July 17, 2012
Russia offers economic opportunity
By Sen. Max Baucus and Sen. John Kerry
Our respective Senate committees are charged with overseeing the engines of America’s unique role in the world: as global trading partner, the leading democracy and a force for international peace. We clearly see how our global economic interests and our foreign policy values are closely tied — which makes a persuasive case for us to seize the opportunity presented by Russia joining the World Trade Organization this summer.
For U.S. businesses to take advantage of this opportunity to increase exports and create jobs our economy needs, Congress must establish permanent normal trade relations, or PNTR, with Russia. That is why we introduced a bill last month with our colleagues Sens. John Thune (R-S.D.) and John McCain (R-Ariz.) to do just that.
The upside of this policy is clear on an international economic landscape that rarely offers this kind of one-sided trade deal — one promising billions of dollars in new U.S. exports and thousands of new jobs in America.
Russia is the world’s seventh-largest economy. When it officially joins the WTO, it will lower tariffs and welcome new imports. That sudden jump in market access will be a windfall for the first ones through the doors.
U.S. businesses won’t be alone, however. They will most likely face competition from Chinese chemical and plastic producers, Japanese automakers and European airplane manufacturers, among countless others overseas.
Why must we act with urgency? Because, as Andrew Carnegie once said, “The first man gets the oyster; the second man gets the shell.” For U.S. businesses to get the oyster, Congress must first repeal the 1974 Jackson-Vanik amendment and approve Russia PNTR.
Jackson-Vanik’s history is important. Congress passed it during the Cold War to pressure the Soviet Union to allow Russian Jews to emigrate freely. It was successful, and the Kremlin relented.
But the Soviet Union collapsed more than two decades ago. Every U.S. president, regardless of political party, has waived Jackson-Vanik’s requirements for Russia since 1994. The American Israel Public Affairs Committee, the National Conference on Soviet Jewry and even Israel now support the repeal of Jackson-Vanik for Russia. The bill is a relic of another era.
But this relic is now standing in the way of Washington solving a new set of challenges. With too many Americans still searching for a job, our manufacturing sector needs every boost it can get. Despite progress, our trade deficit remains too wide. Seizing this opportunity to increase exports to Russia is one way to make concrete progress.
U.S. exports to Russia total more than $9 billion per year. Repealing Jackson-Vanik and establishing PNTR could double that number in just five years, according to one recent study. That could mean thousands of new jobs across every sector of our economy. With the Russian economy’s impressive growth — it’s expected to outgrow Germany’s by 2029 — the long-run gains would be even greater.
Make no mistake, Russia is not without its problems — and they are stark in the foreign policy arena. Its support for the regimes in Syria and Iran remains an obstacle.
The death of anticorruption lawyer Sergei Magnitsky also highlights troubling human rights problems. A bill known as the Magnitsky Act, sponsored by our colleagues Sens. Ben Cardin (D-Md.) and McCain , aims to address these human rights issues by sanctioning those responsible for Magnitsky’s death. It’s a crucial part of the debate surrounding our relationship with Russia — and should be approved together with PNTR.
It is important to understand that this debate is not a choice between improving conditions in Russia and increasing U.S. exports. These are not opposing goals — indeed, they support each other.
Why? Because in addition to the strides the Magnitsky Act would make, Russia’s adherence to WTO trade rules and wider engagement as a global trading partner can boost transparency and spur progress on human rights and democracy.
Human rights, democracy and transparency activists in Russia are eager to make that case. Not only do they favor the passage of constructive human rights legislation in our Congress, but they also see WTO membership and increased trade with the U.S. as avenues toward progress. They understand — as we all should — that repealing Jackson-Vanik is not an acceptance of Moscow’s status quo.
Repealing the bill is also not an economic giveaway to Russia. To the contrary, it is a one-sided gain for U.S. companies and their workers.
By establishing PNTR with Russia, U.S. businesses win increased market access without giving up a single thing in return — no tariff changes, no market concessions, nothing. It also deprives Russian hard-liners of their current, and convenient, abuse of Jackson-Vanik as a rhetorical tool to rally anti-American sentiment.
The clock is ticking for Congress to act. Russia is due to join the WTO and open its doors to the world 30 days after its parliament officially approves the membership this summer. Once that happens, businesses in China, Europe and the more than 150 other WTO member nations can seize the same opening available to us.
But we know that if U.S. workers and businesses are “first to market” and can compete on a level playing field, we can win. Congress owes it to American businesses to repeal Jackson-Vanik — so they’re in the best position to compete.
The global economic imperative couldn’t be clearer: Countries ready to compete get the oyster, as Carnegie said. Those that cannot compete — or worse, choose not to — will be stuck with the shell.
That’s the stark choice before us. Our economic interests and foreign policy imperatives are the engines driving a powerfully persuasive case for Congress to act now.
Sen. Max Baucus (D-Mont.) serves as chairman of the Finance Committee. Sen. John Kerry (D-Mass.) serves as chairman of the Foreign Relations Committee.
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