Wall Street Journal
December 06, 2012

U.S. and Europe Tackle Russia Trade

The Senate moved toward a measure to boost American trade with Russia, even as the European Union's top trade official warned that the bloc could bring complaints against Moscow at the World Trade Organization if the country doesn't end protectionist policies.

The Senate was expected to clear a vote Thursday to grant permanent normal trade relations with Russia, following overwhelming support from the House for the measure to lift Cold War-era trade restrictions. President Barack Obama has said he would sign the bill.

The move would give U.S. firms more legal protections through the WTO, the international arbiter of trade disputes. Russia formally joined the WTO in August after a two-decade journey, agreeing to cut its tariffs and open its market to more foreign products. But Cold War-era restrictions on Russia prevented U.S. businesses from gaining the same rights as other nations.

Lawmakers portrayed the measure as a boost for American jobs as U.S. companies expand into new markets amid slow growth at home. U.S. exports of goods and services to Russia could double over five years—from $9 billion in 2010—with full U.S. access to the market, economists at the Peterson Institute for International Economics estimate. The legislation would overturn the Jackson-Vanik amendment, a Cold War measure that restricts U.S. trade relations with nations that limit emigration. Congress passed the law in 1974 to ensure that Jews could leave the Soviet Union freely. That hasn't been an issue since the Soviet Union collapsed, and U.S. administrations have waived the measure's restrictions annually for Russia since the early 1990s.

"Russia is a fast-growing market," Senate Finance Committee Chairman Max Baucus of Montana said Wednesday. "This is a one-sided deal in favor of American exporters."

In Brussels meanwhile, EU Trade Commissioner Karel De Gucht expressed the bloc's continuing discontent over Russia's trade policies. Mr. De Gucht said Russia has done little since its entry into the WTO to eliminate protectionist policies.

"We would prefer to negotiate our way to a solution," Mr. De Gucht said in a speech to the European Parliament. "However, if that does not prove possible, we are most certainly prepared to use all the legal avenues at our disposal. And since Russia's accession, that includes dispute settlement at the WTO."

Russia is both a key source of raw materials for European industry and a burgeoning export market that EU companies hope to tap at a time when grim economic conditions are weighing on their domestic markets. Merchandise trade between the 27 nations of the EU and Russia amounted to over €300 billion ($390 billion) last year, with European imports of oil and gas from Russia making up the bulk of that trade.

A spokesman at the Russian Ministry of Economic Development didn't respond to a request to comment.

But Russia lashed out at EU's human-rights record Wednesday, in an attempt to turn the tables on the West's criticism of Moscow's rights record. "We are seeing a certain deterioration in regard to safeguarding human rights in the EU member states," Konstantin Dolgov, the Russian Foreign Ministry's special representative for human rights, told a news conference, according to Reuters.

Meanwhile, Russia and China signed several energy deals on Wednesday, but appeared to make little progress on the central issue of sales of Russian gas to China, officials said.

View artice here.