it maintains its stance that the two bills should be kept separate, according to recent comments from Washington’s top trade official.

“You’d be hard pressed to find anyone who would bet against Congress expressing their concerns on the Magnitsky matter in some way,” US Trade Representative (USTR) Ron Kirk: said last Thursday in Moscow. “It’s important to work with Congress on an appropriate mandatory response to that.”

However, Kirk added, while human rights action is necessary, the trade and human rights matters should each be dealt with individually.

“Our priority is for the Congress to lift Jackson-Vanik in a clean bill which deals only with the issue relevant to our ability to maintain our competitiveness,” he said.

US industry, Moscow press against Magnitsky bill

Meanwhile, opposition to the human rights legislation both in Moscow and among US industry groups continues unabated, with questions being raised about the bill’s implications for US-Russia relations should it become law.

“The Sergei Magnitsky Rule of Law Accountability Act is seriously flawed,” said Bill Reinsch, president of the Washington-based National Foreign Trade Council (NFTC). “This legislation would harm US relations with Russia and many other nations, and would jeopardise the significant benefits arising from Russian concessions during its WTO accession negotiations.”

A Magnistky-style law would be “a gross interference in Russian internal affairs and, of course, it won’t have any positive effect on US-Russian ties, to put it mildly,” Konstantin Dolgov, Foreign Ministry’s human rights representative, told reporters in Moscow last month.

Such legislation would provoke an “adequate” response from the Kremlin, Dolgov added, without specifying what such a response might entail.

ICTSD reporting; “Senate bill to normalize trade with Russia greeted with opposition from Senate Republicans,” ASSOCIATED PRESS, 12 June 2012; “US official urges repeal of Russia trade law,” ASSOCIATED PRESS, 7 June 2012; “Human rights concerns complicate efforts to ramp up Russia trade,” THE HILL, 10 June 2012; “Russia Ready to Ratify WTO Agreements,” RIA NOVOSTI, 7 June 2012; “Russian govt approves agreements for country’s accession to WTO,” THE VOICE OF RUSSIA, 7 June 2012.

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