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  • Normal Trade Relations with Russia: We're Almost There

    On August 22, after almost 20 years of negotiations, Russia became the 156th member of World Trade Organization (WTO). Regrettably for the U.S., Russia has still not been granted permanent normal trade relations (PNTR) status, meaning that the U.S. cannot fully benefit from Russia’s new status in the WTO.

    As a fellow WTO member, the United States should be in a position to benefit from Russia’s ascension. A Peterson Institute study estimates that the volume of U.S. exports of merchandise and services to Russia would double from $11 billion in 2011 to $22 billion over about five years if WTO rules apply to U.S. trade with Russia.

    But as it stands, the U.S. is unable to reap the full rewards of trade with Russia and will not be able to do so until it repeals the Jackson–Vanik amendment to the U.S. Trade Act of 1974 as it applies to Russia, thereby granting PNTR status to Russia. Extending PNTR would allow the U.S. to fully benefit from the concessions Russia made in order to join the WTO.

    The Jackson–Vanik Amendment was successfully used during the Cold War to limit trade with the Soviet Union and other nonmarket economies that restricted the freedom of emigration, but it is now woefully outdated. And although Russia continues to violate human rights, the U.S. no longer recognizes Russia as a nonmarket economy and has lifted the Jackson–Vanik trade restrictions annually since 1992 to give Russia normal trade relations treatment.

    On November 16, the U.S. House of Representatives voted resoundingly in favor of H.R. 6156, the Russia and Moldova Jackson–Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act. H.R. 6156 is intended to grant PNTR to Russia while encouraging respect for human rights through an incorporation of the Magnitsky Act. However, there are differences between the House version and current pending legislation in the Senate on the scope of nations covered by this provision.

    Continuing the work of the House on this issue would be an important signal for Congress to send. By doing so, the Senate would provide a solution that pinpoints and punishes gross violators of human rights while allowing U.S. companies to compete for business in Russia and elsewhere.

    Posted in Economics [slideshow_deploy]

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